Organisation study report of Connemara Tea

ORGANIZATIONAL STUDY REPORT CONNEMARA TEA- THE TROPICAL PLANTATION

LIMITED

A Report Submitted To
MAHATMA GANDHI UNIVERSITY, KOTTAYAM

In partial fulfilment of the requirement for the award of the degree of

MASTER OF BUSINESS ADMINISTRATION

Submitted by,

FATHIMA SHOUKATH

Reg. no: 121926

Under the Guidance of,
Prof. Dr. JOHNEY JOHNSON

SCHOOL OF MANAGEMENT AND BUSINESS STUDIES MAHATMA

GANDHI UNIVERSITY
KOTTAYAM
2019 -2021

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 Organisation study report of Connemara Tea

School of Management and Business Studies

Mahatma Gandhi University
Kottayam

CERTIFICATE
This is to certify that this report, based on the organization study about “CONNEMARA TEA-THE
TROPICAL PLANTATION LIMITED” is a bonafide record of the work done by FATHIMA
SHOUKATH submitted in partial fulfillment of the requirements for the award of the degree of
Master of Business Administration in School of Management and Business Studies of Mahatma
Gandhi University, Kottayam.

Dr. JOHNEY JOHNSON Dr. E SULAIMAN

Professor & Dean Professor & HOD
SMBS SMBS
MG University, Kottayam MG University, Kottayam

Place: P.D Hill

Date :

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 Organisation study report of Connemara Tea

DECLARATION

I, FATHIMA SHOUKATH hereby declare that the organization study report entitled
“ORGANIZATIONAL STUDY REPORT CONNEMARA TEA- THE TROPICAL PLANTATION
LIMITED” submitted to the MAHATMA GANDHI UNIVERSITY, in partial fulfilment of the requirement for
the award of degree of MASTER OF BUSINESS ADMINISTRATION, is a record of an original work done by
me during the period of study 2019- 2021 in School of Management and Business Studies, Mahatma Gandhi
University, Kottayam under the supervision of Dr. JOHNEY JOHNSON, Professor & Dean of School of
Management and Business Studies, Mahatma Gandhi University, Kottayam.

FATHIMA SHOUKATH

School of Management and Business Studies

MG University, Kottayam

MBA Batch 2019-2021

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 Organisation study report of Connemara Tea

ACKNOWLEDGEMENT
Any report is never an individual effort. It is a contributory effort of many hands, hearts and brains.
I sincerely feel that the credit of this report couldn’t be narrowed to an individual, all the entire work is
the outcome of integrated effort of all those concerned with it.
At the outset, I thank Lord Almighty for the grace, strength and hope to make my endeavor a
success.
I would like to thank our Head of the Department, Dr. E SULAIMAN, Professor of School of
Management and Business Studies, for providing an opportunity to conduct an organizational study and
his encouragement throughout the study.
I express my gratitude to my faculty guide Dr. JOHNEY JOHNSON, Professor & Dean, School of
Management and Business Studies for providing guidance, suggestion and encouragement from the
beginning to the completion of my work.
Finally, I would like to express my sincere thanks and gratitude to my parents and other faculty
members of School of Management and Business Studies and all my well-wishers who have provided all
necessary support to make this organizational study a success.

FATHIMA SHOUKATH

School of Management and Business Studies

MG University, Kottayam

MBA Batch 2019-2021

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CERTIFICATE

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 Organisation study report of Connemara Tea

INDEX

Chapter No. Particulars Page No.

01 Introduction
8
i. Objective
9
ii. Scope
9
iii. Methodology
9
iv. Benefit of the company
10
v. Limitation of the study
10
02 Industry Analysis 11
i. Competitive Force Model 17
ii. PEST Analysis 19
iii. SWOT Analysis 24

03 Company analysis 25
i. Business Analysis 25
ii. Stakeholder Analysis 32
iii. Competitors Analysis 34
iv. Product Quality Analysis 37
v. Organization Structure 42
vi. Production Process 43
vii. Market Analysis 44
viii. HR Development and 45
Retention Strategy
ix. New Technology Adoption 47
Strategy
x. Finance Department 48
xi. Innovation and future plans 51

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04 Observation 52
Suggestion 53
Conclusion 54
05 Bibliography 55

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Chapter -1

INTRODUCTION

An organization or organisation is an entity, such as a company, an

institution, or an association, comprising one or more people and having a
particular purpose. The word is derived from the Greek word organon, which
means tool or instrument, musical instrument, and organ .

Organizational study is the examination of how individuals construct

organizational structures, processes, and practices and how these, in turn, shape
social relations and create institutions that ultimately influence people. In simple
words, an organization study involves the study of the structure and functioning
of its departments. Organization study implies a comprehensive and systematic
approach adopted by a trainee in order to get him familiar with the working of
an organization as a whole.

Tea was introduced formally to Indians by the British. The origin of tea in
India is owed to the British who intended to overthrow China's monopoly on tea,
having found that Indian soil was eminently suitable to cultivate these plants.
India is one of the largest tea producer in the world which is second ranked to
China. India tea industry is 172 years old. The industry plays a vital role in the
national economy. Today Indian tea industry is having 1692 registered tea
manufacturer, 2200 registered tea exporters 5548 number of registered tea buyers
and 9 auction centres.

Connemara Tea- The Tropical Plantation Limited is one of the oldest tea
factory in Kerala which was established in the year 1941. This is a public limited
company. It has a long history of business. It is a medium scale company which
produces 6 lakh kilogram of tea in a year. Organisation study in this company
helped to understand about the production of tea and its processes.

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OBJECTIVES OF THE STUDY

 To understand and get an idea about the organization environment.

 To familiarize with different departments in the organization and to understand their

functions.
 To understand the co-ordination among each and every department.

 To understand the efficiency of business process and management techniques.

 To get an awareness about the competitors and their products in market.

 To analyse the different strategies of the organization in different fields of business.

 To analyse the measures and techniques taken for growth.

 To conduct SWOT analysis of the industry as well as the company.

SCOPE OF THE STUDY

The organization study in Connemara tea helped to achieve the objectives of the study.
Apart from the theoretical knowledge this helped me to understand many aspect of
management in real life. Various analysis helped to understand the current market and
competition existing, appropriate decision taken for the changing environment and different
strategies adopted by the company.

METHODOLOGY OF THE STUDY

The methodology means the procedures, techniques and process used for the study. It
is one of the important factors to determine the reliability of the scene. Both primary data and
secondary data are collected for the study. Primary data was collected from the deputy manager
and staffs of the company. Secondary data was collected from company records, website of the
company and different journals from internet.

PERIOD OF THE STUDY

The study was conducted for a period of one month. The study started from 01-06-2020
to 30-06-2020.

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BENEFITS TO THE COMPANY

This report will help the company to have a brief understanding of the organization

structure there by the company can cross check its activities. Various analysis will also help to

understand about the changing environment. This report may help to understand some of the

drawback of the company and take appropriate steps.

LIMITATIONS OF THE STUDY

 The pandemic covid-19 and lockdown was the main limitation for the study.

 The time for the study was limited to one month.

 Due to the heavy duty of the managers, most of the information were not discussed.

 Due to the pandemic, company was not allowing for utilizing the whole study period

within the company.

 The company was not ready to disclose its confidential data like financial details.

 The reliability of the data is based on the information collected from the managers.

 Findings are not conclusive. It is only indicatives

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Chapter – 2

INDUSTRY ANALYSIS

Food processing is the transformation of agricultural products into food. Food

processing includes the methods and techniques used to transform raw ingredients into food
for human consumption. Food processing takes clean, harvested or slaughtered and butchered
components and uses them to produce marketable food products. There are several different
ways in which food can be produced.

The term food industries cover a series of industrial activities directed at the processing,
conversion, preparation, preservation and packaging of foodstuffs. The food industry today has
become highly diversified, with manufacturing ranging from small, traditional, family-run
activities that are highly labour intensive, to large, capital-intensive and highly mechanized
industrial processes. Many food industries depend almost entirely on local agriculture or
fishing. Major area that constitutes the Food processing industry is grains, sugar, edible oils,
beverages and dairy products.

Modern food production has made a drastic change in the area of production due to the
technical advancement. Biotechnology is driving much change, in areas as diverse as
agrochemicals, plant breeding and food processing. Many other types of technology are also
involved, to the point where it is hard to find an area that does not have a direct impact on the
food industry.

A strong and dynamic food processing sector plays a vital role in reduction in the
wastage of perishable agricultural produce, enhancing shelf life of food products ensuring value
addition to agricultural produce, diversification &commercialization of agriculture, generation
of employment, enhancing income of farmers and creating surplus for the export of agro &
processed foods.

The major segments in the Food Processing sector comprise of fruits and vegetables,
dairy, edible oils, meat and poultry, non-alcoholic beverages, grain-based products, marine
products, sugar and sugar based products, alcoholic beverages, pulses, aerated beverages,
malted beverages, spices, and salt. Out of these segments, dairy (16%), grain based Products
(34%), bakery-based products (20%), and fish and meat products (14%) contribute to a major
portion of industry revenues, apart from the manufacture of beverages.

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 Fruits and vegetable: Fruits and vegetables processing is dominated by unorganized

players, who occupy a share of 70 per cent in the total market size. Over the last few
years, the industry has witnessed rapid growth of Ready to Eat foods, frozen vegetables,
processed mushroom etc.
 Dairy: The current size of the Indian dairy sector is about Rs.5000 billion and has been
growing rate of 5 per cent a year. The dairy sector is mainly unorganized due to which
the products do not match international standards.
 Meat and Poultry: Entry of many organized players like Godrej, Venkateshwara
Hatcheries, Suguna poultry etc. in meat processing and packaging has accelerated
growth of this industry segment.
 Fish and marine products: Indian seafood processing units are being encouraged to go
in for value addition and export through setting up new units, expanding their capacity
and diversifying their current activities etc. for value addition.
 Snacks: The Indian snacks market is estimated to be worth Rs.150 billion with the
organized segment accounting for half of the market share and is growing at a rate of
15-20 per cent. The unorganized share is roughly Rs.75 billion and is currently growing
at a rate of 7-8 per. Ready to eat extradites, potato chips and potato based products
occupy almost 85 per cent share of the Indian snack market.
 Beverages: The market for carbonated drinks in India is worth US$ 1.5 billion while
the juice and juice based drinks market accounts for US$ 0.25 billion. Growing at a rate
of 25 per cent, the fruit-drinks category is one of the fastest growing segments in the
beverages market.

The F&B sector of food processing industry can be, broadly, classified as covering three major
parts - Farming, Processing & Distribution.

A. Farming: It is involved in the production and collection of raw agricultural commodities

such as rice, wheat and coffee.

B. Food processing: It is an integral part of the value chain and involves the processing of raw
food commodities into forms that can be easily distributed and sold to consumers.

C. Distribution: It is the final stage of the F&B Industry value chain and entails the distribution
of finished or near-finished food products to consumers.

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GLOBAL SCENARIO

The global food and beverages sector is made up of many segments, including
groceries, oils and fats, food additives, functional foods and beverages, packaged foods, health
and natural foods, canned food, baked food, baby food, animal food, soft drinks, alcoholic
drinks, energy drinks, and packaging.

The industry is driven by consumer demand for more nutritious food and better packaging,
which also spurs technology advances in the field. Today, pasteurization, high-pressure
processing, UV treatment, and nanotechnology are influencing the industry. A concern for the
environment has led to the use of more recycled material for packaging.

The growth of the food and beverages sector is propelled mainly by developing countries such
as India, China, and Brazil, as the economies of these nations improve and more people are
lifted into the middle class. The global food, beverage, and grocery industry was estimated to
be worth $7.8 trillion in 2015, or about 10 per cent of the world GDP, according to Plunkett
Research.

The history of food and beverage is, of course, as old as humans themselves. However, there
were no major developments until the 19th century, when Nicholas Appert invented canning
and Louis Pasteur developed pasteurization. These processes made food a product that could
be preserved and packaged for later use.

World War II prepared a fertile ground for innovations in the food industry. As food
was rationed and prices were regulated, better preservatives and flavoring agents were
developed. This paved the way for instant foods. Improvements in distribution are a major part
of the development of the food industry. Before the Industrial Revolution, people consumed
food and drinks mainly from local markets. Today, thanks to transportation and cold storage
facilities, food can be taken to stores anywhere.

By market size, the top ten countries for the overall food and beverages (grocery) sector
are the US (about $1.7 trillion, according to approximations from various sources), China ($700
billion), Japan ($600 billion), India ($400 billion), Russia ($350 billion), Brazil ($250 billion),
Germany ($225 billion), France ($200 billion), UK ($180 billion), and Indonesia ($175 billion).

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The biggest exporters were Germany ($58 billion), US ($56 billion), and France ($48
billion), and the biggest importers the US ($82 billion), Germany ($53 billion), and Japan ($45
billion), as per online sources.

Among the top companies in India are Amul, PepsiCo, Coca Cola, Nestlé, Britannia, ITC,
Cadbury India, Hindustan Lever, and MTR Foods.

INDIAN SCENARIO

Food processing includes many forms of processing foods, from grinding grain to make
raw flour to home cooking to complex industrial methods used to make convenience foods.
India’s food processing sector covers fruit and vegetables, spices, meat and poultry, milk and
milk products, alcoholic beverages, fisheries, plantation, grain processing and other products
like confectionery, chocolates, cocoa products, soya-based products, mineral water and high
protein foods.

Food processing has an important role to play in linking Indian farmers to consumers
in the domestic and international markets. The Ministry of Food Processing Industries (MoFPI)
is making all efforts to encourage investments across the value chain. The industry engages
approximately 1.85 mm people in around 39,748 registered units with fixed capital of $
32.75 bn and aggregate output of around $ 158.69 bn.

Major food processing states in India are Andhra Pradesh (13.4% of India’s food
processing industry, and a centre for fruits, vegetables, grains and livestock products viz.
Poultry, dairy, fisheries, meat, etc.), Gujarat (12.7%, and a centre for edible oils and Dairy),
Maharashtra (14%, and a centre for fruit, vegetables, grains, and beverages), and Uttar Pradesh
(12%, across almost all product categories). There is uneven development of food processing
industries in India, most of the states have not fully capitalized their resources, and most of the
produce is getting waste.

In India, the food sector has emerged as a high-growth and high-profit sector. Food
processing sector is an important industry in India in terms of output and employment. India is
expected to become the fifth largest consumer market in the world by 2025, according to a
paper prepared by the Confederation of Indian Industry (CII) and Grant Thornton.

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Food and beverages sector is the biggest of the consumption categories. The F&B sector
is supported by the vast agriculture sector: India is the biggest producer of pulses, and the
second biggest producer of rice, wheat, sugarcane, and fruits and vegetables.

The liberalization of the economy in the early 1990s minimized business barriers. The
sector has found more avenues to the market with the development of modern retail systems
such as supermarkets. Meanwhile, transportation and storage logistics have improved.

The beverage sector, excluding alcoholic beverages, is worth about $16 billion. Tea and
coffee are the most popular beverages, followed by soft drinks (carbonated drinks and juices),
health drinks, milk-based drinks, flavoured drinks, and energy drinks. Half of the tea and coffee
consumed in the country is sold unpacked. The alcohol beverages market is estimated to be
worth about $35 billion, with whiskey, beer, and wine as the most popular drinks. The Food
and Beverage sector would do well to adopt global standards of quality and safety to earn more
consumer trust. The need of the hour is the introduction of Total Quality Management
principles.

Indian Tea Segment

The Indian tea industry is about 172 years old. India is world’s largest consumer,
second largest producer and fourth largest exporter of tea after China and accounts for nearly
30 per cent of global output and nearly 25 per cent of tea produced worldwide is consumed in
India. Branded market accounts for nearly 55 per cent of the total market and is growing at
about 20 per cent while the unbranded market is growing at 10 per cent annually. It plays an
important role in national economy.

Indian tea is amongst the finest in the world owing to strong geographical indications,
heavy investment in tea processing unit, continuous innovation, augmented product mix and
strategic market expansion. Production of tea reached 1,325.05 million kg 2017-18 (according
tea board of India).

The prominent tea growing regions in India are Darjeeling, Assam, West Bengal, Tamil
Nadu and Kerala. Along with these regions Karnataka, Tripura, Himachal Pradesh,
Uttaranchal, Arunachal Pradesh, Manipur, Sikkim, Nagaland, Meghalaya, Mizoram and Bihar
also produces tea. India offers high-quality specialty teas, such as Darjeeling, Assam Orthodox
and the high-range Nigiri, which have a distinctive aroma, strength, colour and flavour.

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Tea production is led by Assam (307.08 thousand hectares), West Bengal (140.44
thousand hectares), Tamil Nadu (69.62 thousand hectares) and Kerala (35.01 thousand
hectares). Orthodox tea production is balanced basically with the export demand. The total
export of tea in 2017-18 was worth US$784.97 Million. Total Tea exports stood at US$ 830.90
million in 2018-19 and reached US$ 535.13 million in 2019-20 (till November 2019). Between
April-November 2019, major importers of Indian tea were Iran (US$ 131.77 million), CIS
(US$ 90.29), USA (US$ 37.35 million), UK (US$ 30.97 million), UAE (US$ 25.30 million)
and China (US$ 21.70 million).

The competitors to India in tea export are Srilanka, Kenya, China, Indonesia and
Vietnam. Indian tea companies have acquired a number of iconic foreign tea enterprises
including British brands Tetley and Typhoo.

KERALA SCENARIO

Kerala has gained a prominent place in the food industry with tremendous production
and export growth in spices, tea, seafood, and cashew. With the vastness of agricultural food
production, the state has evolved into a major hub for food processing industry. While in the
year 2014-15, exports of spices amounted to Rs.3285.34 crore, the state recorded exports of
seafood worth Rs.5166.08 crore and cashews worth Rs 3098.75 crore. The state, with the aid
of Kerala Industrial Infrastructure Development Corporation (KINFRA), which is set up
under the Act of the State Legislature, has played a pivotal role in boosting the food industry
in the country for the past two decades.

Government of Kerala has accorded “priority status” to the food processing sector due
to its huge potential for development. Kerala has always been in the forefront with respect to
food processing, being a major exporter of food products. Kerala’s association with food
exports to various foreign countries dates back to 16th century. Therefore, it can be said that
Kerala has always been a ‘leader state’ in food processing.

Since the time of country’s Independence, products that were exported from Kerala
such as cashew, seafood and spices mainly constituted the traditional industrial sector of
Kerala. These sectors have over the years evolved into modern food processing sectors. Kerala
is a leading producer and exporters of various spices.

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With respect to cashew, the business has developed to such an extent that the raw
material produced in the state has become insufficient to meet the demand and therefore raw
materials are being imported to be processed and exported. Coffee and tea are two other
products that make significant contributions to exports from the state.

Tea segment in Kerala

Kerala is renowned the world over for being the major producer and exporter of tea.
Tea is grown in high ranges and is available in an exotic variety. Kerala has a very long history
of trade in agricultural commodities. This exchange started much before the arrival of the
Europeans in India, with commodities like tea reaching distant markets even during the
beginning of this millennium. These commodities also played an important role in the early
trade with the European merchant. However, it was the European traders who started
introducing exotic spices to Kerala. Kerala continues to be a major contributor to the
international spices trade over the last decade. The export of spices from Kerala is mainly
through Cochin and Trivandrum Ports.

COMPETITIVE FORCE MODEL (PORTER’S 5 FORCE)

Porter's Five Forces Framework is a method for analysing competition of a business. It

draws from industrial organization economics to derive five forces that determine the
competitive intensity and, therefore, the attractiveness of an industry in terms of its
profitability.

Porter's five forces are:

1. Intensity of industry rivalry.

2. Potential of new entrants into the industry

3. Bargaining power of suppliers

4. Bargaining power of customers

5. Threat of substitute products.

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 Intensity of industry rivalry.

Threats of rivals can be reduced by employing a variety of tactics. To minimize price

competition, distinguish your product from your competitors’ by innovating or improving
features. Other tactics include focusing on a unique segment of the market, distributing your
product in a novel channel, or trying to form stronger relationships and build customer loyalty.
The intensity of competitive rivalry in the industry is extremely high. Company faces
competition from its direct competitors, which are competing with each other over price,
products and promotions intermittently. The slow market growth essentially means that these
increasing market shares from competitors have intensified the market rivalry, which is
threatening market position of companies. The increasing concept of working women is a
major force which becomes the cause of change in industry and the nature of competition face
by the companies in industry.

 Potential of new entrants into the industry

New entrants bring a desire to gain market share and often have significant resources. The
most important barriers to entry are: capital requirements, government policy and regulations,
access to inputs and distribution, economies of scale and other cost advantages switching costs
and brand identity. It is known that a production process for a specific good or service exhibits
economies of scale over the range of output when average cost declines over that range. This
industry is not an easy business to start because it is capital intensive. The threat of entry of
new competitors into the industry is low. The findings of this research indicated that it requires
huge capital investments in order to be competitive and to establish a brand name. Major brands
have already captured the fast consumption market.

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 Bargaining power of suppliers

Any business requires inputs-labour, raw materials. The cost of your inputs can have a
significant effect on your company’s profitability. Contracts and positive relationships with
suppliers and producers are another way a small agricultural producer can manage the
uncertainty and power of suppliers. As seen in Table 1 food processors can buy agricultural
produces from many, weak small and medium farmers. The bargaining power of suppliers is
fairly low.

 Bargaining power of customers

The power of buyers describes the effect that your customers have on the profitability of
your business. The transaction between the seller and the buyer creates value for both. But if
buyers have more economic power, your ability to capture a high proportion of the value
created will decrease, and you will earn lower profits. The bargaining power of buyers is fairly
high. In cases where products have a slight differentiation and are more standardized, the
switching cost is very low and the buyers can easily switch from one brand to another. It has
been proposed that customers are attracted towards the low prices.

 Threat of substitute products

Products from one business can be replaced by products from another. If you produce a
commodity product that is undifferentiated, customers can easily switch away from your
product to a competitor’s product with few consequences.

PEST ANALYSIS

PEST Analysis stands for political, economic, social and technological analysis. PEST analysis
is a management method whereby an organization can assess major external factors that
influence its operation in order to become more competitive in the market.

Political Factors:

 The Ministry of Food Processing Industries:

The Ministry of Food Processing Industries is a ministry of the Government of India

responsible for formulation and administration of the rules and regulations and laws relating to
food processing in India. The Government of India has been instrumental in the growth and

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development of the food processing industry through the Ministry of Food Processing
Industries (MoFPI) which make all efforts to encourage investments in the business.

 Food Safety and Standards Authority of India:

In India the Food Safety and Standards Authority of India (FSSAI) is the apex food
regulator. It is empowered by and functions under the Ministry of Health and Family Welfare,
Government of India. The FSSAI implements and enforces food regulations as prescribed in
the Food Safety and Standards Act, 2006 (FSS Act). The regulations of the FSS Act became
effective in 2011 with FSSAI as its regulatory body. Though the Act continues to evolve it
needs to be further harmonized with standards of international agencies for global parity.

 Income Tax, Custom Duty, Excise Duty:

It is tax on income imposed by the Central Government. Income Tax rebate is allowed,
100% of profits for 5 years and 25% of profits for the next 5 years, for new industries to process,
preserve and package fruits and vegetables. Customs duty on import of food processing and
packing machineries and their parts is chargeable in the range from 7.5% to 10%. Central
Excise duty is an indirect tax levied on those goods which are manufactured in India and are
meant for home consumption. Excise duty for the food and beverages sector ranges from 8%
to 16%.

 Labour Regulations and Laws in India

Laws governing labour in India are over 100 years old and of little practical use in a modern
context. Ostensibly the government could take steps to reform labour laws but not without
considerable opposition from trade unions. Recently the NITI Aayog stated that labour laws
need to be made relevant and business-friendly. It stated when companies have greater leeway
in and hiring and firing workers it will make doing business easier. Yet labour reform is
necessary not only because it will benefit enterprises but also because it will benefit labour.

 Environment regulations:

Each step in the food industry system food production, processing, transportation, storage,
distribution and marketing has some impact on the environment and there is much concern
about environmental pollution. Due to the highly diversified nature of the food industry,
various food processing, handling and packaging operations create wastes of different quality
and quantity, which, if not treated, could lead to increasing disposal problems and severe
pollution problems. Research should be intensified to improve efficiency in waste treatment,

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and to minimize waste in food processing and manufacturing operations through advanced
manufacturing practices, and constructive utilization of what is unavoidable by bioconversion
of by-products and waste into edible food, feed or industrial chemicals in order to decrease
environmental loadings as a consequence of better integrated waste management.

 Ease of doing business

The entry of multinationals, the aggressive rise of commodity branding, an opening up

of the retail sector, increase in local players and the low cost of technology is changing the
economics of the food industry. Sensing the potential of the Indian market, many
international players have forayed into the market by making deals with the domestic
players, for example Starbucks and Tata. Many leading foreign brands are rapidly
expanding and now have presence in many tier II and tier III cities. Domestic players like
Haldiram’s are also gearing up for expansion through routes like franchising.

Economic factors:

 Exchange rate

In the short-term, the exchange rate is determined by the flow of a currency between
two countries. Foreign investors' confidence and expectations will also influence the exchange
rate. In the long-term, exchange rate changes influence the investment and production of the
agriculture sector. Understanding exchange rate and its basic application is important for
agricultural producers. Exchange rates impact agricultural commodity prices, food products
and farmers' margins. Food processing businesses need to recognize the impact of fluctuating
currency on their business and consider ways of managing this risk. The price change on
imported inputs depends on the willingness or ability of the suppliers to pass on the exchange
rate changes to producers.

 Interest rates

Interest rates have significant impacts on the food and beverages industry by affecting the cost
of borrowing money, investment decisions and values of products. Changes in interest rates
directly affect profitability of this sector by influencing borrowing, spending and investing,
since agriculture is a capital-intensive industry. Changing interest rates indirectly impact food
industry through affecting the level of general economic activity, such as output and
employment, exchange rates and international trade. Interest rates affect agricultural markets

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in three major ways as costs of holding inventory, effect on investment decisions such as land,
machinery and input purchases, overall farm business risk associated with possible rising
interest rates. To minimize overall borrowing costs firms in beverage industry are using
currency swaps and interest rate to significantly adapt the rates in order to minimize the
borrowing cost.

 Foreign Direct Investment in the Food Processing Industry

Foreign Direct Investment (hereinafter referred to as "FDI") is permissible for all the
processed food products under 100% automatic route (except for items reserved for micro,
small and medium enterprises, where FDI is permissible under automatic route up to 24%),
subject to applicable laws/regulations/securities and other conditions.

Social factors:

 Population

The huge population (1.27 billion in 2015) and the burgeoning middle class are the
advantage for the industry. About half the population is under 30 years of age, and many of
them start to earn early and strive to lead a better quality of life.

 Age

Consumer choice for beverages and soft drinks is affected by two major characteristics
such as ethnicity and age. In compare to adults, younger consumers specially teens and twenties
have fewer interest spans for products and have a preference of products that seems different
and to be fun. Now players in beverages industry changes to non-cola products for instance
bottled water, sports drinks, tea etc.

 Income

The higher income levels of consumers give them higher disposal incomes. Lifestyles
have changed, and more families are eating out and trying out different cuisines. Working
couples are increasingly purchasing convenience foods. Consumers have become more
discerning and those in urban areas particularly trust branded foods for their promise of quality.
This had made a great impact on the industry.

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 Health consciousness

A section of consumers have become extremely health conscious. This segment is moving
towards protein-rich foods and fruits and vegetables from carbohydrate-rich or fat-laden items.
Quality-conscious customers have taken the bottled water market to $50 million. Due to health
reason, age factor plays very important role when choosing a soft drink or beverage. Some
studies have been conducted and found that soft drinks and cola products in general may result
health problems specially, kidney stones.

Technological factors:

Technological innovation is also a key growth driver for this sector. The use of digital
devices and growth of social media have led to the importance of adopting e-commerce and
digital marketing strategies. Food processing industry has evolved from the earlier days of
crude processing with a purpose of preserving food by cooking, smoking, steaming,
fermenting, sun drying and preserving with salt. While the technological change has been
gradual, the onset of industrial revolution resulted in major advancements in the food
processing techniques which was necessitated and driven by the military needs of nations.

The technological advancements have been rapid with the advent of the space and the
information technology age, which gradually required and also facilitated the changes in
consumer food habits and preferences across the world. These changes brought in technologies
like juice concentrates, preservatives, colorants, self-cooking meals (ready-to-eat/cook foods),
reconstituted foods and fruit juices, etc. While the global industry has embraced these
technological advancements, India is yet to embrace them fully. It is imperative for India to
adopt the best practices in global markets to address or find solutions for the burning issue of
wastage at harvest and post-harvest of major agricultural products, especially in fruits &
vegetables segment, which has witnessed higher wastage.

Some of the Indian players are making use of the newer technologies to increase
production, meet international quality standards and thereby increase profitability, since the
industry is largely unorganised the adoption has been sporadic. In beverage industry
distribution process is a big challenge because process can be able to place the right products
at right time. Even though, the market opportunities have been emerging in the recent past,
requirement of investments, lack of bank credit facility and long gestation period have been
impeding the adoption of newer technologies.

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SWOT ANALYSIS

Strengths:

1. Round the year availability of raw materials.

2. Social acceptability of food-processing as important area and support from the central
government.
3. Vast network of manufacturing facilities all over the country.
4. Vast domestic market.

Weaknesses:

1. High requirement of working capital

2. Low availability of new reliable and better accuracy instruments and equipment
3. Inadequate automation information management.
4. Remuneration less attractive for talent in comparison to contemporary disciplines.
5. Inadequately developed linkages between R&D labs and industry.

Opportunities:

1. Large crop and material base in the country due to agro-ecological variability offers
vast potential for agro processing activities.
2. Integration of developments in contemporary technologies such as electronics, material
science, computer, bio-technology etc. offer vast scope for rapid improvement and
progress.
3. Opening of global markets may lead to export of our developed technologies and
facilitate generation of additional income and employment opportunities.

Threats:

1. Competition from global players.

2. Loss of trained manpower to other industries and other professions due to better
working conditions.

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Chapter- 3

COMPANY ANALYSIS

CONNEMARA TEA- THE TROPICAL PLANTATION LIMITED.

BUSINESS ANALYSIS

History of the company

The Tropical Plantation Limited was started in the year 1919 as a small tea plantation
in the region of Western Ghats. This plantation then developed to commence their own factory
by the year 1941, headquartered in Kottayam, Kerala. The company was founded by Mr. P.T.
THOMAS. The Tropical Plantations Ltd was incorporated on 13 October 1919. It is public
unlisted company with a paid up capital of 20,00,000INR. The beginning of the business was
with tea production. His work was based on the motto “Making Quality Tea, Quietly”. The
company is located in Vandi Periyar, which is the nearest place to Thekkady.

It was very easy to create a market among the local people as the tea consumption habit
of people is high. When the customers had once begun to use the product they were impressed
by the product quality and taste, which leads to the faster development of the company. The
plantation field of the company attracts the tourists and made an excitement among them to
taste the tea. This also helped the company to develop more. From the collection of raw
materials to delivering final product to customer hands, Connemara assure that in each and
every step, quality and purity is maintained to its best levels.

The company has an awfully long history in the field of business since it was started in
1941. Connemara tea that grows in slow and steady with in the last few decades by making
variety of tea. There were many success and failures which made the company to strive even
in very difficult situation. The consumer pack now gets good acceptance from the common
public through its Aroma, Taste and Quality when compared. At present Connemara tea is one
among the leading manufacturers, suppliers and exporters of tea products in various parts of
India and foreign countries. It is the passion and compassion to serve the consumers, which
helps the company to reach its heights.

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Mission:

 To produce a consistently high-quality product, exceeding customer expectation at a

marginal cost.
 Creating an excellent work environment
 Ensure sustained growth with commitment towards social and environmental values.
 To produce maximum quality products with utmost care in processing and
manufacturing with natural taste, colour and appearance.
 To generate employment opportunities for unemployment in the local region.
 To make continuous availability of products in the market.
 To ensure a smooth production without deforestation.
 To protect the interest of government by obeying all the regulations insisted.

Vision:

 To make tea quietly.

 To ensure correct supply of the product according to the demand their customers.
 To collectively create a unique and sustainable business.
 To provide consistent employment to the employees.
 To ensure the commitment and involvement of all the employees.

Founder and his vision.

Connemara Tea-The Tropical Plantation was founded by Mr. P.T. Thomas. He was a
person with good vision and values.

Mr. P.T. Thomas was having an aim to make the product in a calm environment. So, he
made a motto to his company that “Making Tea Quietly”. His main vision while the
commencement of the company was to provide employment to the local people, where there
was more of migrants from Tamil Nadu. Since the time of commencement, the company is
providing a better life to the employees, that shows the success of his mission.

Business in term of product and service

Connemara Tea started its production with black and now it is having varieties in tea,
coffee and pepper. Company produces 6,00,000 kg of tea in a year. Now company is having
the following products:

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 Black tea
 Green tea
 White tea
 Black coffee
 Black pepper

Black tea

Black tea is the main product of Connemara tea. It is the orthodox tea. The tea leaves
are collected from the field and gone through the process like withering, rolling, CTC,
oxidation and drying. CTC is the main advantage of Connemara Tea. Only 50% of Indian Tea
is produced through the process of CTC. While 100% of the tea from Kenya is made by CTC
process.

Green tea

Green tea is the value-added product of the company. Green tea is made from
unoxidized leaves and is one of the less processed types of tea. It therefore contains the
most antioxidants and beneficial polyphenols.

White tea

White tea is also an innovative and value-added product from the company. It is most
delicate tea. It produced with minimal process.

Black coffee

Black pepper

Growth related decision

The decision about the location for Connemara Tea- The Tropical Plantation was itself
was an excellent one for growth, because it was near Thekkady that will help the company to
attract local as well as tourist customers. Another decision which led the company to the growth
is that to recruit migrant people as employees. This helped the company to maintain good
human resource at a lower wage. They also decided to plant black coffee and black pepper as
intercrop so that they can balance during low production period.

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Failure and risk taken as experience

Connemara Tea-The Tropical Plantation Limited has gone through a main failure
during the year of 2000, that was when the price of tea went extremely low. During this period
many of the small tea factory has wound-up. But Connemara had faced and overcome the
situation by taking important decisions in their management and production area. Connemara
had started to produce

List of Shareholders and their contribution

 Palampadam Thomas Joseph. He was appointed on 01 February 2009 and he is the

Managing Director of Connemara Tea. His contribution is 77.66 lakh rupees.

 Thomas Palampadam Thomas. He was appointed on 01 September 2002 and he is the

All-time Director of the company. He contribution was rupees 106.40 lakhs.

 Kaithayil George Joseph. His appointment date is 29 September 2004 and he had

contributed rupees 20.00 lakhs.

 Kytharam Narayanan Subramanian. He was appointed on 28 September 2005. His

contribution is rupees 39.40 lakhs.

 Cunnumpurathu John Abraham. He was appointed on 28 September 2006 with

contribution of 21.00 lakhs.

 Thomas Cherian. He was appointed on 06 December 2006. He is having a contribution

of rupees 28.40 lakhs.

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SWOC and PEST Analysis on the Company and its environment

PEST ANALYSIS

Political Factor

 Tea board of India

The tea industry in India is highly regulated. Under the Tea Act, 1953, the tea board has been
constituted by the Government of India to regulate the production and extent of cultivation of
tea, improve the quality of the tea, promote cooperatives efforts among growers and
manufactures of tea, secure better working condition and the provision and improvement of
amenities and incentives of workers etc. permission has to be obtained from the tea board for
planting of tea on any land, replacement of tea area by planting tea.

The political environment is perhaps among the least predictable element in the
business environment. A cyclical political environment develops as democratic government
have to pursue re-election few years. This external element of business includes the effects of
pressure groups. Pressure groups tend to change government policies.

As political system in different area vary the political impact differs. The country’s
population democratically elects open government system. In totalitarian systems,
government’s power derives from a select group.

Impact on economy

 Changes in regulation: Government could alter their rules and regulations. This could
in tum influence on business. There is always a reaction to the social environment. The
social environment urged a change to make public companies more liable.
 Political stability: Lack of political stability in a country effects business operation. This
is especially true for the companies which operate internationally. This could lead to
riots, looting and general disorder in the environment. These disrupt business
operations.
 Mitigation of Risk: Buying political risk insurance is a way to manage political risk.
Companies that have international operations use such track their political environment.

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There are also certain political factors affecting business which are as follows:

 Bureaucracy
 Corruption level
 Freedom of the press
 Tariffs
 Trade control
 Anti-trust law
 Employment law
 Discrimination law, etc.

Economic factors:

Economic factors include the inflation rate, exchange rate, interest rate, employment or
unemployment rate and other economic growth indicator. The economic factors faced by an
organisation have a significant impact on how a business carries on its operation in future. The
exchange rate effects the organisation by affecting the cost of imported and exported goods.
Furthermore, the interest rates prevailing in the economy influence the capital available to the
organisation and hence play an important role in the expansion and growth of the organisation.

Social factors:

 Culture

It is culture in India that almost every individual in India are the regular consumer of tea at
least twice in a day. There is a tradition of offering tea to the guest in the home. Now the trend
is changing. Now in India every occasion is celebrated with Tea.

 Health consciousness

Dietary components influence prevalence of morbidity and mortality due to chronic disease.
To prevent this, more amount of antioxidants should be consumed in daily diets, which is
readily available in a simple cup of black tea. It is also a natural beverage which provide amino
acid that are beneficial to health without adding up the caloric in diet.

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Technological factor

The labour force accounts for 50 percent of the cost of production, as plucking of the
leaves requires expertise and these leaves are responsible for producing senior quality tea.

The technology that is used in the tea production is not very advanced. new technology
innovation is not very advanced the basic product, Tea. Being highly labour-intensive
technological factor is least affecting the tea industry. India is the largest manufacturer and
exporter of the tea machineries. The company is a symbol of excellence giving a perfect blend
of quality and care in every cup of tea with semi-automated technological advancement.

SWOC ANALYSIS

STRENGTH

 Strong demand for tea in the domestic market.

 Well maintained tea gardens.
 Salubrious climatic conditions for tea cultivation.
 Strong production base.
 Perineal character of tea plant.
 Motivated manpower with experience and expertise in tea production.
 Good export performance.
 Strong research and development department.
 Effective participative management structure.
 Thekkady gaining popularity in world tourism map.

WEAKNESS

 Difficulty in mechanization due to geographical structure of land.

 Restrictions of Tea board in case of pricing and sales.
 The company is not having an established brand in market.
 Diminishing availability of labour.
 Old age of the tea bushes.

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OPPORTUNITIES

 New export operations.

 Growing demand for tea as a health attribute.
 The plan of company in diversification of crops.
 Huge scope available for tourism and related areas.

CHALLENGES

 Increasing labour costs and cost of production.

 Changing climatic conditions can affect the yield of tea production.
 Competitions faced in the domestic markets.
 Lack of manpower availability to meet labour intensive plantation operations.
 Increase on export duty.

STAKEHOLDER ANALYSIS

 Supplier/Vendors

Connemara tea is a tea producing factory. Tea leaves are the major raw material used
for the production. Being a factory, which owns a plantation field of 4500 hectares of tea plant,
Connemara itself is the supplier of main raw material to the company. Fertilizers and pesticides
are required for the growth of tea plants and to ensure the full potential yield from the field.
So, these should be purchased from outside. Upputtil agencies, Kottayam are the suppliers of
fertilisers and pesticides to the company. The collected tea leaves are gone through different
processes like withering, CTC, drying, heating etc. Different machineries are used different
process. For the purchase of machineries, the company call for quotation from different
companies and best quotation is selected for purchase. As of now, Vikram India Ltd and Steels
worth are the supplier of CTC roller, Kilburn co. supplies drier and Paruko supplies heater.

 Customers

. Tea factories are running by the rules of Tea Board India. According to the regulation
certain percentage of production should be sold through tea auctions. So, complying to the
rules Connemara sells 50% of the production through tea auction. The other portion of
production left out is sold through outlets and distributors. Connemara is having its customers

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among local and foreigners. As the tea drinking habit is very common among the people due
to the favourable climatic condition. It is very easy for the company to make more customers
in locality. Foreign customers are also attracted to the Connemara tea by the factor location of
the company, because it is near to Thekkady, which is an established tourist place.

 Investors/shareholders

Connemara tea do not have any external investors as it is a Limited company. There are 6
shareholders in company. The name of the shareholders of the company are as listed below:

 Palampadam Thomas Joseph

 Thomas Palampadam Thomas
 Kaithayil George Joseph
 Kytharam Narayanan Subramanian
 Cunnumpurathu John Abraham
 Thomas Cherian.

 Collaborators:

Connemara tea collaborate with Sundile Vacations. Pvt. Ltd. It is a tour operating
organisation., which is located in Cochin. The speciality of Sundile vacations are that they
provide a customised tour packages to the customers. Connemara tea is the suppliers of tea to
the company. They exhibit it to the tourist. This make attraction in the tourist about Connemara.
So, Sundile also act as a promoter to the company.

 After sales support:

Connemara tea gives very much value to the customers. So, they make several steps to
retain their customers. After sale supports are given to the customers. Website and phone
number are provided to customers to ensure the facility of registering feedback and
suggestions. All the queries are given utmost consideration.

Address: CONNEMARA TEA-THE TROPICAL PLANTATION

Vandi Periyar (P.O), Idukki district, Kerala. PH : 04869 252 233.

Website: [email protected]

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COMPETITOR ANALYSIS

The major of Connemara tea are

 Kannan Devan
 AVT
 Sahya Tea.

KANNAN DEVAN:

The Kanan Devan Hills Plantations Company Private Limited (KDHP) succeeded Tata
Tea Limited on 1st April, 2005, when the latter exited most of its plantations in Munnar to
focus on the growth of its branded tea business. The Kanan Devan Hills Plantations Company
was formed, making it the largest employee-owned tea company in the world. A unique feature
of the Kanan Devan Hills Plantations Company Pvt Ltd is the implementation of the
Participatory Management System, introduced with a view to ensure full participation of the
employees in the management of the company.

Their strategy:

 To constantly improve productivity and quality in every activity of the company for the
overall benefit of the enterprise, the employees and the community.
 To involve all levels of employees in the decision making process whereby a sense of
ownership is fostered.
 To give employees a better understanding of their role and importance in the working
of the company.
 To satisfy employees urge for self-expression

Their product and service:

Speciality tea, black tea, green tea, ice tea, flavoured tea, essential oils and aroma,
incense stick, coffee.

AVT TEA:

A.V. Thomas was the founding owner of leading family-owned business group
in South India, The A.V.T. Group of companies that is based in Chennai. The business began
through its plantation company that bought a 100 hectares of land in Pasuppara, Idukki
district of Kerala and converted the same into a tea plantation. Beyond its plantation arm all

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the major business verticals of the company is today based in Egmore, Chennai. Today the
group is managed by Dilip Thomas (son of Jeysingh Thomas) and Priyalatha Thomas. The
group is involved in diverse businesses.

Their product and service:

Tea, coffee, rubber, spices, leather goods, food ingredients and natural extracts, medical
appliances, treated rubber wood, shipping and warehousing, agency services, plant
biotechnology, investments, virtual lifestyle etc.

SAHYA TEA:

The product Sahya tea comes from a Co-operative tea factory located in
Thankamany, owned by Thankamany service co- operative bank Ltd. This is a joint
venture of around 3500 small tea cultivators of this area. Sahya Farmers Producers
Company formed by the bank, with the assistance of NABARD enables the farmers to
deliver the tea leaves in the factory and the value of which gets transferred through bank,
the very next day without the interference of any intermediaries. the tea samples are
undergoing all the quality parameters as per the FSSAI and Tea Board of India. The
manufacturing process also involves High Tec technologies of modern machineries and
hygienic packing units.
Their products and services:

Green tea, super strong tea, hotel blend tea, supreme dust tea, leaf tea etc.

PORTERS FIVE-FORCE MODEL

Porter's Five Force Model of Competitive Position Analysis were developed in 1979 by
Michael E Porter. It is a widely used approach for developing strategies in many industries.
The intensity of competition among firms varies widely across industries.

 Threat of New Entrants

 Bargaining Power of Suppliers
 Bargaining Power of Buyers
 Threat from Substitute Products
 Rivalry among the existing players.

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Threads of New Entrants

New entrants to business bring a new production capacity the desire to gain a foothold in
the market, and sometimes, substantial resources with which to compete. These new
competitors may come from several sources: market areas or segments currently do not serve,
indirect competitors with competing products, customers and suppliers. the entrance of new
competitors to market depends on the wall to entry and expected reactions of others firms.
Thinks to take in count to study the entry of new business into the market related to Connemara.
 know if there is a growth and profit potential in our company to attract new customers
 list the gats that make difficult the entry on the business and how we can overcome
them
 see if it’s possible that our customers or suppliers can replace us in our business and
make it all by they own.

Bargaining Power of Suppliers

Supplier power refers to the pressure suppliers can exert on businesses by raising prices,
lowering quality, or reducing availability of their products. When suppliers are to many its
pretty easy to them gain power without even trying to damage the company. Connemara is
itself the supplier of major raw material, Tea. So there is no bargaining power for the suppliers.

Bargaining power of buyers

This factor is important because it is the direct contact with the customer, which is
practically the one in charge choosing our product. Therefore, it is important that by offering
our product, the consumer has the perception that has purchased a good product with excellent
service. That the purchase was a good choice. For this Connemara does all the essential steps
to keep its quality to the standard. From here it shows the reason for the success and profits of
the company for the last century. The essentials for a company, is to keep your customer group.
Therefore, it is important to emphasize product quality and service, as these will make us
differentiate ourselves in the marketplace and have an edge over the competition. Improve
communication in this regard with the customer is clearly effective. All this to make the
customer feel that their money is well spent on a product that meets their needs and provides a
new experience of flavours.

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Threat from Substitute Products

Substitute products that deserve the most attention are those that are likely to improve their
price performance quickly in response to market demands. There is not a direct substitute
product for the tea, but perhaps consumers will prefer some products related to tea-based drinks
or coffee (Soft drinks).
The threat of substitute products is highly perceived in our company because of the
easy access people have to the products sold are and how they can play with the prices to obtain
an advantage.
Connemara have an effective differentiation that will create preference in products with
quality. It is necessary to know that threat doesn’t go away entirely but it is reduced.
It important to know and recognize the existence of subsisted products, because it is essential
to have planning strategy to keep customers and to attract new ones.

Rivalry among the existing players

The strategies pursued by one firm can be successful only to the extent that they provide
competitive advantage over the strategies pursued by rival firms.
Technology and innovation perspective of international competitiveness highly focuses on
industrial competitiveness. It indicates that, the roles of enterprises are to import technology
(via foreign direct investments), learn this technology (through training and development),
improve and consequently innovate. Then competitiveness can be referred as a country’s ability
to create, produce and distribute products in international trade while increasing returns on its
resources.

PRODUCT QUALITY ANALYSIS

ABCD ANALYSIS

ABCD is an acronym that stands for Advantages, Benefits, Constraints, and Disadvantages.
Application of ABCD analysis results in an organized list of a business advantages, benefits,
constraints, and disadvantages in a systematic matrix. This includes how various issues should
be identified for models/concepts/systems based on a generalized framework and then how to
derive a specific framework for either a business model or a concept or a system specifically.
A general guideline is given on how to identify various factors affecting these determinant
issues based on the four constructs advantages, benefits, constraints and disadvantages. Finally,

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ABCD analysing framework is compared with other known business model frameworks like
SWOT, Competitive Profile Matrix (CPM) analysis, EFE & IFE Matrices, BCG analysing
frameworks, Porter's Five Forces Model, and PESTLE Analysis.

ADVANTAGES:

 Very long experience and familiarity in the business environment.

 Eco-friendly product
 The ideal climatic conditions for the production and growing of tea
 Technological advancement in production.
 Health benefit of tea help the company to make domestic market
 Availability of Motivated manpower with experience and expertise for tea
production
 Effective and participative management structure.
 Good transportation facilities.
 Favourable government policies in export.
 The facilities for expansion of tea plantation land.
 Progressive working environment

BENEFITS:

 Large plantation field of tea.

 Less number of countries producing tea.
 Increased demand for Indian spices and beverages in global market.
 Strong dealer network in Kerala.
 Increasing tea habit globally.
 Effective research and development of tea in health aspect.

CONSTRAIN:

 Intervention of Tea board of India in every area of the business. Even in pricing and
sales.
 High competition in market.
 Comparatively less product diversification in tea.

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DISADVANTAGES:

 Lack of product differentiation.

 Water shortages and acute agro-related problems.
 Old age of tea bushes.
 Less importance to advertisements.
 Semi-automated machineries.

SIX-SIGMA ANALYSIS

Six Sigma is a quality management methodology used to help businesses improve

current processes, products or services by discovering and eliminating defects. This increase
in performance and decrease in process variation helps lead to defect reduction and
improvement in profits, employee morale, and quality of products or services. Six Sigma was
introduced by Motorola in 1993. It is expected to be defect-free 99.99966 percent of the time
allowing for 3.4 defective features for every million opportunities. Six Sigma DMAIC (Define,
measure, analyse, improve, and control) disciplines work no matter the size of the organization
or even the size of the Six Sigma project.

Tea industry is more the 100 years old. It covers the highest percentage of lands in this
country while feeding a very large low income community base sheltered in plantations. The
impact of plantations to country's economy, ecological system & water distribution is immense
and thus holds a very important position in country's governance. Unfortunately, the cultural
practices, resistance to change, low education levels of community are opposing a real effort
in growth. Inadequate exposure to modern management are vehemently imposing a challenging
set of constraints to any positive sustained development actions in the sector. Problems are
complex and unorthodox, demanding new solutions. Six Sigma is a discipline, a method and a
tool kit to address such problems in a logical sequence and decisions based on data and
statistical analysis of such data.
 Improving product quality and cutting costs:

The problems in the processes and the defects that are costing time, money,
opportunities and customers are identified. Most tea factories in India are performing at 2 to 3
sigma. Defects in these companies in terms of time and waste would cost them as much as 25-
40 % of their total revenue. This is a considerable amount of loss from profit. So as a first step
the problems are identified.

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 Setting off business metrics

Metrics are essential for six sigma. Processes are measured, understand them and the
process are improved and costs are also reduced. Involvement of leaders are ensured in this
step. Metrics are prepared as it aligns with Company strategy. It is believed that if upper
managers are engaged and committed to process improvement, then all employees will have
the power to make changes based on what the metrics are proposed. Dedication, focus, and
logic of the established metric are also ensured.
 Work in a statistical Model

A basic principle of six sigma is reducing variation in the quality of outputs. To reduce
it, it is measured. Standard deviation is used to measure the variation of values from the
mean. Then how much variation is acceptable to your customer is determined. Those values
are used to set the lower specification limit (LSL) and upper specification limit (USL)
within which each line must operate. Then, Standard deviation is compared. A tea factory
never requires the six sigma level of quality but can define quality levels according to Voice
of customer & improve processes to required capability levels

 Focus on bottom line results.

the executive leaders must support and promote the initiative and provide information about
six sigma and all developments. The initiative also depends on the people who play the primary
roles, who are responsible for using six sigma techniques and tools to achieve results. There
are a number of roles different people take on when establishing the Six sigma initiative in an
organization. Champions are generally upper managers. They serve as mentors and leaders.
Executive training should be offered to all senior managers. Identify and prioritize the factors
suspected of affecting your critical to quality metrics.
 Implementation Planning
The standard six sigma methodology consists of five phases; Define, Measure, Analyse,
Improve and control (DMAIC). This methodology is not rigid, and approaches vary. The model
whichever you use DMAIC or MAIC is the key to Six Sigma. It sequences the steps that are
essential to achieving results. Define the projects, the goals, and the deliverables to customers
(internal & external); measure the current performance of the process; analyse and determine
the root cause(s) of the defects. Improve the process to eliminate defects and control the
performance of the process. Each phase has key deliverables that are used as documentation
and evaluations.

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Define Phase
The important problems are identified and the parameters of the project are defined.
Few factors to be measure, analyse, improve and control are determined.

Measure Phase

Quality characteristics for product is selected and standard of performance of another

product is also defined and measured. The process capacity of the product is established.

Analyse Phase
Define the improvement of the product is defined and variation is also measured. The
cause for the change is determined.
Improve Phase
Variable relationships are discovered among vital few initial of our product and
operating tolerances are established and measured.
Control Phase
The ability to control the vital few initial of our product are determined and a process control
system for the vital few initials of product are determined.

CUSTOMER SATISFACTION AND RETENTION SURVEY

Connemara tea provides the best quality of products to its customers. Quality is the
best way to satisfy the customers. In every step of production quality of the raw material is
ensured. The competitor’s products are purchased from the market and comparative study is
made. This is to make better quality of tea from the competitor’s products. This the step taken
by the company to provide better customer satisfaction. Customers are also allowed to express
their feedback and suggestions through the website and phone number which is provided in
every packet of tea. Every feedback and suggestion are taken in account for the production.
This make a better impress in customer’s mind.
Connemara tea provides discount to the customers buying huge quantity of tea (more
than 100kg). extra discounts are also provided to the customers purchasing more than certain
kilograms. Delivery of the product are also made easier by providing door delivery to the
customers for the bulk purchase. These are customer retention strategy used by the company.

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ORGANISATIONAL STRUCTURE

MANAGING DIRECTOR

GENERAL MANAGER

FIELD OPERATIONS MARKETING FACTORY

OPERATIONS OPERATIONS

FIELD OFFICER MARKETING STAFF FACTORY MANAGER

ASSISTANT FIELD BUSINESS DEVELOPMENT FACTORY

OFFICER OFFICER OFFICER

SUPERVISOR SALES MAN

MECHANIC AND ASSISTANT
ELECTRICIAN FACTORY
OFFICER

WORKER
SUPERVISOR

WORKERS

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PRODUCTION PROCESS

Tea can be produced in two ways. Either by CTC process or by orthodox process. Here
the tender tea leaves are gone through several processes like withering, shedder, rolling, CTC,
oxidation, drying to produce tea. It is the speciality of Connemara tea that it produces CTC tea.
Only 50%of Indian tea are produced CTC process.

Withering

Withering is the first stage in tea processing for black tea. The withering process which
involves passing the leaves through withering troughs. These troughs take away partial moisture from
the leaves During withering, the moisture level is brought down to about 68-70 percent. The leaves
become flaccid and rubbery in texture after withering. The leaves typically lose over a quarter of their
weight in water throughout the withering process. This method is also necessary for promoting the
breakdown of leaf proteins into free amino acids and increasing the supply of freed caffeine, which
changes the taste of the tea.

Shredder

This process is done to improve the efficiency of coming processes like CTC. The withered
leaves are preconditioned in this process and shreddered into small pieces. All the dust particles are
removed from the tea leaves.

CTC (Crushing- Tearing-Curling)

The next important step after withering is done by a Rotor Vane and CTC machine. The Rotor
Vane is used as a preconditioner to CTC machine. Rolling tables can also be used for rolling in place
of Rotor Vane. After rotor vane the tea grains are passed through CTC process. For this CTC roller is
used. At every stage of process, the waste materials and fibres are removed inorder to maintain the
quality and taste of the tea.

Oxidation

oxidation process that begin during the rolling continues. Tea leaves are placed fermenting drum. The
quality of tea depends on the temperature and humidity in the drum. The right degree of fermentation
is reached when the tea acquires a copper-red colour and the process must be halted by drying. It is
crucial to maintain the fermentation temperature.

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Drying

The process of drying brings down the moisture content of tea particles from 60-70 percent after
fermentation to a range of 2-3 percent. A machine called dryer is used for the purpose which makes it
possible for the processed tea to be stored for further use.

Grading and Packaging

Grading is the final stage in tea. In this process, tea is classified on the basis of size of the leaves
and dust. Taste of the tea increases as the size of the leaf decreases and aroma of the tea
increases as the size of the dust increases. Tea is graded as SBOP, BOPL, BOP, BP and PF in
the leaf grade PD, RD, SRD, SFD in the dust grade and FD, GD and FDS in secondary grade.
The graded tea is exposed to air penetrator where the fibres in the tea powder is extracted from
the tea. The graded tea is then packed. Packaging materials are bought from Gujarat. Barcode
system is used in packets.

MARKETING ANALYSIS

Marketing is being the most important it is concerned with analysing the market,
discovering the opportunities, formulating marketing strategies, developing the special
strategies and tactics, proposing a budget and establishing a set of control. Tea trading in the
domestic market is done in two ways, Auction and private selling. Auction sale is considered
to be the best method for sale of tea because tea is a commodity with infinite variety and with
wide spectrum of buyers. The marketing analysis is to anticipate market movements to ensure
the movement of tea without compromising on quality and prices and to implement plans in
production according to the movement, to find new markets, to get feedback and suggestions
from the existing market.

Demand for product

Connemara tea is having good quality of tea varieties in its product line. Sale of its
product is based on the regulations of Tea Board. Major market of Connemara tea is auction
centre. In south India there are 3 auction centres as Cochin, Coimbatore and Coonnoor about
50% of the production should be traded through auction centres. This is according to the
guideline of Tea Board and Tea Trade Association.

The next 50% of the production is old through private sale, packet sale and tea
exhibitions. The tea packets with different quantity is available in the market. This help the

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company to analyse the movement of the product in the market and pack tea according to the
demand of the product. The company do not enjoy the advantage of direct export. The
important customers of Connemara tea are local people and tourist visitors, as it is near to the
famous tour destination Thekkady.

Advertisement strategy

Connemara does not concentrate on media advertisement. It uses mouth to mouth

strategy of advertisement. Apart from this, company have some advantages like location of the
company is a best way of advertisement. The large area of tea plantation itself gives an
exposure to the outsiders about the company and its product. Connemara gives a one-hour class
to the visitors about the tea production and its processes. All this act as advertisement among
the tourists. There are exclusive outlets for the company in many areas of Kerala. Easy
availability of the product to the customers itself make a market. The company also give
advertisement by flex boards

HR DEVELOPMENT AND RETENTION STRATEGY

According to standing orders, there are only two classes of workers.

i) Permanent worker: A permanent worker is one who has been declared fit for work and
has been registered on the check roll of the company.
ii) Casual workers: Casual workers are those who are engaged in work on a purely casual
or temporary basis.

Permanent or casual workers further can be classified into three categories.

 Field workers: They work in the estate as pruners, weeding and spraying workers or
employed. They are usually paid on daily basis.
 Pluckers: Usually, women are employed in plucking the tender tea leaves. It is a
uniform rated work.
 Factory workers: Skilled and unskilled workers working in the tea factory are included
in this category. The wage rate is slightly different from the field workers.

Connemara tea is having efficient and skilled employees which is the strength of the
company. It is having 40factory workers and 360 field workers.

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Recruitment strategy

Connemara is one of the oldest tea factory. Even the management are adopting new
technologies, many of its rules and regulations are still traditional. Recruitment strategy is one
among them. When the staff and supervisor vacancy occurs the management recruits fresher
or experienced persons for the respective positions. Usually, the company absorbs the qualified
children or the dependent of their employees to the appropriate posts. In case of the top
management recruitment, qualified persons are recruit from the head office directly through
the serious step of selection.

Training strategy

The company recruit employees on a temporary basis instead of recruiting fresher and
giving training to them. Efficiency of the temporary employees are analysed by the supervisors.
Based on the efficiency and report of the supervisor the employees are selected as permanent
staff. Management staffs are given training every year about the new techniques of
management and in case where the company is not able to do so, the staffs are provided with
training allowance. In case of implementation of new machineries to the company, the
implementing team itself gives the training about the machineries to the employees.

Production enhancement

Connemara tea is providing ‘We feeling’ among the employees to enhance the
production. having well maintained machineries which helps the employees to make easy in
their work. Any of the problem in the factory is addressed by the managing staffs directly and
solutions are implemented. This is to ensure smooth working environment. All the essentials
steps are taken by the management inorder to increase the productivity of the company.

Employee motivation strategy

Employee motivation is one of the policies of company to increase effectual job

management amongst employees in organizations. A motivated employee is responsive of the
definite goals and objectives must achieve, therefore they direct its efforts in that direction.
Welfare of the employees of the company has been one of the core values that the company
has always believed in.

Apart from ensuring that it strictly abides with all statutory and welfare measures as per
provisions of the various enactments applicable to the plantations. The company is providing

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non-monetary benefit to the employees apart from salary. The company has provided welfare
schemes by its own like, free accommodation, land for maintaining kitchen garden, free issue
of hot tea at the work spot and health facilities to the employees. The company’s Medical
Department is involved in providing comprehensive health care and health education to its
employees and family members. The company provides facilities like playgrounds for football,
cricket, volleyball, badminton etc. Inter estate tournaments for Football, athletics, caroms,
badminton etc. are also conducted.

Employment replacement strategy

Connemara tea is having surplus of employees in the company. So, they are not
implementing any strategies to replace the employees. All the existing employees are worked
till their retirement and the vacancy is not filled by new employee. The vacancy is managed
with the existing employees.

NEW TECHNOLOGY ADOPTION STRATEGY

Connemara is a semi-automated company. The company has the machineries from

which was bought during the commencement of the company to the machineries which is

bought recently. There are machineries which has lifelong usage to one year of usage. They

are maintained as per the requirement. Company uses a process layout system. The machineries

are arranged in a way that product passes through the processes get progressed.

Technology has become advanced and there are fully automated machineries in global

market. Connemara is a company which gives more importance to the employees. So it has

commitment to its employees. Full automation of the company may affect the employment of

the people. So, there are many difficulties for implementing the new technology to the

company. Even then the company is ready to adopt the technologies without effecting the

employment of the people.

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FINANCE DEPARTMENT

Finance is the life blood of business. Without adequate finance, it is impossible for
any business firm to carry out its activities. Financial activity is concerned with the planning and
controlling of the firm financial resources. Business finance is concerned with the acquisition and
utilization of funds in a business enterprise. The function of financial management is to make
intensive and economic use of capital resources of the organization. Since business firms are profit
seeking organization, there functions are to maximize the company’s wealth. The Connemara tea
maintains a clear and perfect accounting system with Muziris Agromis software. The main activity
of the finance department is working capital management, Preparation of financial statements such
as balance sheet, profit and loss account etc. The finance department carries out all the activities
pertaining to long term and short term requirements of the operation The auditor manages the matters
relating to tax.

Functions of Finance Department

 Sourcing finance
 Financial accounting
 Cash management
 Taxation
 Management of costing control
 Preparation of financial reports
 Expense analysis
 Determining the source of funds

FINANCIAL PERFORMANCE ANALYSIS

. The financial performance analysis identifies the financial strengths and weaknesses of the
firm by properly establishing relationships between the items of the balance sheet and profit
and loss account. The financial analyst program provides vital methodologies of financial
analysis.

PROFIT RATIO

 Gross profit margin

Gross profit margin is the proportion of money left over from revenues after accounting for
the cost of goods sold. Gross profit margin is the gross profit divided by total revenue,
multiplied by 100, to generate a percentage of income retained as profit after accounting for
the cost of goods.

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 Net profit margin

Net profit margin or net margin is the percentage of net income generated from a company's
revenue. Net income is often called the bottom line for a company or the net profit. Net
profitability is an important distinction since increases in revenue do not necessarily translate
into increased profitability

 Return on total assets

Return on total assets (ROTA) is a ratio that measures a company's earnings before interest and
taxes (EBIT) relative to its total net assets. It is defined as the ratio between net income and
total average assets, or the amount of financial and operational income a company receives in
a financial year as compared to the average of that company's total assets.

 Net income

Net income, also called net profit, is a calculation that measures the amount of total revenues
that exceed total expenses. It other words, it shows how much revenues are left over after all
expenses have been paid.

 Return on stockholder’s equity

The return on shareholders' equity ratio shows how much money is returned to the owners as a
percentage of the money they have invested or retained in the company.

(ii) LIQUIDITY RATIOS

 Current ratio

The current ratio measures a company's ability to pay current, or short-term, liabilities (debt
and payables) with its current, or short-term, assets (cash, inventory, and receivables). The
current ratio is the proportion of the amount of current assets divided by the amount of current
liabilities.

 Quick ratio

The quick ratio is an indicator of a company’s short-term liquidity position and measures a
company’s ability to meet its short-term obligations with its most liquid assets. Since it
indicates the company’s ability to instantly use its near-cash assets (assets that can be converted
quickly to cash) to pay down its current liabilities, it is also called the acid test ratio.

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(iii) ACTIVITY RATIOS

 Inventory turnover

Inventory turnover is a ratio showing how many times a company has sold and replaced
inventory during a given period. Inventory turnover provides insight as to how the company
manages costs and how effective their sales efforts have been.

 Costs of goods sold

Cost of goods sold (COGS) refers to the direct costs of producing the goods sold by a company.
This amount includes the cost of the materials and labour directly used to create the good. It
excludes indirect expenses, such as distribution costs and sales force costs.

 Days sales outstanding

Days sales outstanding (DSO) is a measure of the average number of days that it takes a
company to collect payment after a sale has been made.

(iv) LEVERAGE RATIOS

 Debt- to -assets ratio

The Debt to Asset Ratio, also known as the debt ratio, is a leverage ratio that indicates the
percentage of assets that are being financed with debt. The higher the ratio, the greater the
degree of leverage and financial risk.

 Total debt

Debt ratio is a ratio that indicates the proportion of a company's debt to its total assets. It shows
how much the company relies on debt to finance assets. The higher the ratio, the greater the
risk associated with the firm's operation. A low debt ratio indicates conservative financing with
an opportunity to borrow in the future at no significant risk.

 Debt-to-equity ratio

The debt-to-equity ratio shows the proportions of equity and debt a company is using to finance
its assets and it signals the extent to which shareholder's equity can fulfil obligations to
creditors, in the event a business declines.

 Times-covered ratio

A measure of the extent to which a firm's earnings cover dividend payments on shares that ex
presses profit after tax and interest charges as a ratio of total dividend payments.

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INNOVATION AND FUTURE PLAN ANALYSIS

Connemara tea has varieties of tea, coffee and pepper as its product. Apart from the
orthodox tea, CTC tea, black coffee and pepper it also has some value added product as follows:

 Handcrafted Green Tea

 Silver Tip (white tea)
 First pick (special tea)

The company is also planning to produce some more varieties of tea in future as follows:

Fermented tea

Fermented tea is a type of tea that undergoes open-air fermentation which may continue
for some months to several years. By exposing tea to humidity, micro flora and further air
oxidises it through auto-oxidation fermentation process and also possibly through some
reactivated oxidative enzymes found in the tea. This, in turn, alters the odour through typically
mellowing the flavour of the tea. Astringent or sour teas are typically transformed into
merchandise that is thick and unctuous, by large mouth feel and aftertaste.

Yellow tea

Yellow tea is a special tea processed in a way like green tea, but with a slower drying
phase, where the damp tea leaves per square measure can take a seat and yellow. The tea is
typically yellow green in appearance and smells entirely different from both white and green
tea. This smell is usually mistaken for black tea if the tea is cured with alternative herbs. Yellow
tea has some similarities in taste with green and white teas. The term Yellow tea can, however,
be additionally used to describe high quality teas served at the Imperial court, though this may
be applied to any variety of imperially served tea.

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Chapter - 4

OBSERVATIONS

 Connemara produces high quality products.

 The company has smooth working environment.

 The company is having its own supply of raw material.

 The customers are satisfied with the company’s products.

 Comparative study is made for maintaining the quality of the product.

 Company is having surplus of employees.

 Monetary and non-monetary benefits are given to the employees.

 Company do not concentrate on the media advertisements.

 The production department follows a systematic and standardized way of processing.

 Eco-friendly production is ensured.

 Company have good lead in domestic market.

 Good employer-employee relationship is maintained in the organization.

 Company is ready to expand its product line by providing value added products.

 Company provides training programs to all employees annually.

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SUGGESTIONS

 The organisation should give more importance to the advertisement.

 Export facilities should be encouraged.

 Better department maintenance should be implemented.

 Research and development should be increased.

 Adoption of new technologies should be encouraged.

 Company should increase market share.

 Number of outlets should be increased.

 New techniques should be adopted in the recruitment process of employees.

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CONCLUSION

Connemara tea one of the oldest tea factory located in Vandi Periyar, in Western Ghats.

The company was established in 1941 so it has a very long history in the field of plantation and

business. The company has variety of tea in its product line. They produce high quality tea. But

they have a very low promotion programs. That resisted the company from acquiring more

market shares. This organisation gives very much importance to its employees. so, they

maintain a very good relationship with its employees.

The organisation study in Connemara tea company was very useful and it helped to

achieve the objectives of the study. It helped to familiarise with the organisational environment

and different department of the company. It made understanding about the management

efficiency and also different constrains inorder to strive in a competitive market. Different

decision taken by managers at different situation are very essential to the organisation

environment.

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Bibliography

Primary data: by personal interaction with the Deputy manager and staffs of the
company.

Secondary data:

 Company records
 Previous year project reports
 Website:
 The Tropical Plantation- www.tofler.in
 www.e-sciencecentral.org
 www.indianmirror.com

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