Submitted By: ABHISHEK SRIVASTAVA BEENA VENUGOPALAN JOTINDER SINGH NISHANT DHORELIYA RADHA A S OUBHAGYA RATH YOGESHWAR DUTT

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EXECUTIVE SUMMARY Nestl India is a subsidiary of Nestl S.A. of Switzerland. With six factories and a large number of co-packers, Nestl India is a vibrant Company that provides consu mers in India with products of global standards and is committed to long-term su stainable growth and shareholder satisfaction. The company is known for its bran ds in the Milk Products & Nutrition, Prepared Dishes & Cooking Aids, and Chocola tes & Confectionery segments. Nestl leads the value sales of noodles in India wit h a market share of 79.3%. A testament to Nestl's domination of the sales of plai n noodles is the fact that for its instant noodles brand Maggi, among all its gl obal offices, India accounts for the highest level of volume sales for the compa ny. This marketing plan analyses the current marketing mix of Maggi Noodles, stu dies the popularity of the two new health variants Vegetable Atta and Dal Atta N oodles and makes suggestions with regard to introducing a new brand Cup O Maggi in the cup noodles segment. Various tools like surveys and secondary sources of in formation have been utilized for the purpose of this analysis.

TABLE OF CONTENTS 2. SITUATION ANALYSIS........................................................... .......................................... 5 2.1 Market Summary................. ................................................................................ ........... 5 2.1.1 TARGET MARKETS ............................................. .............................................. 5 2.1.2 MARKET DEMOGRAPHICS ..... ........................................................................ 5 2.1.3 MARKET NEEDS .................................................................. ............................... 6 2.1.4 MARKET TRENDS .......................... .................................................................... 6 2.1.5 MAR KET GROWTH...................................................................... ...................... 8 2.2 SWOT............................................... ............................................................................. 10 2.3 COMPETITION................................................................ ........................................... 11 2.3.1 TOP RAMEN ................. ................................................................................ ...... 11 2.3.2 ITC SUNFEAST PASTA ............................................. ....................................... 11 2.4 CURRENT MAGGI NOODLES BRAND...... ............................................................. 12 IDENTITY/KAPFER ERS PRISM........................................................................ ........... 12 2.5 PRODUCT OFFERING ............................................ .................................................. 13 2.6 PRODUCT DISTRIBUTION . ................................................................................ ..... 13 2.7 KEYS TO SUCCESS.................................................... ................................................ 14 2.7 CRITICAL ISSUES AND CHAL LENGES ................................................................ 14 3. MA RKETING STRATEGY................................................................ ............................. 15 3.1 MISSION.................................... ................................................................................ .. 15 3.2 MARKETING OBJECTIVES ................................................. .................................... 15 3.3 INDUSTRY SEGMENTATION .............. .................................................................... 16 3.4 TARG ET SEGMENTS FOR MAGGI NOODLES .................................................. ... 22 3.4.1 MAGGI 2 MINUTE NOODLES ............................................ ............................ 22 3.4.2 MAGGI CUP O NOODLES ...................... ......................................................... 23 3.5 POSITIONING OF MAGGI .......................................................................... ............. 23 3.5.1 MAGGI 2 MINUTE NOODLES .................................. ...................................... 23 3.5.2 CUP O MAGGI..................... ............................................................................... 23 4. MARKETING MIX ............................................................ .............................................. 24 4.1 CONSUMER SOLUTION ........ ................................................................................ ... 24 4.1.1 IMPROVING THE DAL ATTA VARIANT..................................... ................ 24 4.1.2 NEW PRODUCT: THE CUP-O-MAGGI ......................... ................................ 24 4.1.3 PACKAGING ............................ .......................................................................... 24 4. 2 CONSUMER COST ................................................................ ..................................... 25 4.3 CONVENIENCE........................ ................................................................................ .. 26 4.4 COMMUNICATION......................................................... ........................................... 27 4.5 MARKETING RESEARCH .......... .............................................................................. 2 8 5. FINANCIALS ................................................................ .................................................... 31 5.1 BREAKEVEN ANALYSIS O F A 100 TONNE CAPACITY PLANT OF CUP O MAGGI NOODLES ............................ ............................................................................... 31 5.1.1 BREAK-EVEN ANALYSIS.................................................... ............................ 31 FINAL TOTAL COST ANALYSIS ...................... ...................................................... 33 5.1.2 ANALYTICAL BREAK

-EVEN ANALYSIS.................................................... 33 5.1.3 GRAP HICAL BREAK-EVEN ANALYSIS ...................................................... 34 5.2 SALES FORECAST.......................................................... ........................................... 34 APPENDIX A: INDIAN INSTANT NOODLE S MARKET GROWTH GRAPHS ........ 36 APPENDIX B: NESTLE MAGGI NOODLES FORECAST RET AIL SALES .............. 37

1. INTRODUCTION Ever since its launch in India in 1983, this brand has become synonymous with no odles. The bright red and yellow colours of the packet with the brilliant blue 2minute Noodles printed on it has found a place on every kitchen. Over the years, Maggi has grown as a brand and positioned itself as a Fast to cook! Good to Eat! f ood product. The history of this brand traces back to the 19th century when indu strial revolution in Switzerland created factory jobs for women, who were theref ore left with very little time to prepare meals. Due to this growing problem Swi ss Public Welfare Society asked a miller named Julius Maggi to create a vegetabl e food product that would be quick to prepare and easy to digest. Julius, the so n of an Italian immigrant came up with a formula to bring added taste to meals i n 1863. Soon after he was commissioned by the Swiss Public Welfare Society, he c ame up with two instant pea soups & a bean soup- the first launch of Maggi brand of instant foods in 1882-83.Towards the end of the century, Maggi company was p roducing not just powdered soups, but bouillon cubes, sauces and other flavourin gs. However in India (the largest consumer of Maggi noodles in the world!) it wa s launched in 1980 by Nestle group of companies. Maggie had merged with Nestle f amily in 1947. When launched it had to face a stiff competition from the ready t o eat snack segments like biscuits, wafers etc. Also it had other competitor the so called home made snacks which are till today considered healthy and hygienic . Hence to capture the market it was positioned as a hygienic home made snack, a smart move. But still this didnt work, as it was targeted towards the wrong targ et group, the working women. After conducting an extensive research, the firm fo und that the children were the biggest consumers of Maggi noodles. Quickly a str ategy was developed to capture the kids segment with various tools of sales prom otion like pencils, fun books, Maggi clubs which worked wonders for it. No doubt the ads of Maggi have shown a hungry kid saying Mummy bhookh lagi hai to which hi s mom replies Bas do minute! and soon he is happily eating Maggie noodles. Further the MAGGI 2-MINUTE Noodles has been renovated to provide 20% of the RDA 1 of Ca lcium and Protein for the core target group building on the nutrition propositio n Taste bhi health bhi. The company could have easily positioned the product as a meal, but did not, as a study had shown that Indian mentality did not accept any thing other than rice or roti as meal. They made it a easy to cook snack that co uld be prepared in just two minutes. The formula clicked well and Maggi became a brand name. Recommended Dietary Allowances for children of 79 years as per Nutritive Value of Indian Foods, published by Indian Council of Medical Research, Reprinted 04. 1

2. SITUATION ANALYSIS Nestls Maggie noodles is the leading brand in the instant noodles segment in India , enjoying a market share of 79.3%. The brand has grown to an estimated Rs 200 c rore & contributes to around 10% of Nestle Indias top line. Being the pioneer in the noodles market has given it a first movers advantage over other brands. Maggi has regularly come up with new flavours and has recently launched two variantsVegetable Atta and Dal Atta noodles, catering to the increasing demand for heal thy snacks. 2.1 Market Summary 2.1.1 TARGET MARKETS Primary target: Children (<16) Nestle plans to widen its ta rget audience by launching new variants Vegetable and Dal atta noodles for healt h conscious people. 2.1.2 MARKET DEMOGRAPHICS Demographics: Region: urban, semiurban, rural (recent) Occupation: Housewives, working professionals, self-employ ed Sex : Unisex Income: 1,20,000 p.a. upwards Social class: Middle and upwards F amily life cycle: Young, single, married with children. Behavioural: Occasions: Regular, Everyday user-urban, rural-depends on the tempo ral aspects of the consumers life(varied usage in terms of time of time of day, w eek, month, year) User status: first time user-rural, potential users-semi-urban , heavy users-urban Usage rate: Heavy user-urban, light-rural, medium-semi-urban Loyalty status: hard core and shifting loyals Buyer-Readiness Stage: rural-some are aware, semi-urban:some intend to buy(aware, informed),urban: informed(some desire,some intend to buy) Attitude toward product: Enthusiastic, positive Psych ographics: Lifestyle: Hard pressed for time

2.1.3 MARKET NEEDS The urban Indian is used to having his dinner late from aroun d 8:30 pm to as late as 11 pm. Hence a convenient snack between lunch and dinner is an often exercised option. In rural areas, smaller priced packs stimulates d emand. Maggi is a fun and convenience brand which sits strongly in its position as a "good to eat, fast to cook" anytime snack and is popular across different a ge groups. Opportunities in practically all consumption categories arise in term s of "reach" and "medium of consumption". Hence the onus is on the company to ma ke it easily available and affordable and in different sizes, catering to differ ent categories of users like the new Maggi chota pack conveniently priced at Rs 5 for 50gms. The Indian palate is not too adventurous in terms of trying out new flavours.In fact today, Maggi have settled at standard flavours such as curry, masala, tomato and chicken and not much experimentation is necessarily required in the noodles market. People prefer to have it easily available and affordable. 2.1.4 MARKET TRENDS The FMCG market is set to treble from US$ 11.6 billion in 20 03 to US$ 33.4 billion in 2015. Penetration level is only 30% for Maggi Noodles in urban areas as well as per capita consumption for the Instant noodles and pas ta segment is low indicating the untapped market potential. Urban 53 69 28 3,758 1 Rural 135 153 72 62,700 3.3 Population 2005-06 (mn household) Population 2009-10 (mn household) % Distributi on (2005-06) Markets (Towns) Universe of Outlets (mn) Urban profile Source:Statistical Outline of India (2005-2006) Burgeoning Indian population, particularly the middle class segments and the rur al segments, presents an opportunity to makers of branded products to convert co nsumers to branded products. Growth is also likely to come from consumer 'upgrad ing' in the matured product categories. At 4% constant value CAGR into the forec ast period, value growth for packaged food is predicted to remain healthy. Growt h will continue to be fuelled by convenience products such as noodles and ready meals with 200 million people expected to shift to processed and packaged food b y 2010 Manufacturers are introducing low-priced goods in smaller pack sizes. As a result, the rural marketing efforts have pushed the demand for sachets in many consumer goods

markets. Priced at Rs0.50-1.00, sachets have proved to be extremely popular in s maller towns and villages, where households cannot afford to buy larger packs du e to financial constraints. Consumption pie Source: KSA Technopak Consumer Outlook 2004. An average Indian spends around 40 per cent of his income on grocery products. 1 996 846 480 26 Consumer Profile Source: Statistical Outline of India (2005-2006) Population (millions) Population <25 years of age Urbanisation % 2001 1,012 546 28 2006 1,087 565 31 Rapid urbanisation, increased literacy and rising per capita income, have all ca used rapid growth and change in demand patterns, leading to an explosion of new opportunities. Around 45 per cent of the population in India is below 20 years o f age and the young population is set to rise further. While instant noodles are still not generally consumed as main meals in India, more individuals are bucki ng this trend and accepting them as an option. This is, however, mostly restrict ed to busy working adults who live independently or only with their spouse, away from their parents, and who have little time to prepare their own meals at home . Given the requirements for convenience and saving time, these individuals reso rt to easy-to-prepare meals, such as instant noodles. Increased health conscious ness and abundant production of quality soyabean also indicates a growing demand for soya food segment.

1200 1000 800 600 400 200 0 2003 2015 Incom e (US $/annum ) Rise in disposable income (US$/annum) Source:Euro monitor, BRICs Report (Goldman Sachs) The BRICs report indicates that India's per capita disposable income, currently at US$ 556 per annum, will rise to US$ 1150 by 2015 -another demand driver. Spur t in the industrial and services sector growth is also likely to boost the urban consumption demand. Only about 8-10 per cent of output is processed and consume d in packaged form, thus highlighting the huge potential for expansion of this i ndustry. Currently, the semi processed and ready to eat packaged food segment ha s a size of over US$ 70 billion and is growing at 15 per cent per annum. FICCI F ederation of Indian Chambers of Commerce and Industry has predicted an overall g rowth of culinary products/snack food (10%) 2.1.5 MARKET GROWTH General growth o f the Indian Noodles sector FY 2005-2006 FICCI states that the culinary products and snack category, under which Maggi noodles is classified, has had a robust g rowth of 8%. Growing by a more than robust 21% in current value and 16% in volum e, growth in noodles will be among the fastest in the various packaged food prod ucts in India. (Refer Appendix A: Indian Instant Noodle Market Growth Graphs) Cu rrent value sales of noodles in stood at slightly over Rs 9 billion, with pouch instant noodles accounting for more than 66% of the total value sales. Growth of Maggi Noodles FY 2005-2006 For the FY 2005-2006, the growth of Maggi noodles wa s an impressive 15%, with sales at Rs 6.75 billion and profit at Rs 2 billion.

Maggi Market Share in Instant Noodles Category 79.5 Market Share (%) 79 78.5 78 77.5 77 2000 2001 2002 2003 2004 2005 2006 Maggi Market Share in Instant Noodles Category (2000-2005) Source: Euromonitor International Packaged Food in India May 2006 It has maintained a market share of around 78% despite increasing competition. T he relative performances of the Maggi variants has been presented using the BCG matrix The Boston Consulting Groups Growth-Share Matrix High STARS ( MAGGI Veg Atta Noodles) QUESTION MARKS (MAGGI Chicken, Dal Atta Noo dles) Market Growth Rate Low High CASH COW (MAGGI Masala flavour) DOGS (MAGGI Tomato, Curry flavours) Low Relative Market Share

2.2 SWOT Strengths Strong brand recall and the product is almost eponymous to the brand. Market leader with 79.3% market share in terms of value. Highest advertising sha re(72% (TV AdEx 2004-05)). Emotional relationship with the consumer. A strong di stribution network of the parent company Nestle. Opportunities The instant noodl es segment is projected to grow at a tremendous rate with the market size doubli ng by 2010. Increase in the potential consumer base i.e. single working professi onals and student population Rapid economic growth and rising disposable incomes make a strong case for a premium brand like Maggi. Upward trend of convenience food consumption. Huge untapped serviceable upward class rural base. Weakness Ta gged as a product having no health value. It has tried to bring in innovation bu t has failed.(Dal Atta Noodles refer survey noodles). The product features have remained almost constant since inception in 1983 with any trial of innovation mi sfiring. Market share has fallen from the 80% in 1998-99 to 79.3% in 2005-06. Threats Competition is increasing with established competitors in other segments are foraying into the noodles segment seeing the capacity of growth. Top ramen the prime competitor has come up with new exciting instant noodle offerings like cup noodles and mug noodles which threatens to eat into Maggis market share. For eign players like Wai Wai and Rum Pum have forayed into the noodles market and h ave made their brand presence in eastern markets while indigenous Parle is threa tening to offer their distribution network to international noodle brands wishin g to make an entry. Top Ramen has repositioned itself on a health platform with a new baseline Get on Top fortifying its product with calcium and vitamins. The pr oduct as priced higher than its main rival Top Ramen.

2.3 COMPETITION 2.3.1 TOP RAMEN 'Don't be a noodle, be a Smoodle,' was the ad that brought the Top Ramen brand i nto limelight when it was launched in 1991. Market share FY 2005-2006: 14% Varie ty: a) Packet Noodles: Macho Masala, Funky Chicken, Oye Tomato, Curry Smoodles. b) Cup Noodles: Spicy Vegetable, Tangy Chicken Packaging and Pricing: Top Ramen Packet Noodles Pack Size (gm) 50 100 400 80 Price (Rs) 5 10 34 20 Cup Noodles Distributor: Marico Industries Distributor strength: About 130000 USP: 'Don't be a noodle, be a Smoodle,' innovative flavours and its cup noodles 2.3.2 ITC SUNFEAST PASTA ITC launched India's first instant pasta snack, Sunfeast Pasta Treat in 2005. Ma de from high protein Durum wheat, Sunfeast Pasta Treat is not fried and does not contain maida, making it a nutritious snack. This ready to cook pasta comes wit h a sauce maker inside the pack.

Market share FY 2005-2006: The ready-to-eat Sunfeast Pasta Treat has clocked 6% of the branded noodles volume in just one year. Variety: It is currently availab le in four exciting flavours: Masala, Tomato and Cheese, Sour Cream Onion and Ch eese. Pricing: priced at Rs. 12/- for the Masala flavour and Rs.15/- for Tomato and Cheese, Sour Cream Onion and Cheese. Packaging: Each pack is an 83 gm pack w ith a 15 gm sauce maker Distributor: ITC Limited USP: Sunfeast is made from duru m wheat and is promoted as a healthy alternative to instant noodles made from th e less healthy maida (a type of wheat flour that is slightly lower in quality). 2.4 CURRENT MAGGI NOODLES BRAND IDENTITY/KAPFERERS PRISM Physique Yellow packaging, Tasty Personality Playful children, Hurried youth Relationship Fast to cook and good to eat, Mummy bhookh lagi, Taste bhi health bhi Maggi Noodles Culture Family, Dual Income, Reflection Family oriented Fun-loving Self Image Kid, Independence

2.5 PRODUCT OFFERING Maggi Noodles comes in 4 variants: 1. MASALA: This is the original and most wide ly liked flavour of Maggi and hence has been brought out in 6 different packagin g sizes; the maximum in any variant 2. CHICKEN 3. CURRY 4. TOMATO 5. VEGETABLE A TTA NOODLES: Launched in April 2005, this variant had contributed to 11 per cent in value to the instant noodle category within 7 months of its launch; this was the beginning of the Taste bhi Health bhi focus 6. VEGETABLE DAL ATTA NOODLES: Co ntinuing the healthy snacks trend, this variant was launched in May 2006. Pack S ize (gm) Price (Rs) 5 10 20 38 54 72 10 10 10 13 50 13 50 MAGGI 2 Minute Noodles Masala 50 100 200 400 600 800 Chicken 100 Curry 100 Tomato 100 Vegetable Atta Noodles 1 00 400 Vegetable Dal Atta Noodles 100 400 Variants, Packaging, Prices Source: Nestle India 2.6 PRODUCT DISTRIBUTION Maggi Noodles is being sold through 2,60,000 outlets (FY 2005-2006), which compr ise of grocers, convenience stores, supermarkets and miscellaneous channels. The average Indian still prefers shopping through the traditional grocers or kiranas as can be inferred from the higher distribution of 62.8%.The rising popularity o f the mall-culture in the urban and semi-urban areas also reflects on the slight i ncrease in distribution through supermarkets / hypermarkets. Channel Traditional grocers Convenience stores Supermarkets/hypermarkets Others Overall 2005 63.0 2 0.0 16.6 0.4 100.0 2006 62.8 20.0 16.8 0.4 100.0 India Dried Pasta & Noodles off-trade distribution channels, by value, 2005-2006 (%) Source: Denis Mason, Datamonitor

2.7 KEYS TO SUCCESS Maggi has had the first mover advantage with respect to the Instant noodles segm ent in the Indian market. Continued innovation in terms of flavours and themes f rom an ordinary 2 minute bite to a healthy snack. 2.7 CRITICAL ISSUES AND CHALLENGES To sustain its growth and maintain its position as the leader in the Instant Noo dles segment: Nissins Top Ramen and recently ITCs Sunfeast pasta have been eating into Maggi Noodles market share of the Instant Noodles Market. To be increasingly viewed as the preferred snack of Indians.

3. MARKETING STRATEGY 3.1 MISSION To be considered as the number one snacking option of India combining the values of convenience, taste and health. 3.2 MARKETING OBJECTIVES Increase value market share to 80% in the instant noodles market by 2007-08 from the current 79.3%. To promote Maggi noodles as a healthy ready to eat convenien t food among mothers and single working professionals. To provide line extension by introducing Cup Noodles/Mug Noodles. To upgrade the existing product feature s viz. packaging, ingredients, special additives based on consumer feedback. The objectives were arrived at based on the analysis of Ansoffs Grid. ANSOFFS PRODUCT/MARKET EXPANSION GRID Existing products New products MARKET PENETRATION Existing Markets ( Upgrade existing variants of MAGGI) PRODUCT DEVELOPMENT (Introduce new variants of MAGGI) New Markets MARKET DEVELOPMENT (Finding new markets for existing variants of MAGGI) DIVERSIFICATION (Launch totally new variants of MAGGI in totally new markets)

3.3 INDUSTRY SEGMENTATION The taste preferences and eating habits of consumers bear a high correlation wit h their age. Based on this, we can segment the market into the following age gro ups: 1990 1995 2000 2005 189,211 114,583 153,781 103,179 294,103 358,164 202,754 86,585 2010 184,457 117,137 160,728 110,642 319,267 398,405 232,801 99,728 2015 184,376 114,226 162,495 115,126 336,193 440,655 261,349 117,168 169,999 181,521 187,940 Children: (2-9 years old) 89,781 100,560 109,302 Tweenag ers: (10-14 years old) 120,293 127,645 142,432 Teenagers: (13-19 years) 80,812 8 5,918 92,074 Studying Age: (18-22 years old) 230,839 249,149 270,576 Young Adult s: (15-29 years old) 243,295 277,343 316,065 Middle-Aged Adults: (30-59 years ol d) 134,212 151,646 174,986 Baby Boomers: (40-59 years old) 57,029 65,643 75,712 Pensioners: (aged 60+) Age wise break up and forecast of the population Source: UN census data, Euromonitor database Age wise break up of the population (2005) 86,585 202,754 189,211 Children: (2-9 years old) 114,583 Tweenagers: (10-14 years old) Teenagers: (13-19 years) Studying Age: (18-22 year s old) 153,781 358,164 103,179 294,103 Young Adults: (15-29 years old) Middle-Aged Adults: (30-59 years old) Baby Boome rs: (40-59 years old) Pensioners: (aged 60+) Agewise Breakup of Population, 2005 1) CHILDREN Children as an age group are a m arketers delight. With pester power children play a significant role in decision ma king and purchase choices of just about anything ranging from food items to beve rages to chocolates. As consumers, children know exactly what they want and do n ot experiment too much with flavour or colour. Children rule Indian families con sider children to precious gifts of God, and parents in all income groups do all they can for their offspring. Indian parents are still not completely comfortab le with paid

baby sitters or day care help and use the larger extended family or friends to h elp with care and supervision of children. Rush for pre-school admissions Throug hout urban India, parents of nursery age children are looking to send them in th e best private school they can afford. Pre-schools for toddlers in the 2-3 age g roup are mushrooming all over the country, as anxious parents recognise the perc eived benefits these can bring. '000 Male Female TOTAL as % of total population 1990 87,953 82,046 169,999 20.29 1995 93,797 87,724 181,521 19.67 2000 97,055 90,885 187,940 18.63 2005 97,624 9 1,588 189,211 17.37 2010 95,041 89,416 184,457 15.82 2015 94,897 89,478 184,376 14.88 Children (2-9 years old) 1990-2015 Source:Euromonitor International from nationa l statistics and UN 2) TWEENAGERS The tweenagers age group consists of children on the threshold of adolescence and as a segment are a difficult lot. Though the y are not sure about their choices on an emotional plane, they are a trendy new group that is extremely savvy and self assured when it comes to taking decisions regarding consumer goods and wants. Urban children in this age group would have some amount of pocket money with an upper limit of Rs100 per month. Though allo wances have gone up, parental control still exists over this market segment. Imp ulse foods rule the preference scale as far as the buying behaviour of tweenager s in India is concerned. In fact, the top six expense items for tweenagers seem to be impulse foods: 17% of the total pocket money spent on ice creams, 12% on c hocolates and 10% each on soft drinks and fast food according to a newspaper rep ort in the The Times of India. A key role to play in decision making With increase d awareness through television and advertising, tweenagers are an important infl uence on family decision-making in urban India. They have also mastered the art of nagging their parents into making purchases of gadgets or products that they want. Among the areas where they make their influence felt are the purchase of s uch items as a newly launched chocolate bar, instant noodles and breakfast cerea l. With a penchant for hi-tech and an ease with new technology far superior to t heir parents, these tweenagers are more familiar with operating mobile phones, t he TV remote, DVD player and computer programmes, as well as the product feature s. Cricket-crazy boys Cricket is the obsession and passion of boy tweenagers in India. This interest cuts across income and socio-economic groups. Low income bo ys will play on the streets with makeshift bats and stumps, middle-income childr en can be seen playing in gardens and at school, while boys from more well-to-do families go and play in organised coaching camps. With their education demandin g less time at this age, parents are generally quite happy to see their boys spe nding so much time on cricket.

Lifestyle concerns in urban India A 2005 study of 10-16 year olds in urban India revealed a sedentary lifestyle among 72% of the 20,000 children sampled by Life time Wellness Rx Ltd in the cities of Allahabad in the north and Hyderabad in th e south. Of those sampled, 52% of children showed a risk of developing chemical dependence, with the problem probably attributable to a scarcity of playgrounds and too much TV viewing. Even television channels are zeroing in on this segment in recognition of this fact. There is nothing subtle about the age group any mo re. They like to hear it straight and then make their independent choices and ju dgements. On the flip side, they are becoming increasingly vulnerable to media b litzkrieg. '000 Male Female TOTAL as % of total population 1990 46,682 43,098 89 ,781 10.71 1995 52,240 48,320 100,560 10.90 2000 56,672 52,630 109,302 10.84 200 5 59,329 55,254 114,583 10.52 2010 60,571 56,565 117,137 10.04 2015 58,960 55,26 6 114,226 9.22 Tweenagers (10-14 years old) Source: Euromonitor International from national sta tistics and UN 3) TEENAGERS On the brink of adulthood, teenagers like to emphasi ze and express themselves in a manner that catches attention. They have experime ntal with their food with a preference towards innovative offerings but form str ong opinions which they carry forward in life. They are also predisposed towards snack items as they tend to feel hungry between traditional meals. They have a lot of say about the food that they want to consume with limited parental contro l. Mobile phones This is the mobile phone generation in India. They are complete ly at ease with new technology and are heavy users of value-added services like SMS, ring tone downloads and cricket score updates. Most still depend on their p arents for pocket money but are heavy users of these services. In many urban, mi ddle-income households teenagers are now given a prepaid SIM card with a certain value for the month, in addition to allowances for travel and entertainment. Ha rd pressed for time Teenagers like buying books, music and expensive branded foo twear, as well as watching films and socialising with friends. Older college-goi ng teenagers high school pupils tend to frequent coffee bars, which are a relati vely new focal point for socialising. Teenagers are also among the regular users cinema multiplexes and entertainment zones. This age group is extremely conscio us of their facial and physical looks. They are expected to fuel demand for skin care products as well as health and nutrition-related goods. Urban teenagers ar e far more socially active today and find some difficulty in balancing their sch ool routines with their personal schedules.

'000 Male Female TOTAL as % of total population 1990 62,853 57,440 120,293 14.35 1995 66,433 61,212 127,645 13.83 2000 74,027 68,405 142,432 14.12 2005 79,765 7 4,017 153,781 14.12 2010 83,246 77,482 160,728 13.78 2015 84,033 78,462 162,495 13.11 Teenagers (13-19 years old) Source: Euromonitor International from national stat istics and UN 4) STUDYING AGE A rise in the number of colleges and institutions of higher learning both government owned and privately financed has enabled a la rger number of youth to graduate from their portals. This population grew since 2000 but is set to stagnate in the forecast period with couples actually postpon ing the child bearing decision and some even rejecting the idea of having one at all. This age group has taken up to snacking as a way of life as they keep miss ing regular meals due to erratic schedules. They have longer waking hours and du e to this the traditional three meals does not suffice with the need for filling snacks. Rising financial freedom With growing aspirations on the academic front and shrinking global boundaries this age group has an unquenchable thirst for i nformation whether through their PCs or cell phones. With a rise in employment o pportunities in the Business Process Outsourcing (BPO) sector, more and more con sumers in this age group are juggling jobs along with their studies for the sake of the financial freedom it gives them. Summer jobs Until the 1990s, summer vac ations were a time to relax, read and catch up with friends. This is no longer t he case. Now, teenagers either find a summer job, or undertake activities such a s a trek in the mountains, river rafting or rock climbing. Summer jobs may cover a range of activities from delivering newspapers to working in a restaurant. '0 00 Male Female TOTAL as % of total population 1990 42,311 38,501 80,812 9.64 199 5 44,932 40,986 85,918 9.31 2000 47,947 44,127 92,074 9.13 2005 53,651 49,528 10 3,179 9.47 2010 57,402 53,240 110,642 9.49 2015 59,638 55,489 115,126 9.29 Studying age (18-22 years old) Source: Euromonitor International from national s tatistics and UN 5) YOUNG ADULTS Young adults (15-29 years old) represent the la rgest spending segment in the country. Youngsters are part of a middle-class boo m in India. Of the US$30 billion spent by Indians on themselves in 2003, young a dults spent close to US$10.5 billion with their spending levels

rising 12% each year at twice the pace of the economys growth according to variou s trade press publications. Young adults grew 8% in numbers over the 1999-2004 p eriod and is likely to grow at approximately the same pace. Rising disposable in comes College graduates and students still studying are landing well-paying jobs in a host of emerging industries that barely existed at the start of the new mi llennium retail chains, fast food restaurants, mobile phone companies, call cent res and data processing firms. Many have access to disposable incomes of Rs8,000 -10,000 per month thanks to the BPO boom in India. This age group still does not have responsibilities of running a household, marriage or worry about their chi ldrens education. Thus, this income is almost entirely spent on non-essential ite ms. Most purchases made by this age group are on impulse. There are 16 million u rban consumers in the 20-25 age group. Need for convenience Many single working professionals have to live away from their parents due to the demand of the jobs . This yuppies (young upwardly mobile professionals) class has a hard time prepa ring food and for them convenience is major issue. They are ready to pay a premi um for quality and convenience. Also always being on the move they have a need f or food item that can be easily consumed and disposed of. '000 Male Female TOTAL as % of total population 1990 120,916 109,923 230,839 27. 55 1995 130,305 118,843 249,149 27.00 2000 141,223 129,353 270,576 26.83 2005 15 3,026 141,077 294,103 27.00 2010 165,790 153,477 319,267 27.38 2015 174,236 161, 957 336,193 27.13 Young adults (15-29 years old) Source: Euromonitor International from national s tatistics and UN 6) MIDDLE-AGED ADULTS These middle aged men have strict prefere nces over food and they generally stick to their choices. They experiment less a nd go for products that will enhance their social status. The women in this age group are ones who the primarily buy food items for the entire household though their choices are shaped by the preferences of the household members. The women in this segment play an important role as most of the choices of food items have to pass their scrutiny before it is consumed in the household. Responsibilities Between the ages of 45 and 55, men find themselves with children who are able t o leave school or facing crucial board examinations. Some may also have wives wi th settled careers. These factors make them reluctant to leave or move from thei r city of residence and they would rather resign and move to another job rather than displace the family. Others find themselves redundant in the new hire and f ire labour environment. There is a trend for such people to enter the BPO sector as well.

Mid-life career change In urban India, among the middle class, there are a signi ficant number of men who are making career switches, some out of choice and othe rs out of necessity. Tired of their current salaried jobs, some are taking the e ntrepreneurial plunge, setting up businesses such as small ITservice firms, adve nture tourism companies or leadership training consultancies. '000 Male Female T OTAL as % of total population 1990 125,217 118,079 243,295 29.03 1995 143,223 13 4,120 277,343 30.06 2000 163,764 152,300 316,065 31.34 2005 186,055 172,109 358, 164 32.89 2010 206,920 191,486 398,405 34.16 2015 228,338 212,317 440,655 35.56 Middle-aged adults (30-59 years old) Source: Euromonitor International from nati onal statistics and UN 7) BABY BOOMERS The concept of baby boomers may not be that relevant to India no twithstanding the impact of and its participation in World War II. This generati on has virtually seen it all right from Indian Independence (1947) to the Indo-P akistan war (1965). However, having been born in an age of constrained resources , this segment is somewhat cautious about its approach to consumerist tendencies although it is adopting some of them. For example, a number use mobile phones f or their functional use but frown on the use of credit cards and buying branded clothing. Health-related products, childrens education, automobiles, retirement p lanning, insurance products and vacations form the bulk of their expense. '000 M ale Female TOTAL as % of total population 1990 68,010 66,202 134,212 16.02 1995 77,278 74,368 151,646 16.43 2000 89,882 85,105 174,986 17.35 2005 104,720 98,034 202,754 18.62 2010 120,490 112,310 232,801 19.96 2015 135,142 126,207 261,349 2 1.09 Baby boomers (40-59 years old) Source: Euromonitor International from national s tatistics and UN 8) PENSIONERS In the 1950s and 1960s, government jobs were among the few accepta ble job occupations for people from respectable households. Changing technology and globalisation have changed that with unconventional income opportunities now presenting themselves to Indians. Some pensioners have sought and enjoyed succe ss in information technology-related endeavours whilst others have put their con siderable English language skills to good use in service industries. Pensioners have been the hardest hit section of the population. With declining interest rat es, they have had to play a more active role in financial management. Some of

them are even trying to keep abreast of current happenings and learning how to u se a computer or access the Internet. There food preferences are shaped by their health conditions and they stick to their preferred food items. Independent liv ing on the rise From the 1980s onwards, there has been a steady migration of you ng adults and students to the US, in search of better opportunities. Most have c hosen to settle and make their lives in that country. Therefore, their ageing pa rents have had to learn to continue to live independently. Retirement communitie s viewed as an option Retirement homes were previously viewed negatively in Indi a. If the elderly went there, it meant they had no one to care for them, and wer e in a sense for the destitute elderly. In the new urban India, however, well-ap pointed retirement communities are mushrooming, and couples in their 60s are goi ng there of their own volition. While the numbers are not yet significant, a tre nd is likely to increase in line with growth in the numbers of Indias elderly. It is also now an option for the middle-income and salaried classes. In families w here there is a proprietary business, or a family practice, two-to-three generat ions will continue to live together. '000 Male Female TOTAL as % of total popula tion 1990 28,085 28,944 57,029 6.81 1995 31,905 33,737 65,643 7.11 2000 36,292 3 9,420 75,712 7.51 2005 41,109 45,476 86,585 7.95 2010 47,286 52,441 99,728 8.55 2015 55,928 61,240 117,168 9.45 Pensioners (aged 60+) Source: Euromonitor International from national statistics and UN 3.4 TARGET SEGMENTS FOR MAGGI NOODLES 3.4.1 MAGGI 2 MINUTE NOODLES Maggi 2 Minute Instant Noodles is already associate d with convenience and taste and is currently accepted as a valid filling snack between meals. Maggi will continue to leverage its brand equity and target the f ollowing segments for this product. Children and Tweenagers: This is a large seg ment and is Maggis stronghold. The age group between 4 and 14 years has largely s imilar tastes and is traditionally targeted by Maggi. These segments perceive Ma ggi instant noodles as a welcome change in taste from the regular Indian fare an d they are fascinated by the curly shaped noodles. For these segments innovative products also have novelty value, however, certain dominant preferences emerge. Realizing this early, Maggi shifted focus from the lady of the house to the end consumer i.e. children themselves ending up as the market leader of the instant noodles segment. Early buy in of this segment will help Maggi to sell in other segments in future.

Studying Age: The studying age segment though not traditionally targeted specifi cally has been devouring Maggi 2 minute noodles. The proposition of convenience of cooking as well as that of a tasty filling snack attracts this segment which due to erratic schedules keeps missing their regular meals. 3.4.2 MAGGI CUP O NOODLES Maggi Cup O Noodles is Maggis answer to Nissins Cup Nood les. With reduced cooking time of a minute, ease of preparation and no need of s eparate plates Maggi Cup O Noodles promises to appeal to anyone in need of a qui ck, convenient bite. Maggi Cup O Noodles being a premium priced product, the seg ment targeted should one which is ready to pay a premium for a quality convenien t food. The following segment promises to be the best bet. Young Adults: The gro wing class of affluent young adults does not mind paying higher prices for quali ty products. They are hard pressed for time and would pay a premium for convenie nce. This segment has a good top of the mind recall of Maggi as a brand as the c urrent members of this group were the targets of Maggi in the 1980s and they reta in fond memories of Maggi, a emotional bond which can be leveraged to win them o ver to Maggi Cup O Noodles. This segment is growing and has the potential of acc epting Maggi as a mainstream food item as they see instant noodles as a natural part of Indian food culture. 3.5 POSITIONING OF MAGGI 3.5.1 MAGGI 2 MINUTE NOODLES Maggi 2 Minute Noodles will continue with its curre nt positioning of convenience and as a fast to cook, good to eat snack as this see ms to be working well. To prevent Top Ramen, the main competitor, from eating in to its market share some product innovation is required as otherwise Maggi may g et stereotyped as an unexciting product. Top Ramen is following a cost different iation technique. To deal with this Maggi has to position itself as a differenti ated product. The market is very sensitive to taste and rejects any flavour it d islikes with Maggi having learnt it the hard way, thus the product can not be gr eatly differentiated with on basis of taste. On the other hand Maggi has to deal with the negative perception of Maggi has of being unhealthy in an increasingly health conscious market, a major threat in the current scenario. Both these pro blems can be tackled by positioning Maggi as a snack with nutritional value. The recent launch of Veg Atta Noodles and Dal Atta Noodles with the promise of good nut ritional value ventures in this area. Another 3.5.2 CUP O MAGGI The main USP of Cup O Maggi is convenience without compromising on taste. Nissins Cup Noodles is a huge hit with the consumers liking the concept of noodles served in a cup and the extra convenience of not dealing with cleaning/needing plates and the lesser time required for preparation. Cup O Maggi is targeted towards a segment that v alues time and convenience as well as is getting increasingly health conscious. So Cup O Maggi with added nutrition and wholesome components will position itsel f as a healthy and convenient food option that can be had anywhere, anytime. The crux of positioning will be Healthy Snack Anywhere, Anytime.

4. MARKETING MIX 4.1 CONSUMER SOLUTION The instant noodles segment of Maggi is the market leader in its segment. Availa ble in 4 flavours, the Masala flavour is the hot favourite by a huge margin foll owed by Maggi Vegetable Atta and Tomato flavour. The Maggi Dal Atta variant show s a poor response. 4.1.1 IMPROVING THE DAL ATTA VARIANT Maggi Dal Atta variant r anks really low on taste as suggested by the Marketing Research Survey. The exis ting Sambar taste doesnt go too well with consumers even from the south Indian ma rket. For which we plan to replace the existing Tastemaker with a Spicier Tastem aker to go with the traditional Spicy Indian taste. 4.1.2 NEW PRODUCT: THE CUP-O -MAGGI Maggi is market leader in its segment but it still has no product to chal lenge the growing threat posed by Cup Noodles from Top Ramen, its closest compet itor. The cup noodle market is expanding rapidly and there is a huge scope for g aining further market share by entering this segment which is currently dominate d by Top Ramen. To challenge this threat we propose to launch a new product to d irectly compete in this segment with the name Cup- O Maggi. Features of Cup O Mag gi To be made available in two flavours Masala and Chicken to cater to the overa ll market palate. The noodles will be available in a Plastic cup and just requir e hot water to be added to prepare them. This is to capture the market which has a growing demand towards convenience foods. Dried Vegetables and Dried Chicken chunks to be made available inside the cup The new improved spicier Tastemaker a lso to be added to the cup The Market Research Survey importuned us to improve t he taste and provide better health benefits. For this purpose the improved Taste maker has been added to Cup-O-Maggi. To cater to the demands of the growing heal th conscious people nutritious veggies and chicken chunks have also been added. These extra pieces are already available with the Maggi range of soups and the s ame can be used in Cup-O-Maggi also thus dispenses the need for setting up of a new processing factory specially for the manufacturing of food pieces. 4.1.3 PAC KAGING Major changes are required in the packaging of Maggi noodles as suggested by the Marketing Research Survey: Maggi noodles packets to be flimsy which requ ire to be torn apart carefully so as to not spill the contents. Another issue is with the multi brick packets. Once opened they cannot be stored as it is and th e contents have to be transferred to another container.

To counter the problem, we plan to Increase the thickness of the plastic sheets used in the Maggi Noodles packets to give more strength to the packet and allow easy & safe opening of the pack To provide a Zip-Seal facility along with the ex isting sealing to allow the packets to be stored easily 4.2 CONSUMER COST Pricing strategy for the existing variants of Maggi Noodles is based on the obje ctive of Maximising Market Share. These variants are competitively priced. As the segment is highly price sensitive, any price change initiates an instant price c heck reaction from the competitor. Pack Size Current (gm) (Rs) 50 100 200 400 60 0 800 Chicken Curry Tomato Vegetable Atta Noodles 100 100 100 100 400 Vegetable Dal Atta Noodles 100 400 5 10 20 38 54 72 10 10 10 13 50 13 50 Price Revised (Rs ) 5 10 20 36 54 72 10 10 10 13 50 13 50 Price MAGGI 2 Minute Noodles Masala Maggi 2 Minute Noodles Proposed Revised Prices for existing package sizes Reduci ng the price of the 400g pack of Maggi Masala is a very aggressive move to direc tly attack the competitor whose 400g variant is priced at Rs 34. The effect of t he downward revision in price can be offset by the increase in sales volume. Pri cing strategy for the launch of Cup-O-Maggi is based on the objective of achievi ng Product Quality leadership. Its segment is less price-sensitive so it will be p remium priced to target the higher end customers. Creation of a premium brand gi ves the company an opportunity to provide a differential pricing and service off ering to the customer thereby creating a key differentiator.

CUP-O-MAGGI Masala Chicken Pack Size (gm) 80 80 Price (Rs) 20 20 Cup O Maggi Proposed Pricing and Packaging Product pricing is based on offering high value to our customers compared to most price points in the market. Thus us ing the Competitive- Parity method, Cup-O-Maggi has been priced at Rs 20 for an 80g pack of Masala and Chicken flavours to directly compete against the competit or cup noodles which are also priced at Rs 20 for an 80g pack. The pricing will be regularly revised according to the changing forces in the market environment. 4.3 CONVENIENCE To keep up with the growing trends in the Noodles sector, an intensive dealer-di stributor network is desired. Maggi has a well established distribution network. As of now, the strength of our already robust distribution network could be lev eraged to introduce and sell our new product: Cup-o-Maggi noodles, as also the imp roved versions of the Dal Atta variant. The target markets of Cup-o-Maggi are prim arily present in the metropolitan cities as well as the tier-II cities. In addit ion for Cup O Maggi we propose that: Maggi Noodles have tie-ups with Corporate H ouses Depending on the initial sales of Cup O Maggi, introduce vending machines for the same at schools, colleges as well as corporate houses.

4.4 COMMUNICATION PROMOTION OF CUP O MAGGI With the introduction of Cup-o-Maggi noodles, we propos e to move away from the Child and Mother approach of Maggi. The Cup noodles would be targeted at the young single professionals, as also the housewives, basically people who might prefer to go for a quick meal instead of cooking a whole tradi tional Indian meal, specially in case of early work-day mornings or a tired-evenin g quick snack (in case of professionals). An associated tagline with the Cup-o-M aggi advertisement campaign could be: Cup-o-Maggi: Healthy Snack Anywhere, Anytime! SUGGESTED FUTURE CUP O MAGGI ADVERTISING CAMPAIGN World Cup 2007 (13th March 20 07 to 28th April 2007) Families, couples, kids all enjoying their cricket with C up O Maggi; at home, drive-in screens. Get a cricketer to endorse Maggi noodles. GENERAL PROMOTION Events and Experiences: Hold the Online Maggie Recipe Challeng e, wherein innovative recipes with Maggi Noodles as a base are invited. Winning entries are compiled into an ecookbook which is published online. Celebrity endo rsement: Maggi has associated itself with celebrities like Bollywood actress Pri ety Zinta recently. The reason being Maggi has always been the kids snack. The s ame is brought out and highlighted in the charms of Preity and her bubbly and vi vacious zing, with which she portrays the brand that is Maggi. Television Advert isements: Portraying hassled double income families, finding relief at the end o f a tiring day with a quickly conjured up bowl of Maggi 2 Minute noodles. Portra y different flavours available and focus on the health aspect of the fortified 2 minute Noodles and the Dal and Vegetable Atta Noodles. Communicate the new impr oved east-to-use packaging and the going spicy of Dal Atta Noodles.

4.5 MARKETING RESEARCH An online survey was undertaken at http://www.createsurvey.com/c/39191-OSMZz4/ T he following sections deal with the results obtained on the basis of the 30 poin t questionnaire put forth in the survey. 4.5.1 Maggi Noodles Performance on various attributes 1400 1200 1000 800 600 400 200 0 Im ag e Pr ic e Ta Pa ck ste ag in H g e A va alt ila h In gr bili ed ty ie n Va ts rie ty 4.5.2 Attributes on which Top ramen smoodles performs better then Maggi noodles Ingredients Packaging Taste Price 0 20 40 60 80 100 120 140 B ra nd No. of people ranking Top Ramen smoodles better then Maggi noodles

4.5.3 Attributes on which Top ramen cup noodles performs better then Maggi noodl es Ingredients Convenience in cooking Packaging Taste 0 20 40 60 80 100 120 4.5.4 Maggi Packaging size preference 800 gms 600 gms 400 gms 200 gms 100 gms 50 gms 0 0.1 0.2 0.3 0.4 0.5

4.5.5 How do you like to consume your Maggi ? 11.02% 6.82% 43.31% Plain maggi With vegetables With chicken 38.85% Your secret recipe

5. FINANCIALS 5.1 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 o peration. 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. 5.1.1 BREAK-EVEN ANALYSIS The cost involved in the production can be divided into two categories viz. fixe d 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: t his 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 bui lt-up area of 100 sq.mtrs. is sufficient. Land would cost around Rs.60,000/- whe reas cost of construction could be Rs.2.50 lacs. Main production area would occu py around 50 sq.mtrs. whereas packing room and storage area would occupy balance area. Particulars Land Building Area (sq. mtrs.) 200 100 TOTAL Cost (Rs.) 60,000 2,50, 000 3,10,000 B. Plant and Machinery Marketing is the key success determinant and the producti on capacity has to be finalized accordingly. Keeping in mind the financial viabi lity, the rated production capacity is assumed to be 100 tonnes per year with 30 0 working days and 2 shifts per day.

This would necessitate installation of following machines: Item Qty. Price (Rs) Extrusion Machine Pre-conditioner Mixer ( 50 kgs capacity) Pouch Packing and Sea ling Machine Weighing Scale 1 1 1 1 1 TOTAL 1,00,000 80,000 1,00,000 1,00,000 10,000 3,90,000 C. Miscellaneous Assets Other assets like furniture and fixtures, storage facili ties, 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 requirem ent would be 500-550 liters. Annual expenditure at full capacity utilization wil l be Rs. 1,10,000/-. 2. Variable costs A.MANPOWER REQUIREMENTS Particulars Nos. Monthly Salary (Rs) Total Monthly Salary (Rs) Machine Operators Skilled Workers for Packing Semi-skilled Workers Helpers Sales man 2 2 2 2 2 4,000 3,000 2,000 1,000 2,000 Total 8,000 6,000 4,000 2,000 4,000 24,000 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 f lour, protein isolates, salt, spices, edible oil, preservatives etc. All of them are easily available. Packing materials are equally important. Colourful and at tractive pouches shall have to be printed and outer packing will be corrugated b oxes.

This cost can be shown as Product Qty. (Tonnes) Price/Ton (Rs.) Value Raw Material Packing Material 100 100 70,000 @ Rs.20,000/ Ton of Finished Goods Total 70,00,000 20,00,000 90,00,000 C. Selling Expenses Marketing will be a key element. Expenses shall have to be i ncurred on transportation, Publicity in local media like newspapers, hoardings a nd TV scroll, selling commission, free Sampling etc. A provision of 30% of sales value is made every year to take care of these Expenses since the product is ne w thus more emphasis is given on this section. This expense can be reduced once the product is well established in market. FINAL TOTAL COST ANALYSIS FIXED COSTS Land and Building In Rs. 3,10,000 3,90,000 50,000 1,10,000 8,60,000 Per tonne of production 24,000 90,000 @ 30% of Total sales Plant and Machinery Miscellaneous Assets Utilities TOTAL FIXED COST VARIABLE COSTS Manpower Requirements Raw and Packing Materials Selling Expenses 5.1.2 ANALYTICAL BREAK-EVEN ANALYSIS Let total production be X tones. Since the 80 gm pack of Maggi is available for Rs.20 i.e. Rs.250/kg so lets say that Maggi Noodle is supplied to the market age nt 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

Final conclusion: The plant must operate at the minimum efficiency of 71.66% in order to reach break-even analysis point i.e. not to suffer any loss. 5.1.3 GRAP HICAL BREAK-EVEN ANALYSIS The result obtained above can be verified by plotting a graph between the total cost and Quantity of Maggi produced. The graph is shown below. 20 Rupees (in millions) 15 10 5 0 0 -5 20 40 Break Even Analysis Variable Cost Revenue Cash Balance 60 80 100 120 Sales (in tonnes) 5.2 SALES FORECAST 5.2.1 MAGGI INSTANT NOODLES Sales by value For the year 2007 Projected value of instant noodles category (Refer Appendix B) = Rs. 8,611.1 million The desired market share by value = 80% Therefore, project ed value the sales need to be 80% * Rs.8611.11 = Rs. 6888.88 million. Sales by volume Average retail price per 100 gms of Maggi (across all SKUs) = Rs.9 Price for one thousand Tonnes of Maggi = 9 * 10^7 rupees Projected value of sales = Rs. 6888. 88 million Therefore, Projected volume sales = (Projected Value of Sales / Price per thousand Tonnes) = 76.5 thousand Tonnes. For year 2007 projected category s ales = 96.9 thousand Tonnes. Therefore, volume market share of 78.95 % for the y ear 2007 is projected.

5.2.2 PROPOSED : CUP O MAGGI NOODLES Sales by value For the year 2007 Projected value of cup noodles category (Refer Appendix B) = R s. 143.1 million The suggested target market share by value = 20% Therefore, pro jected value the sales need to be 20% * Rs.143.1 = Rs. 28.62 million. Sales by volume Suggested retail price per 80 gms of Cup O Maggi = Rs.20 Price for one thousand Tonnes of Cup O Maggi = 20 /80* 10^9 rupees Projected value of sales = Rs. 28.88 million Therefore, Projected volume sales = (Projected Value of Sales / Price p er thousand Tonnes) = 0.115 thousand Tonnes. For year 2007 projected category sa les = 0.6 thousand Tonnes. Therefore, volume market share of 19.17 % for the yea r 2007 is projected.

APPENDIX A: INDIAN INSTANT NOODLES MARKET GROWTH GRAPHS Indian Instant Noodles Market Retail volume growth trends Indian Instant Noodles Market Retail value growth trends

APPENDIX B: NESTLE MAGGI NOODLES FORECAST RETAIL SALES Nestl India Ltd Shares of Packaged Food by Subsector 2001-2004 % retail value rsp Instant noodles 2001 79.3 2002 77.3 2003 78.1 2004 78.5 Forecast Retail Sales of Noodles by Subsector: Value 2005-2010 Rs million Instant noodles Cups/bowl instant noodles 2005 6,077.5 2006 7,300.6 2007 8,611.1 2008 9,959.2 2009 11,319.4 2010 12,667.3 84.8 112.6 143.1 175.2 206.8 237.6 Forecast Retail Sales of Noodles by Subsector: Volume 2005-2010 '000 tonnes Instant noodles Cups/bowl instant noodles Source: 2005 59.9 2006 71.6 2007 84.0 2008 96.9 2009 110.1 2010 123.1 0.3

0.5 0.6 0.8 0.9 1.1 Trade press (The Economic Times, The Hindu Business Line, Financial Express, Bus iness Standard, India Infoline, agencyfaqs.com, Mid-day, rediff.com), Company re search, Trade interviews, Euromonitor International estimates