Welcome to Technopreneur

Production Capacity

Qty.

Husk - 60 MT / annum

Bran – 05 MT/annum

Husk – 3.2 MT/annum

Value

Rs. 20,00,000

Uploaded on

April 2007

Introduction and Market potential

The traditional cottage industry for processing cereals occupies a very prominent place in the Indian social fabric. India being essentially agricultural based society, we are processing cereals from the very old days of civilization. Poha is a typical Indian snack made from paddy is consumed as an important breakfast snack in various parts of the country.

The processing of paddy into poha would be best suited for a village based entrepreneur where paddy is available locally. The land and building is taken on rent as it would cheaper to get the building on rent in a village. It would be better if a person in a village who is doing paddy farming puts this project.

Basis and Presumptions

i) The basis for calculation of production capacity has been taken on single shift basis and 300 working days.

ii) The salaries and wages, cost of raw materials, utilities, rents, etc. are based on the prevailing rates in North India. These cost factors are likely to vary with time and location.

iii) Interest on term loan and working capital loan is taken @ 12%. This rate may vary depending upon the policy of the financial institutions/ agencies from time to time.

(iv) The cost of machinery and equipments refer to a particular make/model and pric es are approximate.

(v) The break-even point percentage indicated is of full capacity utilization.

vi) The project preparation cost is considered under pre-operative expenses.

Implementation Schedule

The major activities in the implementation of the project has been listed and the average time for implementation of the project is estimated at 12 months:

Sl. No.	Name of Activity	Period in Months (Estimated)
1	Preparation of project report	0.5
2	Registration and other formalities	1.0
3	Sanction of loan by financial institutions	1.0
4	Plant and Machinery:
	a) Placement of orders	0.5
	b) Procurement	1.0
	c) Power connection/ Electrification	1.0
	d) Installation/Erection of machinery/Test Equipment	1.0

Notes

1. Many of the above activities shall be initiated concurrently.

Technical Aspects
Process of Manufacture

Production Capacity (per annum)

Quantity

Value (Rs.)

Poha - 60 MT

Bran – 05 MT

Husk- 3.2 MT

20,00,000

Motive Power

15 H.P.

Pollution Control

Financial Aspects

A. Fixed Capital

(i) Land and Building
Built up area	125 sq. mtrs.
Office, Store etc.	25 sq. mtrs.
Factory	100 sq. mtrs.
Rent	Rs. 6000 per month

(ii) Machinery and Testing Equipments

Sl. No.	Description	Qty.	Total (Rs.)
1	Misc. machines e.g. poha roller machine, with motor		}
2	Iron plate and pans		}
3	Oven , bhatti		} 5,00,000
4	Weighing balance		}
5	Water tank		}
	Total		5,00,000
	Electrification and Installation charges @ 10% of the cost of machine and equipment		50,000
	Office equipment e.g furniture, fax, computer and telephone etc.		2,00,000
	Total machinery and equipment		7,50,000
(iii) Pre-operative Expenses			50,000
Total Fixed Capital			8,00,000

B. Working Capital (per month)

(i) Staff and Labour

Sl.No.	Designation	No.	Salary (Rs.)	Total (Rs.)
1	Manager	1	5,000	5,000
2	Skilled and semi skilled worker	8	2,500	20,000
	Total			25,000

(ii) Raw Material Requirement (per month)

Sl.No.	Description	Price per Unit	Total (Rs.)
1.	Paddy 4 MT	12,000	48,000
	Total		40,000

(iii) Utilities (per month)	(Rs.)
Power 15x8x25x4x0.8	9600
Water	400
Total	10,000

(iv) Other Contingent Expenses (per month)	(Rs.)
Rent	6,000
Postage Stationery and communication expenses	3,000
Repair and Maintenance	2000
Transport and Packaging	15,000
Conveyance expenses	3,000
Advertisement	10,000
Misc. expenses	1,000
Total	40,000

(v) Total Recurring Expenditure (i+ii+iii+iv) = Rs. 25,000 + Rs. 40,000 + Rs. 10000 + Rs. 40,000	Rs. 1,15,000
(vi) Total Working Capital (3 Months Basis)	3,45,000

C. Total Capital Investment

(i) Fixed Capital	Rs. 8,00,000
(ii) Working Capital (3 months basis)	Rs. 3,45,000
Total	Rs. 11,45,000

Financial Analysis

(1) Cost of Production (per annum)	(Rs.)
Recurring expenditure	13,80,000
Depreciation on Machinery @ 10%	60,000
Depreciation on furniture and office equipment @20%	40,000
Interest on total investment @ 12%	1,37,000
Total	16,17,000

(2) Turnover (per annum)

(Rs.)

By sale of:

1. 60 MT of Poha
2. 05 MT of Bran
3. 3.2 MT of Husk

20,00,000

(3) Profit (per annum) (Before Taxes)

Rs. 20,00,000 – 16,17,000
= Rs. 3,83,000

(4) Net Profit Ratio

	Profit (per annum) ×100
=	-----------------------------
	Sales (per annum)

	3,83,000 ×100
=	-----------------------------
	20,00,000

=	19.15%

(5) Rate of Return

	Profit (per annum) ×100
=	-------------------------------------
	Total capital investment

	3,83,000 ×100
=	--------------------------------
	11,45,000

=	33.4%

(6) Break-even Point

Fixed Cost (per annum)	(Rs.)
1. Total depreciation	1,00,000
2 Rent	72,000
3. Interest on Capital Investment	1,37,000
4. 40% of salaries and wages	1,20,000
5. 40% of other contingent expenses (excluding rent)	1,97,000
Total	6,26,000

B. E. P.

	Fixed Cost ×100
=	------------------------------
	Fixed Cost + Net Profit

	6,26,000 ×100
=	---------------------------------
	6,26,000 + 3,83,000

=	62.04%