2020

Detailed Project Report

for Biscuit Manufacturing
Plant
NAGANU FOODS PVT. LTD.
ALUR SAI VISHNU NANDAN & VENKATESWARA RAO R
 Table of Contents:

Page
SL.No Contents
No
1 Introduction 2
1.1 Products & Its Usage 3
1.2 Plant Capacity & Product Mix 3
2 Promoters Profile 4
3 Industry Trend & Outlook 4
3.1 Market Potential 5
3.2 Target Market & Marketing Strategy 6
3.3 Logistics & Positioning of Factory 7
4 Land Requirement for the Project 7
4.1 Sample Area Workings 8
4.2 Sample Layout Plan - Indicative 8
5 Production Process 10
5.1 Raw Materials Required 10
5.2 Biscuit Manufacturing Process 10
5.3 Effluents 11
6 Manpower Requirement 12
7 Implementation Schedule 13
8 Project Financial Outline 14
8.1 Cost of Project 14
8.2 Means of Finance 14
8.3 Immediate Requirement of Finance from Bank 14
9 Financial Calculations & Estimations 15
9.1 Profitability Calculations 15
9.2 Cash Flow Statement 16
9.3 Calculation of DSCR Ratio 17
9.4 BEP Analysis 18
9.5 IRR Calculation 19
10 Conclusion 20

Page 1 of 20
 Project report for Biscuit Manufacturing Plant
Naganu Foods Pvt. Ltd.

1. INTRODUCTION:
The word 'Biscuit' is derived from the Latin words 'Bis' (meaning 'twice') and 'Coctus' (Meaning

cooked or baked), history evidence is that biscuits are made since 17th century. Typically, biscuits are

small baked products made principally from flour, sugar and fat. They typically have a moisture

content of less than 4% and when packaged in moisture proof packing material has a long shelf life,

perhaps six months or more. The appeal to consumers is determined by the appearance and eating

qualities. Biscuits are mainly of two types: hard dough and soft dough biscuits depending on water

activity of dough. Biscuits are made in many shapes and sizes with or without embossed designs or

logos. They are of different flavours as well they may be coated with chocolate, sandwiched with a

fat-based filling.

Biscuit making is a conventional activity in India and in many other countries. The biscuits are

produced by organized sector in large quantities, however, unorganized sector having prominent share

in market. Despite the advent of modern, large capacity and automatic biscuit making plants, large

section of people especially in semi-urban and rural areas still prefer biscuits from local producers and

brands as they are cheaper and offer many varieties. Some of these manufacturers are able to cater to

some typical local palate as well. Thus, they are easily able to withstand competition from organized

sector units.

Page 2 of 20
1.1. Products and Its Usage:

 Biscuits products are ready to eat and convenient to use at any place or anytime.

 Biscuits having a good food value with substantial energy, protein, carbohydrates and minerals

apart from pleasing taste and texture. Handy foods for breaking hunger.

 Diabetic, protein-rich, gluten-free and multi-grain biscuits are available and capturing good

markets among health conscious people.

1.2. Plant Capacity & Product-Mix:

It is proposed here to produce 500 Kg of glucose biscuits per hour. On the same line, we are planning

to produce other varieties of biscuits like butter cookies, salty, Marie biscuits etc.

Page 3 of 20
2. Promoters’ Profile:

The promoters of the company are Hasan Suryadevara and Sai Vishnu Nandan Alur.

Mr. Hasan Suryadevara holds an MBA degree with specialization in finance from Osmania University.

Got 10 years of experience in General accounting and company accounts in which he worked in abroad

(Saudi Arabia) for 3 years as F&A manager. Has a keen interest in becoming an entrepreneur and to

start a company in food manufacturing which made him to start a Dairy, but after getting the loan

sanctioned as he got an abroad job offer, he had to leave the dairy project to get international exposure.

Now as he returned back to India, with exposure and more deep understanding in FMCG he started

this project so as to create some value addition to the industry and also to fill the gap between supply

and demand in the market.

Mr. Sai Vishnu Nandan Alur is an engineering graduate in electronics stream from JNTU Anantapur

and also holds an MBA degree from NIT Warangal, specialised in finance and marketing. International

exposure in Middle East; as a Business Development Lead in UAE Market, to the Company worked.

With his father being a business centric; vast experience in Business, marketing strategy working-out's

for various products. Distributor to Vishaka Dairy UHT Milk for Couple of Districts for almost two

decades and turned his coin to become, tea manufacturer by his own footprints. Picked up the same

grace from Father with almost a decade of experience in retail marketing for different types of FMCG

commodities and products and his Channels helps in driving this New Initiation to the Market.

3. Industry Outlook/Trend:

The biscuit manufacturing industry is growing at the rate of 8% per annum. Now with GST in place

more growth will be in organized sector. The trend is to go for more variety, taste, healthy products

and innovative packaging. As the competition is high in this industry, selection of target market by

identifying gaps, creativity and innovation in products and packaging will decide the growth of this

sub-sector.

Page 4 of 20
3.1. Market Potential:

The biscuits and cookies industry in India, valued at INR 15,000 crores is growing at CAGR of 8%

over the last three years. It is estimated that the industry will be worth nearly INR 30,000 crores by FY

2020. The industry can be classified into two separate sectors – organized and unorganized. Biscuits

and breads are the major components of the Indian bakery industry and together these two account for

almost 80% of the aggregate production. Nowadays the biscuit industry contributes approximately

33% of the total production of the bakery industry. 70% of the biscuits in India are produced by the

small scale sector.

Per capita consumption of biscuits in India has been estimated at 2 kg. This is fairly low compared to

the per capita consumption of over 10kg in the US and the UK and over 4.5kg in the South-east Asian

countries (Hong Kong, Singapore, Thailand, etc.). India is also one of the leading producers of biscuits

in the world along with the US and China. Approximately 17 percent of the biscuits produced in India

is exported to locations such as the following: USA, UK, Ghana, Angola, Haiti, UAE, etc.

With rising incomes, consumers are being lured towards cream biscuits and cookies instead of glucose

biscuits Premium biscuits are likely to increase its share by FY 2021 as manufacturers are now

aggressively entering the premium biscuit and cookie segment on account of higher margins prevalent

in this category. And both Indian union government and Telangana State government are encouraging

the new MSMEs in the food processing industry with incentives and rebates of various types to

encourage new entrepreneurs and support their dreams and to make them come true.

The leading biscuit brands in India are: PARLE, BRITANIA, PRIYA GOLD, ANMOL, HORLICKS,

CREMICA, SUNFEAST, BISKFARM, ROSE, SOBISCO, DUKES, NEZONE, etc. Apart from

Indian brands, imported brands popular in India are: OREO, SUMO, HAPPYBITE, etc.

Page 5 of 20
3.2 Target Market & Marketing Strategy:

As new entrants in to the market, we plan to focus on rural area markets rather than cities and metros.

As per our survey in the gross root level, we found that there is a huge gap of supply for the existing

demand in the rural areas of Telangana and Andhra Pradesh states. So our target market segment is

rural areas like, mandal headquarters, small villages, towns and semi urban areas of both the states. As

bigger players don’t concentrate much on these above mentioned areas, it is better and easy to do

marketing in these areas where the actual consumption is more than urban and metro areas. And

moreover all the targeted areas have well established marketing network for FMCG products which

helps us to decrease our marketing over heads and to launch the product in to the market smoothly.

This type of approach will help us in creating a good market for the products in coming years and will

increase our brand value and market share.

The current trend in market share is:

 Parle-38%
 Britannia 26%
 ITC 10%
 Others 26%

The general strategy being used by any new entering company in this industry is targeting rural India
with strategies such as:

 Low pricing of the product.

 Maintaining 5 rupee packs for a longer period of time.
 Making the same product available at different size packs i.e. Rs. 2, Rs. 5, Rs. 10, Rs. 20, etc.
 Trying to reach rural areas for more growth in sales.

As a new entrant company in the market we are using the same plan with more defined ways such as
concentrating more on rural places and remote places with a plan of:

 Penetrating the rural market by 50% to 65% in 5 to 7 years down the line in AP & Telangana.
 Maintaining a high and deep distribution network which makes easier availability of biscuits.
 Maintaining the depth for each product to cater needs of all types of consumers.
 Making unique recipes to show the difference perceived.

Page 6 of 20
  Releasing new products for every 4 to 6 months to increase the product line and to have varied
sales distribution.

Maintaining the quality and quantity for the money spent by consumers to give the feel of reliability

and thereby creating the brand value and achieving the brand loyalty.

3.3 Logistics & Positioning of factory:

The proposed area for the factory is GIP Jecdcherla. The main reason for us to choose this place is that

the area is strategically positioned. This place is on NH 44, which connects Telangana, Andhra Pradesh

and Karnataka, two of which are our major market segments where we are targeting our products. As

it is right beside NH 44, it is way easy for the transport of raw material and finished products to their

respective destinations. Jecdcherla is a town which is developing rapidly yet very calm and quite town

which helps us to decrease our over heads. This town is well connected with rail and road facilities. It

is also just 65 Kms from international airport. These all factors help us positively in coming years to

improve our business and our relations with all the stakeholders of the industry.

4. LAND REQUIREMENT FOR THE PROJECT:

The land required for the proposed project is around 1200 Sq.Mts to 1400 Sq.Mts, with 2:1 length and

width ratio. This is because the proposed machinery will be around 150 feet long if we put it in a

straight line. The length of the proposed oven is around 70 feet long which cannot be turned. Apart

from that we need to put a cooling conveyor which should be twice the length of the oven. Along with

the main machinery, auxiliary machinery like, sugar grinder, invert syrup machine, floor mixer etc;

will be installed. Dedicated space for raw material storage and finished goods storage will be needed.

For storage of edible oil, we need to install a tanker with capacity around 20 Kilo litres. The sample

area workings and the sample plant layout are furnished in the below sections. The original layout will

be almost same in positioning shown in the sample layout.

Page 7 of 20
4.1. Sample Area Workings:

SL.NO Description Area in Sq.Mts % of Total Area

1 Factory Main Shed 648 47.93%
2 Green Zone 167.75 12.40%
4 Parking, Loading & Unloading area 109 8.06%
5 Side path length wise (2 sides) 246.88 18.26%
6 LPG Storage 8.125 0.6%
7 Oil Tanker 20.145 1.50%
8 Utility Area 152.1 11.25%
Total 1352 100

Page 8 of 20
4.2 Sample Layout Plan:

Page 9 of 20
5. PRODUCTION PROCESS:

5.1. Raw Material Required:

Requirements of Raw Material is estimated as mentioned below considering the production

capacity of plant as 3 tons glucose biscuits per day (1 shift of 8 hours).

S.No Raw Material Tons/Annum

1 Flour 570.825
2 Sugar 168.435
3 Liquid Glucose 21.411
4 Palmolein 111.33
5 Skimmed Milk Powder 13.452
6 Flavour 1.199
7 Salt 6.283
8 Ammo. Bi-Carbonate 3.115
9 DATEM 3.14
10 Sodium Meta Bi-Sulphite 1.713
11 Lecithin 3.54
12 Vitamin Mix 0.628
13 Water 76.11
981.181

5.2 Biscuit Manufacturing Process:

Biscuit manufacturing consists of four major processes: mixing, forming, baking and packing. Mixing

is a crucial process where shifted flour is mixed with other ingredients and additives in right proportion

to form dough of right consistency as per type of biscuit to be produced. The mixing may be carry out

pin single or double or triple stages as per type of biscuit, ingredients and additives mixing

characteristics and required consistency of dough for moulding. The mixed dough of required

consistency is then fed on to the processing line where it is sheeted or laminated, then cut into required

dimensions under rotary moulding machine followed by baking in two stage oven where each baking

zone has different temperature to bake individual piece of biscuit to get right colour, taste and aroma.
Page 10 of 20
Thus baked biscuits are needed to cool properly in a well-designed cooling zone or belt. The cooled

biscuits are then packed and dispatched.

Fig – 1: Process Flow

5.3. Effluents:

The effluents that are generated from the factory are water vapour, waste water from RO equipment

and solid waste which is generated by handling of raw material like flour, sugar etc. The vapour will

be send out by chimneys and exhaust fans that are connected directly to the oven. The waste water that

is produced from RO is used for watering the green belt inside the premises and for cleaning the
Page 11 of 20
premises. The left over water will be send in to rain water harvesting system inside the compound. The

solid waste will be very less or negligible as we will be using material handling systems which are

semi-automatic. The effluents data furnished below are calculate at peak production scenario and are

on approximate basis only.

i) Water vapour generated per day: 1.49 M3.

ii) Waste water from RO per day: 3.0 M3.

iii) Solid waste generated per day: 5.0 Kgs.

6. MANPOWER REQUIREMENT:

As the nature of the work involved in the production of biscuits with proposed machinery which is

semi-automatic in nature, is to supervise the machines and the process and the flow of ingredients from

end to end. So we will be hiring 10 labour mostly unskilled to semi-skilled. As the machinery and

other equipment need technical people to look after and also to lead the workers we need two technical

staff. As the production of biscuits needs testing of ingredients for quality check and also to test the

biscuits before releasing in to the market we will have lab furnished with all necessary equipment for

testing. So for this purpose we will be hiring a bio-chemist. For the accounting of purchases, sales and

all accounting works and GST compliance work we will be hiring an accountant. As a start we will be

able to generate employment to 14 people directly. This will increase as we grow.

S.No Type of Work No of persons required

1 Administrative Staff 2
2 Technical Staff 2
3 Labour 10
Total 14

Page 12 of 20
7. IMPLEMENTATION SCHEDULE:

Project Stages Time Line

Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19
Idea Incubation
Market Survey
Ground Work
Decision
Company Registration
Search for Land
Discussions with Suppliers
Discussions with Builders
Application for Land Allotment
Land Allotment Order
Ordering Machinery
CFE
Loan Allotment
Starting Construction Work
Completing Shed
Delivery of Machinery
Machinery Installation
Completion of Construction
Installation of Machinery
Manpower Appointment
CFO
Commissioning
Procurement of Inputs
Trail Run
Commercial Production

Project Stages Time Line

Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20
Idea Incubation
Market Survey
Ground Work
Decision
Company Registration
Search for Land
Discussions with Suppliers
Discussions with Builders
Application for Land Allotment
Land Allotment Order
Ordering Machinery
CFE
Loan Allotment
Starting Construction Work
Completing Shed
Delivery of Machinery
Machinery Installation
Completion of Construction
Installation of Machinery
Manpower Appointment
CFO
Commissioning
Procurement of Inputs
Trail Run
Commercial Production

Fig – 2, 3: Implementation Gantt chart

Page 13 of 20
8. PROJECT FINANCIAL OUTLINE:

8.1. Cost of Project:

S.No Costing Heads Quantity Unit Rate Rs. Lacs

1 Land in Sq.Mts + Expences 1352 2394 35
2 Building 1352 - 100
3 Plant & Machinery - - 152
4 Other Equipment - - 25
5 Contingency - - 10
6 Working Capital - - 70
Total Cost of the project 390

8.2. Means of Finance:

S.No Means Heads Rs. Lacs

1 Promoters Capital 50
2 Term Loan 300
3 Unsecured Deposits 40
Total Means of Finance 390

As per our project financial outline, we require the amount of 3 crores as an immediate minimum
requirement with which we can complete the construction of the factory and also completely buy the
machinery we need for the production. Please find the concerned quotes for the construction and also
the machinery in the supporting documents.

8.3. Immediate requirement of Finance from Bank:

S.No Costing Heads Quantity Unit Rate Rs. Lacs

1 Building 1352 - 100
2 Plant & Machinery - - 152
3 Other Equipment - - 08
4 Contingency - - 05
5 Working Capital - - 35
Total Immediate Requirement 300

Page 14 of 20
9. FINANCIAL CALCULATIONS & ESTIMATIONS:

All below estimations are calculated by considering that the production will be for one shift of 8 hours
and for 300 days per annum.

9.1 Profitability Calculations:

ESTIMATE OF COST OF PRODUCTION & PROFITABILITY (Rs.in lakhs)
-
YEARS-------> (1ST) (2ND) (3RD) (4TH) (5TH) (6TH) (7TH) (8TH)
-
A. INSTALLED CAPACITY(Revenue) 3300.00 3300.00 3300.00 3300.00 3300.00 3300.00 3300.00 3300.00
B. Operating Capacity(Revenue) 825.00 990.00 1320.00 1650.00 1650.00 1650.00 1650.00 1650.00
C. CAPACITY UTILISATION(%) 25.00% 30.00% 40.00% 50.00% 50.00% 50.00% 50.00% 50.00%
D. MANUFACTURING EXPENSES
-
RAW MATERIALS (IMPORTED) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
RAW MATERIALS(INDIGENOUS) 299.47 359.36 479.15 598.93 598.93 598.93 598.93 598.93
REPLENISHMENT OF CROCKERY LINEN 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
POWER 30.00 36.00 48.00 59.99 59.99 59.99 59.99 59.99
WAGES 14.64 19.32 28.34 38.97 42.87 47.16 51.87 57.06
REPAIRS&MAINTENANCE 3.00 3.30 3.63 3.99 4.39 4.83 5.31 5.85
RATES & INSURANCE 1.00 1.10 1.21 1.33 1.46 1.61 1.77 1.95
MISCLLANEOUS EXPENSES 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
SUB TOTAL "D": 348.10 419.08 560.33 703.22 707.65 712.53 717.89 723.78
-
E. ADMINISTRATITIVE EXPENSES
MANAGEMENT RENUMERATION 12.00 13.20 14.52 15.97 17.57 19.33 21.26 23.38
SALARIES 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

OTHER ADMN. EXPENSES 8.00 8.80 9.68 10.65 11.71 12.88 14.17 15.59
SUB TOTAL "E" : 20.00 22.00 24.20 26.62 29.28 32.21 35.43 38.97
-
F. ADVERTISEMENT & SELLING EXPNS. 176.63 211.95 282.60 353.25 353.25 353.25 353.25 353.25
G. ROYALTY/EXCISE DUTY 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
H. TOTAL COST OF PRODUCTION 544.73 653.03 867.13 1083.09 1090.19 1097.99 1106.57 1116.01
I. REVENUE FROM OPERATIO S 706.50 847.80 1130.40 1413.00 1413.00 1413.00 1413.00 1413.00
J. GROSS PROFIT BEFORE INT 161.77 194.77 263.27 329.91 322.81 315.01 306.43 296.99
AND DEPRICIATION (I-H) :
K. FINACIAL EXPENSES :
INTEREST ON TERM LOANS 38.43 35.78 30.48 25.18 19.88 14.58 9.28 3.98
INTEREST ON SPL/SEED CAP 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
INT ON BORROWINGS FOR W.C. 9.18 11.01 14.68 18.36 18.36 18.36 18.36 18.36
INT ON OTHER BORROWINGS 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
INT ON FUNDED INTEREST 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
SUB TOTAL "K" : 47.61 46.80 45.17 43.54 38.24 32.93 27.63 22.33
-
L. DEPRECIATION 45.77 39.43 33.98 29.31 25.29 21.84 18.88 16.32
M. OPERATING PROFIT (J-K-L) 68.39 108.54 184.12 257.06 259.28 260.24 259.92 258.34
O. PROVISION FOR TAXATION 24.55 38.97 66.10 92.28 93.08 93.42 93.31 92.74
P. PROFIT AFTER TAX (M-O) 43.84 69.58 118.02 164.78 166.20 166.81 166.61 165.60
Q. NET PROFIT BEFORE TAXES
INT ADDED BACK BUT AFTER
DEPRECIATION OR EBIT(J-L) 116.00 155.34 229.29 300.60 297.52 293.17 287.56 280.67

Note: The profitability basis and projections are indicative and on approximate basis only.

Page 15 of 20
9.2 Cash Flow Statement:

CASH FLOW STATEMENT (Rs.in lakhs)

YEARS------------->
PERIOD 1ST 2ND 3RD 4TH 5TH 6TH 7TH 8TH TOTAL

A SOURCES OF FUNDS
a. NET PROFIT BEFORE TAXES
WITH INT.ADDED BACK BUT
AFTER DEPRECIATION 116.00 155.34 229.29 300.60 297.52 293.17 287.56 280.67 1960.15
b. INC. IN SHARE CAPITAL
EQUITY 100.60 100.60
SPECIAL CAPITAL 0.00 0.00
c. DEPRECIATION 45.77 39.43 33.98 29.31 25.29 21.84 18.88 16.32 230.83
d. INC.IN LONG TERM LOANS&FI 349.40 349.40
e. INC.IN UN.SEC LOANS 0.00 0.00
f. INC.IN BANK BORROWINGS
FOR WORKING CAPITAL 70.60 14.12 28.24 28.24 0.00 0.00 0.000.00 141.20
g. SUBSIDY CENTRAL/STATE 0.00 0.00 0.00
h. OTHERS 0.00 0.00
T O T A L "A": 450.00 232.37 208.89 291.51 358.15 322.81 315.01 306.43 296.99 2782.18

B DISPOSITION OF FUNDS
a. PREL.&PRE.OP EXP 15.00 15.00
b. INC.IN CAP.EXP 360.00 360.00
c. INC. IN CURRENT ASSETS 0.00 145.60 29.12 58.24 58.24 0.00 0.00 0.00 0.00 291.20
d. DEC.IN LONG TERM LOANS 12.05 48.19 48.19 48.19 48.19 48.19 48.19 48.19 349.40
e DEC IN UNSECURED LOANS 0.00 0.00
f INTEREST 47.61 46.80 45.17 43.54 38.24 32.93 27.63 22.33 304.25
g TAXES 24.55 38.97 66.10 92.28 93.08 93.42 93.31 92.74 594.47
h DIVIDENDS ON EQUITY 0.00 0.00 0 0 0 0 0 0 0.00
T O T A L "B" 375.00 229.81 163.08 217.70 242.25 179.51 174.55 169.14 163.27 1914.32

C OPENING BALANCE 75.00 77.56 123.37 197.18 313.08 456.38 596.84 734.13
D NET SURPLUS(A-B) 75.00 2.56 45.81 73.81 115.89 143.30 140.46 137.29 133.73
E CLOSING BALANCE 75.00 77.56 123.37 197.18 313.08 456.38 596.84 734.13 867.86

Page 16 of 20
9.3 Calculation of DSCR ratio:

D .S. C. R STATEMENT. (Rs.in lakhs)

PARTICULARS 1ST YR 2ND YR 3RD YR 4TH YR 5TH YR 6TH YR 7TH YR 8TH YR T0TAL
COVER
a. NET PROFIT AFTER TAX 43.84 69.58 118.02 164.78 166.20 166.81 166.61 165.60 1061.43
b. DEPRECIATION 45.77 39.43 33.98 29.31 25.29 21.84 18.88 16.32 230.83
c. INT. ON L.T LOANS 38.43 35.78 30.48 25.18 19.88 14.58 9.28 3.98 177.59
d. INT. ON SOFT LOANS 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
e. INT. ON FUNDED INT 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
TOTAL COVER 128.04 144.79 182.49 219.27 211.38 203.23 194.76 185.89 1469.85

SERVICE
a. REPAYMENT OF L.T LOANS 12.05 48.19 48.19 48.19 48.19 48.19 48.19 48.19 349.40
b. REPAYMENT OF SOFT LOANS 0.00 0.00 0.00 0.00 0.00
c. INT.ON L.T LOANS 38.43 35.78 30.48 25.18 19.88 14.58 9.28 3.98 177.59
d. INT. ON SOFT LOANS 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
e. INT. ON FUNDED INT 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
TOTAL SERVICE 50.48 83.98 78.68 73.37 68.07 62.77 57.47 52.17 526.99
D.S.C.R.RATIO 2.54 1.72 2.32 2.99 3.11 3.24 3.39 3.56 2.79
D.S.C.R IS EQUAL TO 1: 2.79

Page 17 of 20
9.4 BEP Analysis:

BREAKEVEN POINT.
VARIABLE COSTS:
(Rs.in
lakhs)
RAW MATERIALS 479.15
POWER & FUEL 48.00
WAGES 28.34
CONSUMABLES 0.00
SELLING EXPENSES 282.60
INT ON BANK BORROWINGS 14.68
EXCISE DUTY 0.00
OTHER FACTORY EXPENSES 0.00
TOTAL VARIABLE COSTS 852.77
-
SEMI VARIABLE & FIXED COSTS
-
MANAGERIAL REM & SALARIES 14.52
REPAIRS & MAINTENANCE 3.63
INT.ON TERM&U/S LOANS 30.48
DEPRECIATION 33.98
RENT,TAXES ETC., 1.21
OTHER ADMN EXP 9.68
TOTAL FIXED COSTS 93.51

CONTRIBUTION=(SALES - VARIABLE COSTS) 277.63

BREAK EVEN POINT (%) 13.47%

CASH BREAK EVEN POINT % 8.58%

* Calculated by considering the optimum of 3rd year and

production capacity at 50%.

Page 18 of 20
9.5 IRR Calculation:

I.R.R CALCULATION (Rs.in lakhs)

-
1ST 2ND 3RD 4TH 8TH
5TH YR 6TH YR 7TH YR
CASH INFLOW YR YR YR YR YR
E.B.I.T 116.00 155.34 229.29 300.60 297.52 293.17 287.56 280.67
DEPRECIATION 45.77 39.43 33.98 29.31 25.29 21.84 18.88 16.32
TOTAL: 161.77 194.77 263.27 329.91 322.81 315.01 306.43 296.99
CAPITAL NET DISCOUNTED
BENEFITS
YEAR OUTLAY BENEFITS BENIFITS
CONSTRN 375.00 0.00 -375.00 -375.00
1ST 145.60 161.77 16.17 11.16
2ND 29.12 194.77 165.65 78.93
3RD 58.24 263.27 205.03 67.44
4TH 58.24 329.91 271.67 61.68
5TH 0.00 322.81 322.81 50.60
6TH 0.00 315.01 315.01 34.08
7TH 0.00 306.43 306.43 22.89
8TH 0.00 296.99 296.99 15.31
9TH 0.00 296.99 296.99 10.57
10TH 0.00 296.99 296.99 7.30
11TH 0.00 296.99 296.99 5.04
12TH 0.00 296.99 296.99 3.48
13TH 0.00 296.99 296.99 2.40
14TH 0.00 296.99 296.99 1.66
15TH 0.00 640.19 640.19 2.47
TOTAL DISCOUNTED BENEFITS 0.00

I.R.R (%) 44.87

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10. CONCLUSION:

Here by we request your esteemed bank to encourage us by sanctioning the loan amount so that we
can successfully implement the project and sustain in the market and also to grow as a major player in
the biscuit manufacturing industry.

***

Page 20 of 20