project profile to NI-MSME

                                                                                                        

                                                                  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