cosmetic project

PROJECT REPORT

Of

M/S lakshmi cosmetics

 MANNANGODE

PULASSERRY, PATTAMBI
 

                                                                                  

                                                         

                                                               

                                                                   

M/S LAKSHMI COSMETICS,

PULASSERRY

PATTAMBI

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 of natural toilet soap, washing powders and candles marketing at all over Kerala. Unit has been filed memorandum Part-1 with the district Industries center, Palakkad 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 Smt.Latha.K,R, Ramesh Nivas, Mannangode (post), Pulasserry-679307.All of the workers in the unit will be women .She plans to run the unit as a women industry in order to encourage the women to start such type of units in future. She 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:

           Cosmetics are products that are created for application on the body for the purpose of cleansing, beautifying or altering appearances and enhancing attractive features. But cosmetics are not same thing as medicines and cosmetics cannot be used to alter body’s functions or performance. With growing ecological and health awareness, modern cosmetics are available in the form of organic cosmetics, mineral cosmetics and even environmentally friendly cosmetics to cater to an overwhelming demand for such products. The Indian cosmetic industry includes a long list of cosmetic product buyers, importers, wholesalers, distributors and manufactures.          

                             The unit also aims to produce washing powders and sell it to the market at reasonable prices. Candle manufacturing is one of the common industries which enables the women entrepreneurs’ to produce and sell it to the places where it is needed. The entrepreneur is planning to market the candles near churches and places of work ships where it is commonly sold.

4.0 Location, Land and Building:

                     The unit is proposed to be located at Kulukkallur (DOOR No14/242) in Pattambi Block in Ottappalam Taluk.

 5.0 Machinery & Equipment:

                          Details are shown in annexure 1. 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 20000/-

6.0 Installed capacity of production:

                                   The unit is proposed to be operated in 300 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)

Sl No	items	Production per month	Rate per soap in Rs.(whole sale Rate)	Amount received in one month
1	Toilet Soaps	2000	12	24000
2	Washing powder	375 kg	88	33000
3	candles	600 sets	15	9000
	TOTAL			66000

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 5 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. Natural soap requires chemicals, coconut oil and essential oils. A chemical @ 40% and coconut oil @60% is added and a result of Saponification soap is produced. Essential oil indicates the quality of the soap.

Sl No	Items	Amount required for monthly production
1	Chemicals	9000
2	Coconut oil	42000
3	Essential oils	250
4	Washing powder kit	225000
5	Wax cake	8400
	TOTAL	44350

8.0 Man power requirement and other expenses:

Total manpower of the unit including the workers is 3 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 worker	2	3000	6000
2	helpers	1	2000	2000
3	Office assistant	0	2500	0
	Total	3		8000

OTHER EXPENSES PER MONTH
Sl.No.	Item	Amount
1	Power 2HP	500
2	Postage & Telephone	500
3	Printing & Stationery	1000
4	Travelling expenses	1000
5	Miscellaneous	1000
	Total	4000

9.0 Working capital requirement:

                     Total requirement of working capital for the first phase of operation(one month) is evaluated as Rs. 75000/-. An amount of Rs.45000 /-, 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 tilizeion(%)	300	70	75	80	85	90
	Sales	300	792000	848571	905143	961714	1018286
	Cost of raw materials	300	531000	568929	606857	644786	682714
	Cost of production	300	637100	681789	727095	772115	817030
A	Current Assets
1	Stock of raw materials                                ( day’s consumption)	30	53100	56893	60686	64479	68271
2	Stock in process                                  ( day’s cost of production)	5	10618	11363	12118	12869	13617
3	Stock of finished goods                                ( day’s cost of production)	5	10618	11363	12118	12869	13617
4	Receivables( day’s cost of sales)	1	2640	2829	3017	3206	3394
	Total(A)		76977	82448	87939	93421	98900

10.0 Total Cost of the Project:

Sl.No.	Particulars	Amount RS	Existing	Proposed	Total	Loan @60%	grant@35%	margin@5%
1	Building ( advances)	0		0	0	0	0
2	Building and ther civil construction	50000	0	50000	50000	30000	17500
3	Machinery & Equipment(proposed )	20000		20000	20000	12000	7000
4	Equipment(sales)	0	0	0	0	0	0
5	Electrification and machinery installation cost	5000	0	5000	5000	3000	1750
6	Office Furniture	5000		5000	5000	3000	1750
7	Brochure, advt and web site	5000		5000	5000	3000	1750
8	Prelim & Pre-operative expenses	20000	0	10000	10000	12000	7000
9	Margin Money for Working Capital	75000	0	75000	75000	45000	26250
	Total	180000	0	170000	170000	108000	63000	9000

11.0 Means of Finance:

Sl.No.	Particulars	Amount RS
1	Term loan for building (interior decoration )	30000
2	Term loan for machinery&equipment, office furniture etc	15000
3	prelim&pre-operative including electrification ,brochure etc (items 5,6 and 8 in project cost)	18000
4	grant through WIS ,35% of PROJECT COST	63000
5	Working capital Loan	45000
6	MARGIN @5% OF PROJECT COST	9000
	Total	180000

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 tilize 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	50000	47500	45125	42869	40725
	Depreciation (A)	2500	2375	2256	2143	2036
	WDV on Building	47500	45125	42869	40725	38689
2	Machinery and equipment	10000	9000	8100	7290	6561
	Depreciation(B)	1000	900	810	729	656
	WDV on Machinery and equipment	9000	8100	7290	6561	5905
	Total depreciation(A+B)	3500	3275	3066	2872	2692
		3500	3275	3066	2872	2692

SHEDULE OF IMPLIMENTATION

Acquisition of land	Rented building
Construction of Building	Rented
Installation of plant and Machinery	Expected to be completed by February 2010 after availing the loan
Trial run	Expected to be completed by one month
Commercial Production	February 2010

13.0 Conclusion:

The net profits after taxation in the first year of operation is estimated as                      Rs.85107 /. The return on investment is obtained as 45.34 % in the 2^nd year of operation. 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:                                   

Smt.Latha.K, R,

Ramesh Nivas,

Mannangode (post),

Pulasserry-679307

                                                         

ANNEXURE: 1
	Sl No	Items	Nos	Rate per item	Total amount in Rs
	1	DIES	10	750	7500
	2	Vessels		10000	10000
	3	Packing materials		2500	2500
		TOTAL			20000

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	1131429	1131429	1131429	1131429	1131429
	Capacity utilisation	70	75	80	85	90
	Production	792000	848571	905143	961714	1018286
A	Sales	792000	848571	905143	961714	1018286
B	Cost of Production
	Raw materials	531000	568929	606857	644786	682714
	Wages	96000	102857	109714	116571	123429
	Power,  and Fuel charges	6000	6429	6857	7286	7714
	Repair & maintenance	500	250	500	500	400
	Insurance	100	50	100	100	80
	Depreciation	3500	3275	3066	2872	2692
	Total	637100	681789	727095	772115	817030
C	Gross operating profit	154900	166782	178048	189599	201256
D	Admn. & Selling expenses
	1. Administrative expenses	42000	45000	48000	51000	54000
	2. Selling expenses	7920	8486	9051	9617	10183
E	Financial expenses
	1. Interest on term loan	12266	10414	8563	6711	4860
	2. Interest on WC loan	0	0	0	0	0
	3. Interest on MM loan	0	0	0	0	0
F	Total of D&E	62186	63900	65614	67329	69043
G	Net operating profit	92714	102882	112434	122270	132213
H	Income tax	11108	12328	13474	14654	15848
I	Net profit	81607	90554	98960	107616	116366
J	Withdrawls
K	Depreciation	3500	3275	3066	2872	2692
L	Cash surplus	85107	93829	102026	110488	119058

     

                                                 

 ANNEXURE: 3

BREAK EVEN ANALYSIS

	Particulars	1 YEAR	2 YEAR	3 YEAR	4 YEAR	5 YEAR
FIXED COST
	Salaries	96000	102857	109714	116571	123429
	Repair & Maintenance	500	250	500	500	400
	Insurance	100	50	100	100	80
	Administrative expenses	42000	45000	48000	51000	54000
	Depreciation	3500	3275	3066	2872	2692
	Interest on MM loan	0	0	0	0	0
	Interest on Term loan	12266	10414	8563	6711	4860
	Total	154366	161846	169943	177755	185461
VARIABLE COST
	Raw Materials	531000	568929	606857	644786	682714
	Power Charges	6000	6429	6857	7286	7714
	Selling expenses	7920	8486	9051	9617	10183
	Interest on WC loan	0	0	0	0	0
	Total	544920	583843	622766	661689	700611
	BEP in % of installed capacity	43.73	45.85	48.15	50.36	52.54
	BEP in % of capacity utilisation	62.48	61.14	60.18	59.25	58.38
	Return on Investment	45.34	50.31	54.98	59.79	64.65

  

  ANNEXURE: 4                           

DEBT SERVICE COVERAGE RATIO (DSCR)

	Particulars	1 Year	2 Year	3 Year	4 Year	5 Year
A	Cash generated
1	Net Profit	92714	102882	112434	122270	132213
2	depreciation	3500	3275	3066	2872	2692
3	Interest on term loan	12266	10414	8563	6711	4860
4	Interest on mm loan	0	0	0	0	0
5	Interest on wc loan	0	0	0	0	0
	Total (A)	108480	116571	124063	131854	139766
B	Debt Service Requirement
1	Repayment of term loan	15429	15429	15429	15429	15429
2	Repayment of interest on term loan	12266	10414	8563	6711	4860
3	Repayment of interest on mm loan	0	0	0	0	0
	Repayment of interest on wc loan	0	0	0	0	0
	Total (B)	27694	25843	23991	22140	20289
C	Debt sercice coverage ratio	3.92	4.51	5.17	5.96	6.89
	Averagr DSCR	5.93

ANNEXURE: 5

REPAYMENT SCHEDULE OF TERM LOAN

Year	Instalment  Number	Principal	Inst. Amt	Interest	Balance	repayment per month
1	1	108000	3857	3240	104143	2366
	2	104143	3857	3124	100286	2327
	3	100286	3857	3009	96429	2289
	4	96429	3857	2893	92571	2250
			15429	12266		9231
2	5	92571	3857	2777	88714	2211
	6	88714	3857	2661	84857	2173
	7	84857	3857	2546	81000	2134
	8	81000	3857	2430	77143	2096
			28929	10414		13114
3	9	77143	3857	2314	73286	2057
	10	73286	3857	2199	69429	2019
	11	69429	3857	2083	65571	1980
	12	65571	3857	1967	61714	1941
			28929	8563		12497
4	13	61714	3857	1851	57857	1903
	14	57857	3857	1736	54000	1864
	15	54000	3857	1620	50143	1826
	16	50143	3857	1504	46286	1787
			28929	6711		11880
5	17	46286	3857	1389	42429	1749
	18	42429	3857	1273	38571	1710
	19	38571	3857	1157	34714	1671
	20	34714	3857	1041	30857	1633
			28929	4860		11263
6	21	30857	3857	926	27000	1594
	22	27000	3857	810	23143	1556
	23	23143	3857	694	19286	1517
	24	19286	3857	579	15429	1479
			28929	7869		12266
7	25	15429	3857	463	11571	1440
	26	11571	3857	347	7714	1401
	27	7714	3857	231	3857	1363
	28	3857	3857	116	0	1324

                            

                       

                         

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	104980	113296	120997	128982	137073
2	Increase in capital equity	9000	0
3	Depreciation		3500	3275	3066	2872	2692
4	Investment allowance
5	Increase in long term loan	63000	0
6	Increase in MM loan	63000	0
7	Increase in unsecured  loans
8	Increase in WC loan	0	0	0	0	0	0
9	Sales of fixed assets/invests	0	0	0	0	0	0
10	Others( investment subsidy)	0	0	0	0	0	0
	Total	135000	108480	116571	124063	131854	139766
B	Disposition of Funds
	Prelim & Pre-op expenses	20000	0	0	0	0	0
	Increase in capital expenditure	85000	0	0	0	0	0
	Increase in current assets		76977	5471	5492	5482	5479
	Decrease in long term loans		15429	28929	28929	28929	28929
	Decrease in unsecured loans
	Decrease in MM loan		0	0	0	0	0
	Decrease in WC loan		0	0	0	0	0
	Interest on term loan to bank		12266	10414	8563	6711	4860
	Interest on WC loan		0	0	0	0	0
	Interest on MM loan		0	0	0	0	0
	Taxation		11108	12328	13474	14654	15848
	Divident  on equity			0	0	0	0
	Other expenses
	Total	105000	115779	57142	56458	55777	55115
C	Opening balance	0	30000	22701	82131	149736	225813
D	Net surplus	30000	-7299	59429	67605	76077	84651
E	Closing balance	30000	22701	82131	149736	225813	310464

ANNEXURE: 7

PROJECTED BALANCE SHEET

A	Liabilities	Construction period	1 year	2 year	3 year	4 year	5 year
	Equity share capital	9000	9000	9000	9000	9000	9000
	Reserve & Surplus	0	81607	172161	271121	378737	495102
	Term loan	63000	47571	18642	-10287	-39216	-68145
	Margin Money loan	63000	63000	63000	63000	63000	63000
	Working capital loan		0	0	0	0	0
	Other liabilities(towards subsidy)	0	0	0	0	0	0
	Total Liabilities	135000	201178	262803	332834	411521	498958
B	Assets	Construction period	1 year	2 year	3 year	4 year	5 year
	Gross block	85000	85000	81500	78225	75159	72286
	Depreciation	0	3500	3275	3066	2872	2692
	Net block	85000	81500	78225	75159	72286	69594
	InvestmenT(Prilim. Expences)	20000	20000	20000	20000	20000	20000
	Current assets		76977	82448	87939	93421	98900
	Reserved Stock accumulated to be added to current assets
	Cash and bank balance	30000	22701	82131	149736	225813	310464
	Total Assets	135000	201178	262803	332834	411521	498958