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APRODUCT PROJECT
REPORTON
: PREPARED BY :
RAJESH H. MER: CLASS :
T.Y.B.B.A.
: COLLEGE :
SMT. M.T. DHAMSANIA COLLEGE RAJKOT
: ACADEMIC YEAR :
2011 – 2012
ROLL NO. – 30 SEAT NO. –
: SUBMITTED TO :
SAURASHTRA UNIVERSITY.
: GUIDED BY:
Prof. B.L.SARDHARA
1
DECLARATIONI RAJESH H. MER undersigned a student of T.Y.B.B.A.
here by declare that the project work presented in this report is my
own work and has been carried out under the supervision of Prof.
B.L.SARDHARA of SMT. M.T. DHAMSANIA COLLEGE
RAJKOT
This report has not been previously submitted to any other
University your any examination.
DATE:
PLACE: RAJKOT (RAJESH H. MER.)
2
PREFACEThe B.B.A. is a professional course which helps the students
to develop the knowledge for business field and industry in
T.Y.B.B.A. the product project report is the part of our syllabus.
The product project report shows us actually what
difficulties is new entrepreneur of small business faces while
starting his unit. A product project report plays a significant role
for small business specially for financial arrangement that’s why
proper care should be taken in preparing this report.
3
ACKNOWLEDGEMENTI glad to present Product Project Report on BISCUIT
MIXTURE to the Saurashtra University.
In this reference, I am heartly thankful to Prof.
B.L.SARDHARA for support and guidance provided by her.
I am also thankful to all those person who have helped me in
every aspects for preparing the project.
DATE:
PLACE: RAJKOT (RAJESH H. MER.)
4
INDEXNo. Particular
1 Introduction of Product.
2 Project at a Glance.
3 Partner’s Background.
4 Location.
5 Market Potential.
6 Raw material.
7 Basis and Presumption.
8 Implementation Schedule.
9 Manufacturing Process.
10 Production Capacity.
11 Financial Details of Project.
(A) Details of lord and Building.
(B) Machinery & Equipments.
(C) Other Fixed Assets.
12 Working Capital.
(A) Personnel.
(B) Raw material.
(C) Utilities.
5
(D) Other Contingent Express.
13 Project Cost.
14 Sources of Funds.
15 Depreciation.
16 Financial Analysis.
(A) Cost of Production.
(B) Turnover.
(C) Return on Investment.
(D) Profitability Analysis.
(E) Break Even Analysis.
(F) Balance Sheet.
17 Suppliers of Machinery.
18 Future Prospects.
19 Risk Factors.
6
Introduction Of Product
Biscuits constitute an important item of bakery industry.
Today Biscuits become a common item of consumption among all
classes of people with tea or coffee, Biscuits make a tasty
nutritious shake. Biscuits has become here and more popular as a
convenient food with the changes taking place in the economic life
of masses, the consumption of Biscuit has been increasing over the
years, and this envisages the scope for setting up of Biscuit
Mixture units.
People started manufacturing Biscuits of their own taste by
using baking ovens very popular in the market now-a-days. To
made it more convenient there is a need of Biscuit Mixture which
will be ready mix and after adding water, the dough will be ready
mix hour on commercial scale saves times, labour and is
sometimes ever cheap to the housewives.
7
Project At A Glance
Name of unit : MER Food Product
Communication Address : HOLIDAYCAMP ROAD
CHORWAD-362 250
Form of organization :
Owner : MER RAJESH H.
Name of the Product : BISCUIT
S.S.I. Registration No. : Application has been Made
Subsidy Registration No. : Application has been Made
Type of Industry : Food Industries
Type of Organization :
Budget cost of Product : 6000000
Means of Finance : Owned Capital and Loan from DENA
BANK CHORWAD.
No. of Employees : 16
Plant Installed Capacity : 100 %
8
Owner’s Background
Name : MER RAJESH H.
Age : 20 Years.
Education : B.B.A. with Advance Marketing
Management.
Address : Near water tank chorwad.
Financial Contribution : 20,00,000
Duties and Responsibilities : Marketing and Production Department.
9
Location
To choose the proper location is first step for establishment
of unit. True selection of location helps unit for better growth,
while selecting the site of location the factors should be considered
are as follows:
1. Availability of Raw material.
2. Cheaper Manpower.
3. Transport Facilities.
4. Availability of Energy sources.
I shall start Biscuits industry in chorwad at holidaycamp
road chorwad because Raw material and labour are the main
factors in this industry which is early available at this place.
10
Market Potential
The consumption of Biscuit has been increasing over the
years. The finding of survey indicates that nearly 47% of Biscuits
are consumed in the rural and semi-urban areas which constitutes
bulk of our population. Looking at such a demand this ready mix
can definitely be a popular item particularly in rural and urban
areas.
So, we can class by whole Biscuit market into there
categories based on area:
1. Urban Market.
2. Semi-Urban Market.
3. Rural Market.
11
Raw Material
The main raw material used in Biscuit Mixture are as
follows:
1. Wheat Flour.
2. Sugar.
3. Vegetable Fat.
4. Miscellaneous Items.
(A) Milk Powder.
(B) Chemical.
(C) Colour Flavor.
(D) Coco Vit Fat.
(E) Glucose Etc.
5. Packing Material.
Above all raw materials are easily available from local
market. So, there is no difficulty to get raw material. So, there is
less of transportation. All the materials are available from local
market.
12
Basis And Presumption
1. The scheme is based on single shift 300 working days per
annul.
2. For the first 2 years the utilisation capacity will be 65.71% from
the third year onwards it will run at its full capacity.
3. Labour wages as per the rate prevailing in the area.
13
Implementation Schedule
The Implementation Schedule will be given as below:
1. Preparation of Project Report Selection of Site
Registration as S.S.I. unit.
3 Months
2. Availability of Finance Selection of Machinery,
Procurement of Machines.
3 Months
3. Erection and Commissioning Trial Run. 1 Months
4. Recruitment of labours and Commercial
Production.
½ Months
14
Manufacturing Process
The ingredients normally used are Maida, Sugar, Vanaspati
or Bakery Fat, Backing powder, Milk powder, Essence and
Chemicals. The ingredients as per formulation except Vanaspati
bakery fat are dried to desired moisture content before grinding if
required. They are then weighed, mixed and blended thoroughly.
The product thus obtained is packed in polythene bags of suitable
size paper box and then kept in big cartoons for storing and
transportation. The fat is to be added at the fire of preparation of
the mixture for baking by the consumer.
Quality Specification: -
It is a new product and therefore the quality specifications
about Moisture content and bacteriological count etc. are required
to be looked into.
15
Production Capacity
No. Particulars Quantity
1. Biscuit Mixture 500
g.m. Packet
1,00,000
2 Biscuit Mixture 250
g.m. Packet
1,00,000
3 Biscuit Mixture 100
g.m. Packet
1,50,000
4 Biscuit Mixture 50
g.m. Packet
2,00,000
The total production capacity at 100% is 2,00,000 packets of
50 gm & 1,50,000 packets of 100 gm. & 1,00,000 packets of 250
gm& 1,00,000 packet of 500 gm.
16
Financial Aspect
(I) Details of Lard & Building
No. Details Area [sq. Ht] PSM Rate Total Valve
1. Lard & Building 500 5,000 25,00,000
(II) Machinery & Equipment
No. Details No. of
Machines
Amount
1. Shifter Fitted with 3 Hp Motor 1 85,000
2. Micropuluerser complete with Motor 1 65,000
3. Cabinet model electrically operated
oven with 48 trays each 32" × 16" × 1"
with thermostatic control & other
accustoms
1 2,00,000
4. Weighing machine
a. Platform Type capacity 100
kg.
b. Table model.
1
1
55,000
35,000
5. Polythene Bag sealing machine (5,000
each)
2 40,000
6. Miscellaneous equipments tools, trays, 85,000
17
bells etc.
Total Machinery & Equipment 5,65,000
(III) Other Fixed Assets
No. Details Amount
1. Electricity & Installation 54,500
2. Office Furniture & Other Equipment 1,24,500
1,79,000
Total Fixed Cost = 25,00,000 + 5,65,000 + 1,79,000
= 32,44,000
18
Working Capital1. Personnel
No. Particular No. of
Employees
Monthly Total Cost
1. Manager 1 18000 18000
2. Accountant Store-keeper 1 15000 15000
3. Clerk cum Typist 1 12000 12000
4. Mechanical Supervisor 1 10000 10000
5. Peon cum Chowkidar 2 4500 9000
6. Skilled labour 3 7000 21000
7. Unskilled labour 7 5000 35000
Total salary & wages 16 120000
Add Facilities (20% of salary) 24000
Total 144000
2. Raw material [per month]
No. Particular Quantity (14 Kg)
Rate [perkg.]
Value
1. Wheat Flour 4,200 18 75,600
2. Sugar 1,300 30 39,000
3. Vegetable Fat 750 80 60,000
4. Miscellaneous items Milk Powder, Chemicals, Colour, Flavor, Coco, Vit, Fat, Glucose, etc.
35,600
5. Packing Material 52,000
Total 2,62,200
19
3. Utilities [per month]
No. Particular Amount
1. Power 8,000
2. Water 12,000
Total 20,000
4. Other Contingent Expenses [per month]
No. Particular’s Amount
1. Postage and Stationary. 2,000
2. Telephone. 3,500
3. Consumable Stores. 3,000
4. Repair & maintenance. 5,000
5. Transport Charge. 4,000
6. Insurance. 5,500
7. Sales Expenses. 4,000
8. Other Miscellaneous Expenses. 3,000
Total 30,000
Total Recurring expenditure
= 1,44,000 + 2,62,200 + 20,000 + 30,000
= Rs. 4,56,200
Working Capital for 3 Months
= 4,56,200 × 3
= Rs. 13,68,600
Project Cost20
1. Fixed Capital
No. Particular Amount
1. Land and Building 25,00,000
2. Machinery & Equipment 5,65,000
3. Other Fixed & Installation
a. Electricity & Installation
b. Office Function & other Equipment
46,500
1,32,500
Total 32,44,000
2. Working Capital
No. Particular Amount
1. Personnel (Wages & Salary) 1,44,000
2. Raw Material 2,62,200
3. Utility of Power & Water 20,000
4. Other contingent Expenses 30,000
Total 4,56,200
Total capital investment: -
Fixed Capital Investment 32,44,000
Working Capital for 13,68,600
(4,56,200 × 3)
Total Project Cost 46,12,600
Sources of Funds: -
No. Description Amount
21
1. Owned Capital 23,03,300
2. Borrowed Capital 23,03,300
46,12,600
Owners Capital: -
No. Description Amount
1. RAJESH H. MER 23,03,300
23,03,300
Borrowed Capital: -
No. Description Amount
1. DENA BANK CHORWAD 23,03,300
23,03,300
Interest on Fund: -
No. Description Rate Amount
1. Owned Capital 10% 2,30,330
22
2. Borrowed Capital 12% 2,76,396
5,06,726
Depreciation: -
No. Description Rate Amount
1. Depreciation on Machinery 25% 1,41,250
2. Depreciation on L&B 15% 3,75,000
3. Depreciation on Other 12% 21,480
Assets
5,37,730
Cost of Production
23
No. Particulars Amount
1. Total recurring cost per year (4,) 54,74,400
2. Total Depreciation 5,37,730
Total cost of Production 6012130
Turnover
24
No. Particulars Rate per packet Quantity Value
1. Biscuit Mixture 500
g.m. Packet
39.5 1,00,000 3950000
2 Biscuit Mixture 250
g.m. Packet
19.5 1,00,000 1950000
3 Biscuit Mixture 100
g.m. Packet
9.5 1,50,000 1425000
4 Biscuit Mixture 50
g.m. Packet
4.5 2,00,000 900000
Annual Turnover 8225000
25
Return on Investment
ROI = EBIT × 100
Cost of Project
= 1705544× 100
4612600
= 36.97%
Cost Of Capital
Interest on Owned Capital 10 %
Interest on Borrowed Capital 12 %
COC = 10 + 12
2
= 11 %
Thus, ROI > COC
26
Profitability Analysis
Sales 8225000
Less: Cost of Production 6012130
EBIT 2212670
Less: Interest 506726
EBT 1706144
Less: Tax 35 % 597150
PAT 1108994
Profit Volume Ratio:
PVR = Contribution × 100
Sales
= 2212670× 100
8225000
= 26.90%
Net Profit Ratio:
Net Profit Ratio = Net Profit × 100
Sales
= 1108994 × 100
8225000
= 13.48%
27
Break Even Analysis
For the calculation of B.E.P., we have to calculate fixed cost
& variable cost
Fixed Cost:
Total Depreciation 537730
40% of Salary & Wages 691200
40% of other Contingent Expenses 144000
Interest on Total Investment 506726
1879656
Variable Cost:
60% of Salary & Wages 1036800
60% of other Contingent Expenses 216000
Raw Materials 3146400
Utilities 1,20,000
4519200
28
Contribution:
Contribution = Sales – Variable Cost
= 8225000 – 4519200
= 3705800
BREAK EVEN POINT:
B.E.P. (in %) = Fixed Cost × Utilized Capacity
Contribution
= 1879656× 65.71
3705800
= 33.33%
29
Trading & P&L Acc.
Particulars Amount Particulars Amount
Purchase 3146400 Sales 8225000
Utility 240000
Gross Profit 4838600
8225000 8225000
Wages &Salary 1728000 Gross Profit 4838600
Depreciation 537730
Interest 506726
Other Contingent 360000
Expenses
EBT 1706144
Less: Tax 597150
Net Profit 1108994
4838600 4838600
30
Balance Sheet
Capabilities Amount Assets Amount
Capital: L & B
Owned: 2303300 2500000
– Dep.: 375000 2125000
Machine& Equip.
Borrowed: 2303300 565000
– Dep.: 141250 423750
Interest 506726
Other Assets
Net Profit 1108994 179000
– Dep.: 21480 157520
6222320 Cash & Bank 3516050
6222320
31
Suppliers of Machinery
Address of Machines and
Equipment Suppliers:
(i) M/s. Nagpal Brothers,
2789 Zorawar Singh Marg, Delhi.
(ii) M/s. Nagpal Engg. Works,
Loharogate, Patiala.
(iii) M/s. Baltiboi & co. (p) Ltd.,
P.B. No. 1904 – Fort, Bombay – 400 001.
(iv) M/s. Novel Engineers Pvt. Limited,
4th Floor, Sambhava Chambers,
Sir Phirozshah Mehta Road,
Bombay – 400 001.
(v) M/s. Narang Corporation,
P –24 Cop naught place,
New Delhi – 110 002.
Address of raw material Suppliers:
32
Locally Available
Future Prospects
Every units airs at its growth and development in future at
the time of establishment. The future development of any unit
shows its success in the market. Future development may be get
through the increasing installed capacity or utilizing the existing
resources of the unit to the full extend.
So far as our unit is concern we have to utilize folly the
available resources of our unit and by increasing production
capacity we want to cover none market share with maintenance of
good quality.
There are so many varieties of Biscuits in the market. The
consumption of Biscuits has been increasing over the year. We
wants to cover more market in rural as well as in urban areas.
Looking to this good prospect I select the product of Biscuit.
It is for medium clays people as well as poor class people also.
33
Risk Factors
In each and every business activity there is some risk in the
some way our unit is also having some risk factory, which are as
follows:
As our product is under the list of food items so if license not
provided by government authority within a specific time it is
difficult to start the production.
There is also possibility for non-receipt or less receipt of loan
from government.
At present there is minimum competition in the market but in
the future then may be cut-throat competition and it may be
difficult to continue the business at the time of competition.
It is also possible that all the factory may suitable for production
and finance but the marketing of our products may not enough
so there is every possibility of failure or close-down the unit.
34
