The Manufacturing Process At Almoiz Sugar Mills Marketing Essay

The Manufacturing Process At Almoiz Sugar pulverisation around Marketing EssayIntroductionAl-Moiz Sugar Mills hold in incorporated in 2004 as a limited attach to and certificate of commencement of business was granted in 2005. The Head Office of the corporation is located at Gulberg III Lahore whereas the pulverization whole is located on Chashma Road in the D.I.KHAN District Khyber Pakhtunkhwa. The companionship is recognized in the local and international market as a fine note discoverr of white subtile Sugar, Molasses and also holds a substantial share in the market. The companionship is also engaged in the export of white refined sweeten to Afghanistan and molasses to Euro countries and is contributing to the national economy in the form of foreign exchange. The company has strong corporate clients including Engro and Pepsi. This is the only Pakistani company with situate of the artwork technology and is one of the truly few nerds in Pakistan that is providing Wap da with electricity.The scrape move basic plant machinery was acquired and installed by The Heavy Mechanical Complex Taxila (A arouse Engineering attach to). different equipment much(prenominal) as turbines and gearboxes etc were imported from Germany and United Kingdom. Currently the plant is working at the crushing capacity of 1oooo MTCD and company is keen to ontogeny it to 12000 MTCD. The bread plodding has a state of the art technology which is the latest technology in Pakistan. The mill produces borecole by using both cole cane and lettuce beet as a desolate material.The company is committed to invest in IT with an eventual target of implementing ERP system.AL-MOIZ Sugar Mills Limited is one of the significant units of Almoiz group of industries. The company is principally engaged in the business of manufacture sales of white refined clams molasses (as a byproduct), quelling of sugarcane, Sugar beet raw sugar in to white refined sugar.Manufacturing ProcessThe manufacturing process at Almoiz Sugar Mills comprises of the following steps important CompetitorsProductsWhite refined sugarMajor business of the company is to produce white refined cane sugar of intermission standard and from the erased cane and one-third different components are achieved that are fibber, pith and moisture.MolassesThis is a by product and it is exchange to molasses contractors. One of the allied concerns, reliance commodities (pvt) limited is the main buyer of the molasses of al-moiz sugar mills limited and also the main buyer of molasses from whole the pastoral. Reliance commodities (pvt) limited is the main exporter of molasses in pakistan.BaggaseThis is also a bye product of the company. Baggase is apply as source of energy fuel for sugar effort for juice heating. And also utilise for making medium density fiber board (mdfb). Baggase is sold to the baggase contractors.MudMud is also the by-product of the company. It is sold to the mud contractors. This i s used in making chocolates and other products.ElectricityAl-moiz sugar mills also produce electricity on large quantity. The mill does not only fulfil its own energy requirements but is able to product surplus electricity which is supplies to wapda.Departments at the ciphery SiteDepartments at the Head OfficeThe strengths and Weaknesses of the company are as followsStrengthsAttractive recompense packages for employees on the siteTop management. The CEO of the company is a Stanford Graduate and is a man of great visionFriendly and cooperative working environmentFinancial resourcesAgricultural assistance to the local farmers convey of the art technologyCorporate Social ResponsibilityWeaknessesLack of skilled persons un inclined in the region where the mill is locatedShortage of residence available for employees on the siteThe site is prone to creation affected by the flood and has been affected by the floods that occurred in the pastUnavailability of modern facilities on the site Number of accidental reports are increasingTurnover rate is highWeak organizational policiesPoor GSM services on the site publications Re studySugar Industry in PakistanJCR-VIS Credit rate Company Limited, (2011) described the sugar diligence ranked the fifteenth largest globally and the second largest afterwards textile industry with 86 operational factories across the country with an installed capacity of 7.0 billion piles of sugar annually. It directly employed over 30,000 personnel.JCR-VIS Credit Rating Company Limited, (2010) described the industry as the driving engine of the rural economy after agrarian economy in many countries. They also say the sugar industrys cyclical nature as harvesting of sugar cane was dependent on weather as well as the availability of adequate water.Khushk, Memon Saeed described the Pakistan sugar industry as uncompetitive in nature due to low sugarcane yield per hectare and low content of sucrose ranging amid 7-9 percent however they also described the sugar industry from a growers perspective as competitive since the growers were of the opinion that the sugar crisis was artificially created by mill owners with the motive of keeping sugarcane prices below support prices and reaping abnormal realises.(Shaukat) described Pakistan as the fifth largest country in the world in monetary value of sports stadium under sugar cane cultivation, eleventh by production and sixtieth in yield. The author also described the sugar industry in Pakistan as the second largest agro based industry with 81 sugar mills with annual crushing capacity of over 6.1 million tons. The author also mentioned that the Sugar industry is generally located in the rural areas of Punjab and Sindh. A small percentage of total production is produced in Khyber Pakhtunkhwa. Previously, Punjab was partly dependent on supply of sugar from Sindh however after the establishment of some large scale units in Punjab the Province became self-sufficient in the com modity.(Rizvi) described Pakistans sugar industry as mostly owned by politicians. The author also mentions that majority of the sugar mills were setup with the help of Development Financial Institutions normally trapped with the working enceinte crisis. Consequently, some of the mills were closed and it was feared that some more(prenominal)(prenominal) sick units would close down. The author also mentions the collapse of sugar mill being a firing of national assets, reduction in the sales tax revenue and an increase in unemployment.Awareness of consumers towards shoped productsAaker (2000) was of the opinion that mail awareness was a unco durable and sustainable asset that provided a sense of familiarity in particular in low- involvement products. It also provided with a sense of presence, commitment and substance. It was very vital to recollect at the time of purchase. Besides the conventional media in that respect were other effective means to create awareness such as ev ent promotions, publicity and sampling.subgenus Chen (2001) stated that though place awareness was a necessary asset however it was not sufficient for building strong brand equity. In this view a brand could be well k forthwithn because it had inferior quality.Ramasamy et al. (2005) reported that, the buying behavior was vastly influenced by the awareness and attitude towards the product. Television commercials were verbalise to be the most important source of cultivation, followed by retail outlet displays. Consumers formed an opinion about a brand on the basis of conglomerate product features. A large number of respondents laid emphasis on quality and were of the opinion that price is an important factor while other respondents attached importance to image of manufacturer.Purchase Behavior of ConsumersResults of the study conducted by Joshi (1993) in Dharwad on nutrition purchasing habits and consumer awareness among rural and urban housewives indicated that majority of the u rban respondents purchased sugar (69.00%) on monthly basis. Rural respondents purchased sugar (71.00%) once in week. Both rural and urban respondents purchased groceries (99.00% each) from retail shops. Price, quality and weight of the products were the important factors considered by both rural and urban respondents while purchasing of food items.Nagaraja (2004) opined that, buying behaviour is very much influenced by experience of their own and of neighbour consumers and his family. above all, the quality of the product and its easy availability were the primary and the vital determinants of his buying behaviour. Consumers were influenced by touch and feel aspect of any promotional activity.Shivkumar (2004) showed that the consumer, irrespective of income groups, was in the main influenced by the opinions of their family members to purchase. Consumers were also influenced by the dealers recommendation, followed by advertisement. smear PreferenceKubendran and Vanniarajan (2005) d escribed the change in consumption pattern a result of change in food habits. If income and urbanization increase among consumers, the percentage of income spent on consumption increased. Branded products were preferred my urban consumers. The major factors influencing buying decisions were accessibility, quality, veritable(a) supply, door preservation and the mode of payment.Narang (2006) claimed that, a buyer does not stick to one brand when it comes to purchasing a food item. They should be able recall different brand names when they go for purchase. Repetitive advertising can be used to aid brand recall. The product should appeal to the consumer.Kim-Hyunah et al. (2005) concluded that brand preference and brand image had considerable positive effects on brand loyalty. Thus, the companies should strive to strengthence brand loyalty through building brand preference and brand image. Brand loyalty led to increased customer visits.Low and Lamb Jr. (2000) maintained that known bran ds tend to exhibit multi-dimensional brand associations, consistent with the idea that consumers have more developed memory structures for more familiar brands. Consumers might be willing to expend more energy in processing information regarding familiar brands compared to unfamiliar brands.Padmanabhan (1999) conducted study on brand loyalty, which revealed that the price of the preferred brand, efficiency of the preferred brand and influence of advertisement significantly influenced the brand loyalty.Factors Influencing Brand PreferenceIn a study conducted by Sarwade (2002) it was observed that the factor which influenced the purchasing decision as against the quality of the product was its price. Another wagering decision was that the company image and brand image were not totally considered by the households.Kubendran and Vanniarajan (2005) described the change in consumption pattern is due to changes in food habits. If income and urbanization increase among consumers, the perc entage of income spent on consumption increases. The urban consumers prefer mostly branded products compared to rural consumers. The most significant factors influencing buying decisions were acceptability, quality, regular supply, door delivery and the mode of payment.Vincent (2006) elicited that quality was an important factor that draws consumer towards branded products. Branded products were accepted as good quality products. People do not mind paying extra for branded products, as they get value for money. Media is a key constituent in promoting and influencing brand. outer environmental analysisSugar Industry in PakistanSugar is the important sector of Pakistans economy. Sugar industry plays a vital role for development of any countries. In Pakistan this industry play a significant role for frugal development.Its share in the large scale industry is 19.25% and in GDP is 1.98%. Sugar industry component to the government exchequer in federal excise duty 17.34%HistoryAt the t ime of partition in 1947 only seven sugar mills, existed in the territories of Pakistan, 5 in East Pakistan now known as Bangladesh and only 2 in West Pakistan now known as Pakistan. These two sugar mills namely Rahwali Sugar Mills and Frontier Sugar Mills established in 1936 and 1938 had a capacity of 5000 tonnes each of producing white sugar. During 1954-56 three more sugar mills were established with a capacity of 10000-15000 tonnes. By 1955-56, the sugar production capacity in Pakistan was around 45,000 tonnes. With an abrupt change in the economic activities and urbanization, the demand for white sugar was on the increase. This was attributed to the manufacture of soft drinks, confectioneries and bakery products etc. The number of sugar mills was also on the increase to hit the demand.Major Players in the Sugar IndustryThe major players in the sugar industry areCurrent ScenarioThe sugar industry is the second largest in the country after the textile industry. Currently there a re 83 sugar mills operating in Pakistan. In Pakistan normally gentle starts in November and ends in April. Out of the 83 sugar mills present in the country 76 Sugar Mills are operating having crushing capacity of 361,300 tons of cane per day (TCD). Seven Sugar mills extended capacity but they are unable to utilize. Based on 160 days season these sugar mills have a total crushing capacity of 58 million tons of sugarcane capable to produce 5 million tons of refined sugar and 3 million tons of molasses. Also the weekly sugar production is conveyed to the government via Pakistan Sugar Mills Association.The environmental analysis can be classified into two major references of environments that a firm has to face. They are micro and the macro (mega) environment. These are discussed in detail below.Macro milieuTechnological EnvironmentAlmoiz sugar mills placement as far as the technological environment is touch is pretty strong as of now. It uses the state of the art technology and ca n produce sugar using sugar beet as a raw material other than sugar cane. Other than sugar production the firm is also engaged in electricity production and is a supplier of electricity to wapda.Socio-cultural EnvironmentThe impact of societal changes, conduct styles and culture on Almoiz sugar mill is significant. There has been a shift in the life style, for example the type of stores customer prefer to shop from, the type of packaging they prefer sugar in. Consumers are becoming more health conscious they prefer to go for low calorie versions and are very concerned about hygienic conditions of the sugar and the shop that sugar is purchased from.Economic EnvironmentThe economic environment of Pakistan is not very stable and it continues to fluctuate every now and then. With the rise in interest rates and double digit inflation in the country, it has practically become im doable for the consumers to buy the alike number of products as they used to buy a few years ago, thus the pu rchasing power of the consumers has sharply gone down.Political EnvironmentThe political scenario of Pakistan is the biggest threat to a business. Changing tax rates, rebates, labor strikes and the instability in general makes it difficult for Almoiz sugar mill to coping up with these changes and thus it can hamper time to come operations and thus profitability of the entire business.Legal EnvironmentThe legal system of Pakistan is generally not very strong and in case of a problem, a company can involve itself into years long legal implications and trials.Micro EnvironmentSuppliersAlmoiz has divided its suppliers into two partitionsFactory Zone 73 % of sugar cane during the cane season is obtained from the factory zone i.e. 640,000 M .TonsOuter Zone 27% of sugar cane during the cane season is obtained from the outer zone i.e. 240,000 M. Tons. The outer zone comprises of areas including Indus road, Bypass, Bhakkar and Mianwali.Market DemandThere is a great deal of demand for sugar in households. Sugar is used in very house it may be directly consumed or may be indirectly consumed in other products such as beverages and Confectionery items such as sweets, lollipops, candy bars, chocolate, cotton candy and other sweet snack items.CompetitionAlmoiz sugar mill has many competitors with Chashma sugar mill and Layyah sugar mill being the its two immediate competitors. The competitors also offer the same range of products with white refined sugar being the core product and several other by product including molasses however there isnt any sugar mill that generates its own electricity as Almoiz sugar mill.Skill Level of WorkforceWorkforce and the good deal in the company is the biggest asset of an organization. In the case of Almoiz sugar mill the workforce plays a very important role in the organizations productivity. The location of the factory is in Dera Ismail Khan and due to the instability in the region finding skilled workforce in that area is very hard. Hen ce attractive salary packages are given to attract skilled workforce from other regions of the country to come and work for Almoiz sugar mill.Marketing IntermediariesMarketing intermediaries are involved especially when it comes to sugar distribution to retailers and wholesalers. A high level of intermediary involvement makes communication difficult and increases the dependence.Porters Five Forces Modelhttp//www.12manage.com/images/porterfiveforces.gifPorters five forces model basically gauges the posture of competition within its industry. The collective strength of all these forces combined determines the ultimate profit potential of the industry where profit potential is measured in legal injury of the long-run return on investment of capital.Threat of New EntrantsIf someone from a political or influential background wants to set up a sugar mill they have the financial resources to obtain the machinery and contacts needed to obtain a license to start up a sugar mill. So ledger entry into the sugar industry is not hard. There are 83 sugar mills in Pakistan out of which 76 Sugar Mills are operating. negotiate Power of SuppliersAlmoiz has a diverse range of suppliers as mentioned earlier. It has separate categories of suppliers based on distance from the factory site. Thus giving the suppliers a low dicker power.Bargaining Power of CustomersCustomers have the option of switching to other sugar producers since barely one or two sugar mills have through something to distinguish themselves from other competitors in terms if having a brand name or packaging. People dont even take into consideration the brand or sugar mill name while purchasing sugar they just purchase whatever is easily available.Threat of Substitute ProductsAlmoiz has many direct competitors. Currently there are 83 sugar mills in the country out of which 76 sugar mills are operating. The competitors also offer the exact same range of products with white refined sugar being the core product thu s making the threat of substitute products high. Also other substitute products such as canderal are available for consumers who want to go for a sweetener with less sugar contentPorters Generic StrategiesAccording to this strategy, in order to cope up with competition, firms adopt three generic strategic approaches to gain competitive advantage.Overall cost leadership entails the firm to make all or possible attempts to achieve the lowest costs in production and marketing.Differentiation approach lays emphasis on achieving class leadership by providing unique characteristics to the product/service. charge strategy attempts to serve a narrow strategic target effectively and efficiently.Thus, on the basis of these three strategies, Almoiz sugar mill follows the Overall Cost lead Strategy. By being the low cost leader, it increases its efficiency at all levels thus gaining a significant market share. An illustration is shown belowExternal Factor Analysis SummaryOpportunitiesEntering International MarketsExpanding corporate clientsTechnologyGovernment and industrial projects.Minimization of cost by properly utilizing the by-products.Organic sugarThreatsseasonal worker Variation in sugar canePolitical InstabilityNatural CalamitiesThe region in which the mill is located is very risk of exposurey in terms of stabilityCompetitors in the same region can attract the skilled resource of the company by offering them a better packageExternal FactorWeightRatingWeighted ScoreOpportunitiesEntering International Markets0.0530.15Expanding corporate clients0.1540.6Technology0.0340.12Government and industrial projects0.1340.52utilizing by-products0.0730.21Organic Sugar0.1430.42ThreatsSeasonal Variation in sugar cane0.1440.56Political Instability0.0930.27Natural Calamities0.0730.21location of factory0.1320.26Total13.32Competitor AnalysisThe following are the main competitors of Almoiz Sugar millsLayyah Sugar Mills LayyahChashma sugar Mills D. I. KhanChashma Sugar Mill (D.I.Khan )The mill was set up by the sponsors of the Premier Group in 1991. Technical and other assistance is provided to the sugarcane growers, in addition to the development of 150,000 acres of land for the cane supply. The mill production stands at 18,000 tons per day, the largest in Pakistan.In the financial year 2010, the Company was declared a subsidiary of The Premier Sugar Mills Distillery Company Limited, under the directions of the Securities and Exchange Commission of Pakistan.. The factory is located in Dera Ismail Khan, Khyber Pakhtunkhwa. The company has the following strategic goalsProviding Customer Satisfaction by serving with superior quality production of white sugar at lowest costEnsuring pledge and Accountability by creating an environment of security and accountability for employees, production facilities and productsExpanding Customer Base by exploring new national and international markets and undertaking product look and development in sugar industryEnsuring Effic ient Resource Management by managing human, financial, technical and infrastructural resources so as to support all our strategic goals and to chequer highest possible value addition to stakeholders.ProductsWhite Crystaline SugarWhite Crystalline SugarMolassesMolassesBagasseBagasseLayyah Sugar Mills (Layyah)Layyah Sugar Mills is a project of The Thal Industries muckle Limited having its registered office at 23 Pir Khurshid Colony, Multan. The company was incorporated on September 07, 1953 under the companies Act 1913 (Now Companies Ordinance 1984) as Public Limited company limited by shares. Its shares are quoted on Karachi and Lahore stock exchanges in Pakistan. The company is engaged in production and sale of white refined sugar.Layyah Sugar Mills was set up by the Thal Development Authority (Defunct) with a capacity of 1200 TCD in 1954, which was enhanced, to 2000 TCD in 1979-80 and further to 2700 TCD in 1990-91. It was the first sugar mills installed and fit out in Punjab af ter existence of Pakistan. After privatization the new management, by taking some drastic measures, enhanced the crushing capacity of sugar mills from 2700 TCD to 3500 TCD in year 2001.In 2002 Company undertook BMR Expansion to add new mills tandem of 4000 Tons Crushing/Day .In 2002-2003 Undertook second human body ofBMR Expansion to increase in crushing capacity and synchronize the process house with the mills house to 6700 Tons Crushed/Day (TCD),successfullycompleted during the crushing season 2002-2003. Due to whichcapacity of sugar mills has been increased from 6,700 TCD to 9,300 TCD.Financial AnalysisLiquidity RatiosYear201120102009AlmoizChashmaLayyahAlmoizChashmaLayyahAlmoizChashmaCurrent Ratio0.960.961.120.760.871.081.000.72 bustling Ratio0.350.220.790.360.520.580.550.22Inventory to nett working Capital-13.50-19.632.81-1.62-2.696.08213.06-1.80Thecurrent ratiois afinancial ratiothat measures whether or not a firm has full resources to pay its debts over the next 12 months . It compares a firmscurrent assetsto its current liabilities. The current ratio is an indication of a firmsmarket liquidityand ability to fill up creditors demands. Acceptable current ratios vary from industry to industry and are generally between 1.5 and 3 for healthy businesses. If a companys current ratio is in this range, then it generally indicates good short-run financial strength. Almoiz has a current ratio of less than 1 for the year 2011 as well as the year 2010 where as in 2009 the current assets of Almoiz are slightly more than its current liabilities therefore the ratio is above 1 in 2009. Out of the three sugar mills the value of current ratio for Layyah sugar mill indicates good financial strength as compared to Chashma and Almoiz sugar mills.Quick Ratio is an indicator of a companys short-term liquidity.The quick ratiomeasuresa companysability to meetits short-term obligations withits most liquid assets. A high quick ratioindicates abetter position of thecompany. In the years 2010 and 2011 Layyah sugar mills has a higher quick ratio where as in 2009 Almoiz has a higher quick ratio.Inventory to Net Working Capital measuresa firmscapabilityto finance itsinventoriesfrom its available cash. Layyah sugar mill has a better capability to finance its inventories from available cash as compared to Almoiz and Chashma sugar mills.Leverage Ratios201120102009LeverageAlmoizChashmaLayyahAlmoizChashmaLayyahAlmoizChashmaDebt to assets0.700.710.810.650.680.800.650.82Debt to equity2.282.434.221.892.123.941.864.48Long Term Debt to equity1.340.831.471.381.351.961.452.30 withdraw1.081.371.650.122.161.820.020.68Debt to Assets is A metric used to measure a companys financial risk by determining how much of the companys assets have been financed by debt. Layyah and Chashma sugar mill have a higher debt to assets ratio as compared to Almoiz sugar mill.Debt to Equity is a measure of a companys financial leverage compute by dividingits total liabilitiesbystockholders equity. It indicates what proportion of equity and debt the company is using to finance its assets. Almoiz sugar mill has a lesser debt to equity ratio as compared to Layyah and Chashma sugar mill.Long term debt to equity is a way to determine a companysleverage. The ratio is calculated by taking the companyslong-term debt and dividing it by stockholders equity. The greater a companys leverage, the higher the ratio. Generally, companies with higher ratios are thought to be more riskybecause they have more liabilities and lessequity. Overall for all the three years Layyah sugar mill has a higher debt to equity ratio as compared to Almoiz and Chasma sugar mill.Times touch on Earned (TIE) is a metric used to measure a companys ability to meet its debt obligations. It is calculated by taking a companys earnings before interest and taxes (EBIT) and dividing it by the total interest payable on bonds and other contractual debt. It is usually quoted as a ratio and indicates how many times a company can cover its interest charges on a pretax basis. Failing to meet these obligations could force a company into bankruptcy.In 2009 Almoiz has a very less TIE ratio Chashma and Layyah have higher TIE ratio than Almoiz sugar mill.Profitability RatiosProfitability201120102009AlmoizChashmaLayyahAlmoizChashmaLayyahAlmoizChashmaGPM0.120.120.130.030.120.110.050.09NPM0.0080.020.025-0.0220.050.018-0.217-0.05OPM0.1060.100.110.0130.100.080.0050.08ROA0.0060.0250.046-0.0150.1040.040-0.072-0.062EPS0.164.912.23-0.3510.787.9-7.59Gross Profit shore is a financial metric used to assessa firms financial health by revealing theproportion of money left over from revenues after accounting for the cost of goods sold.Gross profit margin serves as thesource for paying additional expenses and future savings. The GPM for Almoiz sugar mill has increased from 2009 to 2011 and in 2011 it is almost the same as Layyah and Chashma sugar mill however in between it dropped down to 0.03 in 2010.Net Profit Ma rgin is very useful when comparingcompanies in similar industries. A higher profit margin indicates a more profitable company thathas better control overits costs compared toits competitors. Almoiz sugar mill has a negative NPM in 2010 and 2009 since it faced a net loss and in 2011 though it didnt face a loss but the NPM is still less than that of its competitors.Operating Profit Margin is a measurement of what proportion of a companys revenue is left over after paying for variable costs of production such as wages, raw materials, etc. A healthy operating margin is required for a company to be able to pay for its