1.

Quantitative and Qualitative Analysis of Noodle Market in India

The instant Noodle Market in India has been over 35 years old since the launch of Maggi by Nestle in
1983. “2 minute noodles” concept positioned by Maggi as instant snacks option has found quick
acceptance by children, adults and even by older people.

Following are the factors of qualitative and quantitative analysis:

 Customers Base by:

Region: Urban, Semi-Urban, Rural
Occupation: Housewives, Working Professional, Self-Employed, College Students
Sex: Unisex
Family Life Cycle: Young, Single, Married with children, Older People

 Competition and Market Share:

The prominent players in the Indian instant noodles market include Maggi, Yippee, Wai-Wai,
Top Ramen, Patanjali and others. In the past few years, we have seen consumer goods giants
Glaxo-Smithkline (Horlicks Foodles), and Hindustan Unilever Limited (Knorr Soupy Noodles)
foray into this lucrative market with differentiated product offerings. These brands have
brought a competitive intensity to the space. This market now also comprises private labels
like Feasters (AV Birla Retail), Tasty Treat (Future Group), and Smart Choice (Spencers).

 Regulation:
Noodles is a food product item. And the business demands specific licensing before
commencing the manufacturing operation. Here we put in some of the basic requirements:
• First of all, register your business with ROC. Choose your organisation form carefully.
• Obtain Trade License from the local authority.
• In addition, you must apply for Udyog Aadhaar MSME online registration.
• Apply for VAT Registration.
• Additionally, you will need to apply for FSSAI license.
• Furthermore, obtain BIS Certification. It is mandatory.
• Compliance with PFA Act and GMP are mandatory.
• Register your brand name with Trademark
• Furthermore, you can also go for ISO 9001 certification to generate the trust of your
consumers.
• This type of manufacturing operation doesn’t demand Pollution Control NOC, However,
one can check with your local office. Additionally, one must maintain the good height of
the roof of your workshop. And arrange exhaust fans to maintain a comfortable
environment inside the factory premises.

2. Status and projections for the market and players

The Indian instant noodles market was valued at USD 1438.04 million in 2017 is expected to
register a CAGR of 5.6 % during the forecast period (2018-2023). This growth can be attributed
to the increasing youth population, increasing disposable income, higher brand consciousness,
and changing consumer preferences.
The product has the good potential market in the both urban and rural areas of our country. And the
popularity in increasing rapidly. Due to fast cooking properties, instant noodles today have a hugely
important position in almost every Indian kitchen. Some of the most popular brands are Maggi,
Yippee, Top Ramen, Knorr, and Patanjali. Additionally, some of the major reasons for its popularity
are

 Increasing population of the country.

 Rapid industrialisation in the country.
 Increasing purchasing capacity of the people.
 The durability of the product.
 The changing eating habit of the population.

3. Problem statement solution – Is there a chance for another player with a strong brand
recall like Kellogg’s to capture the noodle market and become the number 1 player in 10
years in the saturated Indian scenario right now?

India is an exciting instant noodles market. We do see a chance for Kellogg’s noodles becoming
the market leader in the next years. As Kellogg’s noodles will feature superior quality, health
benefits and competitive pricing. Kellogg’s will be offering Organic Noodles in the Indian market
as the public are becoming more and more health conscious.

The benefits of Organic Food are:

 Organic produce contains fewer pesticides

 Organic food is often fresher 
 Organic farming is better for the environment.

Total Expenditure Plan, Capital and Operating Spent

BREAKEVEN ANALYSIS OF A 100 TONNE CAPACITY PLANT OF CUP O MAGGI NOODLES

In this analysis we will look for the different costs involved in the production of Maggi cup noodles
and then comparing it with the total sales to find out the minimum efficiency at which the plant
should operate in order to have a neither loss nor profit relationship. This is done by finding the
Break-Even point of operation. If the plant operates at the efficiency higher than that indicated by
the Break-Even point than the plant operates at a profit and vice-versa.

BREAK-EVEN ANALYSIS
The cost involved in the production can be divided into two categories viz. fixed cost and variable
cost. They can be defined as

Fixed cost: This is the cost which is independent of the quantity of the product produced e.g. Land
&Building cost, plant & Machinery cost etc.
Variable Cost: this is the cost that varies with per unit of product produced e.g. Raw material cost,
packaging cost etc. The break up of the various costs is shown below:

1. Fixed Cost

A. Land and Building

A plot of land of about 200 sq.mtrs. with built-up area of 100 sq.mtrs. is sufficient. Land would cost
around Rs.60,000/- whereas cost of construction could be Rs.2.50 lacs. Main production area would
occupy around 50 sq.mtrs. whereas packing room and storage area would occupy balance area.
 Particulars Area (sq. mtrs.) Cost (Rs.)
Land 200 60,000
Building 100 2,50,000

B. Plant and Machinery

Marketing is the key success determinant and the production capacity has to be finalized
accordingly. Keeping in mind the financial viability, the rated production capacity is assumed to be
100 tonnes per year with 300 working days and 2 shifts per day. This would necessitate installation
of following machines:

Item Qty. Price (Rs)

Extrusion Machine 1 1,00,000
Pre-conditioner 1 80,000
Mixer 1 1,00,000
Pouch Packing and Sealing 1 1,00,000
Machine
Weighing Scale 1 10,000
TOTAL 3,90,000

C. Miscellaneous Assets

Other assets like furniture and fixtures, storage facilities, working tables, SS utensils, etc. would call
for expenditure of Rs. 50,000/-.

D. Utilities

Power requirement shall be 20 HP whereas per day water requirement would be 500-550 liters.
Annual expenditure at full capacity utilization will be Rs. 1,10,000/-.

2. Variable costs

A. MANPOWER REQUIREMENTS

Particulars. Nos. Monthly Salary (Rs) Total Monthly Salary (Rs)

Machine Operators 2 4000 8000
Skilled Workers for 2 3000 6000
Packing
Semi-skilled Workers 2 2000 4000
Helpers 2 1000 2000
Salesman 2 2000 4000
Total 24000

B. Raw and Packing Materials

Noodles are made with the help of many ingredients with major input being wheat flour. Other
materials required are corn and rice flour, protein isolates, salt, spices, edible oil, preservatives etc.
All of them are easily available. Packing materials are equally important. Colourful and attractive
pouches shall have to be printed and outer packing will be corrugated boxes.
The cost can be shown as
Product Quantity (Tonnes) Price/Ton (₹) Value
Raw material 100 70000 7000000
Packing Material 100 @20000/ton of 2000000
Finished Goods
Total 9000000
C. Selling Expenses

FINAL TOTAL COST ANALYSIS

FIXED COST In ₹
Land and Building 310000
Plant and machinery 390000
Miscellaneous Assets 50000
Utilities 110000
TOTAL FIXED COST 860000
VARIABLE COST Per tonne of production
Manpower requirements 24000
Raw and Packing materials 90000
Selling Expenses @20% of total sales

ANALYTICAL BREAK-EVEN ANALYSIS

Let total production be X tones. Since the 80 gm pack of Kellogg’s Atta Noodles is available
for Rs.20 i.e. Rs.250/kg so let’s say that Kellogg’s Atta Noodles is supplied to the market
agent at Rs. 180/kg.

So for no profit no loss equation is

860000+ (1,14,000*X) + (30/100)*X*1000*180= (180*X*1000)

860000 = (180000-114000-54000)*X

X = 71.66 tonnes
5. Action plan to enter market

Distribution and activation:

Tolaram group will bring its noodles product under the brand name of Kellogg's as Kellogg's
already has a brand presence in India. Kellogg's Noodles will use the existing supply chain
network of Kellogg's. There will be 4 products launched in India.
1. Kellogg's Masala noodles
2. Kellogg's Atta noodles
3. Kellogg's Anda noodles
4. Kellogg's Chicken noodles

All these products will be launched with a base size of 90 grams and will also be available in the
pack of 4 and pack of 6. Pricing of these products is comparable to existing competitors in India.

Marketing Strategy:

Target Audience:
Target group Range - 12 to 35 years
Geographic Area - All urban cities in India and slowly expanding to rural areas.

1. Online Presence: Build a dynamic online presence through social media marketing and
influencer marketing. Introduction of an exclusive brand store on Amazon or flipkart.
Kellogg's Noodles will be available for online orders on online grocery selling services like
Amazon Pantry, Big Basket etc.
2. Offline Presence: Commercials of Kellogg's Noodles will be shown on TV in day time as well
as Prime time to create awareness of the product which will boost the sales of Kellogg's
Noodles.
 3. Holdings on Retail shops: Holding on retail shop also play an important role in creating
awareness of product in the market.
4. Google Ads: Google ads will be shown when people are surfing on internet specially
purchasing stuffs online.
5. Free Samples: Free samples will be provided as part of brand Awareness campaign.

Sizing & Pricing:

Product Quantity Price (₹)
80 20
Kellogg’s Atta Noodles 320 (Pack of 4) 80
480 (Pack of 6) 115
80 20
Kellogg’s Masala Noodles 320 (Pack of 4) 80
480 (Pack of 6) 115
80 23
Kellogg’s Anda Noodles 320 (Pack of 4) 90
480 (Pack of 6) 130
80 25
Kellogg’s Chicken Noodles 320 (Pack of 4) 100
480 (Pack of 6) 135
1. Procurement of Raw Materials
The basic ingredients of noodles is Wheat, which will be grown organically in Madhya
Pradhesh, India. Other ingredients like Oil, Spices such as Chilly Powder, Turmeric etc will
also be procured from local vendors in India only. Since India is the home for spices.
We will also get Vegetable Oil from local vendors.

6. Potential Future Challenges

India in among the top consumers in noodles market and is the most attractive instant
noodles market in the world. Noodles market has matured in india but still limited to few
players. Apart from Maggi, major brands which has successfully gained a market share
recently are Top Ramen, Yippee, Ching's Secret, Patanjali Aata noodles, Knorr Soupy,
Noodles and Wai-Wai. With the constant changing world, there could be a lot of future
challenges which every manufacturer could face. These challenges could be following:

1. Entry of a new competitor: Indian government is taking steps to improve the ease of doing
business which would make the entry of any firm in the market easy. There is always a
possibility of emerging of a new competitor which would disrupt the market share. Entry of
a new competitor will increase the competition and may lead in the reduction of profit
margins and decline in sales.
2. Changes in food norms by the government: FSSAI (Food safety and standards authority of
India) can change the norms in food safety and standard regulations, which every company
has to follow if they want to do business in India. We have seen the case of Maggi, where
Maggi had to recall its product from the market due to high lead content than the standards.
3. Change in taste and preferences of consumers: With the increase in the health
consciousness of people in India, there is a possibility of decrease in sales and profit margins
as these products are not considered very healthy.
7. Financial Projections

Kellogg’s Noodles has projected to achieve its Break even point in 2 years. In 1 year, the
company has planned to achieve 4% market share. Further, in the next 5 years, the company
has planned to achieve 22 to 24%. In 10 years, we expect to achieve 30 to 40% market share
thus becoming the market leader.