Management in Action

A Consultancy Report

on

Ashritha Cashew Industries

Shirlalu, Karkala

Submitted by

Vaibhav N Bhat 4NY18MBA84

Shrihari K 4NY18MBA72

Shyamala S Shenoy 4NM18MBA79

Under the Guidance of

Dr. Sudhir Raj K

Professor and Guide, JKSHIM, Nitte

Submitted in Partial Fulfillment of MBA Course to

Justice K.S. Hegde Institute of Management

(An Autonomous Institute Under Visvesvaraya Technological University, Belagavi)

Department of Business Administration

August, 2019
1. Ashritha Cashew Industries: A Profile

Ashritha Cashew Industries was established in 2006 at Shirlalu village in Karkala. The Industries was
founded by Mr. Shanthi Raj Jain. The Proprietor of the Ashritha Cashew Industries is Ms. Anila S Raj. It
was started with an initial investment of Rs.25 lakhs. The capital was raised from the Karnataka Bank of the
Shirlalu branch. With Rs.13,75,000, which is 55% of the investment, they also got 20% subsidy from the
Central government which is Rs.5,00,000 and rest Rs.6,25,000 cash was invested by Mr. Shanthi Raj Jain.
The premise was of 4000 sq. ft. The business has license from Shirlalu panchayath and Industry license from
District Industrial Centre (DIC) and the industry has also got the license from Food Safety and Standards
Authority of India (FSSAI) by the Ministry of Health and Family Welfare of India. The initial turnover of
the business was Rs. 50 lakhs. This makes a brief history of Ashritha Cashew Industry.

In 2011, Mr. Sheetal Kumar Jain took over the Management and shifted the industry to new building of 9000
sq. ft with an additional investment of Rs.40 lakhs. The view of renovated premise is shown in the Fig No.1.0.
At present (7th August 2019), there are 93 employees working in Ashritha Cashew Industries, including 88
female employees. Among 93 employees, 28 are engaged in cutting, 50 are engaged in peeling and 12 are
engaged in grading. It also includes 2 persons for loading and driving job and 1 office administrator. The
workers are provided with canteen facility with refreshments, meals and tea free of cost.

The main objective of the industry is to provide its customers with high quality products. They ensure that
the raw materials are brought at right quantity at right price without compromising the quality of product.
The mission of the industry is to provide the customers with outstanding quality, ensuring the value for the
money and instill pride of the ownership. The vision of the industry is globalization of business by exporting
the processed cashews outside the country.

Figure No. 1.0: The Renovated Premises of Ashritha Cashew Industries

1.1. Products Produced

Processed Cashew nuts are the only products produced by the industry. These cashews are packed carefully
in metal tins and sell them to the dealers. Ashritha Cashew Industries is engaged in supplying the processed
cashew nuts to their dealers across the country. The raw cashews are imported from Tanzania, Benin, Ivory
Coast and Guinea-Bissau and within India the raw cashews are procured from Maharashtra, Kerala and
Karnataka. There are 40 different grades of cashews. These grades differ based on the taste, size, color,
quality and the protein content in the cashews. The skilled employees are assigned with this job. One day
training will be given to the workers to identify the cashews and separate them according to their grades.
The final cashew nuts are stored in metal tin. After grading according to grade, they store it in tin and seal
it. Each tin of 800 grams carries 10 kg of cashew nuts. It is further packed and sold in a card board box. And
each box contains 2 tins.

Different Grades of Cashews

There are 42 different grades in cashew and it is been classified under two heads that is Wholes and Pieces.
W180 is the finest quality among these 42 grades of cashews.

Wholes Pieces
W180 JH
A180 JH2
W120 SS
A210 K
M210 LWP
W240 SK
A240 SWP
M240 SSP
W320 BB
A320 SP
300 DP
SSW DP1
W400 DP2
A400 DSP
FW DSP2
KW SDP
 PKW PKP
DW OP
RW Pg
SSW1 BB2
SW240
OW
Table No. 1.01.: Different grades of cashews

1.2. Value Chain Analysis of the Cashew Industry

Value chain comprises a series of activities that are involved in conversion of raw materials into finished
goods. In order to create a competitive advantage, a firm has to identify which activity is more valuable with
the help of value chain analysis the firm can recognize its most valuable activity and keep on improving it
for the betterment of its results. It also helps to analyze the internal firm activities. Applying Michael Porter’s
model of Value Chain Analysis to an industries activities, it helps to gain competitive advantage and boost
the profit.
The primary actors in a cashew industry are Farmers, Co-operative societies and Retailers. The Cashews will
be separated into Cashew Nut and Cashew Apples in the hands of Farmers or Traders itself. After drying
process, the cashew nuts are moved to different process in processing industries to get final cashew. On other
hand, the cashew apples are moved to different process like juice, wine etc. and are sold in domestic market.
The cashew nuts are sold both domestic as well as international market. The detailed view of this process is
represented diagrammatically in the value chain analysis Chart.No.1.01.
1.3. Value Chain of the Cashew Industry

Cashew

Collection of Cashew nuts and Cashew apples

Cashew nut Trader Cashew Apple

Drying of Cashew
Cashew nut Apple Juice

Cashew nut Cashew Kernels,

Cashew nut
processing
shells Wholes, Splits

Cashew
Cashew
apple wine
Sugar coated Roasted and Butter
cashew nuts salted cashew
nuts

Cashew
apple
Cashew nut shell CSNL based pomase
liquid products

Export Market Domestic Market

(Source: Google)

Chart No. 1.01: Value Chain Analysis of the Cashew Industry

1.4. Value Chain Analysis of Ashritha Cashew Industries

Purchase and Import of Raw

cashews

The raw cashews are boiled in the

boiling machine and cooker

Boiled cashews are sent for cutting

department

Now the cashews are kept in hot

chamber

Cashews are sent for peeling

process

Cashews are graded under 42

different types under grading
process

Cashews are sent for packaging

process

Source: Developed by the authors

Chart No. 1.02: Value Chain of the Ashritha Cashew Industries

A. Primary Activities

Inbound Logistics

The inbound logistics of the firm comprises of procuring the raw materials. Ashritha Cashew Industries
purchase raw cashews from both domestic and foreign countries. In April-June they procure raw cashews
from Benin. In August-October they procure from Ivory Coast. In November and December they procure
from Tanzania. And during March and April they purchase within the Country. That is Maharashtra, Kerala
and Karnataka. With a good warehouse facility they store previous year stock for January and February for
processing. The orders for the raw materials are placed before three months. The orders are placed by clients
after receiving the quotations and the raw materials are procured as per the order.

Operations

After the procurement of raw cashews, series of activities are involved in it to make a final product. The raw
cashews are sent to the boiling and steaming process. Men workers are involved in this process. Three boiler
and cookers, each with the capacity of 350 kilograms per batch boils the raw cashews for half an hour at 60
degree Celsius. Then it will go for steaming process and cutting with more of the involvement of the internal
as well as outsourced workers. To remove the husk, hot chamber treatment has been implemented. This
makes the cashews taste better. Temperature management is a part of the process. After the hot chamber
treatment, peeling process starts. Care has to be taken to minimize the damage. This process is generally
done manually which is shown in Figure No.1.1. After peeling, Cashew nuts are separated according to
grades. The final cashew nuts are stored in metal tins. The detailed view of the cashew processing activities
of the Ashritha Cashew Industries are represented diagrammatically in the value chain analysis
Chart.No.1.02.

Figure No 1.1: Peeling Process at Ashritha Cashew Industries

Outbound Logistics

The outbound activities of Ashritha Cashew Industries include packing and distributing. The packed cashews
are to be sold in wholesale to the dealers and retailers. The Ashritha Cashew Industries transports the packed
cashews to the destination of customers as per the order placed by them.

Marketing and Sales

Marketing and selling is done offline by Ashritha Cashew Industries domestically. Selling is done directly
through the roadways. The dealers are spread over Karnataka, Kerala and Maharashtra.

B. Support Activities

Infrastructure

Cookers and Boilers

Wood storage area

for boilers

For hot chamber

after cutting

Hot chamber Machine

For boiling process

Peeling and cutting

process
Packing area

For packing Cutting Process

Warehouse Peeling after from
hot chamber

Peeling and grading process

Unloading and
storing Office

Chart No. 1.03: Layout of Ashrtiha Cashew Industries

Ashrita Cashew Industries have a well-designed infrastructure. The layout of the industry is shown in the
Chart No.1.03. The work floor consists of office, processing areas and warehouse. The activities involved in
the processing activities are made inside the outlet.

1.3 Technology Development

The processing activities such as boiling, steaming and hot chamber treatment is done using machines which
are procured domestically. The machines are purchased from Sri Banashankari Engineering Works Hebri,
Karnataka.

1.4 Human Resource Management

There are 93 employees in the firm consisting of 88 female employees. The details of employees are given
below in the Table No.1.01. Men Workers are experts in operating boiling process and the Female workers
are experts in cutting and peeling process.

Department No. of Workers Salary/ Wages (Rs.)

Cutting 28 28 per kg
Peeling 50 26 per kg
Grading 12 26 per kg
Administration 1 11,000 per month
Driver/Helper 2 350 per day
Table No. 1.02.: No. of Workers in Each Department

1.5 Owners’ and Administrators’ Profile

The present owner Mr. Sheetal Kumar is the main decision maker of the Ashritha Cashew Industries. He
also takes the guidance of the administrator of the organization Mr. Sandeep in decision making process as
he pursues good leadership qualities in him. The qualification of the owner and the administrator of the
Ashritha Cashew Industries is shown in the Table

Name Designation Qualification Age

Mr. Sheetal Kumar Jain Owner B.com 30
Sandeep Administrator B.com 27
Table No. 1.03: Owners’ and Administrators’ Profile
1.6 Nature of the Ashritha Cashew Industries
The Ashritha Cashew Industries is a proprietorship firm. A sole proprietor has very less formalities to start a
business. It is not a legal entity. It refers to a single person who owns the business and is personally held
liable for its debts. The proprietor can run a business provided that his or her name is registered and has
secured some of the local licenses. The firm is governed by the Factories Act 1948. The industry license has
been issued by the District Industrial Centre (DIC), Udupi.

1.7 Rationale, Beliefs and Values for the Ashritha Cashew Industries
Ashritha Cashew Industries is dedicated in providing high values for their customers.

1.8 Organogram (Organization structure of Ashritha cashew industries)

Organogram is a diagram or chart that shows the structure of an organization and the relationships between
the different people, departments, and jobs at different levels within that organization. After the restructuring,
employees were encouraged to look at the new organogram to see where their job fitted in to the overall
structure. The Chart No.1.04 shows the Organogram of the Ashritha Cashew Industry.

Managing director

Administrator

Supervisor (Cutting) Supervisor (Peeling)

Men workers

Workers (Cutting) Workers (Peeling)

Chart: 1.04: Organization Structure of Ashritha Cashew Industries

Functional Areas

Customers’ Profile

Ashritha Cashew Industries concentrate on supplying their final products to the dealers spread across India.
Most of the dealers are from Udupi, Sullia, Bengaluru, Mumbai and Pune. Raghavendra Cashews Bengaluru
is one of the regular bulk buyers.
1.9 Time Line of Major Milestones
Year Major Milestones in action
2011 Expansion of Industry with new plant & machineries and building.
2011 Change in Leadership
2016 Remuneration payment to employees savings account
2017 Started new subsidiary unit Aradhya Cashew Industry
Table No. 1.03: Major Milestones of Ashritha Cashew Industries

1.10 Competitor Analysis

Competitor Analysis is a strategic technique used to evaluate the competitors in order to identify strength
and weakness. The major competitors for Ashritha Cashew Industries are Bola Surendra Kamath & Sons
cashew industry, Madhav Prakash cashew industry, Muddu Krishna Cashew Industries, Karkala and Gayathri
Cashew Industry. The details of the Competitor Analysis is shown in the table below (Table No.1.04).

Company Objective Strategy Resources and Assumptions

Capabilities
Bola Surendra To become the Innovative and State of the art Future plans to
Kamath & Sons frontrunners in the 11 hygienic 11 d processing and expand the market
Cashew Industry, cashew, coffee approach with packing facilities. on other segments.
Manjarpalke beans, edible oil and highest degree of Our workforce
dry fruits industry. Employee comprising nearly
Orientation that is 90% women is
backed by 100% provided with the
top management finest protective
commitment. A gear for safety.
strong corporate They ensure that
culture and ethics every bag of
is a strategic processed cashew
element for the is packed with its
survival and natural goodness.
success of a
business.
 Madhav Prakash To become the best Using top quality They are using the Introducing pre-
Cashew Industry, preferred supplier of machineries latest machinery pack sorting lines,
Karkala Cashews in entire maintaining good and the most color-sorters, size-
India quality of 12 hygienic sorters to provide
products. technology to best quality
produce a cashews in packs.
premium product. They also offer
We are producers fresh cashews,
with a social
consciousness and chosen by
are currently specialist eyes,
providing roasted to
livelihood to over perfection and
200 workers in an inert-packed for
area which lacks better shelf life.
industrialization.
Products are very
well suited for use
as high quality
snack-nuts and
food-ingredients.
Muddu Krishna
Cashew Industry
Pulkeri, Karkala
Gayathri Cashew To export the Strong reputation Strong market Exporting
Industry, Bola cashews to USA and for high quality chain, state-of-the- processed and
Netherland and and consistency in art processing suitably graded
provide employment deliverables to facility with fully kernels to global
for rural people demanding export automated consumption
markets machines for markets.
processing the
kernels.
Table No. 1.05.: Competitor Analysis
1.11 SWOT Analysis
A. Relative Strengths
 No rental agreement for the land since they have their own land.
 Well-equipped storage facilities and warehouse for continuous process.
 Experienced and skilled labor force.
 Employee satisfaction assured. The employees are provided with food and transport facilities.
 The firm has certified by Food Safety and Standard Authority of India (FSSAI) for its quality of their
cashews.
B. Weaknesses
 The industry is located in rural area, which is far from the highway leading to high transportation cost.
And it is difficult to pass heavy containers in the road.
 The industry is also undergoing some labor issues that arises need to outsource some of the activities.
Because firm located in less populated area. So, availability of workers is less.
 Lack of optimum utilization of machineries. In Ashrita cashew industry some machinery are not used for
processing.
C. Opportunities
 The Cashew Board of India and Cashew Export Promotion Council of India extends its full support to
small processing units of cashews for its growth. It will act as intermediary between importer of cashew
and exporter of kernels. They will solve any dispute between its importers and exporter.
 The huge demand in Domestic as well as international market. According to team Tridge data in 2016,
cashew nut demand increased by 6.1 percent. In 2021, it is expected that cashews take over 29 percent of
the global nut market.
 Enter into global market by expansion of business outside India 2022
 Expansion of market by adopting digital marketing services including websites and advertisements in
various Social Medias.
D. Threats
 Threat from big players and trend setters in the local market.
 Spoil of Raw Cashews in foreign market because of pests. And it leads to rise in the price for fine quality
of raw cashews. That will directly affect small industries like Ashrita.

1.12 Strategic Group

The organizations within an industry with similar strategic characters, following the similar strategies or
compete on a similar basis are called Strategic groups. There are two cashew factories in Shirlal Village
namely Bahubali Cashew Industries and Bhramari Cashew Industries with similar business characters and
strategies. At the distance of 6Kms there is Gajanana Cashews, Kervashe. And Nagaraj Cashew Industries,
Ajekar.

1.13 Strategic Group Mapping of Ashritha Cashew Industries

One of the best techniques used to reveal different competitive position of industry rival is strategic group
mapping. It includes a cluster of firm in an industry with similar competitive approaches and market
positions. Firms in the same strategic group have two or more competitive characteristics in common.

y
High
Bola Surendra
Kamath & Sons

Gayathri
Price Range Cashews

Ashritha
Low Cashew Madhav
Industries Prakash
Cashew
Muddu Krishna
Cashews
O x
Low Product Range High

Figure 1.5: Strategic Group Mapping of Cashew industries in Karkala

In the Figure 1.5, the OX axis represents Product range of the Ashritha Cashew Industries and its competitors
in OY axis it represents Price range of these cashew industries. In this graph the Ashritha Cashew Industries
and Muddu Krishna Cashew Industries comes under same group as they have less product range and low
price, but the Madhav Prakash Cashew Industries have wide range of products but the price range is same as
Muddu Krishna Cashew Industries and Ashritha Cashew Industries. The Gayathri Cashew Industries has less
number of Product range but their price range is high compared to Ashritha Cashew Industries, Muddu
Krishna Cashews and Madhav Prakash Cashews. The Bola Surendra Kamath & Sons have high product
range and high price compared all other Cashew Industries.
2. Context

2.1. Changes in the External Context

Prior to the introduction of GST, the tax rate which was applicable for Ashritha Cashew Industries was 5.5%
per kilogram of cashew and after the implementation of GST, it has been reduced to 5% per kilogram of
cashew. The implication of GST has a positive impact on Ashritha Cashew Industries.
Another external factor which affected the Ashritha Cashew Industries was the change in the imposition of
import duty. Till the financial year 2015-16, the firm did not have any obligation to pay the import duty but
after the Financial Year 2015-16, the import duty on cashew industries was set to 5%.

2.2. Changes in the Internal Context

In 2011, Ashritha Cashew Industries was expanded by 9000 sq.ft by Mr. Sheetal Kumar Jain with an
additional investment of Rs. 40 lakhs. The cashew industry was managed by Mr. Shanthi Raj Jain till 2010
and from the year 2011, it is being managed by his son Mr. Sheetal Kumar. The initial turnover of the firm
was Rs. 50 lakhs and in the year 2018, the turnover of the business has increased to Rs. 10 crores. From the
financial year 2016-17, Ashritha Cashew Industries started to pay the salary to its employees through Account
Payment from the Karnataka Bank of Shirlalu branch.

2.3. Product Life Cycle of Ashritha Cashew Industries

Sales P

o x

Time

Figure: 1.6. Product life cycle of Ashritha Cashew Industries

Product Life Cycle Theory suggests that product life cycle in all parts and labor associated with that product.
In this theory the products are classified into three different categories based on their stage in the Product life
cycle.

1. Introduction Stage

Under this stage the new product is introduced to the market. The Ashritha Cashew Industries was established
and introduced its product to market in 2006. The first-year turnover was ₹ 50 lakhs and the loss were ₹ 7
Lakhs. Till the year 2009 the company faced loss because of the lack of experience and knowledge in the
particular field of business.

2. Growth Stage

In this stage, the demand for cashew of the Ashritha Cashew Industries increases as result the sale of cashews
increases. The Industry will face the growth as it started to earn profit and the management authority gets
changed and the industry will be led by Mr. Sheetal Kumar and the business also gets expanded in the year
2011.

3. Maturity Stage

At this stage, the product is widely known and many customers own it. The Ashritha Cashew Industry had
many customers at this point and it also reached its highest profit of ₹ 49 lakhs in the year 2015. The industry
had its customers across various parts of India in Delhi, Bengaluru, Mumbai and Pune. Ragavendra Cashews
Bengaluru was one of the biggest customers of Ashritha Cashew Industry.

4. Decline Stage

In this stage, the product peaks in the maturity stage and then begins downward slides in the business. In the
year 2016 the Ashritha Cashew Industries profit got reduced to ₹ 39 lakhs because of increase in the price of
raw materials due to spoilage of raw cashews in the international market. And in coming days the external
factors like GST and Demonetization affected the industry. Because that in 2017 the profit reduced to ₹ 29
lakhs and in 2018 the profit reduced to ₹ 9 lakhs.

5. Issues
3.1 Problems Identified
 No direct marketing which results to low sales.
 No presence in digital marketing or various social media platform which leads in lack of brand awareness.
3.2 Opportunities to overcome the Challenges
6. Scope of the Project

The broad objectives for this study:

 Implementing the idea of digital marketing and enter global market

The scope is further divided into the following aspects:

1. To determine and suggest better strategies to increase the sales

1. Methodology
Methodology is the systematic and theoretical analysis of the methods applied to a field of study. It comprises
the theoretical analysis of the body of methods and principles associated with a branch of knowledge. In a
nutshell, ‘it is the specific procedures or techniques used to identify, select, process, and analyze information
about a topic’. Good methodology is helpful in figuring out the solutions for concerned problems.

1) 2) Lack of Brand
Low Sales Awareness

Creating marketing Enter into digital

and distribution marketing
team

Establishing a
packaging unit
Sell online Enter into new
Geographical area

Geographical Entering into retail

diversification by marketing by
entering into providing good profit
international market margin of the retailers