Group Members: Bilal Asif Bushra Anis A Ajazz Ahmed KhurramAtif Sattar Ismail Industries limited Contact Name: Mr r Liaquat Telephone Number 0333-214: 687, 021 - pu iy ABIAcknowledgement ‘This report is a product of the concerted efforts of a number of people; without their support we wouldn't fave been able to make it through. We are grateful to Mr. Najam- ub-Hasan, Instructor for the course, “Managerial Policy” taught at the Institute of Business Administration, His Knowledge in the field enlightened us greatly. We would alto Ge to mention our heart-felt thanks to DCEO and Marketing Director Mr. Mifta Ismail also thankful to the persons who also contributed a fot in our report: Mbrand manager, import and Mr Akmer Liagat export manager . They were of immense assistance in the preparation and imparting their experience in this report, Contact Numbers Ismail Industries Candyland Phone Number ~ 4311172 — 4311175 Manager Exports Mr Ahmer Liagat - 0333 21426687Contribution Sheet The entire team members coordinated and visited the Ismail Industries Limited several time. As well as other major Competition of Candyland Bilal Asif Completed SWOT analysis, TOWS analysis, marketing and Management formed recommendation for the case study. Compile the report with 5,620 words. Visited Company several times. AM Ajazz Ahmed Industry overview, company overview analysis based on value chain and visited factory at HUB. Completed 5110 words. Au au Bushara Anis, Jana Visited several confectionery companies for competition analysis and completed 5,233 words overall. Khuraam Atif | Kho Achy Financial analysis and management analysis based on interviews with different levels of mangers at Candyland and completed 5140 words.Background The makers of Candyland and bisconi, Ismail Industries limited was established on 21% July 1987 authorized capital of Rs 10 million /11 million ordinary share which was increased substantially to 40 million/ 14 million ordinary share the basic objective behind setting of an industrial unit for the manufacturing of sugar confectionary item the company was converted into limited company on 1“ novemneber1989 with an authorized capital of 80 million divided into /10 Rs each share. The Ismail Industries limited was own by the family members of an old confectionery maker Union, Due to turka (family wealth distribution) one of the brother M.M. Ismail started his own confectionery industry in the name of Ismail industries mrt The company presently own two plants of confectionery and biscuit making at different locations near hub-choki district Lasbeela Balochostan. The first site was over area of 231,255 meters and another site at a distance of 10 Kms from the first site. Both sites was developed due to availability of cheap and skillful labor on the other hand government support terms in developingthis project in terms of tax holiday making it easy for the company in initial set up. The company major brand is Candyland and Bisconi under which they started producing different product under the same name. The company was well known for its jelly in the beginning, Candyland was the pioneer of jellies in this Pakistani market even now at present they are the leaders in the segment others that their famous bubble gum are another product which come in early 90’s almost 15 years in the confectionery industry Candyland is coming nearer to get the top position and become second to market leader in the industry. The company holds I! 1 certification which differentiates them from other manufacturers. Ismail industries own state of art technology most of the equipment being imported from different countries, the major part of the plant was imported from Germany Australia Holland Italy and the remaining part of equipment was developed under the supervision of Japanese engineering company at the location. MM Ismail who has valuable experience in the confectionery industry ran the company professionally the company key success is behind the quality ofleadership and the management another major name in the company Dr.Miftah.Ismail holds valuable education and experience. He is a graduate of university of Pennsylvania after his graduation he joined IMF and later came to Pakistan to run his own family business; he is running the company professionally. The success of Ismail Industries is attributed to Miftah Ismail and his valuable team of professionals out of which most of them are IBA. graduates and the technical staff and quality controller are trained and educated the company also send their employee from training to Germany and France. The company acquired recently a plant scuits manufacturing and another of chocolates filled bis rom Mejia. An Ismail industry is in the stage of diversific and expansion. Companies adopt related diversification and expansion strategy. Currently candy land is the largest exporting company of Pakistan and substantial gain from its export. The company not only sells its product in their own name but also supplying its product for private brands who out sourcing their product. The director Miftah Ismail wants Candyland to become a leader in the local industry as well as attain sustainable growth in the international market thecompany is the second best manufacturing of confectionery in Pakistan after Hilal. Industry background Sugar base product and confectionery industry in Pakistan is an important segment of food processing, as in preserving foods industry even before independence the industry has footing in Punjab and Sindh. The JB Managaram factory was well known in the sub continent. After partition the industry picked up its development, achieve in the when the main centers of production JK at Karachi. Hyderabad, sucker Shaiwal and Lahore .B) owned by Hindu family in recent years the major player in thé industry are Hilal, BP, Mayfair and Mitchells some other players also present in different niche market like kidcoo in low income segment Mitchell and Cadbury in high income segment . Some imported confectionery items are also available in limited number of urban markets Industry over View The sugar and confectionery industry in Pakistan is an important segment of food processing as foods preserving industry even before independence ofthe industry has a factory in Punjab. The industry has a footing in the Punjab and Sindh the Jb-Mangaram factory at Sui was well known in the sub continent after partition the industry picked up its development achievers in the late sixties when the main centers of production JK at Karachi, Hyderabad, Sukkar, Sahiwal, and Lahore. Further expansion took place during the last fifteen years in which period the old plant was modernizing and new capacities with sophisticated machinery created. The major capacity of the industries was confined to transitional project like sweets bubble gums as chocolates een added at present in Pakistan 26 factories are in this out of which are modern and 167 are out dated based on jutput based on the output of these units on 100% capacity the capital consumption of sugar confectionery arrives to an estimate of 134 grams per day in1989 and estimated almost at 5.08 gram per day in 2003 (growth rate of 10%). This appears to be too little when compares with international standard one is to grow approachably in consequences of the growth of population couples with the increase of income and improvements in the standard of living.The sponsors are the previous directors of large biscuit as confectionery manufacturers unit normally Union Industries Pvt, Ltd as the family is in this field for last 40 years since they carry high expertise in the manufacturing and marketing of confectionary product as there are their successful penetration in the market seems to be week assumed. This view is further strengthened by their product planning which consist of high exotic and innovative varieties. The products of the company will be sold locally as well as internationally exports to USA, Sing: ighanistan ,Kenya, the project is capable of producing healthy return on investment and on local demand of sugar confectionery items and earning foreign exchange through exports, Expansion in the industry Major expansion took place during the last fifteen year. The competition was growing at a rapid rate Hilal became the market leader where as Candyland at second in the market after 15 years of operations.Rapid change in the industry take place in the last fifteen year, when old plants were replace by new plants and increase in capacities, with sophisticated machinery created the major change of the industry which was confined to new project like sweet, bubble, gums and chocolates. There is a need at present in Pakistan for upgrading the factories. Out of all formal and informal sector 26 factories are update to present modern technology and 167 are outdated based on the output of these units on 100% capacity the per capital consumption of sugar confectionery arrives to an estimate of 5 grams per day This appears to be too little when compared to international standard one is to grow approachably in consequences of the growth of population with the increase in income and improvements in the standard of living Candyland The sponsors of Ismail industriesTimited are the directors of large biscuit and confectionery ufacturing units known as Union industries (private) Itd, as the family is in the field for the last 40 years since they have substantial amount of experience in manufacturing and marketing of anyconfectionery product they are their successfully penetrating in the market but still they seem weak in the market. The new company Istnail Industries limited is of the view the company will be strengthen by their product planning which consist of high exotic and innovative varieties of products of the company which will be sold locally as well as internationally export to USA Singapore Afghanistan Kenya, Uganda, Tanzania and other African countries based on the existence of such environment . The projects demand for it is about 20% apart from experience of managems the field of confectionaries. The product hence on one sit ¢ product is capable of producing healthy return on investment ayd on local demand of sugar confectionary items and earning foreign exchange through exports. Mission statement The company mission statement stated in the earlier period being change few times. The first mission statement of Ismail industries limited started in 1990“To become the top confectionery producers in Pakistan and south Asian markets which retaining our competitive advantage through excellent quality of own products that are continuously redesigned and innovated to satisfy customers” Later he company amended their mission statement by replacing “confectionery products” with “consumer food for products”. The mission statement define the business of the company which clearly States as confectionery producers which is changed to consumer food product because of related diversification of the company to achieve growth in a competitive environment. They believe that their people are the for their success; therefore, they contim écruit train and retain the best professionals in the fiels They realize their responsibility toward society and contribute the other aspect of mission statement is to Cleary state the long term objectives which is stated in term of becoming a market leader in the industry which enables the company in settling objectives. Mission statement considered how company differentiates itself from other, after analyzing different mission statement of the industry, excellent qualitycontinuous redesigned and innovated to satisfy our customer is the point of differentiation of the mission statement in the industry at the same time it also give company a sense of direction to the company. Ismail industries timited evaluate their mission statement from time to time as the environment changes in 2000 company reviewed its mission statement after capturing second position in the industry and almost nearer to be a market leader this changed the mission statement entirely “We strive to deliver to our consumer’s product which maximize value and customer satisfaction. We are extensively cat fo the domestic market and strengthening our international ones. We wish to consolidate and strj en our position as the most technologically fmpany in our field. We have state of art factories and the most sophisticated processing technology in Pakistan we recognized the importance of efficiency and creativity” The recent mission statement is up dated from the previous ones. The scope of the mission statement being wider and cover number of key elements it Describe what is the business? Objectives that help in setting future target and strategy and the most important part the responsibility toward societythe mission statement incorporated almost major aspect as compare to the competitor it is the best statement stated by any company. It define all the key clements like customer, product and services, market, technology, growth and profitability, philosophy (beliefs, value aspirations and ethics) self-concept and concern for employees. But the only element in mission statement left behind is public image. According to the verdict (Mr. Miftah Ismail) the product or company creates its own image by its quality the point here is how consumer come to know about the product by creating public image Vision statement The company vision statement must ans} fe question “what company wants to become?” The Ismail Inc ies Vision statement Define “We aim to offer high quality product to our consumer by remaining the most technologically advanced company in this field. We strive to be brand leaders in all the categories that we compete in. We wish to have substantial presence outside of Pakistan through export and local manufacturing” Ismail Industries Limited W‘The Ismail industry clearly state the company matrix to achieve and develop a sense of urgency in the company to strive forward step by step and to develop a perception in the mind of employees to attain this stated vision Objective The company states different set of objectives which cover the overall company objectives as well as develop partial objective for each division "The first and foremost objective of Candyland is to become the market leader in all the categories of confectionery and major segment of biscuits. "To attain sustainable gro ‘Ompany averaging above the industry standard. = Develop regularly number of new and innovative product to sustain the growth at the same time reduce the number of product which are not performing well in the market.= Export target set an annual growth of 17% add new countries in the export portfolio that dependency on one or more country can be reduced. "Every year explore three new markets where potential export can be made « Develop new and innovative product through comprehensive research and analysis of market to reduce the risk of failure for new product, *In the local area market expansion and in the international market development must be made to develop regulatory in sales. "Ismail industries m yw the importance of qualified staff. The foremost objeCtive is to hire qualified staff, develops their skills and gets them trained from foreign countries. = The company wants to recognize its brand in the eyes of consumer for its quality and innovativeness.* The company estimates the product life cycle is short and to retain market share and growth new product must enter the market at regular intervals of three month or little more. Key success factor The key success factor behind Candyland is the innovation competent set of employees and the leadership of qualified and experience people specially Miftah Ismail and Muhammad M Ismail. professional attitude; each and every manger of the firm is highly qualified. Each and every department of the firm owns qualified people. The decision making power are in the hand of qualified people. The true leader behind the success of the company is due to Miftah Ismail and he coordination among directors and managers. Miftah Ismail is a business graduate of university of Pennsylvania with experience of 5 years with IMF with a family background of confectionery industry"The company estimates the product life cycle is short and to retain market share and growth new product must enter the market at regular intervals of three month or little more. Key success factor The key success factor behind Candyland is the innovation competent set of employees and the leadership of qualified and experience people specially Miftah Ismail and Muhammad M Ismail, success of Candyland is due to its highly qualified workforce and professional attitude; each and every manger of the firm is highly qualified. Each and every department of the firm owns qualified people. The decision making power are in the hand of qualified people. The true leader behind the success of the company is due to Miftah Ismail and he coordination among directors and managers. Miftah Ismail is a business graduate of university of Pennsylvania with experience of 5 years with IMF with a family background of confectionery industryThe company select top quality managers who are well qualified Candyland is one of the dominant place where you will find all of the managers hold MBA degree from IBA and some from foreign country. The technical staff plant manager, quality controllers and product developments team is highly qualified and trained from abroad. Most of them are educated from with in the country but they are send abroad for training and extra qualification. The Jelly making Candyland hold a dominating leadership in jelly making with more than 50% market share .we can easily define jellies as thei not only leader but also the int of Jellies in the Pakistani market. I would not say they are th€ innovators because jellies being already sold in international market before Candyland started the idea of jellies was actually copied from USA and state of art technology equipment and machinery was imported form different countries like Germany ,France USA and France, The continuous success in the confectionery market segment is due to continuous innovation, redesigning and development of new taste of jellics lead Candyland to sustain this segment leadership started with jelly beans,jelly alphabet and other types of jellies the innovation in jellies which further enhance the declining market share of Candyland is due to chilli mille this jelly is developed in consideration with the research made by Candyland which analyzed the taste and performance of candies and jellies so it was discovered that there is a vacant market niche of chatpati jellies and candies capture the leadership strength again as the leader. State of art machinery and plant The maker of Candyland, Ismail industries ltd is one of the earlier companies who develop the product with latest state of art technology. This kind of technology was not their in the industry since Ismail industries took off with such a modern plant which give an competitors. Most modern proj for manufacturing of sugar confectionary items consisting oft bubble, gums, chewing gums, candies, crunchy /lom candies and starch molders and candies as to offer the annual capacity of the project is 6600 tonnes based on our shift of 8 hours a day 330 days a year. The machinery incorporated latest technology has been imported from Japan of sugar confectionery manufacturing machinery imported from all over the world. The machinery imported from different countries of the world fromGermany, USA, Australia, Holland and Italy, Beside that, some local hosed machinery is also purchased. ISO 9001 quality Certification Another major success of the company is the quality standard certificate in the early 1990’s. Candyland was the only confectionery company that was certified by ISO 9001 standard, which open new door toward the international market. Export Ismail industries limited set new st ‘When they started exporting their product to different c, ies like Bangladesh, Dubai, Kenya, Sudan earns Rs 227 million from exports, which come to approximately $4 million, continuous increase in export by increasing the number of market constantly. The company management target is to start exporting to at least three new countries every year,Company own research and development Lab Candyland set up a research lab, where they use to develop new recipes of confectionary this lab is of the most sophisticated laboratory which develop products having comparative advantage over other Candyland sets standard in the industry due to its capability to introduce new products in the market Production under some well-known international brands The company also produces for other international companies product, who have out source their product to private labels like Candyland in accordance with the Candyland export manger “Our production under someon: name business gives us valuable experience towat ‘elopment of new product for domestic market” Rite biscuit The new products introduced commercially is doing above their expectation and the horizontal diversification adopt by the company is successful. Again looking at the horizontal diversification company develop another competitive advantage over its competitors in the new segment of theindustry rite biscuits is no doubt a well tried copy of OREO biscuits but OREO does not have that vast market because the marketing agents of Nabiscoco makers of OREO have a little niche market due to its skimming strategy, where as Biscini use premium price strategy, but still chagrining much less then OREO, but higher then other market players like prince. Rite was an instant success through out the country and which gains substantial profits and develops new taste of Pakistani ‘consumer the company director says about Rite “We could not achieve better introduction on rite then that, all the market segment are incline to use it as premium price we are working at more that expected to fulfill the demand of the market” Continuous Inclusion of New product known international product and use it as a bench mark to produce that type of product in the local market they are not scared of coping international confectionery products,Value chain analysis Ismail industries value chain activities starts from raw material and end in the hands of th consumer the value chain continue towards the end of the production distribution each process add value to cost as well as consumer Raw material The basic raw material used in confectionery industry is sugar, glucose and milk powder these are the raw material available locally in abundance flavors fragrance and taste makers are major part of the confectionery which is usually imported from European countries, Singapore and France for which order have to be placed to importers. imported raw material attract customers only longing from 40% + producing raw For makigg Rite and Cocooma coco and artificial flavors being imported. Candyland is in contact with number of suppliers of raw materials which provide materials on time plant manager send his demand for material to import manager who manages the timely supply the martial importers on month to month basis. Candyland all use the approach of stocking forValue chain analysis Ismail industries vatue chain activities starts from raw material and end in the hands of th consumer the value chain continue towards the end of the production distribution each process add value to cost as well as consumer Raw material The basic raw material used in confectionery industry is sugar, glucose and milk powder these are the raw material available locally in abundance flavors fragrance and taste makers are major part of the confectionery which is usually imported from European countries, Singapore and France for which order have to be placed to importers. imported raw material attract customers only longing from 40% ifficulty is appre producing raw For Rite and Cocooma coco and artificial flavors being imported. Candyland is in contact with number of suppliers of raw materials which provide materials on time plant manager send his demand for material to import manager who manages the timely supply the martial importers on month to month basis. Candyland all use the approach of stocking forseasonal raw martial like coco imported on the basis of production season when coco prices are lower in the international market. Storage Candyland store limited manufactured product because they develop production forecast on the basis of sales forecast the company hold storage capacity of raw material and finished goods at the factory site. The management believes inn produce less goods that they will not store the product at the factory, but they stock raw materials specially, those materials which are imported from foreign countries the main stock house is located at Manipur Ghadar. On the other side, distributors also stock the. i ions for their own comfort to \¢-to-time demand in the distribution areas. Candyland ha¥e manufacturing facilities in the hub and supply its product country wide the company have distribution channel in major cities where regional sales office is located the regional, sales office where the stock is stored at Rawalpindi, Faislabad and Lahore. Lahore is considered as a major distribution center where the entire region has storage capacity and able to store good on the basis of their demand.Manufacturing The manufacturing facilities are located in Balochistan near Hub ~ Chiko. The company has two manufacturing facilities both at hub. The first facility is used for making confectionery based items like toffee, chocolates and jellies, where as the other facility is located ten miles away from the confectionery plant the company has state of art technology to produce biscuits. At the manufacturing facility power generators is also provided to maintain the continuous level of production through out the season. The generators has the capacity to produce electricity for the whole plant as we mentioned earlier the company is ISO 9001 certified so t ity of product develop at the producti ility is in accordance with the international S The plant operation control by the plant managers who able to estimate production level in accordance with there sales forecast we assume in Pakistan most of the plants in operation does not followjust in time production but some what partially they may be using it. Candyland on partially but not able té fully adopt it because of constrains in the industry and the environment prevailing around itDistribution Ismail industries have 150 distributors through out the country with four major distributions centers at Karachi, Faislabad, Rawalpindi and Lahore. The company holds distribution in Karachi and the regional head quarter is considered to be Lahore, which is another major centre of the region. The company has its own distribution network of trucks, which supply to the products to the distributors. Candyland have only sells Candyland brands on the other hand Candyland also considering to out sourcing its distribution network to other agencies. Advertising and promotion Adverting plays a tremendous role in the growth of any product demand. Company outsource it adverting and promotion to its within country they use services o: ic and interflow where as animated advertising done by fyland is develop outside Pakistan in UAE and India because technology is not available in Pakistan. The distributors and sales department carries out other promotional activities. Candyland know the importance of outlet based promotion candies and confectionery based on impulse buying of consumer Marjory are children.So on the outlet base sales promotion by the distributors are made the industry critics suggest, Candyland major weakness is their advertising and promotional activities in terms of competition where Hilal is doing extensive marketing campaign Candyland spend 6% on advertising marketing expenses. Packaging Candyland owns its own packaging unit and wrapping of goods. Companies design and develop packaging of confectionery products. The company is considerifig to develop a new polypropylene film project for man ing warping, which is used for wrapping of confectionery biscuits and other project aggregate cost of the project of these two projects is around Rs 300 million.Management of Candyland Organizational management Ismail industries LTD believes in the real talent of educated people who are well qualified for the company. The director Miftah Ismail say for the success of Candyland, we develop a winning combination by hiring only educated people. In the management all of them are at least MBA’s. The company develops its winnin; imation of dedicated and committed workforce. Canc have almost 40 MBA’s all of them are from IBA. The agement is centralized at the top. Memon business community dominates Candyland. About 76% of the share holed by the director and their family member.POLICY Your management believes in carrying out the company’s business in line with the best We are taki féps to ensure that we achieve full compliance with the requirements of the Code of Corporate Governance (the Code) issued by the Securities and Exchange Commission of Pakistan. The required compliance statement has also been included in this report. We also confirm to you that:1.The enclosed financial statements, prepared by the management of Ismail Industries Limited present fairly the company’s state of affairs, the results of its operations, cash flows and changes in equity, 2.The company as required by the Companies Ordinance 1984 has maintained proper books of account. 3. Appropriate accounting policies have been consistently applied in preparation of the financial statements and accounting estimate are based on reasonable and prudent judgment. 4.International accounting standards as applicable in Pakistan have been followed in preparati mancial statemei and any departure from has been adequately disclosed. tem of internal control is sound in design and has been effectively implemented and monitored. 6.There are no significant doubts upon Ismail Industries Limited’s ability to continue as a going concern. 7.There has been no material departure from the best practices of the corporate governance that have become applicable to the company, as detailed in the listing regulations.8.Key operating and financial data for last six years in summarized form is annexed. 9.During the year, 8 board meetings were held and the attendance by each director is annexed. 10. Statement showing the company’s shares bought & sales by the Directors, CEO, CFO, Company Secretary and their spouses and minor children is annexed. The project plant and machinery Most modern project was setup for manufacturing of sugar confectionary items consisting of bubble gums, chewing candies, crunchy /lams and candies starch molder cadies as to offer th Of the project is 6600 tons based on. ‘ift of eight hours a day 330 day a year. The machinery incorporated latest technology has been imparities under buyers credit which has been supplies by nissho Iwai corporation of Japan the machinery proclaimed has a most optimum modem way of the sugar confectionary manufacturing machinery from all over the world the machinery imported from different parts of the world from west GermanyAustralia Holland Italy and east Germany the cost of almost 100.411 million. Beside importing machinery locally manufactures purchased machinery consisting of boiler water softening plant compressors power generators lift tracks tally mixers air conditioning installations electrical workshops of laboratory equipment to bring itself in the project the cost of locally manufacturers proclaimed Machinery is Rs 111.35 million the total cost of imports and local machinery is Rs 111.769 million The ib machines has completed by the engineers of Nisshoiwa Corporation of Japan. Company has acquire: iscuit factory in the vicinity of the present facilities of the company. Directors of the company feel that keepifig in view the synergies of the confectionery business with biscuit manufacturing sale; this investment is expected to further reinforce the company’s profitability in the ensuring years. Moreover, considering the core competencies available in the company of manufacturing, marketing, distribution and sale of consumer products, this acquisition also provides an opportunity for diversification into an area in which the company has sufficient expertise. ‘The company has also made investments in a new plant, which has been imported and installed for manufacture of lollypops. Moreover, theproduction capacity of Jellies, a popular and profitable product has been expanded significantly. Additionally, the company has also acquired and successfully installed a gas-based generator that will help in production efficiencies and reduced cost of electric power. The aggregate cost of capital expenditure on all these projects is estimated at Rs. 50 million, which is being partly financed through a director’s loan and internal cash flows and partly by external financing from banks. Company has continued to expand its busine: ing in view the large unsatisfied demand of Candy Li Products. Not only new products have been added in the w years, we have also introduced new lines and a new segmenf of business, namely, biscuits. Keeping in view the tremendous success of the biscuit project, your directors have also approved further expansion of the biscuits factory for which additional plants and machinery are being imported. Additionally, the directors have also approved to establish a project for manufacture of Cast Polypropylene Film, a product used for wrapping of confectionery, biscuits, and other products. The aggregate cost of these two projects is estimated at Rs. 300 million. Appropriate financing facilities for these two projects have been finalized subsequent to the year-end. We are confident that both of these projects will further add to the company's profitability.Location The project is locate at hub-chuki district lasbella- Balochistan on a plot of 23,1255 meters this site is sell due to its class proximity to the developed with developers market easy availability of skill full labor and well developed work of infrastructure and overall facilities. (Set up in balochistan due to tax benefits) Plant Expansion 't Expansions are taken from time to time not only in confectionaries but also in biscuits and printing on rappers on high quality. Company has acquired a biscuit factory in the vicinity of the present manufacturing facilities in the company. Your director feels that keeping in view the synergies of the confectionery business with biscuit manufacturing and sale, this investment is expected to further reinforce the company’s profitability in the ensuring years. Moreover, considering the core competencies available in the company of manufacturing, marketing, distribution and sale of consumer products, this acquisition also provides anOpportunity for diversification into an area in which the company has sufficient expertise. The company has also made investments in a new plant, which has been imported and installed for manufacture of lollypops. Moreover, the production capacity of Jellies, a popular & profitable product, has been expanded significantly, Additionally, the company has also acquired and successfully installed a gas-based generator that will help in production efficiencies and reduced cost of electric power. The aggressive cost of capital expenditure on all these projects is estimated at Rs. 50 million. Raw material The basic raw iat required are glucose and milk powder these are raw materials available locally in abundance, also a part of the material will be importing from western European countries and Singapore for which order have placed importers raw material attract customers only longing from 40% to 100% no difficulty is apprehended in producing raw materialsRisks Factors = Major risks that may hamper the attainment of the corporate objective, which are continuously monitored by our management to minimize their adverse effects are: * Volatile movements in the prices of our major raw materials like sugar and glucose, which largely depends on the growth of agriculture sector, the government policies relating to regulation of prices and international market prices. = Possibility of continuing in the domestic market “Increased cot ion, especially from the small producers of low quality confectionery products in the informa! sector who do not pay their taxes, indulge in piracy and have minimum overhead costs * Risk of failure of our new products, including biscuit manufacturing Management has designed appropriate strategies to address and mitigate the above risk factors so as to minimize their adverse affects on the company’s future profitability.Product Line The company owns a diversified portfolio of product line. Candyland consumers are the same for the entire product they marketed. In some segment, Candyland also targeted age bracket above children age range from 16 and above but the business remain Ismail industries limited the same. Ismail Industries Ltd diversified business in to biscuits manufacturing. They develop a separate strategic business unit in the name of “bisconni”. They started marketing their product “Rite Biscuit” which was an instant hit in the domestic market. The Company is thinking of expending their plant of biscuits due to excessive demand in the local market. Another product they develop in line “Cocomg'-whith is an Egg shaped chocolate filled uit, which is gaining market share. In our analysis, the company is diversifying horizontally where consumer remains the same. Confectionary industry is highly segmented in term of its product line they have in their portfolio. Every competitor in the industry is leading one or other segment. Such as candy land is a dominant leader in the Jellies segment market share of almost 70%. Where as in the segment of Gum and toffees it’s Hilal, in chocolate it’s Mitchels.The over all market leader in the industry is Hilal with sales of Rs 2 billion Where as Candyland ranked second with Rs 0.9 billion and expected to gain market share with introduction of Rite biscuits. Expected sale of Biscuits 0.4 Billion by the year end 2004 and export will expected to increase to $4.5 million by the end of this year if export will not be affected by Iraq War. Company is expected to expand their product line with number of new product especially in biscuits and also planning to expend the product line in Snacks. The product line of Ismail Industries Limited is. .Rite Biscutts : | f ‘Cocome | FLO | (Vanilla cream sandwich) (Chocatate filled balis) Jellies Years of experience and constant research and development have established Candyland as leaders in every major range of the South Asian confectionery market, In Jellies, too they are the leaders both in terms of quality and market-share. CandyLand jellies come in a variety of tastes ranging from sweet to sour with many delectable combinations of the two. The jellies are based on a combination of gelatin, pectin, and starch. We manufacture jellies in different shapes. The j roduced in both 30g per piece. The number of Jelly product are Jelly ABA, Jelly Bear, Jelly Bottles, Jelly Cartoon, Jelly Delight, Jelly-O, Jelly Rabbit, Jelly Racers, Jelly Shooters, Jelly Surprise , Jelly Slices and Jellies. These Jellies are packed individually in small or large bags, by weight or numbers and also in bulk.SBU #2 Jellies Years of experience and constant research and development have established Candyland as leaders in every major range of the South Asian confectionery market. In Jellies, too they are the leaders both in terms of quality and market-share. CandyLand jellies come in a variety of tastes ranging from sweet to sour with many delectable combinations of the two. ‘The jellies are based on a combination of gelatin, pectin, and starch. We manufacture jellies in different shapes. The jelli duced in both sugar-sanded and “inn wa ite necate tomig 30g per piece. The number of Jelly product are Jelly ABA, Jelly Bear, Jelly Bottles, Jelly Cartoon, Jelly Delight, Jelly-O, Jelly Rabbit, Jelly Racers, Jelly Shooters, Jelly Surprise , Jelly Stices and Jellies. These Jellies are packed individually in small or large bags, by weight or numbers and also in bulk.Toffees CandyLand markets two different types of Toffees. One is the traditional low boiled toffee and the other is the sensational chew toffee. CandyLand Toffees are hot favorites with children. They are high in nutritional value and conform to strict health standards. Carefully derived recipes and rich flavors add to the appeal of thei; ¢ taste. Available in various sizes and winner, Milkish, Fruit Yums, Milk Toffees, Jungle Jollies, Toffee Delight, Twins and Imlee Delight. Candies In effort to come up with a delicious product, they select the best possible ingredients from various countries around the world. When such selective ingredients are processed on the state of the art machinery that they possess, then they come up with the great tasting CandyLand candies, Due to their exquisite taste, CandyLand candies are established as market leaders. They offer the widest variety of candies available from almost anycompany in the world. We make hard-boiled, filled, deposited, coated, and laminated (honey-combed) candies. These are produced in ball, oval (rugby or American football), disk, and bar shape. For each of these shapes we have several variations of weight, color, flavor and texture. These candies are wrapped in double twist, single twist (traditional or basket type) or flow pack form. They bag these candies by count, by weight and pack them in jars, tubs ane iéy manufacture candies in ten flavors from butterscotch to chocolate and mango to milk. Some of these are cream-filled, others are laminated with milk powder, and still others are translucent and brilliant. The number of Candyland Candies are famous in the domestic market, the name of the product line of Candies are. Butter Scotch, Cheer Up, Crunchi Bar Clear Fruit Drops, Munch Candies, Super Cola, Super Fanty, Mint Candies and Strawberry Family Bubble Gums The quality of CandyLand Bubble gums truly makes chewing a treat. Due to this, each of their brands is a market leader in its category but it is not true for candyland because they are not leading chewing Gum Market, but thelead in some chewing Gums. Behind such success lies the uncompromising commitment to quality and taste. To maintain the high marketability of their delectable gums, they are constantly introducing new bubble gums with exciting flavors and gum bases. This enables them to always stay one step ahead of the competition. They produce gums in nearly all of the contemporary forms, namely, bar, bazooka, ball and filled. They have the ability to print figures and names on the gums if needed. Besides various shapes and sizes, they provide gums in different packaging to suit the preferences of the buyers. The number of chewing gum of Candyland is FRESH & JUICY GUM, DINO SPORTS GUM, POWDER BUBBLE GUM, BUBBLE YOUR NAME, DUBBLE GUM, POWER GUM, SUPER SOFT GUM, SUPER GUM and GIANT GUM. Chocolate Continuing with their tradition of offering high quality confectionery products at very competitive prices, Candyland have included Chocolate enrobed cand: jive range of products. They have introduced a caramel-nougat bar enrobed with chocolate, a coconut barenrobed with chocolate and a peanut-caramel bar enrobed with chocolate. These Chocolates with their attractive packing and exquisite taste have readily been accepted as one of the leading in their respective category in Pakistan. With the aim of offering a unique and delectable experience of taste to our patrons, they have also launched a nougat plus pistachio candy bar. While catering to the traditional palate of East, this product is also a nourishing experience for sweet lovers. The number of chocolates Candyland offers Now, Paradise, Sonnet and Sorinr Chocolate. Biscuits Ismail ine ies limited develop a separate division of biscuits in the name ‘iscooni as separate Strategic Business unit, which began its production last year. The first product developed by this unit in the name of Rite (a chocolate biscuit with cream filling) and another product namely Cocome (cgg shape chocolate filed biscuits), This horizontal diversification work well for the firm and Rife was an instant hit in the domestic market. Similar type of product is also marketed by an American manufacturer namely Nabiscoo in some market niche of Karachi,Lahore and Islamabad. But there product is quite expensive and not every other person knows about the product. No doubt, candy land tried to cheat the product but due to its extensive marketing campaign in term of advertising make the product an instant hit. Ismail industries limited is planning to expend their biscuit manufacturing plant due extensive market demand for Rite biscuit. The other product of this division namely Cocomo, which i: introduced performing well in the ‘and gaining popularity in children’s. The company intenjidn for Cocomto is to target consumer aging 4-18 years. This product is not as success full as Rite biscuit but doing fine in according to their expectation. They are planning to introduce number of new product for different segment of the market. One of these products is Flo, which is introduced in different market on trial bases. Marketing Mix Product Candyland believes in product innovation. Nature of the business in this industry demands continuous innovation and improvements in product line. Starting its business with jellies, just after 15 years Candyland has strongpresence in every product category of confectionary. Candyland invests in brands and believes in building brands. Thus, while competitors’ most brands appear and disappear in 6-12 months, Candyland’s many brands have kept market presence for quite long. This approach helps Candyland reap long-term benefits. Also, Candyland products are tailored to consumer’s needs and taste. For example Chilli Milli and is a jelly with taste of Chilli catering mainly to Pakistani consumer’s taste. Pricing In this industry, companies can’t play more with prices but pricing is crucial in export to make the price enough competitive to gain attention of major buyer most of the competition centered on price. In domestic market for standard products, market determines price of the product. Companies have some liberty to charge slightly more for some additional features. For example, a candy for 50 paisa can be sol if it is center filled. Penne Fes teu ps ad ey bn to maintain costs at a determined level. On the other hand, a unique product can be price differently keeping in mind consumer’s perception and competitor’s approach. For new products, pricing approach used can be one of below= Competition pricing = Cost based pricing = Consumer perception = Combination of above approaches. Promotion Brand names play a crucial role in the industry, industry annalist suggest brand name will fetch 10% - 15% extra sales. Candyland use Asiatic, Interflow and some international advertising companies who develop animated advertisement C: Candyland Changed the face of advertising used by confectionary companies. Candyland promotion is not effective as the competitors in the industry who are wisely spending on advertising. Recently they renew their strategy, Rather than focusing just kids and using animated characters. Candyland has started focusing on teenagers and graduate level students. For example: advertisements of Chilli Milli and Campus bubble gum. Now other companies, especially Hilal, are following this approach. Not all brands are advertised, only those who are more promising and have potential to give more sales if marketed.Candyland does not focus more on consumer promotion but they recognize the need to do so. It is believed, that brand should stand on its own, and also consumer promotion dilutes impression of a brand. But, sometimes consumer promotion becomes necessary because of competitor’s approach or to supplement weak brands. Consumer promotion can also be to challenge competitor’s strong brand, such as promotion on Sim Sim bubble for challenging Hilal’s Ding- Dong. Trade promotion is also practiced so as to get more presence on shelves. Candyland holds a display competition, whereby; wholesalers are encouraged to keep more of Candyland’s stock and display on the front of their shelves. Competition is based on area fing shopkeeper gets prizes. This approach api encouraging wholesalers yiclds more benefit such as lyland gets display for many of its products which otherwise be placed some where in the shop and will not be visible. = These displays, which are so attractive, pursue buyers to buy more of Candyland’s product, which otherwise they won’t. = Wholesaler can keep a limited of stock of products in his shop. If, he has more of Candyland’s product this will be done on the expense of forgoingsome other competing products, this also gives a boost to sales of Candyland. Placing Candyland know most of the buying of candies are not by choice or made by promotion it is made impulsively. In placing the product getting a better place for their product is important for Candyland .Candyland uses combination of distributors and its own sales istribute its products. Distributor buys from id basically on cash. Within Karachi, one sales rep is finted with every van of distributor who takes orders from the shgpkeeper and distributor supplies the goods. There are around 360 distributors around Pakistan for Candyland. Distributor can keep competitors products. Outside Karachi sales reps are not with every distributor van rather, their job is to ensure sales and availability of products in 15-20 towns under them. These sales reps report to area sales managers. There are 8 area sales managers around the country. Total strength of sales force is around 130. Within Karachi, products are supplied directly to retailers. Outside Karachi, products are supplied to wholesalers, then retailers purchase fromwholesalers. Karachi is main focus of sales and 2 of area sales managers are in Karachi. International distribution or you can say export can be down by shipment on Letter of credit but African countries are not given credit because of the default risk. International distribution is also carried by Dubai office which gives Candyland an extra mileage over domestic competitor. Packaging Other than innovative products, packaging is another of Candyland’s strength. Having a beautiful and attractj important in this indust ich is characterized by impulse buying. For this reason, Candyland gets all wrappers and packaging designed by its advertising agency. In this job product managers coordinate with the agency, keeping in mind the consumer psyche and product characteristics. One example of Candyland’s commitment to packaging is wrapper of Rite (mate finish wrapper introduced for the first time in Pakistan), Rite is product of Bisconni (sister company of Candyland).BCG Matrix’s Ismail industries Itd hold a diversified portfolio of products of candies toffees and gums chewing gums jellies and biscuits. BCG matrix is the best way to describe the type of product of company holds. Autonomous division of an origination make up is called BCG matrix as lio when firm operate in di justry or different segment of the market. Sey f strategies are used. The matrix defines or portrays the company product position among division in terms of relative market share position and industry growth rate. Relatives market share in a particular industry to the market share held by the largest rival firm in the industry BCG matrix of candy landCondyland Relative market share Chili mili Jelly) " Famy, cola .butter scotch, = FILG campus gum éclair = Sarint = Per bubble = New entry segment of in = Rite biscuit snakes and chips All the Jellies — msim and other —_— ~\ = Now bubble your name Lower end fruit toffees = Dino supers * Sonnet Fruit based toffees * All old products not working = Bxport oriented preducts well the company Question marks Ismail industries limited acquire of chocolate filled biscuit factory and started producing chocolates filled egg shape biscuit which is gaining sager but the company is still in doubt that this product will be able to payback to the organization price. Sonnet is another product whose future is not definitethe company is going for horizontal diversification to snack’s food product and all this still is a question mark for the research and department. Stars Candyland develop new products on regular basis. New products Rite biscuits became a star product of Ismail industries with in no time and company is considering on expansion plan for biscuit. On the other side the confectionery side new product like BEERIO and CHILIMILI are big glowing stars of company fanty cola and butter scotch are old but hold their leadership potions in their respective segments Cash cow The company holds a diversified portfolio of product and has market which generates cash flows. The segment of jellies where Candyland is a leader play’ s very vital role in fueling the cash flows of the company to invest in other segment and other product like now chocolates and other chocolates and gumsDogs The company holds a long list of products in this segment. All the lower category of products is in toffee and candies. Gum is also one of the weak segments for Candyland expect for few good ones. Some have the lower and segment also doing well in lower end market the product line ready for divestment. The cost of equipment is low and no loses are made in terms of equipment and plant because it can cab be used for making products International Trade of Confectionary The confectis makers of Pakistan are also started exporting their confegfionary product to different market of the world; most of them are the major players of the industry. Some of them are having competitive advantage over other because they enter the international market earlier then other, Candyland is one of them who enter the international market earlier then other, which give them an extra edge over the competitor. Candyland establish a chain of venders in different countries, which buy their product regularly from them. Candyland is the market leader in term of export expecting to earn $4 million from international sale in the current financial year. On the other hand, most of the companies in the industry do not have substantial export caning.Ismail industries also produce their product in some other private brands as well as vendor for some well-known confectionary producer who outsource their product for production. ISO 9001 certification gives Ismail industries an extra edge as compare to its competitor in exports. On the other, hand most of the industry being involved in importing their raw material from different countries. Most of those material is not available in Pakistan like taste makers, flavors, coco for chocolate and fragrance etc. Exports and Import Import Confectionaries require Glucose, sugar, flavors, Fruit juices and fragrance of candies. After inclusion of the biscuit unit Candyland require Coco which is used not only in biscuit units but also use in making chocolate. Candyland import chocolate, coco and different kind of flavors use in confectionary. Ismail Industries Ltd has a separate department for managing ate raw material needhin imports on regular basis. The plant managers est coordination with of production department and send their material requirement to Import manager on weekly and monthly basis.Candyland develop relations with number of vendor who provides timely supplies to candyland. The import managers estimate the prices of product to get low price quality supplies, specially those products, which are seasonal like chocolate, and coco imported in the season will be beneficial to slash down the cost by 40% at least. Raw material being imported from different countries likes England, Germany, France, Spain, Indonesia, Thailand and Malaysia. Ismail Industries develop number of alternative to keep their option open for bargaining with supplies to get better price, stocked for at least for month in stock he . The import use to make on the basis of analysis of sales it, production requirement and import manager analysis of international market conditions. Ismail Industries also pay premium price of extra 10% for packaging to importers to secure the material from damage. Export Ismail Industries maker of candyland are the leaders in exports of confectionary industry in Pakistan. In the current fiscal year, they are also being awarded as the Exporter of the year for the confectionary industry.Ismail Industries earn $3.6 million in the year 2002 and expected to earn $4 billion in export next year. Candy land export their products to number of countries, these countries are. New Zealand, Australia, Zambia, South Africa, Sirilanka, United Kingdom, Bangladesh, Taiwan, Congo, Mozambique, Ghana, Saudi Arabia, Nigeria, Tanzania, Mauritius, USA and Kenya. Ismail Industries Export strategy is to expend their market portfolio by at least three countries every year; presently company export department is doing fine Job in increasing the number of market in the portfolio. Ismail Industries also produce Confectionary for private labels and supply the required company who has outsourced their product to different venders, Ismail Industries work as a vendor for some famious American companies. Company strategy in export is to-avoid dependence on one market. Ismail Industries has developed“one of its international offices at Dubai. marketing is made through exhibitions and Internet contract. Ip international market Price is the most important factor to attract buyer. You can not charge higher prices your prices must be based on cost plus margin but pricing may differ from country to country you can not charge higher prices to market where consumer does not possess purchasing power. There are number of threats which can severely hit our export suchas exchange rate volatility, market protection Laws and Strategie alliance between countries can shrink our export margin. International packaging is different from local packaging; packaging should be made in accordance with importers requirements. Financial performance statement and balance sheets are given in the appendix. Company has experienced constant growth in sales and sales for June 2001- 2002 were Rs, 773.8 million. For 2001-2002 company experienced 19% growth in sales. Also the gross profit increased 31%. Their was a increase of 43% in selling expenses which, management attributes to advertising and publicity. Although selling expenses were quite high, profits still increased and also the earning per share. Directors and their family hold 76% of the company stocks. Individuals other than the family own 19.58% of the stocks and remaining are hold by other companies and financial institution FINANCIAL GOALS & OBJECTIVES = To attain annual growth in volume of over 20%.= To maintain gross profit margin above 20% * To maintain yearly earning at rate of 1.65 per share =" Aconsistent dividend policy. FINANCE DEPARTMENT One of the major players in every industry for generating and maintaining funds for future prosperity of the company and can be seen for the following statements: Profit and Loss Statement For the Year 2000,2001 2002 2001 2000 Net Sales 773,796,244 652,534,628 527,599,917 cocs 614,424,560 _ (531,031,681) (434,248,328) Gross Profit 159,371,684 121,502,947 93,351,589 Administrative expenses 12,576,508 (11,675,568) (9,970,859) Selling Expenes 100,771,694 (70,472,444) (48,711,176) Operating Profit 46,023,482 39,354,935 34,669,554, Other income 1,027,529 664,535, 249,356 Financial Charges 19,210,049 (21,597,724) (19,920,431) Workers! Profit Participation Fund 1,392,048 (921,087) (749,924) Workers’ Welfare Fund 518,606 (343,150) (299,970) Profit before taxation 25,930,308 17,157,509 13,948,585 ‘Taxation- current for the year 5,009,783 (4,223,014) (2,960,919) Profit after taxation 20,920,525 12,934,495 10,987,666 eS Ot OPE 7008 Ismail Industries Limited 55Ratio Analysis Asset Management Ratios Inventory tumover 5.7x 4.36% Inventory time period 64days 84 days Fixed Assets Tumover 2.79% 2.35% Total Asset Tumover 1.48x 1.25% Debt Management Total debt to Total assets 67.44% 81.80% Profitabitity Profit margin on sales 1.98% 2.08% Basic Eaming power 8.92% 8.22% ROA 2.93% 2.61% RCE 9.00% 14.32% Profitability ratios of the company are decreased because company is in a face of expansion from the last two year for its production and packaging operations. A review of the enclosed financial statements will highlight that almost all the indicators are showing robust growth. Revenue, gross profit, profit before tax and profit after tax have all grown significantly compared to last year. Company strategy of relentless product innovation and improvement, further consolidation of the sales force, and penetration into new markets through widening of our Ismail Industries Limited 57distribution network and by launching creative advertisement campaigns was pursued vigorously. The result was a strong growth in our sales, both local and exports, which was sustained as predicted in last year’s annual report despite slow-down of the economy. Total sales increased to Rs. 774 million compared to Rs. 652 million in the previous year, reflecting a rise of 19 percent over the previous year. Almost similar growth was achieved in exports, despite a stable rupee during the year. Through close fective monitoring, the cost of production was controlled and your company was able to post a handsome increase in gross profit of Rs. 159 million, up 31 percent compared to the corresponding year. Further, the gross profit as a percentage of sales has improved to 20.5 percent compared to 18.6 percent in the corresponding year. The operating profit, profit before tax and net profit-after-tax increased to Rs. 46 million, Rs. 25 million and Rs. 21 million respectively and compared to the corresponding year, these figures were higher by 17 percent, 51 percent and 62 percent respectively.On the expenditure side, there has been substantial increase in the selling expenses of 43 percent compared to the corresponding period. However, this was necessitated in view of the enhanced advertising and publicity requirements to sustain the company's volume amidst a highly competitive market. Consequently, despite such steep increase in the selling expenses, there was a marked improvement in the company's profitability. The basic earning per share amounted to Rs. 1.65 compared to Rs. 1.46 in the previous year. Dividend We have great pleasure to announcing that the directors have recommended a dividend of 17.5 percent (2001:17.7 percent) to be paid to the minority share-hold: ctors and the majority sh ers have waived their right to dividend owing to the cash flow requirements of the company for further expansion described below.Research and development Ismail Industries is onc of the modernized firms of confectionary, who owns well-equipped research lab where new products being develop regularly by food experts, Candyland develop new by their efforts and also by copying some international product. Chili mili was one of the products, which in innovated by Ismail Industries food exy also able to mi ies of international product.One of their closest copied products is Rite Biscuit which is a replica of Oreo product of Nabisco, but they develop the product in such a way that it will meet the taste of domestic market. Human resource Management Ismail Industries is one of the dynamic organizations in the country where they only recruit qualified staff in their respected field. At management level, they only hired MBA from IBA and in other section Engineers, Quality assurance, production and_o! i ient in their work. Ismail Industries oe on cn duane enon which makes them enough satisfied that they do not switch Jobs. The switch over ratio is negligible due to satisfied and motivated work force.Ismail industry does not possess a proper buman resource department for managing recruitment, human resource management, training and development. The departmental managers hire employees by themselves when there is a need to acquire services of qualified people. Most of the recruitment is done on the basis of references from top management. Plant manager also hire the locals for labor work by themselves or by references of other labors which may create a problem in times to come. Characteristics of competitions Confectionary industry is in late maturity mature stage. Major players are Hilal, Candyland, BP, Mayfair and Mitchells. Apart from these big players, there are many smal ‘size compani ‘the im | sector who manufacture similar products they account for 60% of total market. Barriers to entry are low and for informal sector manufacturing is more labor intensive, as they do not use costly state of the art plants. Similar products can be manufactured without costly machines by just coping the major player’s product, and that is why informal sector gives tough competition to big companies.Industry condition is such that ail major players have strong distribution networks because they are in the industry for many decades. Market share remains constant until a major change in the product line or any new product being introduced. Market share of company rises when one of its products gets clicked, this causes market share of others to suffer. Reason for this phenomenon is that all companies are targeting kids and teenagers generally from age 5-18, and consumer on average spends every day a certain amount of money to buy confectionary products. The industry growth rate is approximately 6%. A new product that hit the market gets more sales for some periods of time until a new product is available to catch consumer’s attention. Pros cycle is short, so companies are continuously fing out new products which, mainly, are modified form of products already present in the market, such as a flavor change or addition of some ingredients. Product life cycle is very short, from 6-12 months and very few brands are able to sustain their position over years. Since products are similar and also the flavors, for many companies (like milk or butter candies by Hilal, BP, Candyland, Mayfair) so it is very difficult for consumer to be different among those brands. Also the buying decision is mostly impulse. This poses a challenge that if a kid gocs to buy amilk candy and finds only Milkona, and then he/she is likely to buy that candy. So shelf space and merchandising are very important. Also some innovative attributes of the product are likely to make the kid insist for that product (like BP’s Mr. Bear is the only chocolate lollypop and thus kid will ask specifically for Mr. Bear). Due to very slight differentiation and heavy competition, advertising plays a critical role in directing the buying decision towards a particular product. COMPETITION Confectionary Industry account for 10 billion total sale including the informal sector but in formal sector in which Hilal share is estimated 32% of share captured by Hilal in organized market which include products of Shalimar which is not a part of confectionary, followed by Candyland with 16% and BP. These shares are calculated on the base of approximation due to lack of data available. New product development is the key to success in confectionary business and companics-are-amore depending on their vexeart-and. evelopment Department and coming up with innovative type of products as may fair has done in 2001 by giving creamer Candy which was a unique product and they were able to get handsome share of candies market. To get substantialmarket share it is necessary that we try to develop a product with USP and have frequent launches round the year at an average of one product per month, In confectionary market heavy margins are given, more focus on designing and packaging, uniform and small packaging are introduced and merchandising has also become necessity for boasting up your product. The biggest problem that confectionary industry is facing is the competition from unorganized sector offering relatively substandard products at comparatively low cost and this is due to easy ent industry. As this industry ¢ potential, there for every new entrant is able to take some share with few chances of failure. Brand loyalty in this industry is found to be very less among children for confectionary products. Market Share of Major Players in Confectionary Market Hilal 32% Candyland 22% BP 16% May Fair 10% Union 8%market share it is necessary that we try to develop a product with USP and have frequent launches round the year at an average of one product per month. In confectionary market heavy margins are given, more focus on designing and packaging, uniform and small packaging are introduced and merchandising has also become necessity for boasting up your product. The biggest problem that confectionary industry is facing is the competition from unorganized sector offering relatively substandard products at comparatively low cost and this is due to easy ent industry. As this industry ige potential, there for every new entrant is able to take séme share with few chances of failure. Brand loyalty in this industry is found to be very less among children for confectionary products. Market Share of Major Players in Confectionary Market Hilal 32% Candyland 22% BP 16% May Fair 10% Union 8%There are very few major players in this industry and then there are manufacturers from informal sector. For major players not all of them deal in all confectionary products except BP and Candyland. Competitors Analysis Mitchells Mitchell’s is the oldest food company in Pakistan. Francis J. Mitchell established it in 1933 under the name of Indian Mildura Fruit Farms Ltd. After the country gained independence in 1947, the company's name was changed to "MITCHELL’S Fruit Farms (Pvt.) Ltd." with the brand name of “MITCHELL’S”. Since its inception, Mitchell’s has gone from strength to strength, not only expanding its product line but also maintaining quality through the years to become one of the largest food companies in the country. From the procurement of best quality raw materials, fresh from their own farms and orchards to the adoption of latest production techniques, Mitchell’s has been in sync with the evolving times. The result of their efforts is that today their products are also gaining a market abroad with exports to several parts of the world including UK,USA, Canada, the Middle East and South-West Asia where already Mitchell’s is a name to reckon with. Mitchells’s has the outstanding performance in chocolate category. It has two mega brands JUBILEE and DISCOVEREE in its portfolio. Also, it has the Milk Toffee, which is very strong brand name. This company has the annual sales of 680 million last years, which include Jam, Jellies and mamlates. Mitchells competes with Candyland in chocolates and toffees. Chocolates represent a small portion of Candyland’s sale but the market share is rising, Mitchells Jubilee is the strongest chocolate brand of Pakistan. Also if you look at toffees Mitchells has an edge over Pakistan. Mitchells has ys ited number of brands and two of them are very strong, jubilee and Mitchells toffee. Only Mitchells and Candyland compete in high price category of chocolate that is 5 Rs. (here I am not considering Mars or Cadbury because they are foreign firms catering to mainly A and B class where as local companies cater to B, C and D class. Mitchell’s is the only major food company in Pakistan today with fully integrated operations having its own growing and processing facilities at one location. Modern high-volume industrial equipment, professional management and a trained workforce all combine to ensure that Mitchell’scontinues its dominance as the innovator, market leader and trend setter. In this regard, a major step was taken in 1998, when Mitchell’s became the first food company in Pakistan to achieve ISO 9001 accreditation, thus becoming more competitive on the international stage. Fully computerized and inter-linked regional sales offices ensuring a smooth distribution system with nationwide coverage manage countrywide sales. Highly qualified executives, using modern management tools, handle marketing, commercial, financial and accounting functions from the Head Office in Lahore, Institutional Clients Mitchell’s has successfully catered to the demands of its prestigious clients such as the Pakistan International hotels and clubs, Utility S} ‘orporation, Canteen Stores Department, main stores ited restaurants in major cities. Foreign Licensees In recognition of its dedication to quality and technical expertise, Mitchell’s was also given proprietary rights by L. Rose and Company Ltd. of England Ismail Industries Limited 67in 1946 to become the sole manufacturer and distributor of their world famous Rosc’s brand of Lime Juice Cordial and Lime Marmalade in Pakistan and Afghanistan. Corporate Philosophy The success of Mitchell’s brands is the result of the corporate emphasis laid upon Quality Control reit y Research & Development. The Research ent section prepares new recipes and formulations whereas the lity control section ensures selection of the finest fruits and error free processing and packaging, thus ensuring that all products live up to the consumers’ high expectations. Human Resource is also of the pivotal importance for the Management and employee skills are constantly being updated through training courses and study tours both at home and abroad. Mayfair Asian Food Industries through the years has emerged as one of the largest confectionery concerns of Pakistan. The ultra modem plant is situated nearLahore. It has been equipped with latest state of the art machinery imported from UK, Germany and Switzerland. The Product The following products are manufactured by Asian Food Industries Ltd. and are marketed under the umbrella brand of “Mayfair” Sweets and Bubbles. (a)Hard Boiled Sweets & Candies (b) Toffees. (c) Treat Toffees (d) Bubble Gums To produce prime quality products, the basic ingredients are imported from Germany, UK, Italy, Switzerland, Holland, Denmark, Singapore, etc. Asian Food Industries has the honour of introducing Bubble Gum for the first time in Pakistan in 1969, A fully computerised plant was installed in the year 1970 and bubble production was started under the brand name “Mayfair Bubble". Effective Marketing efforts and s quality com made Mayfair Bubble, the market leader. Asian Food Industries Ltd. also is pioneers in installing the country's first Chew Toffee plant, The company has added new dimensions to this productLahore, It has been equipped with latest state of the art machinery imported from UK, Germany and Switzerland. The Product The following products are manufactured by Asian Food Industries Ltd. and. are marketed under the umbrella brand of “Mayfair” Sweets and Bubbles. (a)Hard Boiled Sweets & Candies (b) Toffees (c) Treat Toffees (d) Bubble Gums To produce prime quality products, the basic ingredients are imported from Germany, UK, Italy, Switzerland, Holland, Denmark, Singapore, etc. Asian Food Industries has the honour of introducing Bubble Gum for the first time in Pakistan in 1969. A fully computerised plant was installed in the year 1970 and bubble production was started under the brand name “Mayfair Bubble". Effective Marketing efforts and strict quality com made Mayfair Bubble, the market leader. Asian Food Industries Ltd. also is pioneers in installing the country's first Chew Toffee plant. The company has added new dimensions to this productand its various items like Fruita Milk, Chew Toffees are extremely popular in the national as well as international markets. Asian Food Industries Ltd. also is pioneers in installing the country’s first Chew Toffee plant. The company has added new dimensions to this product and its various items like Fruita Milk, Chew Toffees are extremely popular in the national as well as international markets. AFI Leaders in Production & Marketing Presently AFI has one of the hi ‘production capacities in Pakistan. Its well-organized ution and marketing network is responsible for easy AFI not only caters to the confectionery needs of the domestic market but also exports its products to the Middle East, South and South East Asia, USA and Europe. Its exports are a valid source of adding to the foreign exchange reserves of the country.Mayfair competes in mainly three categories, candies, toffees, and bubble gum. A Karachi based company whose main strength was its pink color bubble gum, closed its business in Karachi. After some time moved to Lahore and started again, now Mayfair is one of major players. Being a smaller company than Candyland, it is not considered as a major threat by Candyland people. BP Industries A BP industry is in operation since 1947. BP’s initial business was making bread (now this category is very small portion of their brand portfolio). In 1961, they started confectionery production, which is presently the main business operation of BP Industries. During 1960s, both related and unrelated diversification was followed in BP because it was Ayub Khan’s era, so, it was the period of gro i up new industries. The added businesses were: = MF Ice Cream = AB Oils: which had three plants (Karachi, Multan and Khusdaar), and they were the market leader in Oil Industry of Pakistan. « AB Textiles = AB Beverages: 7UP and Slice were major brands. Ismail Industries Limited aADuring that time, they also built strong distribution network in both East Pakistan and West Pakistan. From, 1960 till now, BP factory is the largest food factory in South Asia under one roof. 1985, BP bought Chocolate plant from Europe. After one year, they bought chews plant and Toffees plant in Pakistan. By that time, they were the biggest manufacturer of confectionery. Last arrival of machinery in Company was the whole printing facility in 1991 to achieve to cost savings, and to respond quickly to any competitors’ moves. So, from 1991 onwards, they developed new products and BP industries ete directly with Candyland in all categories except chocolate (they are in chocolate but in molded and enrobed ones, having prices between Rs | to 3). So because of low price range and difference in product their competition in this category is not direct. Brand portfolio of BP is larger than any other confectionary company, this is because they don’t believe in building brands rather milk them and switch to a new variant of old one. Thus, incurring less cost.They are in following categories of confectionary; «© Chewing gum and bubble gum. = Jellies = Toffees = Candies = Chews = Chocolates «= Biscuit = Wafers = Bread Within above categories usually there are three categories of brands: * Brands «" Wholesale Brands = Consumer Promotion Brands Brands simply are those that can be advertised, if the company wants to {other two classifications can’t be advertised) and sold normally. Wholesale brands are the ones pushed through wholesalers. These mainly include copies of famous brands of other companies. Question is why this technique is used which seems quite unethical? Ismail Industries Limited 73They are in foliowing categories of confectionary; * Chewing gum and bubble gum. = Jellies = Toffees =* Candies = Chews = Chocolates = Biscuit = Wafers = Bread Within above categories usually there are three categories of brands: * Brands = Wholesale Brands = Consumer Promotion Brands Brands simply are those that can be advertised, if the company wants to (other two classifications can’t be advertised) and sold normaily. Wholesale brands are the ones pushed through wholesalers. These mainly include copies of famous brands of other companies. Question is why this technique is used which seems quite unethical? Ismail Industries Limited 73Answer I got was that BP believes in stimulus generation. They introduce copies of other brands like Hilal’s Choco- 4 and He n she’s bunties as Me n She so that, if a kid goes to buy these brands might pick BP’s fakes. CP based brands are the ones that are run throughout on the basis of consumer promotion like lotteries and win cash prizes. These brands are not of high quality rather they are to utilize the plant capacity and make category more profitable. Main concern of BP is not in building and sustaining brands. They don’t focus more on image rather on profit. Their prices are low in all product categories, for example they manufacture chocolal was Rs. | and BP’s main advantage is that that they have a lot of resources and they believe in vertical integration, especially backward integration. This makes them more cost competitive and less dependant on suppliers, also this could help them sustain competitive advantages they might have. They have their own advertising agency, make and print cartons, make Ismail Industries Limited 74boxes for their products also make bags, and they have their own printing department to print wrapping material. RAW MATERIAL The main raw material for BP is FLAVORS. This is the most important thing in the value chain activities. They are outsourcing the flavors by importing it from different European countries. Major countries are Switzerland, France, England and China. From China, flavors for chewing gums are imported. Flavor is the critical thing but it can be imitated easily because all other competitors (Hilal, Candyland, May Kidco, Mitchell’s etc.) are importing it fe same countries and even with the same suppliers, ‘can’t make it locally because these flavors are very expensive and it also requires a huge investment. Major suppliers are APEX, GMC (France) and PUF (Germany). Packaging material, which is BOPP (bioxide propylene), is imported from Germany. Candyland has this technology to produce it. Almost all other raw materials are acquired locally, which includes Sugar (the biggest ingredient), milk, oi] and other packaging materials.There are certain positive and negative aspects of following such an intense backward integration at one end this is a source of cost saving, freedom, and sustaining competitive advantage, on the other hand it would result in lack of diverse ideas, diversion from their core business and limit their vision. So this must be looked into, that is this approach of integration good or bad for the performance and long-term success of the company. DISTRIBUTION BP completely outsources this activity. They are operating all over the country and distributing the products by maintaining 320 distributors all over Pakistan. But BP is trying to capture this activity also. As a first step, they completely owned the transportation, which distributes the products to all the depots of distributors. So, distributors’ job is limited to distribute products to retailers. Secondly, they are reducing the number of distributors. In Karachi, they reduce the distributors from 10 to 7. The logic behind maintaining the lar; isteibutars instead of big They also carry the competitors’ brands. For Example, IBL has large numberof companies but the most of time focusing more on P&G and Gillette products, The main distributors’ list is given in appendix. BP is perceived as a low-income brand, their brand manager told me. Thus, their sales force focuses more on suburban areas and small cities rather than metropolitan cities (except Karachi which accounts for 25% of their sales). There are 11 sales officers all around Pakistan (except Karachi where a sales Tep goes with every distributor van). Sales are mainly on cash basis. BP uses instant price consumer promotions. For wholesale, they use trade promotion, for example; one box free 24 box. To give incentive , for example: a box of 24 pieces will be filled with six extra pieces and box will mention 24+6, these six extra pieces will be an incentive for retailer. This approach is more viable because incentive will surely reach the retailer without any unfair advantage taken by the retailer. Storage BP has the land of more than 3 acres, so, raw materials are stored at the same location. BP has the ISO 9001 certificate, so, all materials are stored according to its standards.Manufacturing There are pre written standards which quality control department developed for BP. So, they are also performing the checks and lab test to make sure the better quality of products according to standards, But, this activity is same in other competitors also. So, this has a great importance but it is not a core competency of company. But certainly, it is distinctive competency of company. Note that informal sector has 2/3 of market share, so, they can’t copy the same procedures for manufacturing confectionery. So, maintaining the same level of quality and taste is most important for the success of confectionery products. This techni itical factor for success in this i Apart from many positive points, BP in my opinion lack vision. They are in this industry for more than 50 yrs, once industry leader now are at third place in terms of market share. Quite young competitors have beaten them. The lack of vision is mainly due to focus on just profits and not on methods of earning profits. They have staked their image and reputation by indulging in unethical practices of copying others’ brands. They also have a weak salesforce. There are many shops in Karachi where you won't find BP’s confectionary while competitor will have strong presence. UNION Feeling the potential around 42 years back in 1957 Union Industries landed in the market as major focus on Biscuits and then flowed by May Fair in early 70's which has develop the bubble market and become the leader in it as they were also having monopoly in bubble market. Mayfair then shifted their office from Karachi to Lahore, which encouraged Hilal and Candyland to establish their footing in Karachi. Hilal in early 90's launch Ding-Dong Bubble with an exceptionally good animated commercial of the times and become the market leader in confections BP took a turned around by concentrating on uniform pricing, small packaging and in turn also increased the margins for the trade to the extent that trade start pushing their products. Hilal as being the clear leader in the bubble market was aggressively countered by tiger bubble but Hilal again due to its heavy advertisement and trade schemes didn't let tiger establish. Later on in 2001 Union Launch their Ismail Industries Limited 0bubble by the name of King Kong and was able to get some share of Ding Dong and still is giving real tough time to the giant of bubble market later on, Candyland brought a revolution in the confectionary market by introducing jelly products and they shifted the confectionary market from 50-paisa bracket to 2 and 4 rupees price bracket. BP responded immediately by coming up with different shapes in jelly but to inferior quality filled wafers) and no other company has such fine product. CURRENT COMPANY SITUATION SALES ANALYSIS ‘Now let us go through the sales history of Union on yearly basis, which shows stable sales of 140m per annum but the area of concern is that there is no growth in it so immediate measure, should be done to increase sales to at least that level where company can sustain. The sales pattern for last 4 years is as underMonth Net Sales (In millions) 2001-2002 2000-2001 1997-1998 JULY 10.56 10.78 AUG. 13.48 11.46 SEP. 13.66 11.22 ocT. 23.02 11.97 NOV. 13.43 12.55 DEC. 12.37 11.31 JAN. 13.25 11.75 FEB. 10.00 1541 MAR. 14.45 11.50 APR. 15.94 12.49 MAY. 10.44 11.09 JUN. 10.68 TOTAL 151 142 Now we will see the growth from month to month in comparison with last years sales which clearly reflects that just in October we have a major growth duc to which we were able to have 15% growth on last year’s sales but we fail to maintain that sales consistently. IRRENT PRODUCT SITUATION Union has a strong Company Name and have some very nice products on its portfolio which are the bi it Hi month but the draw back is that there are many a products whose volume are so negligible that we should not continue with them. We have to come up with frequent new launches and re-launch the existing ones after redesigning. Ismail Industries Limited 81The major front line runners are as under with average sales and USP just to give a picture that in achieving the above sales which products are the major contributor. PRODUCTS AVERAGE SALES. USP King Kong 3600" 0 ” It was a new successful Launch the Rock n Rolk 1389 2403 The Unique roll with coconut filled chocolate and a established brand Milky Red 2199 2307 Very strong brand name with remarkable brand loyalty in Karachi Nice 3*36 917 1291 Strong Brand name and good sales Wafees 364 263 Unique Product with no competition Full Creme 574 1124 Strong Brand Name but decreasing sales due to obsolete packing Col SITUATION In competition, there are numbers of companies operating but we will be focusing on organized sector. Following are the companies whom we have to compete with » Hilal * Candyland Ismail Industries Limited 82«= BP » Kims Distribution Network This area is also of great concern for Union as retail coverage of our products is pathetic and more focus is to be needed. A team has been established in Karachi due to which situation is much better comparatively. For this an effective sales team has to be strengthened all over Pakistan. New towns to be opened and good distributors are to be appointed. To get quick results we have to immediately strengthen our sales network. HILAL Hilal is the market leader in confectionery industry. But its major portion of revenue comes from bubble gum segment, which is the dog in BP’s portfolio. DIN and COOL YAAR are Hilal’s hot selling brands. But in €hew bar, BP is market leader. The total sale of HILAL is 2.88 billion per year, which include betel nuts in the name of shalima which is not a part of confectionary industry, approximately Hilal share in confectionary industry is 2 billon. Ismail Industries Limited 83With 50 years of manufacturing experience, they have attained not only the status of being market leaders in several products but have also dominating expertise due to superior quality & high customer satisfaction PRODUCT LINE The product line of Hilal includes: Bubble Gums * Bubble gums «© Candies * Chocolate beans etc. The superb bubble gum tastes that Hilal provides include: ¢ Ding Dong « Juico » Mint we Hilal is the leader in confectionary industry by achieving a sales volume of Approximately 130 million per month. The major products of Hilal are Ding Dong, Tulsi, Energic and Aamrus Candy.MARKETING ACTIVITIES Hilal keeps huge budgets for marketing and focuses on electronic media. Recently Hilal has changed its marketing strategy and now rather building up a brand it prefers to come up with a product and give full media burst on it and capture the substantial share of the market after which he shift his focus to other products and the sales of that product start declining but still it takes time in declining and by that time new product is in the market. Where as Ding Dong is always their strength Ver any competitors tries to give tough time he start givifig media with a ratio of one to four i.e. if there are one Ad of gefpetitor he place at least four Ads of Ding Dong. Hilal has good sales and distribution network which is also one of their strengths accompanied with superior product quality. ADVERTISING Hilal allocates a lot of budget to advertising. It makes sure that all the products of Hilal are constantly advertised so that people remember them always as their favorite brand. One of the major edge that they have over their competitors is the powerful advertising campaigns that they launch every two months.‘The new products that they introduce are always backed up by very strong marketing activities, which create good awareness among the consumers and increase the sale as well as brand loyalty. Some of the advantages that Hilal enjoys include: = Established brand name = Cost advantage (Economies of Scale) « Strong distribution network * Financial strength and no labor unions. In confectionery industry, there is not much technological development over past many years. Hilal has the manufacturing facilities, which are better then the competitors and can be termed as state of art. The technological development, which has taken place in packaging and marketing of products, is remarkable which produces novelty in their confectionery items. Similarly, new flavors are coming at very fast rate but all of these flavors are imported from EuipeantUSK According to Economic survey, 45% of total population of Pakistan is below 18 ages. Every year there is an increase in population of children by 2500000. This is very favorable situation for confectionery industry because their main target market is CHILDREN. Also, it is in culture that we like Ismail Industries Limited 86sweets and due to this factor there is a great demand for confectionery products and Hilal with its nutritious, high quality and tasty products have conquered the hearts of not only the young but also the alder generation. The latest inclusion in Hilal’s vast product line is Milkol, which is basically targeted towards younger generation instead of children and has introduced the toffee with a very powerful campaign. DISTRIBUTION The‘distribution network of Hilal is exemplary. It is because of this control over all the distribution channels that Hilal has excelled in the confectionary business. Hilal has networks of 350 distributors throughout Karachi, making sure that the products of the company are available at ail retail outlets. They also make sure that the quality of the products is not tampered with and that they are delivered exactly in the similar way as they are being loaded from the plant manufacturing the products.SWOT ANALYSIS Ismail Industries Ltd analyzes in respect to their strength, the company manager and analysis by our group member through formal and informal information collection state weakness, opportunities and threat. STRENGTHS = Candyland well qualified management at all management !evel and competent in their respected field. The employees of the company are satisfied and motivated toward there respective work assigned to them, » Ismail Industries know the importance of qualified employees, because of it they regularly send their employee for training abroad and local institute to provide them with complete knowledge of the ttetd they are working. S. * Ismail Industries top management (board of directors) are experience in confectionary industry, they were running operation in the name of Union Pvt. Lid before starting candy land. Ismail Industries Limited 88= Commitment from board of directors when ever there is a need for capital expansion, the directors wave off their dividend for the company expansion not only their own share but also the share of the family or spouse share holding. " Some of their brands become a source of competitive advantage for Ismail Industries. The segment of Jellies is leading the segment comprehensively. = Ismail Industries is among one of those companies of confectionary who have ISO 9001 certification which is a source of competitive advantage in local market but also in the international market. « Ismail Industries is very well equipped with one of the most sophisticated State of art technology which make their product competitively strong in the market. — = Ismail Industries Exports of co) Tonary is also a source of competitive advant: ‘andy land in leader in export and won Export trophy of the year several times. = Ismail Industries diversify their product line by developing a new strategic business unit of biscuit manufacturing which started production last year. The first product introduce become Ismail Industries Limited 89an instant success which become a major brand of this SBU, strengthen the company with huge profits. Ismail Industries is looking forward to expend their business in this segment. = Ismail Industries owns a well equipped research lab where, number of food specialist is working toward development of number of new product to be introduced in the domestic market. = Ismail Industries also being able to copy product of international brand and change these product accordingly with the domestic need with consultation of food specialists. « Ismail Industries are not scared of out sourcing their production to some. here they lack compete: one of these segment where candyland does not hold stick Gum plant which being out source to one of their vender. * Ismail Industries are continuously updating their plant from time to time most of the equipment is imported from different countries around the world, presently they are locking forward to purchase a plant of Printing biocide propylene and new technology base plant. Ismail Industries Limited 90Candyland = Ismail Industries competitive advantage in their inventory system, production forecast and sales forecast which enable the company to produce the right quantity at the right time. = To avail the low cost raw material Ismail Industries import raw material when the prices are low because of season, if those raw material are seasonal. = Ismail Industries Ltd is the only confectionary company who is registered in both stock exchanges, which definitely is advantageous for the company when it come to acquiring new capital or increasing the capital base; where as no other company of the industry is registered in any stock exchange of the country. " The Ismail Industries is a limited company but most of the share hoTding concentrated and hold by Ismaitfamily. There is no change in the board of director since the company is incorporated, except for some of the young family member of Ismail become part of board. = Candyland is committed to their customer, with continuously improving and introducing new product to make them more competitive and enjoyable for consumers. Ismail Industries Limited 9Car wad * There no labour union in the company, the major reason is labour force is quite satisfied with the company policy. WEAKNESS " Candyland no doubt quality wise they are good, but their marketing, sales promotion, and advertising are unable to develop an image in the mind of consumer about the product they are selling. * Some of the product in the portfolio are not performing well make them candidate etrenchment Or divestment but company is Still contend with those product. ©o much involvement of director in every department, no doubt they call meeting and discuss things with management but the end resulting decision is the same what top management want to apply they will whether the management is in favor of it or not. " Most of the advertisement and promotion campaign by Candyland are not that effective as the other major players in the industry. Ismail Industries Limited 92Car wad = Distribution system is not large enough to expend the market of the company to cover each and every city of the country. At present company is only covering the major cities of the countries. = Ismail Industries and our team of member feel in product line of Candyland the major weakness for the company is Bubble gum unit where company is unable to develop an impact on the mind of consumer, even the quality of product is not as good as it must be the gum stick on the wrapper in hot temperature. "Sim Sim bubble gui its Market and company _is-Still spending lot of money on this product that it might work well, Sim Sim is one of the candidates of product line to be taken back from the market, retrenchment or liquidation strategy must be adapted. = The market segment of toffees is not growing at a rapid rate for Candyland as compared to competitors, where as the market share in toffees is reducing at a rapid rate to estimated 17% which is substantially less than the market leader. Ismail Industries Limited 93« Ismail industries, strategy of advertising is to use animated or cartoon oriented commercials to attract children who are the major consumer, which is quit expensive & developed by foreign based advertising firms in India and UAE. Where these firms does not possess knowledge about Pakistani market of confectionaries, which ultimately affect the sales of their product substantially. = Ismail industries do not own a proper human resource department for managing recruitment, human resource management, training and development. The departmental y themselves when there is a need to managers hire emy acquire-Services of qualified people. Most of the recruitment is done on the basis of references from top management. Plant manager also hire the locals for labor work by themselves or by references of other labors, which may create a problem in times to come. =" No-* doubt Ismail industries has a research/product development lab but there is no proper research department for product testing and which can analyze the competitors & Ismail Industries Limited 94Candyjwul consumers taste about confectionaries which can change the dimensions of confectionary making. * Ismail industries do not possess any organization chart that can define who will report to whom and how all most all the managers such as sales, import, export & brand to the same person Mr. Miftah Ismail that make it difficult for him to manage different activities at the same time. =" Mr. Miftah Ismail dominates Ismail industry’s most of the operations; too much dependence on him will be difficult to be managed by any other director replacing him. = The decision making at candyland is highly centralized and Ismail family for the company takes most of the decisions whether it is correct or not. They concern their managers before taking any decision but few major players of the company always dominate the last decision. " As “nalyze by Mr. Ijaz teacher at IBA the product of Candyland are good but they are position in the middle of market which does not gain any competitive advantage rather it is a defensive approach. Ismail Industries Limited 95. No long term planning. There seem to be yearly plans but no concept of long term plans, Or if directors have some long term plans, they are not formalized and communicated to managers. = Anegative working capital showing that current assets are not sufficient to finance current liabilities. OPPERTUNITIES Ismail industries Ltd from time to time analyze opportunities in the industry to expend whether in to product development, diversification, penetration, vertical integration, backward integration o ‘ward. Most of the opportunities for Ismail indi ‘ies lie in horizontal diversification. = Ismail industries strength is their export market where they can develop new market by adding new countries to their portfolio and at the same time penetrate the current market. = Ismail, industries see opportunity to grow horizontally by entering in the biscuit making, where competitors are not same but consumer are the same. Ismail Industries Limited 96Candyland = Most of the product in the industry has shorter product life cycle with little change or by adding new product to the product, line with in six month will be an extra-added advantage. = No body in the industry exploiting mango base product, which is one of the favorite fruit, sold in the country as an opportunity to covert it in to mango bar, which is quite famous in different regions of the world. = Ismail industries other opportunities lies in starting a new line of snacks, they are already in the business of biscuits and has capacity to expand in snack like chips etc. «Another opportunity for Ismail industries is to start producing real fruit based candies and not only sugar based bu ‘or number of people who are diabetic, the increase in the number of diabetic people in the country and abroad it self an opportunity for company to enter sugar free confectionary product and sugar free chocolate which are imported in Pakistan. = For Ismail industries entry in to fruit juices also seems to be appropriate and it seems that the target segment of customer may change little but it will come under concentric diversification. Ismail Industries Limited 97= Market penetration with present product is possible in domestic market where competition is not as intense as in the major market of the country, such market belong to rural areas where population of children and youth in more. * No doubt, advertising strategy for biscuits is working well for them but there is a need to redevelop new advertisement for the company to reinforce the message of candy land. THREATS "The product made by any company is copied very easily by competitor and companies like Ismail industries unable to enjoy the competitive advantage of their product which they has develop by their valuable experts. «Intensified compétition is also threatening Candyland but the of competition come from Hilal and any international firm inters the market. * Volatile movement in the prices of raw material like sugar and glucose, which largely depend on the growth of agriculture sector, can extensively affect the production cost. Ismail Industries Limited 98Car wad = Possibility of continuous recession in the domestic market also hit sale of Ismail industries through reducing sale of the product. * Increase competition, especially in the lower end of the domestic market by small confectionary makers who cheat any successful product of major player’s product with their name. = Risk involve in introducing new product in the market like Ismail industries does specially in biscuits, = International competition is also a threat for Ismail industries where the com —to_compete international (petition but also different trade barriers and intgrffational alliance of countries benefiting the competitors. = Regularly changing prices of currencies and country currency revaluation of currency hit Export with reducing the margins and benefiting import but the benefit is less then losses from export. = International political scenario also hit the company when retailer reduce the quantities on the stores and start stocking necessary food product just as it happen when India put their forces on boarder and the recent Iraq crises which affect the Ismail Industries Limited 99export of the company. An Ismail industry is also a victim of war surcharge on their export affecting their margins substantially, " Ismail industries export is also affected by rules and regulation of different market where they are exporting their product. The restriction of using certain material, different type of labeling and packaging requirement. = Change of consumer taste is one of the biggest threats not only for the company but also to whole of the industry.The TOWS Matrix For Ismail Industries re y Candyland This Box is left Intentionally Rian Stated Earlier in SWAT Analysis Stated Earlier in SWAT Analysis, Stated Earlier in SWAT Analysis = The Quality certification of ISO 9001 can be used to promote the product quality of Candy land products. "The company well equipped product development lab, which can be used in developing new product Tine, * Candyland is a limited company can acquire new capital by raising share for expansion in any related business. * Export of Candyland is one their strength and further expansion is possible by adding number of countries in the portfolio. * Candyland major strength is their The company profit centuries are also abroad and those profit centuries are under constant threat of Pak Rupee appreciation. * Candyland competitive advantage can not be sustainable for long and competitor can enter the marke. Stated Earlier in SWAT Analysis ® Candy land fail in developing an image of the company through advertising, new look to company’ marketing campaign can make product line successful © Distribution network in the domestic. market is not large enough to grab sales by| penetrating domestic market. * Candy Iand gums are not as good as the competitor by improving the quality or by coping international bubbles gums can enable the company to strengthen market position. Wal Strate * Candyland is unable to develop Lan-image-of-products as of good quality and competition being the major threat that can take away from the market. "The marketing and advertising campaign is not as effective as it must be which being under a constant threat by Hilal to take away market share. Ismail Industries Limited 101The TOWS Matrix For Ismail Industries This Box is left Car in SWAT Analysis itr) Stated Earlier in SWAT Analysis Tsmail Industries limited eg ‘Stated Earlier in SWAT Analysis, Some = The Quality certification of ISO 9001 can be used to promote the product quality of Candy land products. "The company well equipped product development lab, which can be used in developing new product line. * Candyland is a limited company can acquire new capital by raising share for expansion in any related Ddusiness. "Export of Candyland is one their strength and further expansion is possible by adding number of countries in the portfolio, esd "Candyland major strength is their new and innovative pro can be ‘by competitiors Company can’t eam much. whe company profit centuries are also abroad and those profit centuries are under constant threat of Pak Rupee appreciation. * Candyland competitive advantage can not be sustainable for long and ‘competitor can enter the market Any in SWAT Analysis Peo = Candy land fail in developing an image of the company through advertising, new look to company’ marketing campaign can make product line successful. = Distribution network in the’ domestic market is not large enough to grab sales by, penetrating domestic market. * Candy land gums ere not as good as the competitor by| improving the quality or by coping intemational bubbles ‘gums can enable the company to strengthen market position, Bis oe tt * Candyland is unable to develop] L-an-image-of products as of good! quality and competition being the’ major threat that can lake away from the market, "The marketing and advertising campaign is not as effective as it must be which being under a constant threat by Hilal to take away market share. 101This Box is left Intentionally Blank, ‘Stated Earlier in SWAT Analysis weridy land Stated Earlier SWAT Analysis, Stated Barlier SWOT Analysis Stated Earlier in SWAT Analysis "Candy land diversification strategy is one of company strength .Candy Jand can adopt diversification strategy to exploit the market of snakes © Candy land strength in developing new product in the market, inetease in number of diabetic patent give rise to demand of sugar free candies and chocolates where company can have a Adistinetive edge. "The product life cycle is short in confectionary by introducing new real fruit candies and jellies give new shape in pruning the product line, sah é Candyland major strength isthe expending number of countries in the portfolio but with WTO, threat and international regulation and alliances can affect Candyland, = Candyland no doubt well but the continuous ree: global and iy can reduce iS ‘company margins. Candyland based on contimiously introducing new — product — but introducing new product comes with high risk high reward situation and risk of failure és always a threat performing = Some of the Toffees in candy’ land portfolio are not making money, Candy land have an option to stop those product not performing well and put up a new line of product for this segment. + No proper road map being laid| down for future which can be beneficial when coming up opportunities can be grabbing, as fast as possible. + There is no organizational chast which gives employee in dilemma| what are their boundaries to work. + Some of the market segments of Candyland are not performing well such as gums and some toffees where as this segment being threaten by intense competition from Hilal -Disuibuion network in the domestic fiarket is not large enough to grab sales, where competitor may penetrate and capture untapped market. + Some products are not up to the| quality asthe competitor products. Ismail Industries Limited 102MICHEL PORTER FIVE FORCES OF COMPETITION RIVALRY AMONGCOMPETING SELLERS (Intense) Rivalry among sellers already in the industry is very intense. They are all going for same target market with similar products; any differentiation can’t be sustained for long till it is due to technology advantage. There are prices determined by the market, and price for any new product is to be set such that competitor moving in that category could not price it lower than that. BARGAT! iG POWER OF SUPPLERS (Weak) Bargaining power of suppliers is weak, because, there are large numbers of small suppliers while Candyland is larger in size so is able to dictate its own terms. Also, Candyland imports a lot of raw material thus reducing dependency on local suppliers. BARGAIN) POWER OF BUYERS (Weak) Bargaining power of buyers is weak, because they don’t set prices and can’t dictate their terms, Also there are large numbers of buyers with small volume of purchases. Ismail Industries Limited 103THREAT OF SUBSTITUTES (Moderate) Threat of substitute product is moderate because confectionary companies are mostly going after the pocket moncy a kid gets. If the kid has some other options to use his/her pocket money he/she will not purchase confectionary products. The substitutes include: chips, nimco, qulfi, French fries, cold drinks and juices. All these can be a substitute, THREAT OF NEW ENTRANTS (Moderate) Threat of new entrants is fate, because barriers to entry are low so a few entrants can be expected, but, these entrants will be mostly in informal sector with small scale of investment. But a chance of some company coming with full force can’t be neglected.Strategies Adopted by Candyland At different level of management Ismail industries limited, adopt different strategies to accomplish their Mission, vision objectives, long term goals and short term goal. Majority of the plan ase developed by top management and implemented. Ismail industries limited strategies at different level are. * Corporate level strategy = Business level strategy = Operational level strategy 1. Corporate level strat Corporate“Tével strategy give an over all direction tothe company. The company strategy is change, the company adopts diversification as a whole looking at the maturity level, Ismail industries limited entering in to related business of biscuit manufacturing and looking extensively at opportunities where they can use the same value chain with little or no change in the company capital investment. Ismail industries limited adopted several strategies to cope up the challenging task ahead, Mr. Miftah Ismail said “it is easily said we want to become a market leader but it is hard to manage it to get things done to achieve it”, Ismail Industries Limited 105Market Penetration Ismail industries limited adopt market penetration strategy by entering in to markets where brands of Ismail industries are not available in the domestic market of the country. Ismail industries limited strategy is not only to penetrate in domestic market but also in international market by present product which can gain market share for Ismail industries locally as well as internationally. Market Development Strategy An Ismail industry limited is not only trying to penetrate the domestic market, but they know the ii eveloping ‘ket for their product wetting ai the domestic market. The Ismail industries limited strategy is to reduce dependence on one market, even one country and try to be a present in all market of region, in some as a leader and in some as a leader in their respected niche. Especially in international market, they want to expend to different countries by adding at least of twenty countries and increase the number of countries by three each year. Ismail Industries Limited 106Product Development In Confectionary industries product life cycle are short there is a continuous development of new products is required. Despite of Ismail industries limited product are having longer product life then other confectionary maker in the industry, Ismail industries limi ing to expend its portfolio of product few and innovative product by introducing new product at legst“évery six month. The reason for this approach is to have teplacement of the product before their product enters maturity stage. This strategy is tailored to sustain the growth of the company and profits. Concentric diversification Ismail industries limited known to the fact the confectionary market is maturing and competition is intensified. Ismail industries limited looking forward to all opportunities entering in development of all related products, which can give them an edge over entering in to entirely new business, which can also be costly. ittidustries limited enter business of business where the ingredients are almost the same, packaging and distribution and customer are also the same. Ismail Industries Limited 107Backward integration Ismail industries limited is planning to integrate them self backward by acquiring a plant of from abroad for printing of biscuits and candy packing material from Germany. The packaging of Rite is quite expensive develop by other firms, to reduce the price of packaging Ismail industries limited is thinking strategies to acquire a printing equipment. Business Level Strategies Ismail industries ‘ited form strategies for their competitor for different division they have develop different strategies. Looking at the over all business level strategy, they are focusing on their core competence and differentiating their product by innovation in developing new tastes. "Focus strategy = Differentiation strategy Focus Strategy Ismail industries Limited know the market segment where they are leader and to sustain the leadership in a fragmented market is quite difficult. The focus strategy of Candyland to retain the leadership of Jellies segment but at Ismail Industries Limited 108‘the same time also enter new product in the market that no one threaten their position. Differentiation strategy Ismail industries always try to be different from its competitor by coming up with new and innovative product that no body has ever introduced in the market. This differentiation is one of the key success factors of Candyland and Bisconi. The company is known for its innovative product that can beat competitor easily. The management of Ismail industries limited believes in high-risk high return because of it they are able to take high reward from domestic and international market. Operational level strategy Ismail industries limited adopt push as the entire competitor in the industry is doing. With in the company they adopt different strategies these strategies aaa sumama nase Ismail industries ited recruitment policy is to hire qualified.people for their organization at all level, Specially MBA’s from top business school TBA and retain them by motivating them and by assigning challenging tasks. Ismail Industries Limited 109Raw material Raw material is purchase in season to take advantage of low prices locally as well as internationally. The company develops a link with number of supplier to be in the bargaining position to gain advantage of lower prices. Production and sales forecasting Ismail industries limited forecast their production in accordance with the sale and on the bases of. forecast material requisition is made, Ismail industries Jieifed believe in Just In Time production and try to come closer to it but in Pakistani environment it is difficult to do work under Just in Time production. Research and Development Ismail Industries is one of the modernized firms of confectionary, who owns well-equipped research lab where new products being develop regularly by food experts. Candyland develop new by there own efforts and also by copying some international product. Ismail Industries Limited 110Strategic Problem After analyzing Ismail Industries Ltd from all aspects from financial, marketing, management internally and externally,the ovell all company there are certain problems which may lead company into difficulties. Symptoms are there which are giving signal of problems that can substantially affect the company performance, * Centralized Management = Ineffective promotion = Intensified competition = No proper organizational chart = No proper planning Centralized Management a, Ismail Industries Ltd no doubt owns valuable human resource at different management levels but most of the decision making is done by the top management. Top management means all the Ismail Industries Limited Mtdominant players like Miftah Ismail and their family members who are part of board of directors of the company. They call meetings and take opinion from their managers but they do what ever they feel right for the company, even companies top management from time to time consult directors for making minor decisions that they can take easily by themselves. In our opinion and management also sees this centralization of authority as a barrier for Ismail Industries in future. Ineffective Promoti Confectionary industry is the stage of maturity where the growth rate is declining and competition between rivals are intensified in such situations especially in confectionary industry promotion play a vital role in making continuous growth. Brand of Ismail Industry Ltd especially products under the brand name of Candy Land are not promoted as compared to major competitors like Hilal whose advertising is one of the most effective advertising and promotion campaign in the company. Ismail Industries Limited 112Candy Land used animated advertisement which are expensive and not developed in Pakistan most of the advertisements these ads are not effective as they must be in promoting the product. No doubt the quality of most of the products are good but due to lack of effective promotional campaign they are unable to capture substantial market share and defective advertising company may distort companies image and reduce sales negatively. It is the characteristic of mature market; the competition is intensified where rivalries become stronger and stronger. Product life cycle is short in confectionary industry. If the company product fail when introduce or there is no competitive advantage new product develop can be copied as soon as possible which also threaten the’ company any new product develop by any company give others competitive advantage. Ismail Industries Limited 113No proper organizational chart Ismail industries does not have ant proper organizational chart which define who report to whom and also define the delegation of authority but no such chart is their in candy land which can help the management out their powers and responsibility. This effect company performance and hinders managers while operations and performing their duties. No proper planning No proper plans being laid down at any stage of company operation. At jower levels there are some plan but they are a real short term plan like production and sales forecast. But company doing any thing in accordance with long term plan that is missing, there is no definite plan laid down for any unit which may say company have some strategic thinking in predicting their future. Numbers of problems are there in Candyland in spite of all the company is perform is fine but to sustain long term growth of the company these problem must be tackled to regain the market in the losing segment of the market. Ismail Industries Limited 114Candyjaiud Corubland Alternative solutions To cope up with all these problems, Ismail industries is to develop different alternative solution that can be taken under consideration. The first and foremost alternative is to improve the weakness. Develop proper organization chart define authorities and responsibility for manager that they come out with their potential out they are under performing. Secondly the market maturity is another major problem, which can be intact by entering local and international markets, which are untapped; mean to adopt market developmen: y and to come up with new product with in accordance with the taste of local consumer. To cope up with mature market may also be keep intact by related diversification in to area where competition is less and product in the early stage of life cycle. Ismail Industry Ltd promotion campaign is not successful in developing a permanent market demand for their product so company must develop new marketing campaign for the company: specially those product which are good but under performing due to ineffective or lack of promotion. Proper long term planning must be under taken to secure the future of the company. Ismail Industries Limited 115Candyjwul Creraby land Choosing the alternative and Implementation The best of the entire alternative is to go for one of the grand growth strategy market development and product development. By entering new market, threat of intense competition and mature market can be over come by market development. By product development, mature market can be renewed and capitalized. Diversification strategy is also adopted and it is success full. Related diversification is not # ly but advantageous that working can be started as fast as if can. Ismail industries must diversify more in biscuits and) must enter the market of snakes that hold tremendous growth potential for Ismail industries in the business. Future prospects Viewed in the background of continuing recession in the economy and stagnancy in the country’s exports, this is a remarkably fine performance and it deserves to be appreciated in terms of sales growth and profitability. The outlook is very promising for your company. Your company is extensively expanding its biscuit plant whereby the capacity will be more Ismail Industries Limited 116Candyjaid Cred lard than doubled in the coming year. This should make us a significant player in the biscuit market. Company is also in the process of setting up a Cast Polypropylene manufacturing facility in the coming year. As per our future expansion plans, our net sales in, years should cross the Rs.2 billion mark. Similarly, our proffability should also cross Rs.100 million marks. Ismail Industries Limited 117Appendix. CandyLand ht Productwise Sales Report From 22-06-02 To 28-06-02 Pag 30 [CHEWTOFFEES ASSORTED Isovni7 [Dewy exewy cst6)30 a s70saa] 4.87.29 sears fasnte Jogwrr crew (oRo}-20 | roxsisa] 182058] en7584 seis Joewy cHewy (cHo1-20 14] 2,640.6] sxs.se| 17,360.10] lsonizo_|oewy cxewy auto 30 21] 270000] azar er3e| usta ‘eres |restwvaLeo | e150] tro 04] ena. Tou! “CHEW roreeEs a] 568] 686,777.00] 197,998.03] 1,075.04 7os,c4r.06 «0 canoes oo [sTRAWaERRY ranLY60 4 13000] zo] oo s.aea.0a Noo [usar caxoy.00 “ macico —aattay co] asse21 1 lava? [putter scotou. sae ey versio] saree 0 eozniad : Laver froxe waste casovan to] sanaoro| ——_24.r0na | e190 {ois Jourrer scorer pac.so ae] aazaraga] —enprase], aware «7091337 jsorss7 leseredso canoy crea : s7e4ca] wa 20035] sasiea Trorsss feseneeso canny mon | 570409 ozaar] 2205 asi saris |ooconut canoy Wary 2 rozeaas] ——aansz ne aaeatee larseo [PEAT canoy-29 2 27009 rr) oc) 2 1s00 fries mur canoy-o 76] rox2080] —ssauaz] “2706 ras0224 2113 [oruncimeando aa] asosizan]—anasase) ——earece| 264.256.16 {eoesze |sureR anys ood] 413044940} 8106189] 80,649.74 1230.867.85 lata. super ranre-so ace] aezrrooo]—assranit 9202. arson] vcasaa | SUPER mute cANDY-90 “4 rsesi} 327981 «aas000 casas |sypencouaso , 2 s4donas] 19326007 aopeeca| Leeres [sureR cousso 14 zopossa| 7.10428 10,6355] ‘ore [ourrer scorcH sox-30 as} sagarasc) ——erarsas| —24.05.0 599,500.84 Naoaraa_fayrrer scovcH rRay.20 sss} staarecal —20.29802/—az0050 153358 0 jeans [amo caxoys0 tora] siasiazso] —ae7saiz4] —szenos} —y.n0725.28| leg2a7 | weRI-o (rRAY) 200 223,149.30) 36,228.18] 4,700.56) 255,275.50] liar3e |oeaa canoy 20.040) sai] aanomao]—esaeage| 18328020] sraa73.} roate: [wwe canoy-00 1 sna. sas 21 1250] aoz16s | | CREAM SCOA-90 4 4,132.20 587.52) 437.54 4,336.58] Lazzet [wasn canoy.co wd sesszo] —sa76sa| 20024 saatsay Horm |asn canny ua) 4 Pe) zea ooo] 09503 | Total “CANDIES” srr] 6.394666.70) sss.ess.zs| 245,382.14 —_8,977,971.50 \so TOFFEES 'saxiz2 | winner TOFFeE-o 1] 10,485.00 185193 3.9} 12,308.93 lsor11s [nue TOFFEE BOK.24 7 4359.0 rear as) seta 01126 [MLK TOFFEE.69 5 esq] saad sats 198729 Vsorrar fecuan rorres-sa n] + te.4020) —tassaes] 1. 786.22 razon 01728 [coconut rorFee.30 3 20130] ona] i froze ecune torre. 30 es ans] 767506) _ 3.22 98 siss7as F Total (9086) 6,760,269.44) —1,644,096.6] 73,307.09] 17,040,568.73) se “asec terse | s0.870,008.73 TORECandyland . CandyLand A Productwise Sales Report From 22-06-02 To 28-06-02 7 (eosew Deseriation Cartons] Amount ‘Stax | Schome Total | Share % or [neo Tererse sonra aor |oewy cHewy (sr3}30 ay ‘s.705.40] 1.10720] perry oa ey fercerees | 2 ston] tie] teva] Sine lecweewerse | san| “coe Man] sens emcee |S] Sita] nen] Soe] S| En fame |) “tee een] as) tes| Ji Joos uo ccemremnen | 3 mal] mn] o] tame fore memo fof ef tind fm] Sad | fort cttwcencts | x} smn] sea] ca] aaa] ta fog [omcresctees | Sime] Mies] neal uses] cea omnes |] Sita]. Sts] "sos “ely lores JESPRESSO CANDY (BOX) sf 5,784.00] azs.a7| 260,85 53514a| feca [Eiecrcwcrees | a] ana] amen] sa] acl ‘one femercwore 3] toe] “n) | (oom cnn 3] tel sa] “neoa] ames She nono co] tone] mane] teal aa |ace1z0 |suPeR FANTY.090 1994 13044850) etostas] 80.6434 200887685] San feneerann Siroe| ‘tewn] foc) “aaua) Sho foramen ‘onn| “ne| “tme| ame] a Sa feo ‘motn| San] “astn] a foie. fponenocrences Stine) nm) sue] tas (She. foonenscrorton ‘man| een] owe] om Jao2196 JeeRs-ocanoy-30 1973] 1,145,642.10} 197,831.24] 32,449.06 1,310,728,28] Jeorss7 |BERHO (TRAN) 223,148.20] 38,828.18] ‘5.70096 286,276.80] [Sia foevsceo’ ney Shean) ium) wae] isnt fuecnovan | ee) en| SOS] a torus [emocance YS Sep me) fawn fiemors |RSS] tual an) ae [Sr fseneter ry ] Mee) “Sta as) ta yo Pocacuoer | ent] eames] sma] sere] gars 2. TOFFEES Svar «| meso tan] ae] ala foe fearon |) “ae} Sekt a] tea) Se oe foucrereen } Se) ES) on] ad Not Saread Candia re eure cr [ere wiser (rss foo Jecune foro [cee fro sien fp foie Iw fo sara mn eomwo| em OR rio [ner [ome Be zoseepe Candyjaid oH oF 254 9}o5 Parone] a Ts 7a [aap soos] ause9Candyland ey CandyLand Productwise Sales Report From 22-06-02 To 28-05-02 Page tt a Description Garcons] __Armount ‘Star ‘Scheme Total ve [oetues: sone? fyetty ear oon-18 1s| ra 169.9 2260.3 535.9 15.8023] ‘ye1a02 seu sorte eoxa 1 1370240 1.45.0 208,19 9883.90 rypia08 |Jetey RaBerrBOK48 | 23.09 sesrai| 2614.3] ra05 hiotaes peu 'o eoxs x 282.00 sane] 226734 ss.ria0} ore? |ueuiy crime B0x-48 2 rvzse6e0] a7an06o] 676080 ww2986. orsts euty suce Boxe s| 3938.0 ona ‘200.40 «eo iorore _[aetey sour suces.. 4] 3938.00 csioo]~ s248| asec rover |ieuySurpnise-24 1] srosase| —1saaa7] 2870.9 sv122687| Hyataoe | [uetcy oeucHt-26 ss] nasi] raass.os] 258278 25.1549} Favor «Jetty ase nec 14 wszaross] — aztsazs] 567] araseror} 1.89): oaiea "fuett eear neov8 2» s2araso ‘sssoad| 72830] se2sas| 0.4] varies | etiy BOTTLE REGAB | seams 264152] wren! 06: voaras fuetty'o REG | erates) tao asarsa 0.3 ‘yaete7 fueuty chim Res 34 mireso| 1472420 sxrassoo] 3.4] vor [sett Rasert suMioR.96 a 620016] 182.7 azan| 03x frorarz fuetty'owwor —- «| raaezeo| —raase0s| .a.si04s] wsim} 08: veasea_|seuiy seas cue.12 4 sass. 2228.9 1 rinss2q ont Total JELLIES" 1263] 1447010) 230,070.36] 4,860.15 T447.19) 1.8 zo” |euseecums roe Jonos 5| rama 09 603.6q] 0.06] zoo Jeowen cum24 nl ars.g 0.09 siasors| 2.20) rors. [surer cunmaa 210] ssroseoo] «zsgiss] 9.48200 so.essa] 2.7 rors Jovecie your nave swaui-s] 7 csaieso| 1420076) * 1434.0 roa03.76| 0.58 Ione Jeusste Your name vances] 55] esonr| —- s1asa3e] 1 s32a rrrea75| 0.56] rae Jeanpuscunse x| 4197909] roe 140087 aruaal 03% Tovar foampus cuneas sa] 108 398 atreaas] 670724 riosseor} 1.62). row, |A.2.2 suseue2 4 3.02409 saa 609 ee ee prov [smsm avasce-8 | ssiazoas] —searara| 2.2824 srarsa} 27 fror120 fenoco.cunere a] 2900.6} “450g rosa] reooo2} 02 eae |enesnawev-72 137| arass2sq| — aegor.za| 5.71268] aaaear| 17 jronss |waNGona cun72 an aorgreso| —3s2ers0| "sora aiairss| 1.6 ozs |eemo cumre 113 raiserse]—zg0se20]—_a.sett| wigan} 1 ane fonanona cur 106 vo2won|. —2ygens| 3.23405 wean] ones |unronacumre | ‘doanea] S300 20.89] ssasoai] 0.2 Jones fananas ouaste-r2 | woos] — r9saasa} 617.09 coos] os : Total ‘BUBBLE GuMs* | 1.775] 2,112,229.00| 307,075.04) 65,122.44). 2,424,104.90) 17.8) fae [enewroreres e assonreo frome frwwvcnewao + a] seaazomo| saast.ro| sg e265 ersan| 457 Louse Ionwis crew assonrep as | sl 3022.09] 203.88 2.00 522593] 0.04 i Total are) <700,s80.98] 701,900.06 177,590.28] _4,69a,e09.70] 33.39] ! Loss estou suse) se istsales_—_l 4024.317.76| : TOBE xaCandyland TT 5 CandyLand hy Productwise Sales Report From 22-06-02 To 28-0602 Tene] description [carton] Amount ‘Shome {30 __[GHEW TOFFEES & ASSORTED fois» leew ene r0>20 a sarsoao] rasa] sera earns} loewr cnewy onc)30 te] saaoaaal rossi] sas cass] ew cnewy e030 a saekoo] — asenss] sang rae evr MEW 900-90 a] 2176000) a.2az eee usotse estwaLsa ‘| seas] soroaa oe as26..| Tota! “CHEW TOFFEE) 0 rar00) ss7aneea]—shorsse| ——Toaeeras 110 |canoues ject |strawaenayrascy.co | 123009 nae og saszea (enw leememerse a] sane] ass] oe] ome Jaorsar_aurrer scorer. oan so raansal ——szsazad 09 soars loner |rone waste canov tof tanaotoo] 240240 09 112 904.0 Horta |eurrae scoren enoso as] aararaco] , caarese]| —ssaross roan Lonsr Jesenadeo carey crear) | reac] asa] 208 asta Trorsse Jeseresso canov eon 4 #74400] 20a] 2w0as| ast lose feoconut eaor war) nl roasoas| ans xa zass4es jsort60 }PEANUT cANDY.60 a 490.60) 0.00) 2,180.69] fens rma eaoras a5 rosso] 1.34012] 247049 sees lors. fener nando aol rosin) aozsnes| ——ssseay 204205 laczi20 |sueer eavrys0 ood] smoaze) —sesosuaa]—eneiare] snus] lanier Jourenranry.so sos] se,rt0o]—sssreos] —saaazas amass lca feupernaze caov- uf assuoso) saan] aarasi ‘sa0asd lacaas~ [suver couse ee ee amaaasea lcatzs [suencousso iu raemasoo]—zosossal 042 osnsso Vinisoleurrer scoren 0x30 an] szszraco) rains] zasesas sa sense Jen |eurteascorenteavo0 sss] wraaznoo]—zozasea] zene 9035505 Ja02136 |@eRA0 cANoY.20 1073] 1.146,642,10} 107,531.24) 32,448.05] 310,728.25} joe [tevocman co] sznsenao] tae. 70 2searssa leas | peRioccanoy 50 (840) sai] ranoenco] seers] roses snarl Neate |uwere canov-90 | 192020] ‘maas a2} sansa focawes leneansonaso , asa] corse] sre aaoeed lor201_Juast cavovca 1 eeeze] —sarnsa| raze sass Neceae fwsticano cam) 4 sar. aaa | onto ! Total “CANDIES* sara) s224ees.ro] assanzs| zasaezre] — sarzart.so| \s0 TOFFEES: sors |wmnen T0FFEe-59 4 roassoo] ast ea lors. | ee TOFFEE sox24 7 ose] ‘an ad leoss [waxrorree-so B rassco]—tazzoq| a5 eras] isorser_lecusn torres-so nr] swearoao)—taannce] 2700.0 argon} owas lcoconur rorree-s0 3 220234] veo. raze rece ‘hase Iecuane roreee sa a 3357] __re7s0s|__aszzss 5 Total “oee] — 0700,289.04] 604,606.28) 373,307.09] 1, 090,508.73] a ad 40,370,006.73|pe Candyland ' CandyLand Productwise Sales Report - From 22-05-02 To 28-05-02 oes ve [peuues ever euvoean aor ve] wssoso] azn] sasse] sami] vos [pucraortie eoean nf aa oat ano vont picyrager pan 3] esata] cars] sis] maa voos feureeoce vn] aaasaso) name] sara esta Frere? [JELLY creme BOXAs 218 172,396.60] -21,.20860| 6,768.29 92.548.) Noa euy suce Boxee | 3.93600 971.33] 203.40] 4404.47] ‘oa |feursouevces.a s}—aoveas] arcs] = ssa ieee] d03h Stover fac sunense se wo] sroseso]—toausr] zoos] siz ews [aur onuanr 2 ] ras] faaso] aaa] eat vera peuvascnease ve] amare] isons] Gosenn] naar } brava evan ascsn 3] santse] | aasoae| rae] stam very puveorne nea s] aso] was rain] wea woes far nese mn] samesol erates uanse] casey ver [cron aes se] ass] regen] eel ras veaie fie nagar none x] sors] exon] tata] ate tim [aro anon s] mz) esas] asim nate veto [bey abusive «| awed] sz] ono] asses "raat sete sata] saazonasel —asasrase| —anasase| —sasrsarsy 20 Jovosue cous sane foro ; a sone "201120 |PowER GUM24 as) 7386) 312,990.16] wins fovrcue |g asta] sass ine fpaeevonnusans| 2 es er vrs ovo yourrmurtanacs] nama] sme] rear sie [eamusauese 3] aimee] tao] samen) aay fein lemme une sr] sesimeal—stronso]—aranso]——tesaeas] a dona face comme ] omen] tual co] aaa vn, fomsnauseese ne] sosmose] snare] assae] "arene ftevse |enoce ouurs ca] tsetse] taneao] roan] Uwe [nese exe vw] anime] sasetze] sites] zara (RRS amoonacers rf amnamae] aero] seas} iar terse [letwocumrs vo] terre] gata] gue] stn ‘are fonevannsurs vos] ratose] —atueas]——azseao]—emstaet] fers fanronaauwere em] toni] + rm os] ona sss frwseussers S}—susese] teers] stra] aasas ON Prout sauaaue cums: | 4776) aaszzzo09| sonora] asizatd|-—aczaaatad 30 [onew rurrees & assonreD fone Premensivae voi] suszoéo]—eaatxm) nerve] eoranar sun fnusscstaassaatszse | sl samen) ose] a sassy Treva ER : Lass PxEIGUT ‘fn sexw0} si sczaarr TF srCandyland iil Ismail Industries Limited Annual Report 2001 BALANCE SHEET as at June 30, 2001 Note 2001 2000 Rupees Rupees SHARE CAPITAL AND RESERVES Authorised capital 20,000,000 ordinary shares of Rs. 10/- each 200,000,000 Issued, subscribed and paid-up capital 112,705,000 (2000: 7,260,000) ordinary shares of Rs. 10/-each fully paid in cash 127,050,000 72,600,000 UNAPPROPRIATED PROFIT 16,617,050, 4185590 143,667,050 76,755,590 LONG TERM LOANS 3 904682927 145,812,976 LIABILITIES AGAINST ASSETS SUBJECT ‘TO FINANCE LEASE 4 - 94a DEFERRED LIABILITIES 5 8,720,739 7,690,650 CURRENT LIABILITIES Current portions of: Long term loans 6 20,070,218 20,724,221 Liabilities against assets subject to financelease 4 9a ‘100,929 Short term finances 7 100428,011 | | 105,304,136 Creditors, accrued and other liabilities 8 76,875,160 164,584,060 Proposed dividend '836,590 '306,400 196,219,830 191,519,736 CONTINGENCIES AND COMMITMENTS 9 - - #41 390,136 221,788,398 ‘The annexed notes form an integral part of these financial statements.iil Ismail Industries Limited PROFIT AND LOSS ACCOUNT for the year ended June 30, 2001 Net sales Cost of goods sold Gross profit Administrative expenses Selling expenses Operating profit Other income Financial charges Workers’ Profit Participation Fund Workers’ Welfare Fund Profit before taxation ‘Taxation - current for the year Profit after taxation Unappropriated profit / (accumulated loss) brought forward Profit available for appropriation Appropriations: Proposed dividend @ 17.50% (2000: 17.5%) (Sponsors and associates have waived their right to dividend) Dividend reversed Unappropriated profit carried forward Basic earnings per share Candyland ‘Annual Report 2001 Note 2001 2000 Rupees Rupees 18 052,534,628 527,599,917 19 53103181 434,248,328 121,502,947 93,351,589 20 11,675,568 9,970,859 | i a, mwarzaas | | 4871176 82,148,012 58,682,085 39,354,935 34,669 554 2 249,356 (mB HI 21,597,724 | 2B | 19,920,431 | 921,087 749,924 i 299,970 22,861,961 20,970,325 17,157,509 13,948,585 4,223,014 12,934,495 4,155,590 (6113371) “77,090,085 «4,874,295 (836,590) (806,400) 25 363,555 87,695 (473,035) (718,705) 16,617,050 4,155,590 26 The annexed notes form an integral part of these financial statements MUHAMMAD M. ISMAIL. CHIEF EXECUTIVE 0 MAQSOOD ISMAIL DIRECTORSTATEMENT OF CHANGES IN EQUITY for the year ended June 30, 2001 Balance as at June 30, 1999 Profit forthe year Proposed dividend Dividend reversed Balance as at June 38, 1999 Right shares issue during the year Profit for the year Proposed dividend Dividend reversed Balance as at June 30, 2001 MUHAMMAD M. ISMAIL CHIEF EXECUTIVE Issued, subscribed & paid up capital 72,600,000 72,600,000 54,450,000 127,050,000 Annual Report 2001 Accumulated Total profit/(loss) Rupees (6113371) 66,486,629 10,987,666 10,987,666 (806,400) (806,400) 87,695 87,695 4155590 76,755,590 - 54,450,000 12934495 12,934,495 (636,590) (636,590) 363,555 363,555 16,617,050 143,667,050 MAQSOOD ISMAIL DIRECTORCandyland Annual Report 2001 PATTERN OF HOLDING OF SHARES HELD BY THE SHAREHOLDERS as at June 30, 2001 NUMBER OF SHARE HOLDING SHAREHOLDERS FROM 10 190 1 - 300 121 101 : 500 34 501 : 1000 11001 - 5000 100,375 5001 - 10000 27,500 10001 - 15000 14,000 15001 - 20000 31,900 105001 : 310000 307,800 215001 - 220000 218,400 315001 - 320000 1270480 440001 - “445000 440,200 495001 - 500000 499,900 620001 - 625000 623,300 640001 - 645000 641,200 2105001 - 2120000 4,215,618 2155001 - 2160000 2,156,917 2225001 - 230000 2207304 12,705,000 S, CATEGORIES OF NUMBER SHARES PERCENTAGE. No. SHAREHOLDERS HELD 1. JOINT STOCK COMPANIES 3 658,700 5.18 2. FINANCIAL INSTITUTIONS 1 17.400 044 3. INSURANCE COMPANIES 1 107,800 0.88 4. INDIVIDUALS 428 nig21.300 9363 TOTALS 3 73,705,000 70.00iil. Ismail Industries Limited _araamarermcasomaae rea re Candyland Annual Report 2000 PATTERN OF HOLDING OF SHARES HELD BY THE SHAREHOLDERS as at June 30, 2000 NUMBER OF SHARE HOLDING TOTAL SHAREHOLDERS FROM TO SHARES HELD 123 1 : 100 12,300 “7 101 : 500 59,400 60 501 - 1000 57,000 9 2001 - +5000 121,700 5 5001 7 10000 43,000 1 10001 > 15000, 14,000 2 20001 - 25000, 48,000 1 30001 - 35000 31,500 1 60001 : 65000 61,600 1 150001 - 155000 153,500 1 280001 285000 284,200 4 315001 - 320000 1,270,480 1 495001 : 500000 499,900 2 635001 7 640000 1,270,500 1 690001 - 695000 694,750 1 700001 705000 701,700 1 715001 7 720000 716,700 1 1215001 - 1220000 1,219,770 QQ 7,260,000 S. CATEGORIES OF NUMBER SHARES PERCENTAGE No. SHAREHOLDERS HELD _ _ 1. JOINT STOCK COMPANIES 3 437,800 6.03, 2, FINANCIAL INSTITUTIONS 1 23,000 0.32 3. INSURANCE COMPANIES 1 61,600 085 4. INVESTMENT COMPANIES 1 8,700 0.12 5. INDIVIDUALS 396 6,728,900 92.68 TOTALS 402 7,260,000 100.00iil. Ismail Industries Limited BALANCE SHEET as at June 30, 2000 SHARE CAPITAL AND RESERVES Authorised capital 20,000,000 (1999: 8,000,000) ordinary shares of Rs. 10/- each Issued, subscribed and paid-up capital 7,260,000 ordinary shares of Rs. 10/-each fully paid in cash UNAPPROPRIATED PROFITALOSS) LONG TERM FINANCES AND LOANS LIABILITIES AGAINST ASSETS SUBJECT TO FINANCE LEASE DEFERRED LIABILITIES CURRENT LIABILITIES Current portion of long term finances and loans Current portion of liabilities against assets subject to finance lease Short term finances Creditors, accrued and other liabilities Proposed dividend CONTINGENCIES AND COMMITMENTS Note Candyland Annual Report 2000 ‘The armexed notes form an integral part of these financial statements. 2000 199 Rupees Rupees 200,000,000 80,000,000 72,600,000 72,600,000 4,155,590 (113,371) 76,735,590 66,486,629 145,812,976 139,406,338 9a 110,360 7,690,650 602,902, © 20,724,201 13,959,111 100,919 80,359 105,304,136 86,059,497 64,584,060 78,983,435 806,400 954,625 191 519,736 180,037,027 421,788,393, 392,443,256,iil, remau inaustries Limited Seer PROFIT AND LOSS ACCOUNT for the year ended June 30, 2000 re Candia read Annual Report 2000 Note 2000 1999 Rupees Rupees Net sales 16 527,599,917 468,490,273 Cost of goods sold v7 434,248,328 391,124,919 Gross profit 93,351,589 77,365,354 Administrative expenses 18 9,970,859 7543,98 Selling expenses 19 49,711,176 41,678,725 38,682,035 49,222,063 Operating profit 35,669,554 = (28,143,291 Other income 20 249,356 4,248,563 34,918,910 32,391,854 Financial cha 21 19,920,431 15,452,992 Workers’ profit participation fund 749,924 846,943 Workers’ welfare fund 299,970 338,77 . 20,970,325 16,638,712 Profit before taxation 13948585 15,753,142 ‘Taxation - current for the year 2,960,919 2,674,755 Profit after taxation 10,987,666 13,078,387 Accumulated (loss) brought forward 611337) (18,458,333) Accumulated Profit/ (loss) available for appropriation 4374295 (5,379,946) Appropriation: Proposed dividend @ 17.5% (1999: 17.5%) (Gponsors and associates have waived their right to dividend) (806,400) (954,625) Dividend reversed 2 87,695 221,200 18,705) (33,435) ‘Unappropriated Profit/ (loss) carried forward _#755,590 «= (6113,371)_ Basic Earnings per share 3B 151 1.80 ‘The annexed notes form an integral part of these financial statements MUHAMMAD M. ISMAIL MAQSOOD ISMAIL CHIEF EXECUTIVE DIRECTOR 0