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”, First day, first class in B School, our marketing teacher asked us to check whether we are familiar with Pune or not. Few hands went up, “Sir it’s a very famous sweets shop in Pune”, one of the students replied, “Sir they have RFID System in their shop and their Bakarwadi is a hot selling item”. I was surprised to hear that whether it is regarding a Sweet shop or something else? We heard this name “Chitale Bandhu Mithaiwale” from our faculties while telling us about success story. It created a curiosity and we could not resist visiting Chitale Bandhu Mithaiwale shop. We (Deepak Mehta & Abhinav Mishra) planned to visit the shop. We were not familiar with Pune, so we had to ask for direction at many places. We were amazed to see that almost everyone knew the address to this shop. Finally we reached the shop; it was like any other simple shop from outside. When we reached the main entrance of the shop, we had to stand in queue. At the entrance a security guard gave us a plastic card (RFID Card) and instructed us to carry this inside. Inside the customers were ubiquitous. It took us some time to understand the contour of the shop. We approached one counter and asked for different variety of sweets available. We were bewildered to know the varieties they had. We went ahead to the Bakarwadi counter. There was big queue and we thought if we do not purchase now, it might get over. When we reached the counter, man behind the counter asked for the plastic card and we gave it to him. Next question,” how much do you want?” we said,” 500 gm”. He put the card on a machine which was kept behind, pressed few buttons, packed Bakarwadi and gave it back to us along with our card. Next we bought amba katali and cornflakes chivda. Then we approached the counter person and asked if we could meet the manager. He took us to the manager who was sitting behind the counter with computer and in front of CCTV. We introduced ourselves and requested him if we could know about the insight of the operation. He introduced himself as Kedar Chitale, one of the proprietors of Chitale Bandhu and told us to call Mr. S. R. Chitale and fix an appointment to get the insights. We thanked him and reached the exit where we were asked for the card, the cashier put this card on machines and told us to pay Rs. 200. Next day we called Mr. S. R. Chitale and fixed an appointment for Thursday Afternoon. We reached the shop on time, asked for Mr. S.R. Chitale and we were taken inside and introduced to a very simple gentleman. Mr. S. R. Chitale offered us seats.
Finally with lots of changes German supplier could develop one for producing Bakarwadi at Chitale Bandhu. which could control the transactions and made billing process easy. Germany.10 Million. To solve this they stated with Chit system and increase the production of Bakarwadi. Mr. Later in 1995. They checked with suppliers for designing a similar automated machine for producing Bakarwadi. which was a huge investment. Customer started flowing in and Chitale Bandhu realised that they could not meet the demand of few products like Bakarwadi. One more principal outlet at Deccan Gymkhana. But the two problems instead of getting solved became complicated. The firm began its operations in the heart of the Pune city at Bajirao Road. When they started this business. his eldest son. B.Mr.. where RFID plastic card of customers were fed with the price of sweets 2 . One of the suppliers showed interest and visited their factory in India. but as per our financial planning we were sure that breakeven point will come within a year & that’s what happened. promoted the firm of Chitale Bandhu Mithaiwale in 1950 in Pune. of customer visiting the shop was quite high. Maharashtra. Anova. Background: Mr. Chitale started dairy business at Bhilawadi in the Sangli district of Maharashtra state in 1939. prime focus was on quality product and fair price.” This machine could produce 350kg of Bakarwadi per hour. they were first to implement RFID System in their shop. Chitale started unwinding the secret of Chitale Bandhu’s Success. Chitale. S. Raghunathrao (Bhausaheb) Chitale. Late Shri. Gradually people started liking the products of Chitale Bandhu. especially Bakarwadi and Peda and became habituated. The inspiration behind venturing into a dairy based food products business was of course. Another problem was no. G. B. R. which was sufficient enough to meet the customer demand. G. Shri. Under this system small machines were kept near every counter. In 1980 the automated machine was imported to India and spent around Rs. Pune was opened. they did in-house R&D and travelled to various exhibitions abroad (Holland & Germany). They saw a machine for Cream Roll production in Food & Beverage Exibition. Chitale when asked about this investment responded: “It was high investment. To solve this problem.
Besides manufacturing. Today: From a very small beginning which saw food items being produced manually with domestic help under a limited physical space.000 litres of milk per day and manufactures products such as cream. better priced and now were integrated with technology thereby creating huge success. A comprehensive infrastructure. distribution hubs at key locations and a wide & strong agent & distributor network in place to take care of all the business needs of concern. and are ably handled through a strong distribution and franchisee network in Pune and across the country. a wide network of authorised agents and distributors is placed all over Maharashtra and outside states. Chitale Dairy produces about 200. butter and yoghurt. Besides Pune city. Having built a brand identity for itself through the sheer range and quality of food products over the past five decades & more. Today they have grown into Rs. Chitale Bandhu Mithaiwale owns two huge and modern shops at key locations in Pune city. Chitale Bandhu Mithaiwale today boasts of state-of-the-art use of technology in production and end-cycle management of business.bought and finally this card was read at cash counter. Of these. These innovations created curiosity. 3 . 5 Billion business. It has appointed 10 franchisees within the city and plans to increase this number to 15 shortly. for not just the residents of Pune but all over Maharashtra. Chitale Bandhu Mithaiwale today is a household name associated with the eating habits. automated manufacturing units situated at easily accessible points. the unit located at Ranje. There are a total of 6 different manufacturing units owned by the firm that supply the food products. Chitale Bandhu Mithaiwale provides employment to about 300 people at all its establishments. in terms of skilled manpower. Chitale Bandhu products were of high quality. where customer could pay the full amount. Sweet items like the ‘Gulabjamuns’. Shivapur near Pune has two automated manufacturing lines specifically devoted for manufacture and export of ‘Bakarwadi’. the unique and monopoly food snack item from Chitale Bandhu Mithaiwale. the ‘Pedhas’ and the ‘Rasgullas’ are also manufactured on machines imported from Japan.
These manufacturing units are: • • • Chitale Sweets & Snacks Pvt. it has three main manufacturing concerns with multiple units in and around Pune. Ltd.” New product development started from home. – 4 units Shrikrishna Food Industries – 1 unit Chitale Bandhu Mithaiwale – 1 unit The quality of food products of Chitale Bandhu Mithaiwale is strongly looked after and the business activity is (Hazard Analysis Critical Control Points) HACCP certified. R. Then new product is sent for testing to customers and other family members. Being a family owned and managed business. determination and efforts of four generations of the Chitale family. All shops have to send next 4 . where state-of-the-art machinery is in use for production of various types of sweets. Chitale Bandhu uses only one source of advertisement and that is through local newspaper. Chitale Bandhu Mithaiwale acquires all its dairy supplies from its Sangli dairy farm. Chitale Says: “Current annual turnover is $ 5 Billion. $ 4 Billion from Dairy business where the profit margin is only 2% and rest $ 1 Billion from Sweets business where profit margin is 12 to 15%. Singapore and Israel. where family ladies develop new product. Logistics and Technologies: Entire transportation is been looked after by Chitale Bandhu only. salted and ready-to-eat food products. Chitale Bandhu Mithaiwale has evolved and developed through the sheer grit. Mr. Currently about 56 varieties of sweets and 31 varieties of Namkeens are being sold.By establishing and operating through various corporate and non-corporate entities. Its present exports are to countries like USA. once approved it is introduced in the system. S. They have 13 small to Medium vehicles.” He continues: “60% of the entire sweets sales happen during festival time. Chitale Bandhu Mithaiwale is also up-to-date in the use of computer systems and modern technology in all its business activities. Besides this. this business today is a major supplier of food products all over India and is also slowly but surely establishing itself as a major exporter of its products abroad. which carry out the entire operations in Pune.
This posed a significant risk to its operations. Various companies and firms look after the diversified interests of the Group. In 2005. Director. “Our environment is highly scalable.day demand based on the forecast by 5pm (evening). With the business operating 10 physical servers across two data centres in a town 500 kilometres from the nearest large city.” said Vishvas Chitale. “Using VMware High Availability (HA). with consequent 50% reduction in power. “We can easily support another 20 virtual servers on our existing hardware to service our growth of 15 percent year-on-year and expansion into new lines of business. Accordingly next day morning at 5 am products are sent to the respective shops. These 20 host virtual servers running multiple production applications and operating system. Chitale Dairy.” Chitale Dairy is also evaluating VMware Desktop Infrastructure (VDI) for deployment. we could reduce this to just 10 minutes. These are: 5 . the Group is into digital services and agro businesses.” says Chitale. we would need six or seven hours to fully restore it.” In June 2007. The business decided to implement VMware server virtualization to provide the required availability and disaster-recovery capabilities. Chitale Dairy began evaluating ways of streamlining and enhancing its technology environment. diversified and prestigious Chitale Group. cooling and real estate. “We determined that if a server became corrupted. Chitale Dairy consolidated its environment to three physical servers operating in one data centre. Chitale Dairy found it expensive and hard to source qualified IT support staff . Apart from the milk and dairy products business which is the foundation of the food products business. including 64-bit Microsoft Exchange Server 2007. Results • Reduced server hardware acquisition costs by 50% • Cut software acquisition costs by 75% • Reduced server deployment times from three weeks to three hours • Gained the ability to restore a corrupted server in 10 minutes rather than six to seven hours • Eliminated second data centre. by consolidating from 10 physical servers to three • Reduced storage costs by 25% • Gained the ability to seamlessly migrate virtual environment to new physical node • Delivered flexibility by supporting a range of storage options Chitale Group: Chitale Bandhu Mithaiwale is a part of the large.
The latest entrant is Yakult Danone with its investment worth US$ 28. marketing and distribution network. Chitale Digitals • • • • Each of these businesses has its own separate production.161 million in 2012. Ltd. it is poised for an upswing. in the last fiscal. food and the agro industries businesses also efficiently put to use their internal synergies to minimize costs and adhere to strict and high quality of products. While using this network. build immunity and help in digestion. are an emerging category in the Indian food market. the current size of the Indian dairy sector is US$ 62. According to the latest report on Indian Functional Foods and Beverage markets' by Frost & Sullivan.57 million in the corresponding period.67 billion and has been growing at a rate of 5 per cent a year. G.5 million against US$ 113.3 million and an additional US$ 20. A healthy domestic 6 . The dairy exports in 2007–08 rose to US$ 210. the market of nutraceuticals and probiotics earned revenues of over US$ 185 million in 2007 and is projected to touch an estimated US$ 1. Along with domestic dairy majors like. global players like Nestle have made significant investments to capitalise the potential of the segment. whereas the domestic dairy sector is slated to cross US$ 108 billion in revenues by 2011. Probiotic dairy products. Amul and Mother Dairy. Sweets and Snacks market In India: According to Dairy India 2007 estimates. the dairy. Although the segment in its nascent stage currently.8 million on the cards for the next 2–3 years. which contain live organisms. Both production and consumption of milk and its derivatives are traditionally high in the country. Chitale (Chitale Dairy) Chitale Bandhu Mithaiwale Chitale Foods Chitale Agro Industries Pvt.• B.
2 billion).3 billion).sweetsnackfactory. (Ref: www. Organized retail will be about 13 percent of the total market at Rs 2. Haldiram's are known for aggressive marketing. In 2007.5 per cent of the organised retail market at Rs. Das and the Ganguram groups have quality control laboratories. In the organised retail segment.9.5 percent share valued at Rs 7.9 per cent in 2006. 10. compared to a 2.economy and awareness of health products are expected to give a boost to the segment. Food and grocery dominates the retail segment with 59.000 Crore.000 Crore by 2010. 92. Both the K. the picture is quite different. This is followed by 7 .792. Valued at Rs. INDIAN RETAIL (SHARE IN 2007) At constant prices. and lot more fireworks can be expected this year and the years ahead. 000 Crore (USD 2. The food & grocery retail categories achieved 55. But the organised retail segment in this category is simmering in the true sense – a 50 per cent growth in 2007 as compared to 42. retailing and export orientation for its further expansion. The Indian retail industry will touch Rs 18. the overall F&G retail market grew slightly higher at 2.com) Market Structure The organized sector is focusing on new product development.000 Crore. 000 Crore (USD 198. 000 Crore. The organized sector's stress on quality has also been noticed.5 per cent share.3 per cent in 2007.2 per cent growth in 2007. and their distribution network has helped them attain leadership within the organized sector. this organised market constitutes barely 1. valued at Rs.C.9.1 per cent of the total food & grocery retail market.2 per cent annual growth in the previous two years. in the overall Retail pie Food and Grocery was the dominant category with 59. packaging. Food & Grocery (F&G) is the second largest category accounting for 11. 30.
800 Crore. Watches and eyewear at Rs 4. The other traditional products introduced in the 'instant mix' product form are kalakand. the khoa-based mithais are more popular in northern. Chitale says: We do not have competitor in Pune as all other sweets shops are working on different parameters. Out-of-home food (catering) services at Rs 71. kesar kulfi and shahi rabri by Nestle under the brand name 'Milkmaid'.500 Crore.9 percent share at Rs 1. 31. This is followed by mobiles and accessories at Rs 27. including Amul. EXPECTED INDIAN RETAIL (SHARE IN 2010) Product Profile In terms of regional preferences. At seventh place is entertainment at Rs 45. western and southern parts of the country while chhana-based sweets are popular in eastern India. Health and beauty care services at Rs 4.500 Crore are the fifth-largest retail category.indianmilkproducts. R.000-1. with a 5.000 Crore. Consumer durables at Rs 57.600 Crore.200 Crore. Footwear at Rs 16.4% market share.” 8 .com) Competitor Analysis: Mr.300 Crore. S. Instant-mix Sweets the 'instant mix' market in India was estimated to be around Rs 1.clothing and accessories with a 9. (Ref: www. The most popular 'instant mix' so far is that for gulabjamun which is available in a number of brands.400 Crore. Market Opportunities Multinational companies like Nestle had introduced innovations of blending product design of Western pastries with khoa-based sweets marketed as "Mithai Magic" and position it for corporate gifting. Leisure retail at Rs 16.250 million in 1998. furnishings and kitchenware at Rs 45. Nestle and Gits.400 Crore as the thirdlargest retail category. The growth of cultured products like shrikhand in western India and chhana-based sweets in northern and southern India is levelling out the regional preferences for traditional sweets. At eighth place is furniture.400 Crore.600 Crore.300 Crore have overtaken jewellery Rs 69. At sixth place is health and pharmaceuticals at Rs 48.
with farm inputs and farm machinery companies achieving the biggest profits. Like • • • • • • • Kaka Halwai Sweets Karachi Sweet Mart Mithaas Sweet Shop Purohit Sweets Mithai Ghar Prabhat Farsan & Sweets Mamta Sweets Future Plans of Chitale Bandhu: • • • Chitale Bandhu Mithaiwale is focusing on packaging and online selling. the year 2008 has been a record year for India’s food grain sector with increased production. But they are not focusing on large expansion. the Union Minister of State for MFPI. according to an Economic Times analysis.But. According to Mr Subodh Kant Sahai. According to the minister.80 million was put into the food processing industry in 2007–08 against US$ 5. Franchisee outlets in Maharashtra. Future Growth of Indian Food Industry: 9 . in Pune there are lots of small sweets shop. In fact. Foreign direct investments (FDI) totalling US$ 143. Further. the industry is presently growing at 14 per cent against 6–7 per cent growth in 2003–04. acreage under cultivation and record procurements. few among them are very famous as well. the food processing industry in India was seeing growth even as the world was facing economic recession. according to the 'India Food Report 2008' by Research and Markets is estimated at over US$ 182 billion. one out of every five listed companies in India confirmed higher profits during the first half of fiscal 2008–09.70 million in the previous fiscal. Retailing in International market. Indian Food Industry: The Indian food market. and accounts for about two thirds of the total Indian retail market.
which would grow to US$ 400 billion from US$ 175 billion by 2025.. accounting for a large chunk of the world food industry.According to consultancy firm McKinsey & Amp. the retail food sector in India is likely to grow from around US$ 70 billion in 2008 to US$ 150 billion by 2025. Retail Landscape: Food Chains and Restaurants 10 . Co.
According to a BMI forecast. Major investments: 11 . which plans a partnership with the Tata Group. The sector has recently attracted UK retail giant Tesco. and therefore. According to industry estimates. the segment is growing at a rate of 104 per cent and is expected to grow to US$ 482 billion by 2020. India is likely to see a huge 443 per cent increase in mass grocery retail (MGR) sales during the 2007–2012 period. and coffee joints.The food and grocery market in India is the sixth largest in the world. Ninety nine per cent of this segment is unorganised. there is immense scope for growth for the organised sector. Food and grocery retail contributes to 70 per cent of the total retail sales. fast food outlets. The organised food retail sector is largely dominated by restaurants.
dairy major and ice cream specialist.37 million. has announced plans to enter India's US$ 500 million snack food market. reveals that the total amount of investments in the food processing sector in the pipeline for the next three years is about US$ 23 billion. • • The government has received around 40 expressions of interest (EoI) for the setting up of 10 mega food parks (MFPs) with an investment of US$ 514.25 billion in a dairy project. • According to Business Monitor’s Q108 India Food & Drink Report. The 'India Food Report 2008'. Conglomerate Reliance Industries Ltd has invested US$ 1.Private investment has been one of the key drivers for growth of the Indian food industry. In August 2008. Reliance Industries was reported to be mulling a partnership with UK-based supply chain solutions provider. for its efforts focussed on India’s mass grocery retail (MGR) sector. 12 . Wincanton. Amul Dairy.
is reportedly in talks with EPIC. Cream Centre and a franchisee agreement with the California-based coffee chain. ITC is planning to set up a world-class processing infrastructure in Rajasthan for an integrated 'cleaning-cum-sorting' facility for spices like cumin. Blue Foods’ flagship brands include Noodle Bar. Fast-food chain McDonald’s is pumping in US$ 83. 13 . Moreover. plans to open 100 outlets in different parts of the country with an investment of US$ 51 million. an upmarket tea and coffee retailer in the UK.• Future Group and its private equity arm. • Sapat International. for the acquisition of its stake in Whittard. Spaghetti Kitchen. Blue Foods. have acquired a controlling 50 per cent plus equity stake in the multi-cuisine lifestyle restaurants’ chain. a Mumbai-based tea company. apart from a 'blended spices' facility over the next two years.4 million on increasing its footprint in India. ITC is also planning investments to automate the different operations in its supply chain. a private equity firm in the UK. coriander and pepper. in division India Partners. Copper Chimney. • • • The world's third largest pizza chain. Bombay Blue. Gelato Italiano. It is planning to set up a pepper garbling and steam-washing facility in Kerala. Coffee Beans & Tea Leaf. Papa John's.
000 from the current 700. S. What constrains do you see in Chitale Bandhu Success story? Q3.R. Students of Balaji Institute of Modern Management.in www. Pune under guidance of Prof.com http://www.Srini.68 million .86 million for expanding its number of cafes to around 1. What lesson do you learn from this case? Ref: • • • • • Personal Interview of Mr. R. Chitale. over 2009. Why Chitale Bandhu is not expanding all over India when all other players are on expansion drive? Q7. Should Chitale Bandhu rebrand itself for international look? Q9. Do you see the need of expansion? What will you suggested strategy for Chitale Bandhu? Q8. Who are Chitale Bandhu’s Competitors? Q6. www.ibef.com www.sweetsnackfactory.org/home.Srinivasan.indianmilkproducts.chitalebandhu.US$ 30. Questions: Q1.• Cafe Coffee Day is planning an investment of US$ 24. Do you feel Chitale Bandhu is optimizing its resources? Justify your answer? Q5.) 14 .aspx Indian Retail Report International food policy research Institute • • (This Case Study is prepared by Deepak Mehta and Abhinav Kumar Mishra.
org/home. Pune under guidance of Prof. Questions: Q1.in www.y Cafe Coffee Day is planning an investment of US$ 24.86 million for expanding its number of cafes to around 1.US$ 30.sweetsnackfactory. S. Should Chitale Bandhu rebrand itself for international look? Q9.com www. over 2009.aspx Indian Retail Report International food policy research Institute (This Case Study is prepared by Deepak Mehta and Abhinav Kumar Mishra. Why Chitale Bandhu is not expanding all over India when all other players are on expansion drive? Q7. R. Chitale.Srini.ibef. www.R. Students of Balaji Institute of Modern Management. What constrains do you see in Chitale Bandhu Success story? Q3. What lesson do you learn from this case? Ref: y y y y y y y Personal Interview of Mr. Who are Chitale Bandhu¶s Competitors? Q6. Do you feel Chitale Bandhu is optimizing its resources? Justify your answer? Q5.68 million .com http://www.) 15 .chitalebandhu.indianmilkproducts.000 from the current 700. Do you see the need of expansion? What will you suggested strategy for Chitale Bandhu? Q8.Srinivasan.
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