PROJECT REPORT
1.0 Introduction:
This proposal evaluates the technical feasibility and financial viability in setting up of a small-scale enterprise to do the activity on manufacturing different kinds of printed materials and news papers in Kerala. Unit has been filed memorandum Part-1 with the district Industries center, Kottayam and applied for permission from Local body for the construction of building and for the installation of plant and machinery.
2.0 Promoter and Management:
The ownership of the unit is as a proprietary concern by Sri Prasad.P.V, Palathil House, Mundathanam, Kangazha, Changanasserry. He is a business man and having rich experience in the management of business concern. He can assure monitoring of the day to day affairs of the proposed unit. The experience from the market studies will help to establish the proposed activity in a successful manner.
3.0 Scope and Market Potential:
Offset printing industry is a value added manufacturing industry for the production of printed materials especially different materials for colleges and other institutions in Kottayam district and other states of Kerala. The unit also wants to print newspapers and weekly magazines for publishers and got orders for printing the same. Using conventional machine requires the support of other printing units for binding, cover design, punching and other works which in turn results less profit compared to have a mechanized machine and other accessories. Raw material required for printing is available in the local market. Past experience in this field will help him to establish the new unit successfully.
4.0 Location, Land and Building:
The unit is proposed to be located at Kangazha in Changanasserry . An estimate of Rs, 150,000/-is assigned for the furnishing of Building.The door number is
Bank has already agreed all financial supports for building, plant and machineries and working capital required for establishing the unit. The total project cost is Rs 20, 00000/-
5.0 Machinery & Equipment:
Details are shown in annexure 2. The plant and machinery proposed to be installed in the unit are Indigenous. Total cost of machinery and equipment to be purchased is evaluated as Rs 1300000/-
6.0 Installed capacity of production:
The unit is proposed to be operated in 150 days per annum. As per the capacity of machinery to be installed and by considering production wastage the monthly production is worked out in the fallowing table.
It is proposed to utilise 70% of the installed capacity in the first year of operation and 75%, 80%, 85%, 90% in the consecutive years of operation. The production realization for first year of operation is shown below. (70% production capacity). The unit gets one college for printing all types of materials for the students and also plans to print news papers and weekly magazines.
| Sl No | Items | Numbers | Turnover /item | Total production charge including profit |
| 1 | Note books | 5500 | 22.5 | 123750 |
| 2 | Weekly | 50000 | 3.25 | 162500 |
| 3 | Rough records | 3000 | 21 | 63000 |
| 4 | Receipt books | 50 | 49 | 2450 |
| 5 | Syllabus books | 375 | 23 | 8675 |
| 6 | Envelops(cotton cloths) | 350 | 3.5 | 1225 |
| 7 | Letter heads (multicolors) | 15 | 215 | 3225 |
| 8 | Paper files | 600 | 9.5 | 5700 |
| 9 | Course file (attendance books) | 400 | 60 | 24000 |
| 10 | News papers | 50000 | 2 | 100000 |
| | TOTAL | | | 494525,Say 495000/- |
7.0 Raw material Requirement:
All the raw materials required by the unit are available throughout the year. The raw material can also be procured from the nearby districts and from other states. The stock and procurement period proposed in this scheme is for a period of 10 days. The details of requirement for 70% capacity utilization in the unit are tabulated as below. The raw material required by the unit is proposed to be arranged through local distributors. The requirements of the unit for the targeted production are as below.
| Sl No | Items | Number of pages | Number of each items | Paper cost (cost of raw material /items) in Rs |
| 1 | Note books | 160 | 5500 | 95000 |
| 2 | Weekly | 50 | 50000 | 125000 |
| 3 | Rough records | 80 | 3000 | 48000 |
| 4 | Receipt books | 100 | 50 | 1100 |
| 5 | Syllabus books | 72 | 375 | 14500 |
| 6 | Envelops(cotton cloths) | | 350 | 630 |
| 7 | Letter heads (multicolors) | 100 | 15 | 1600 |
| 8 | Paper heads | | 600 | 3500 |
| 9 | Course file (attendance books) | 40 | 400 | 13000 |
| 10 | News papers | 10 | 50000 | 50000 |
| | TOTAL | | 352330 Say Say Rs 355000/- | |
8.0 Man power requirement and other expenses:
Total manpower of the unit including the workers is 5 numbers and the details of man power requirement, salary and other expenses per month are as follows.
| Sl.No. | Designation / Category | No | Monthly salary | Amount Rs | ||
| 1 | Skilled workers | 2 | 8000 | 16000 | ||
| 2 | Helpers | 2 | 6000 | 12000 | ||
| 3 | manager | 1 | 7000 | 7000 | ||
| | Total | 5 | | 35000 | ||
| OTHER EXPENSES PER MONTH | ||||||
| Sl.No. | Item | Amount | ||||
| 1 | Power | 15000 | ||||
| 2 | Postage & Telephone | 5000 | ||||
| 3 | Stationery | 5000 | ||||
| 4 | Travelling expenses | 5000 | ||||
| 5 | Miscellaneous | 5000 | ||||
| | Total | 35000 | ||||
9.0 Working capital requirement:
Total requirement of working capital for the first phase of operation is evaluated as Rs. 350000/-. An amount of Rs.250000 /-, is proposed to be obtained as working capital loan from bank.
| Sl.No. | particulars | Period in Days | 1 year | 2 year | 3 year | 4 year | 5 year |
| | Capacity utilisation(%) | 300 | 70 | 75 | 80 | 85 | 90 |
| | Sales | 300 | 6000000 | 6428571 | 6857143 | 7285714 | 7714286 |
| | Cost of raw materials | 300 | 4260000 | 4564286 | 4868571 | 5172857 | 5477143 |
| | Cost of production | 300 | 5002200 | 5343143 | 5687486 | 6030629 | 6374531 |
| A | Current Assets | | | | | | |
| 1 | Stock of raw materials ( day's consumption) | 2 | 28400 | 30429 | 32457 | 34486 | 36514 |
| 2 | Stock in process ( day's cost of production) | 15 | 250110 | 267157 | 284374 | 301531 | 318727 |
| 3 | Stock of finished goods ( day's cost of production) | 1 | 16674 | 17810 | 18958 | 20102 | 21248 |
| 4 | Receivables( day's cost of sales) | 3 | 60000 | 64286 | 68571 | 72857 | 77143 |
| | Total(A) | | 355184 | 379682 | 404361 | 428976 | 453632 |
10.0 Total Cost of the Project:
| Sl.No. | Particulars | Amount RS | Proposed | Total | Loan required | Margin |
| 1 | Land and Building ( own) | | 0 | 0 | 0 | 0 |
| 2 | Building and ther civil construction | 150000 | 150000 | 150000 | 105000 | 45000 |
| 3 | Machinery & Equipment( existing) | 0 | 0 | 0 | 0 | 0 |
| 4 | Machinery & Equipment(proposed) | 1300000 | 1300000 | 1300000 | 1040000 | 260000 |
| 5 | Electrification and machinery installation cost | 200000 | 200000 | 200000 | 160000 | 40000 |
| 6 | Office Furniture | 20000 | 20000 | 20000 | 16000 | 4000 |
| 7 | Brochure, advt and web site | 0 | 0 | 0 | 0 | 0 |
| 8 | Prelim & Pre-operative expenses | 80000 | 80000 | 80000 | 64000 | 16000 |
| 9 | Margin Money for Working Capital | 250000 | 250000 | 250000 | 187500 | 62500 |
| | Total | 2000000 | 2000000 | 2000000 | 1572500 | 427500 |
11.0 Means of Finance:
| Sl.No. | Particulars | Amount RS |
| 1 | Term loan for furnishing (75%) | 105000 |
| 2 | Term loan for machinery & equipment, electrification, furniture etc.. | 1280000 |
| 3 | Margin money loan proposed to be obtained from DIC | 213750 |
| 4 | Investment subsidy assistance | Through DIC |
| 5 | Working capital Loan | 187500 |
| 6 | Own Capital (including the amount already invested in acquiring the fixed assets of the unit) | 213750 |
| | Total | 2000000 |
12.0 Profitability analysis:
Detailed statement is given in annexure. Assumptions made for the calculation are as follows:
(a) Unit will function for 300 days per annum in single shift basis per day.
(b) Proposed to utilise 70% of the installed capacity in the first year of operation, 75%, 80%, 85% and 90% are in the consecutive years of operation.
(c) Interest on term loan and working capital loan is assumed @ 12 % and repairing and maintenance as 5% of cost of fixed assets.
(d) Depreciation @ 5% of cost of building and 10% of the cost of machinery.
(e) Selling expense is considered as 5 % of total sales turn over. This includes the advertisement and publicity charges
(f) Insurance expenses of building and machinery is calculated @ 1% of cost
(g) The cost of raw material and finished product is based on the present market rate.
Depreciation: Depreciation on Building, Machinery and Equipment are evaluated on WDV basis and is tabulated as below
| sl No | Particulars | I year | 2 year | 3 year | 4 year | 5 year |
| 1 | Building | 150000 | 142500 | 135375 | 128606 | 122176 |
| | Depreciation (A) | 7500 | 7125 | 6769 | 6430 | 6109 |
| | WDV on Building | 142500 | 135375 | 128606 | 122176 | 116067 |
| 2 | Machinery and equipment | 1520000 | 1368000 | 1231200 | 1108080 | 997272 |
| | Depreciation(B) | 152000 | 136800 | 123120 | 110808 | 99727 |
| | WDV on Machinery and equipment | 1368000 | 1231200 | 1108080 | 997272 | 897545 |
| | Total depreciation(A+B) | 159500 | 143925 | 129889 | 117238 | 105836 |
SHEDULE OF IMPLIMENTATION
| Acquisition of land | Already completed |
| Construction of Building | Expected to be completed TWO months after availing the loan amount |
| Installation of plant and Machinery | Expected to be completed by one month within completion of the building |
| Trial run | Expected to be completed after installation |
| Commercial Production | November 2011 |
13.0 Conclusion:
The net profits after taxation in the first year of operation is estimated as Rs.395000 /. The break-even point is 54% of installed capacity. The cost of production and profitability statement for the first 5 years, break-even analysis, repayment schedule for term loan, cash flow statement and the projected balance sheet are given in Annexure. Based on the analysis made above it is found that the scheme is technically feasible and economically viable.
Submitted by:
PRASAD P.V
PATHALIL HOUSE
MUNDATHANAM
KANGAZHA
CHANGANASSERRY
PIN-686541
| ANNEXURE: 1 (as per quotations) | ||||||
| Sl No | Items | Nos | Rate per item | Total amount in Rs | ||
| 1 | Offset printing machine ,single dummy MACHINE | 1 | 700000 | 700000 | ||
| 2 | Paper cutting machine | 1 | 275000 | 275000 | ||
| 3 | Plate printer | 1 | 100000 | 100000 | ||
| 4 | Perforating machine single and pedal | 1 | 10000 | 10000 | ||
| 5 | Computer and printer | 1 | 100000 | 100000 | ||
| 6 | Stitching machine | 1 | 50000 | 50000 | ||
| VAT 4% | 49400 | 49400 | ||||
| CESS1% | 494 | 494 | ||||
| TOTAL | 1284894 | 1284894 | ||||
| SAY 1300000 | ||||||
ANNEXURE: 2
Cost of production & Profitability statement
| | Particulars | 1 YEAR | 2 YEAR | 3 YEAR | 4 YEAR | 5 YEAR |
| | No. of working days | 300 | 300 | 300 | 300 | 300 |
| | No. of shifts | 1 | 1 | 1 | 1 | 1 |
| | Installed capacity | 8571429 | 8571429 | 8571429 | 8571429 | 8571429 |
| | Capacity utilisation | 70 | 75 | 80 | 85 | 90 |
| | Production | 6000000 | 6428571 | 6857143 | 7285714 | 7714286 |
| | | | | | | |
| A | Sales | 6000000 | 6428571 | 6857143 | 7285714 | 7714286 |
| | | | | | | |
| B | Cost of Production | | | | | |
| | Raw materials | 4260000 | 4564286 | 4868571 | 5172857 | 5477143 |
| | Wages | 420000 | 450000 | 480000 | 510000 | 540000 |
| | Power, and Fuel charges | 180000 | 192857 | 205714 | 218571 | 231429 |
| | Repair & maintenance | 76000 | 75000 | 76000 | 76000 | 75800 |
| | Insurance | 15200 | 15000 | 15200 | 15200 | 15160 |
| | Depreciation | 159500 | 143925 | 129889 | 117238 | 105836 |
| | Total | 5110700 | 5441068 | 5775374 | 6109867 | 6445367 |
| | | | | | | |
| C | Gross operating profit | 889300 | 987504 | 1081768 | 1175847 | 1268918 |
| D | Admn. & Selling expenses | | | | | |
| | 1. Administrative expenses | 240000 | 257143 | 274286 | 291429 | 308571 |
| | 2. Selling expenses | 60000 | 64286 | 68571 | 72857 | 77143 |
| E | Financial expenses | | | | | |
| | 1. Interest on term loan | 209729 | 178071 | 146414 | 114757 | 83100 |
| | 2. Interest on WC loan | 30000 | 36000 | 42000 | 48000 | 54000 |
| | 3. Interest on MM loan | 12825 | 12825 | 12825 | 12825 | 12825 |
| F | Total of D&E | 552554 | 548325 | 544096 | 539868 | 535639 |
| G | Net operating profit | 336746 | 439179 | 537672 | 635980 | 733279 |
| H | Income tax | 100998 | 131728 | 161276 | 190768 | 219958 |
| I | Net profit | 235749 | 307451 | 376396 | 445212 | 513321 |
| J | Withdrawls | | | | | |
| K | Depreciation | 159500 | 143925 | 129889 | 117238 | 105836 |
| L | Cash surplus | 395249 | 451376 | 506285 | 562450 | 619157 |
ANNEXURE: 3
BREAK EVEN ANALYSIS
| | Particulars | 1 YEAR | 2 YEAR | 3 YEAR | 4 YEAR | 5 YEAR |
| FIXED COST | | | | | | |
| | Salaries | 420000 | 450000 | 480000 | 510000 | 540000 |
| | Repair & Maintenance | 76000 | 75000 | 76000 | 76000 | 75800 |
| | Insurance | 15200 | 15000 | 15200 | 15200 | 15160 |
| | Administrative expenses | 240000 | 257143 | 274286 | 291429 | 308571 |
| | Depreciation | 159500 | 143925 | 129889 | 117238 | 105836 |
| | Interest on MM loan | 12825 | 12825 | 12825 | 12825 | 12825 |
| | Interest on Term loan | 209729 | 178071 | 146414 | 114757 | 83100 |
| | Total | 1133254 | 1131964 | 1134614 | 1137449 | 1141292 |
| | | | | | | |
| VARIABLE COST | | | | | | |
| | Raw Materials | 4260000 | 4564286 | 4868571 | 5172857 | 5477143 |
| | Power Charges | 180000 | 192857 | 205714 | 218571 | 231429 |
| | Selling expenses | 60000 | 64286 | 68571 | 72857 | 77143 |
| | Interest on WC loan | 30000 | 36000 | 42000 | 48000 | 54000 |
| | Total | 4530000 | 4857429 | 5184857 | 5512286 | 5839714 |
| | | | | | | |
| | BEP in % of installed capacity | 53.96 | 54.04 | 54.28 | 54.52 | 54.79 |
| | BEP in % of capacity utilisation | 77.09 | 72.05 | 67.85 | 64.14 | 60.88 |
ANNEXURE: 4
DEBT SERVICE COVERAGE RATIO (DSCR)
| | Particulars | 1 Year | 2 Year | 3 Year | 4 Year | 5 Year |
| A | Cash generated | | | | | |
| 1 | Net Profit | 336746 | 439179 | 537672 | 635980 | 733279 |
| 2 | depreciation | 159500 | 143925 | 129889 | 117238 | 105836 |
| 3 | Interest on term loan | 209729 | 178071 | 146414 | 114757 | 83100 |
| 4 | Interest on mm loan | 12825 | 12825 | 12825 | 12825 | 12825 |
| 5 | Interest on wc loan | 30000 | 36000 | 42000 | 48000 | 54000 |
| | Total (A) | 748800 | 810000 | 868800 | 928800 | 989040 |
| B | Debt Service Requirement | | | | | |
| 1 | Repayment of term loan | 197857 | 197857 | 197857 | 197857 | 197857 |
| 2 | Repayment of interest on term loan | 209729 | 178071 | 146414 | 114757 | 83100 |
| 3 | Repayment of interest on mm loan | 12825 | 12825 | 12825 | 12825 | 12825 |
| | Repayment of interest on wc loan | 30000 | 36000 | 42000 | 48000 | 54000 |
| | Total (B) | 450411 | 424754 | 399096 | 373439 | 347782 |
| C | Debt service coverage ratio | 1.66 | 1.91 | 2.18 | 2.49 | 2.84 |
| | Average DSCR | 2.51 | | | | |
ANNEXURE: 5
REPAYMENT SCHEDULE OF TERM LOAN
| Year | Instalment Number | Principal | Inst. Amt | Interest | Balance |
| 1 | 1 | 1385000 | 49464 | 55400 | 1335536 |
| | 2 | 1335536 | 49464 | 53421 | 1286071 |
| | 3 | 1286071 | 49464 | 51443 | 1236607 |
| | 4 | 1236607 | 49464 | 49464 | 1187143 |
| | | | 197857 | 209729 | |
| 2 | 5 | 1187143 | 49464 | 47486 | 1137679 |
| | 6 | 1137679 | 49464 | 45507 | 1088214 |
| | 7 | 1088214 | 49464 | 43529 | 1038750 |
| | 8 | 1038750 | 49464 | 41550 | 989286 |
| | | | 197857 | 178071 | |
| 3 | 9 | 989286 | 49464 | 39571 | 939821 |
| | 10 | 939821 | 49464 | 37593 | 890357 |
| | 11 | 890357 | 49464 | 35614 | 840893 |
| | 12 | 840893 | 49464 | 33636 | 791429 |
| | | | 197857 | 146414 | |
| 4 | 13 | 791429 | 49464 | 31657 | 741964 |
| | 14 | 741964 | 49464 | 29679 | 692500 |
| | 15 | 692500 | 49464 | 27700 | 643036 |
| | 16 | 643036 | 49464 | 25721 | 593571 |
| | | | 197857 | 114757 | |
| 5 | 17 | 593571 | 49464 | 23743 | 544107 |
| | 18 | 544107 | 49464 | 21764 | 494643 |
| | 19 | 494643 | 49464 | 19786 | 445179 |
| | 20 | 445179 | 49464 | 17807 | 395714 |
| | | | 197857 | 83100 | |
| 6 | 21 | 395714 | 49464 | 15829 | 346250 |
| | 22 | 346250 | 49464 | 13850 | 296786 |
| | 23 | 296786 | 49464 | 11871 | 247321 |
| | 24 | 247321 | 49464 | 9893 | 197857 |
| | | | 197857 | 51443 | |
| 7 | 25 | 197857 | 49464 | 7914 | 148393 |
| | 26 | 148393 | 49464 | 5936 | 98929 |
| | 27 | 98929 | 49464 | 3957 | 49464 |
| | 28 | 49464 | 49464 | 1979 | 0 |
| | | | 197857 | 19786 | |
REPAYMENT OF MARGIN MONEY LOAN
| | Year | Principal | Inst. Amt | Interest | Balance |
| | 1 | 213750 | | 12825 | 213750 |
| | 2 | 213750 | | 12825 | 213750 |
| | 3 | 213750 | | 12825 | 213750 |
| | 4 | 213750 | | 12825 | 213750 |
| | 5 | 213750 | 53438 | 12825 | 160313 |
| | 6 | 160313 | 53438 | 9619 | 106875 |
| | 7 | 106875 | 53438 | 6413 | 53438 |
| | 8 | 53438 | 53438 | 3206 | 0 |
REPAYMENT OF WORKING CAPITAL LOAN
| | 1 Year | 2 Year | 3 Year | 4 Year | 5 Year |
| Total Working capital | 250000 | 300000 | 350000 | 400000 | 450000 |
| Loan Amount | 187500 | 225000 | 262500 | 300000 | 337500 |
| Interest | 30000 | 36000 | 42000 | 48000 | 54000 |
ANNEXURE: 6
CASH FLOW STATEMENT
| A | Source of Funds | Construction period | 1 year | 2 year | 3 year | 4 year | 5 year |
| 1 | Cash accruals(profit before int&tax) | 0 | 589300 | 666075 | 738911 | 811562 | 883204 |
| 2 | Increase in capital equity | 213750 | 0 | | | | |
| 3 | Depreciation | | 159500 | 143925 | 129889 | 117238 | 105836 |
| 4 | Investment allowance | | | | | | |
| 5 | Increase in long term loan | 1385000 | 0 | | | | |
| 6 | Increase in MM loan | 213750 | 0 | | | | |
| 7 | Increase in unsecured loans | | | | | | |
| 8 | Increase in WC loan | 0 | 187500 | 37500 | 37500 | 37500 | 37500 |
| 9 | Sales of fixed assets/invests | 0 | 0 | 0 | 0 | 0 | 0 |
| 10 | Others( investment subsidy) | 0 | 0 | 0 | 0 | 0 | 0 |
| | Total | 1812500 | 936300 | 847500 | 906300 | 966300 | 1026540 |
| | | | | | | | |
| B | Disposition of Funds | | | | | | |
| | Prelim & Pre-op expenses | 80000 | 0 | 0 | 0 | 0 | 0 |
| | Increase in capital expenditure | 1670000 | 0 | 0 | 0 | 0 | 0 |
| | Increase in current assets | | 250000 | 50000 | 50000 | 50000 | 50000 |
| | Decrease in long term loans | | 197857 | 197857 | 197857 | 197857 | 197857 |
| | Decrease in unsecured loans | | | | | | |
| | Decrease in MM loan | | 0 | 0 | 0 | 0 | 53438 |
| | Decrease in WC loan | | 0 | 0 | 0 | 0 | 0 |
| | Interest on term loan to bank | | 209729 | 178071 | 146414 | 114757 | 83100 |
| | Interest on WC loan | | 30000 | 36000 | 42000 | 48000 | 54000 |
| | Interest on MM loan | | 12825 | 12825 | 12825 | 12825 | 12825 |
| | Taxation | | 100998 | 131728 | 161276 | 190768 | 219958 |
| | Divident on equity | | | 0 | 0 | 0 | 0 |
| | Other expenses | | | | | | |
| | Total | 1750000 | 801409 | 606481 | 610372 | 614207 | 671177 |
| | | | | | | | |
| C | Opening balance | 0 | 62500 | 197391 | 438410 | 734338 | 1086431 |
| D | Net surplus | 62500 | 134891 | 241019 | 295928 | 352093 | 355363 |
| E | Closing balance | 62500 | 197391 | 438410 | 734338 | 1086431 | 1441794 |
ANNEXURE: 7
PROJECTED BALANCE SHEET
| A | Liabilities | Construction period | 1 year | 2 year | 3 year | 4 year | 5 year |
| | Equity share capital | 213750 | 213750 | 213750 | 213750 | 213750 | 213750 |
| | Reserve & Surplus | 0 | 235749 | 543200 | 919596 | 1364808 | 1878129 |
| | Term loan | 1385000 | 1187143 | 989286 | 791429 | 593572 | 395715 |
| | Margin Money loan | 213750 | 213750 | 213750 | 213750 | 213750 | 160313 |
| | Working capital loan | | 187500 | 225000 | 262500 | 300000 | 337500 |
| | Other liabilities(towards subsidy) | 0 | 0 | 0 | 0 | 0 | 0 |
| | Total Liabilities | 1812500 | 2037891 | 2184985 | 2401025 | 2685879 | 2985406 |
| | | | | | | | |
| B | Assets | Construction period | 1 year | 2 year | 3 year | 4 year | 5 year |
| | Gross block | 1670000 | 1670000 | 1510500 | 1366575 | 1236686 | 1119448 |
| | Depreciation | 0 | 159500 | 143925 | 129889 | 117238 | 105836 |
| | Net block | 1670000 | 1510500 | 1366575 | 1236686 | 1119448 | 1013612 |
| | InvestmenT(Prilim. Expences) | 80000 | 80000 | 80000 | 80000 | 80000 | 80000 |
| | Current assets | | 250000 | 300000 | 350000 | 400000 | 450000 |
| | Reserved Stock accumulated to be added to current assets | | | | | | |
| | Cash and bank balance | 62500 | 197391 | 438410 | 734338 | 1086431 | 1441794 |
| | Total Assets | 1812500 | 2037891 | 2184985 | 2401025 | 2685879 | 2985406 |
