INTERNATIONAL BUSINESS

Exports of Chorizo

(Goan Sausages)

Sri Sri Institute Of Management Studies

By Zico RodriguesBatch: 2011-2012

ACKNOWLEDGEMENT

I take this opportunity to extend my heartfelt gratitude to all those people who have given me support and co-operation, without which it would be nearly impossible to bring this project to a successful completion.

I am grateful to Mr. Raul Costa Azaredo, for sharing his precious time and valuable information

I would also like to thank Mr. Bhasker Assoldenkar for encouraging me and also supporting me in successfully completing my project.

Introduction:

Linguiça or Chorizo commonly called as Goan Sausages are made using diced pork, which are then salted and mixed with stone ground Goan Piri Piri masala. After marinating, this mixture it is then stuffed into sausage casing, strung together with a thick thread and dried. They are usually sold by each strand or else, by the kilo. It is a century old tradition of preserving meats without refrigeration giving these sausages a shelf life of over 8 months, which, which makes it great to buy in large quantities and consume in small quantities, without the hassles of it getting spoilt soon.

Goan sausages are an essential ingredient of Goan cuisine and a must have in every cupboard as it produces a wonderful dish on short notice for that unexpected guest, that's quick, inexpensive and without the need of a cupboard full of spices or the skill of a chef. Just a drop of oil, would be more than required.

Sausages have been with us for a very long time. It’s one of the oldest methods of food preservation. Virtually every culture has developed sausages to preserve meats that could not be consumed at the time of slaughter. This preservation process goes back to the Roman, Chinese, Greek and Babylonian era, where the product that were fermented and dried. It was the Portuguese who brought this delicacy to Goa together with the chillies and wine. The Goans added a blend of spices to produce Goa's signature dish of Goa sausages. It’s a marriage of east meets west which when cooked burst with exotic flavors on your palate. Once eaten it leaves an overwhelming desire for more.

Goa Sausage has a delicate blend of the traditional Portuguese Sausage and spices from Goa. Made from choice pork portions mixed with freshly ground spices, pickled, smoked and then cured for that distinct taste.

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International scenario:

The global production and consumption of pork has increased substantially in recent decades. This demand for pork clearly offers opportunities for pork producers to expand to international sales. Domestic demand for pork in individual countries is related to market size, supply and prices of competitive meats, per capita income effect on protein demand and pork demand’s vulnerability to currency or economic instability.

Primary challenges for the pork industry are animal welfare, ethanol’s impact on feed stock price, labor availability, environmental/political issues and food safety/traceability programs.

While strong competition for export markets will come from both old and new pork producing countries, an improving global economic growth and rising demand for pork, especially in the Asian countries, will contribute to gains for the country producing pork and exports.

Top pork producing countries in the world:

China, with about 50% of the world pig population 25 countries of Europe United States (USA) Brazil Canada

India’s scenario:

If India, compared to the world in terms of Pork production and consumption, is a pity amount, though its known to have the 2nd largest population in the world, followed by China. This is mainly because majority of the population do not consume pork.

Majority of the population around the world who do consume pork, are Christians, and their sub divisions.

The picture above shows the concentration of Christians in India. This suggests that within India too, there is a market for pork. But no doubt, it is small. But growing

Target Market

Dubai, U.A.E.

Analysis of pork exports from India to U.A.E. :

Strengths:

1. Growing economy & potential international market2. Few players in the market.3. Cheap availability of labor within India4. A lot of subsidies given to rearing farm animals including their feed5. Pork, by itself is expensive to purchase6. Few dealers, therefore propensity to purchase is higher7. Command in pricing8. Rate of Producing in U.A.E. is way higher than our rates even after

exporting

Weaknesses:

1. Machinery comes pretty expensive ( in comparison to purchasing it abroad)2. Awareness has to be built, but advertising pork products in U.A.E. is not

allowed3. Quality of pork may not match with the kind of pork, that the Chinese/ U.S.

may export4. The Gulf countries may not be much supportive5. Niche Market

Opportunities:1. The whole market can be captured, initially. Since monopoly2. Large potential market

Threats:1. Various diseases spread through reared animals2. Quality must match to other country levels3. Goan owned restaurants in Dubai like Casa de Goa, Susegad, viva goa, etc.4. The manufacturer itself may start exporting.

“GO-AN Eating” products LTD:

About us:

GO-AN Eating is a company that primarily deals in the exports of Chorizo A.K.A. Goan Sausages. It is located at Majorda, Salcete – Goa. Basically, it is a partnership firm between my uncle and myself, registered under the name GO-AN Eating private Ltd. It is an unlimited liability partnership, which means that, our personal belongings too could be at risk, to pay off immediate debts.

We procure fresh pork sausages from Mr. Roque Menino or from Mr. Costancio, who also sell their produce in the market themselves. These producers, have special skilled laborers, and are soo good that one may say that they are the best at what they do.

We do the packaging of Goan Sausages and export them to U.A.E. The company currently exports Goan Sausages, produced by local producers in Goa, therefore acting as a merchant exporter. We have presently two varieties: Mild and spicy. The reasons for coming up with a different variant, i.e. Mild, which is strange, as Goan sausages are known not only to get your mouth watering, but also your nose, is because most foreigners cannot really take spicy food, due to their eating habits, and so, just to broaden the market even more, we have introduced a variant, that has just a hint of spice. We also plan to export to China, since china’s population is really large, and so is their pork consuming population.

How exactly did the idea conceive?

One would wonder if someone has to start up a pork export business, why would he start up in U.A.E.

In addition, to the locals who do consume pork in U.A.E., many Indians have gone in search for jobs, and many have settled in U.A.E. Over the years, in Goa, it has been seen that every time one would come down to Goa for holidays, they would take back with them about 500 to 2000 sausages for self-consumption in U.A.E. This was my self-experience, and I have also personally got this information from Mr. Roque Menino and from Mr. Costancio, who said that in a month nearly 10,000 stands of sausages are picked up from their shop in the market, Margao, which is worth more than Rs 25000

Another advantage was that when research was done, regarding the documentation, certificates, and other statutory requirements, we found out that U.A.E. is real tight when it comes to exporting pork to their country. And so just before we would call this business plan void, there came an idea in my head:

As a child I was brought up in Dubai, U.A.E. Though being in a Muslim country, U.A.E. seemed to be a little less strict, in comparison to other GCC. And had some slack when it came to adopting to the western culture.

Pork was available, but not in real abundance. That is, not all the supermarkets could keep pork, neither the shops. Only exceptionally, a few dealers like Spinneys, which was a huge supermarket and THOMSUN FOODS LLC could do so. And so I targeted Thompson, to sell my product in their shops. By doing this, less paper work and hassles were there, as Thompsun were into this business since 1994, and have maintained a good relation with the Sheikhs of Dubai.

Vision:

“To be a premium supplier of Goan Sausages, and to be the number one supplier to the Gulf region”

Mission:

“To provide superior quality Sausages at the most reasonable prices”.

Objective:

“Obtaining total customer satisfaction in the product”

Limitation:

We are small scale industry and so it makes it really difficult to produce in large scale, thus, increasing cost.

Packaging:

As the sausages are collected, after they are filled in the sausage casing, we collect them and keep them in the drying section of our unit for 2 days. This is necessary as chances of sausages catching fungus, thus rotting it, is minimized.

After drying them out, they are then analyzed if they are totally dry or not. If yes, then the sausages are packed using Semi-Automatic Vacuum Nitrogen Sealing Machine Flex VN-900 into pouches sized Length: 17cm, Breadth: 12cm and Height: 4cm, which fits just right. These pouches are vacuumed and nitrogen is pumped in it. This keeps bacteria away.

After packing the pouches, they are then put in a box. The dimensions of the box are Length 80cm, Breadth 60cm and height 20cm. In each box, 60 packs of Goan sausages can be accommodated, with enough place, to avoid collision and could be filled with thermacol fillings. These will be placed on the pallet on the ship, and transported safely. This product can take heat, and so refrigeration is not required.

Organization Structure:

Zico Rodrigues

Finanace / Q.C.

Jerome Rodrigues

Marketing

Workers

Operators

Watchman

Profile of the Company:

Name of the company: GO-AN Eating Pvt. LTD

Infrastructure:

The company is situated in Majorda, Salcete – Goa

The total area of the factory building is 1400 sq ft. inclusive of the office area. To assist in packaging, we have purchased a Semi-automatic sealing machine

SEMI AUTOMATIC VACUUM NITROGEN SEALING MACHINE FLEX VN-900

Semi-Automatic Vacuum, Nitrogen Flushing & Sealing Machine is a user friendly packing system to pack and seal product in pre-formed pouches like center seal pouch, three side seal pouch, stand-up pouch and zipper pouch etc. made-up of heat sealable laminated film. The machine is suitable to pack products like dry fruits, potato chips, coffee, mushrooms, processed snacks, cheese, pharmaceutical products etc. This machine is provided with the pneumatically operated sealing & nitrogen flushing system. All the product contact parts are made up of food grade SS 304/316. The machine operation cycle is actuated by a foot operated pulse switch. All machine operations can be customized by individual timer.

The machines operation cycle is: Vacuum, Nitrogen Flushing and pouch sealing

Technical Sophistication:

Pouch Dimension: Length: 17cmBreadth: 12cmHeight: 4cm

Power Consumption:2.5KW

Power Supply:415 V / AC, three phase / 50

Speed :100 pouches/hour

Dimensions:L:1100 mm, W:800mm, H:1800mm

Net Weight:300 Kgs

Documents required for exporting:

1. Registration:The first step is to register the company along with its unique name under the Indian company’s act of 1956.

2. Registration with Export Promotion Council:Export Promotion Council is a non-profit organization for the promotion of various goods exported from India in the international market. EPC works in close association with ministry of commerce and industry, Govt. of India and acts as a platform for interaction between the exporting community and the government. Thus, it is necessary for an exporter to obtain a registration cum membership certificate from EPC

3. Commercial Invoice:Commercial Invoice is a document used in foreign trade. It is used as a custom declaration provided by the corporation that is exporting an item across international boundaries.Although there is no standard format, the document should include a few specific pieces of information such as the parties involved in the shipping transaction, the goods being transported, the country of manufacture, and the harmonized system codes for those goods. A commercial invoice should also include certifying that the invoice is true and a signature. It is normally used to calculate tariffs

4. Packing List:The packing list is an extension to the commercial invoice, as it looks like a commercial invoice. The exporter or the agent reserves the shipping space based on the gross weight or the measurement shown in the packing list. Customs uses the packing list as a check list to verify the outgoing cargao and the incoming. The importers uses the packing list to inventory the incoming consignments.

5. Consular invoice:

An invoice that must be certified by a consular representative of the country to which the goods have to be exported

6. Other documentation may also be required to be officially legalized by consular authorities

7. Certificate of Origin:

The document is used for certifying that the products exported are wholly obtained, manufactured in India. It is generally a integral part of exports documents. It is a document that helps improve the competitive edge of your exports. It enables your buyer to claim preferential tariff treatment when importing your products under many schemes of preferences such as available under WTO, commonwealth preferences, and many more.

8. Bill of Lading:

A bill of lading is a document issued by a carrier to a shipper, acknowledging that the specified good have received on board as cargo for conveyance to a named place for delivery to the consignee who is usually defined. A through bill of lading the use of at least two different modes of transport from road, rail, air and sea.

9. Bills of exchange:

These are demands made for payment by the exporter and presented to the importer, usually through a financial intermediary. They might be at sight when goods are delivered or at maturity

10.Documentary credit:

They are commonly called as letter of credit. These are one of the most popular forms of guarantying payments for international transaction.the types of letter of credit are:

a) Irrevocableb) Revocablec) Confirmed

11. Insurance documents:

Documentations certifying insurance may be required in certain markets. The responsibility for providing insurance is agreed in individual contacts. Information on all aspects of export documentation can be obtained from commercial banks and freight forwards

12. HACCP certified by BSI systems India Pvt. Ltd.

It refers to a quality check, to ensure that the product to be exported, is export quality product and of proper standards

4 P’s

Product:We deal in Goan sausages, mainly of two flavors: Mild and Spicy. The products produced are of high quality, and are made in traditional style keeping the flavors intact

Promotion:The main mode of promoting our product in Dubai, U.A.E., is by attending trade exhibition. We also intend to join in blogs, and also other sites like. http://the-agriculture.com/B2B/Agriculture-Products/UAE-Pork-186761.html

Pricing:It is a product that is relished by many people and especially the Christians (South Indians) who are working in U.A.E. Thereby we provide authentic Sausages at very reasonable rates.

Place:Largest Indian population who have gone abroad for jobs, and other opportunities, are concentrated in Gulf countries. A lot of Goans too are known to have been working for a long time in Gulf countries.

Financial Projections:

Profit & Loss Account 2012 RsSales 9400 packs @ Rs160/pack 1504000Less excise duty -Net Sales 1504000Less purchases 297600Gross Profit 1206400Expenses:Salaries 140000Lighting 40000Maintenance cost 12000transportation cost 20000Advt. and selling expenses 50000Water charges 2500Rent Own premisesTravelling expenses and other expenses 250000Printing & Stationary 16000CIF charges 190000Preliminary expenses written off 3000DepreciationMachinery @ 12% 27000Office equipment 7000Total expenses 757500PBIT 448900Less: Tax 30% 134670Purchase of cartoons, labels, straps 280000Wastages 10000custom fees 30000Loss bared -5770

Due to lack of expertise, we have incurred a loss. And this serves as a valuable lesson to us. This was

done intentionally as to see whether there is adequate demand in the market. If initially annual

units to be sold were set to 25000 units, and if demand was for only 15000 units, a greater loss

would have been incurred. So through trial and error, we have saved a lot of money, and have gained vital market knowledge, and will go ahead producing for

next year, this time 14000 units.

Through Thompsun’s, we have created a new market for Goan Pork Sausages. In the years to come, we

are planning to hold onto Spinneys too, as the propensity of frequent purchase would be more, due

to the number of customers coming in every day, and also the type of customers. In addition, plans of venturing into China are also on, once we are set in

the U.A.E.

THE END