flour mill project
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1
Institute of Management Sciences
Feasibility ReportOn
Roller Flour Mills
Nida Mohammad, Khalid khan, Tamoor Shah, Waqas Ahmed, Saadat ali, Nida Ishfaque
KHAIBER Flour Mills (Pvt.) Ltd.Takhtani By Pass,
Quetta.
Nida Mohammad Khan Achakzai Tamoor Shah Shamail KakarWaqas Ahmed Qureshi Khalid KhanSaadat AliNida Ishfaque
2
TABLE OF CONTENTS
-----------------------------------------------------------------------------------------------------------S# CONTENTS PAGE#-----------------------------------------------------------------------------------------------------------
PART A : GENERAL
SUMMARY OF THE PROJECT 4
LAND AND BULIDING 5
PLANT AND MACHINERY 6
RAW MATERIAL 7
WATER AND POWER 7
MARKET PROJECTS 8
DEMAND AND SUPPLY GAP 8
CONCLUSION 9
PART B ; TECHNICAL
OBJECTIVES OF MILLING 10
WHEAT OF THE WORLD 11
WHEAT TYPE 11
DESCRIPTION OF WORKING PROCESSING 12
PART C : FINAJNCIAL & COSTS
FINANCIAL PROJECTIONS 14
ASSUMPTION UNDERLYINGEARNING & EXPENSES FORECAST 15
RAW MATERIAL 16
PACKING MATERIAL 17
MANPOWER 18
Nida Mohammad, Khalid khan, Tamoor Shah, Waqas Ahmed, Saadat ali, Nida Ishfaque
3
UTILITIES 19
OTHER MANUFACTURING OVERHEADS 19
STATEMENT OF DEPRECIATION 20
CLOSING INVENTORY 20
OPERATING EXPENSES 21
NET INITIAL WORKING CAPITAL 22
COST OF GOODS SOLD 23
FORECECAST OF INCOME STATEMENT 24
FORECAST OF BALANCE SHEET 30
FORECAST STATEMENT OF CHANGESIN FINANCIAL POSITION 32
ECONOMIC EVALUATION 34
BREAK EVEN ANALYSIS 35
Nida Mohammad, Khalid khan, Tamoor Shah, Waqas Ahmed, Saadat ali, Nida Ishfaque
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SUMMARY OF THE PROJECT
Name of the project: Flour Mulling
Name of the Project: KHAIBER FLOUR MILLS (PVT) Ltd
ADDRESS: Takhtani by pass, Quetta.
Corporate Setup: Privated Limited Compay
Directors/ Sponsors Mr. Naseeb Ullah KakarCh: Hashmate Ali
TOTAL COST OF THE PORJECT:
Fixed Capital Cost : 24.900
Working Capital : 4.896
MEANS OF FINANCE:
Total Equity Financing : 20.121 67.53%
Total Debts Financing : 9.675 32.47%
Nida Mohammad, Khalid khan, Tamoor Shah, Waqas Ahmed, Saadat ali, Nida Ishfaque
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LAND
A piece of land, measuring 2 acres has already been acquired by the sponsors for housing the plant and other
structures of the flour mills. The land is quite sufficient for the flour mills even if it is expanded. The cost of
the land is estimated Rs. 30, 00,000.00.
BUILDING
The cost for the mill machinery building, wheat godown, atta godown, overhead tank underground tank and
the boundary wall is worked out to be Rs. 80, 00,000.00. It is being completed with in eight to ten months.
For the details please see the building plan with the construction costs.
Nida Mohammad, Khalid khan, Tamoor Shah, Waqas Ahmed, Saadat ali, Nida Ishfaque
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THE PLANT AND MACHINERY (RS. In 000)
………………………………………………………………………………………………Description Quantity Rate Amount………………………………………………………………………………………………
Roller Bodies 06 435 2610Plan Sifter 02 725 1450Washing Machine 01 435 435Reel Machine 01 87 87Grain Cleaning Separator(8ton) 02 116 232Scourer Machine 01 87 87Purifier 01 203 203Production Pipes 1700 ft.s (61.40) 104Lift Pipes 1100 ft.s (101.50) 112General Pipe 01 29 29Conveyor Worm 270 ft.s (1375) 371Air Lock Gate 07 8.70 61Air Lock With Cyclone 20 5.80 116Low Pressure Cyclone 4x8 Size 03 36.25 109High Pressure Cyclone 01 87 87Water Pump 02 8.70 17Packing Bins 04 4.35 17Air Preston 01 87 87Elevator 05 87 435Cyclone Small 16 4.35 70Cyclone large 04 26 104Welding Plant 02 11.60 23Battery Set 4 ways 01 73 73Battery Set 8 ways 01 145 145Electric Motors 2-75 HPs 46 870 870Pannel, Starters etc. lot 653 653Cable Various type & guage lot 653 653Complete Machinery & Electric Works,Installation and Commissioning Charges 435 435………………………………………………………………………………………………
Total Cost = 9675………………………………………………………………………………………………
Nida Mohammad, Khalid khan, Tamoor Shah, Waqas Ahmed, Saadat ali, Nida Ishfaque
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RAW MATERIAL
The main raw material is wheat. The food Department Government of Balochistan has already sanctioned the
supply of wheat on demand from the fixed off-take of the province. As such there will be no problem in this
regard.
WATER AND POWER FACILITEIS
QESCO HT3 Power line is passing in front of the mill site. An application for the supply of 400KVA
transformer and power connection already submitted to the QESCO at Quetta. A standby generator will be an
option to use as an alternative source of power.
Nida Mohammad, Khalid khan, Tamoor Shah, Waqas Ahmed, Saadat ali, Nida Ishfaque
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MARKET PROSPECTS
The monthly demand of atta in Quetta City is estimated to be 25000 to 75,000 bags (100). Due to Few No of
flour mills in the entire City the atta is transported from other cities to meet the demand. The sponsors do not
see any marketing problem. Further the prospective market consists of a very large area from, Quetta to
Border Ares of Afghanistan.
DEMAND AND SUPPLY GAP
A comparison of estimated supply and projected demand of wheat flour in Balochistan is given below: (in
tones)
Year Demand Supply Gap
…… ……….. ……… ……....
2005 1003880 886500 117380
2006 1054074 886500 167574
2007 1106777 886500 220277
2008 1162116 886500 275616
Nida Mohammad, Khalid khan, Tamoor Shah, Waqas Ahmed, Saadat ali, Nida Ishfaque
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CONCLUSTION
Establishment of a flour Mill in Quetta City Provincial headquarter of the Baluchistan seems all the more
imperative in the face of fast changing scenario in the region. The population of the area itself in particular
has already into grow.
The proposed project will strengthen Government’s efforts to industrialize the areas of Balochistan especially
the Quetta city.
The sponsors of the project are technically and financially capable and competent and have al lot of
experience in this field. As such the risks for its failure are very very low.
The project is technically and financially viable and will break even just for the very first year.
The projects profit & Loss summary show that it will be earning profits form the very first year of its
operation and will pay the entire loans according to the financing Bank Repayment Schedule.
Nida Mohammad, Khalid khan, Tamoor Shah, Waqas Ahmed, Saadat ali, Nida Ishfaque
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OBJECTIVES OF MILLING
The objectives in the milling of white flour are:
To make- as completely as possible a separation of endosperm form the bran and germ so that the flour shall
be free form bran specks and of good color and so that the palatability and digestibility of the product shall
be improved and its storage life lengthened.
To reduce the maximum amount of endosperm to flour fineness there by obtaining the maximum extraction
of white flour form the wheat and at the some time to ensure that the amount of damage to the starch
granules does not exceed the optimum.
Nida Mohammad, Khalid khan, Tamoor Shah, Waqas Ahmed, Saadat ali, Nida Ishfaque
11
WHEAT OF THE WORLD
Wheat is grown throughout the world from the borders of the arctic to near equator- although the crop is
most successful between latitude it ranges form sea level to 10,000 ft. in Kenya and 15,00 ft. in Tibet.
Cultivated varieties which are of widely differing pedigree and are grown ender varied conditions of soil and
climate show wide variations in characteristics.
WHEAT TYPE
In general way wheat’s are classified according to (1) the texture of the endosperm because this characteristic
of the grain is connected with the way the grain breaks down in milling and (2) the protein content because
the properties of the flour and its suitability for different purpose are related to this characteristic.
Hard and Soft Wheat
“Hardness” and “Softness” are milling characteristics relating to the way the endosperm breaks down. Greer
and Hinton (1950) observed that if the cut surface of hard wheat is lightly and uniformly wetted and allowed
to dry a pattern of cracks appears following the lines of the endosperm cell boundaries of the endosperm
(which resemble that in hard wheat) but passes indiscriminately through.
Nida Mohammad, Khalid khan, Tamoor Shah, Waqas Ahmed, Saadat ali, Nida Ishfaque
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DESCRIPTION OF WORKING PROCESS
The grain discharged from the supply truck and be means of input paternoster is delivered to raw silo.
The grain cleaning procedure at first stage takes its place at the seed cleaner. The sand dust stones and other
heavy foreign particles are removed by means of vibrating sieves. Light particles and dust are separated from
the grain through aspiration. Then by means of gravity the grain go to destoner for mineral impurities
removing and after that to wild oat- (or cockle) remover.
To begin peeling process the grain is delivered to the scourer where dry first peeling of the outer shell of the
grain is executed.
Then cleaned grain is delivered to intensive humidifier where from 3 to 5% water is added.
Afterwards the wetted grain is moved by auger into the four- section silo for conditioning during 4-6 hours.
Such operation allows hardening the peripheral part of the grain.
After conditioning and second peeling but before first grinding the grain is wetted again. This operation is
occurred at the mild humidifier where only 0.5% water has been added. (Optional).
After conditional the grain reside approximately 20 minutes at the small silo which is placed the top of the
first roller mill. In run that procedure allows to harden the grain shell and sill stimulate the easiest way of
bran separation after first breaking.
First breaking take place at the first roller in roller mill #1. the grain products by mean of pneumatic transport
are delivered to the 2-section. Thus due to the sifting procedure three types of flours can be separated. Coarse
milling products follow to the next reduction system of the roller mill #1 and #2 with afterwards fraction’s
separation in the adequate section of sifter machine and so on.
The bran is the one of the largest tail fraction which needs to be processed at the finisher for increasing of the
total flour output.
Nida Mohammad, Khalid khan, Tamoor Shah, Waqas Ahmed, Saadat ali, Nida Ishfaque
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All grain products transportation is executed by pneumatic transport which consists of fan, filter-cyclone and
cyclone dischargers.
The flour and bran are transported to the adequate silo.
The flour of each grade by auger is delivered form silo to the filling weighing section for bagging.
Nida Mohammad, Khalid khan, Tamoor Shah, Waqas Ahmed, Saadat ali, Nida Ishfaque
14
THE FINANCIAL PROJECTS
The total cost of the project is estimated to be Rs. 297, 96,000.00 inclusive of the initial working capital Rs 40, 00,000.00. the details of the cost are as under.
THE ESTIMATED PROJECT COST (Rs. 000)
ITEM SPONSORS BANKS TOTAL
Land (2 acres) 3000 3000
Buildings 8000 8000
Plant & Machinery (with erectionAnd test period running) 9675 9675
Cost of Carriage 150 150
WAPDA Connection (with
400KVA transformer) 1200 1200
Furniture & Fixtures 150 150
Preliminary & Startup Expenses 375 375
Supply Vehicles 2000 2000
Contingencies 350 350
Fixed Capital Cost 15225 9675 24900Percentage 61% 39% 100%
Initial Working Capital 4896 4896
TOTAL PROJECT COST 20121 9675 29796Equity-Debt Ratio : 67.53% 32.47% 100%
Nida Mohammad, Khalid khan, Tamoor Shah, Waqas Ahmed, Saadat ali, Nida Ishfaque
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ASSUMPTION UNDERLYINGEARNING & EXPENSES FORECAST
Sales Estimates (Rs. 000-Qty. /tones)_______________________________________________________________________________
Year Operations 1st Year 2nd Year 3rd Year 4th Year 5th Year_______________________________________________________________________________
Capacity Utilization 50% 55% 60% 65% 70%
Production during the Year 9600 10560 11520 12480 13440
Add: moister 4-5%per ton 432 475 518 561 604
Net: quantity produced 10032 11035 12038 13041 14044
Add: opening stock of flour 0 64 70 76 82
Less: closing stock of flour(2days) 64 70 76 82 88
Quantity available for sale 9968 10965 11962 12959 13956
Sale price (Rs. 12000/-per ton 12 12 12 12 12_______________________________________________________________________________
Net Sales Value 119616 131580 143544 155508 167472_______________________________________________________________________________
Assumption and Explanation Remarks:
a) Operation times (shift/ days) 1
b) Production period (days/ annum) 300
c) Rated capacity (in ton) 19200
d) Selling price per ton (in Rs) 12000
Nida Mohammad, Khalid khan, Tamoor Shah, Waqas Ahmed, Saadat ali, Nida Ishfaque
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Raw Material
The price of wheat is assumed at Rs. 11000/-per ton based on open market price. Annual cost for the projected period is estimated as under:
Operation Year 1st Year 2nd Year 3rd Year 4th Year 5th Year
Capacity utilization 50% 55% 60% 65% 70%
Production during the year 9600 10560 11520 12480 13440
Add: Wastage 1% per ton 96 106 116 126 136
Net quantity 9696 10666 11636 12606 13576
Purchase price (in Rs.) 11 11 11 11 11
Cost of Raw Material 106656 117326 127996 138666 149336
Nida Mohammad, Khalid khan, Tamoor Shah, Waqas Ahmed, Saadat ali, Nida Ishfaque
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Packing Materials
50% of the annual production will be packed in the 60kg bags @ Rs 6/-per bag.
Year 1st Year 2nd Year 3rd Year 4th Year 5th Year
Production to be packed 4984 5482 5980 6478 6976No of bags 83067 91374 99680 107987 116293Cost per bag (in Rs) 6 6 6 6 6Total Cost 498 548 597 647 696
30% of the annual production will be packed in the 30kg bags @ Rs 4/-per bag
Production to be packed 2994 3290 3589 3888 4187No of bags 99667 109634 119600 129567 139533Cost per bag (in Rs) 4 4 4 4 4Total Cost 399 439 478 518 557
20% of the annual production will be packed in the 20kg bags @ Rs. 3/-per bag.
Production to be packed 1994 2193 2393 2593 2793No of bags 99700 109670 119640 129610 139580Cost per bag (in Rs) 3 3 3 3 3Total Cost 299 329 358 388 417
Total Cost of the packing Material
Plastic bags 60 kgs 498 548 597 647 696
Plastic bags 30 kgs 399 439 478 518 557
Plastic bags 20 kgs 299 329 358 388 417
Total Cost 1196 1316 1433 1553 1670
Nida Mohammad, Khalid khan, Tamoor Shah, Waqas Ahmed, Saadat ali, Nida Ishfaque
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Manpower
Milling Staff:
Particular Number Monthly Total Pay Yearly
Miller 01 8 8 96Assistant Miller/ Fitter 01 4 4 48Electrician 01 3 3 36Skill man 01 3 3 36Washer man 01 3 3 36Helper 02 2 4 48Labour 06 3 18 216
___________________________________________________
Total = 13 516Fringe benefit @ 25% 129
=====Grand Total = 645
======The annual salaries & wages are escalated by 10% for projected period:
645 710 781 859 945
Administrative Staff:Particular Number Monthly Total Pay Yearly
Chief Executive 01 16 16 192Manager Production/Operation 01 10 10 120Manager Sales 01 6 6 72Accountant 01 4 4 48Assistants 02 3 6 72Drivers 02 3 6 72Peon 01 3 3 36Chowkidar 02 3 6 72
___________________________________________________
Total = 11 684
Fringe benefit @ 25% 171 =====
Grand Total = 855 ======
The annual salaries & wages are escalated by 10% for projected period:
855 944 1035 1139 1253
Nida Mohammad, Khalid khan, Tamoor Shah, Waqas Ahmed, Saadat ali, Nida Ishfaque
1st Year 2nd Year 3rd Year 4th Year 5th Year
1st Year 2nd Year 3rd Year 4th Year 5th Year
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UtilitiesPower;
Fixed Charges
Connecting Load x Rs x 200 x No. Of months = fixed charges
400 x 200 x 12 = 960
Variable charge Consumption x Hrs x No. of days = kwh
300 x 24 x 300 = 216,000 kwh
Efficiently % 50% 55% 60% 65% 70%
Kwh 1080,000 1188,000 1296,000 1404,000 1512,000
Rate (Rs) 0.68 0.68 0.68 0.68 0.68
Cost 735 808 881 954 1028
Total Cost Of Electricity
Fixed Charges 960 960 960 960 960
Variable Charges 735 808 881 954 1028
Total 1665 1768 1841 1914 1988
Other Manufacturing Overheads The overheads are estimated @ 10% of Machinery Cost which includes cost of insurance, Stores & Spares
and maintenance.
968 1065 1162 1259 1356
Nida Mohammad, Khalid khan, Tamoor Shah, Waqas Ahmed, Saadat ali, Nida Ishfaque
1st Year 2nd Year 3rd Year 4th Year 5th Year
1st Year 2nd Year 3rd Year 4th Year 5th Year
1st Year 2nd Year 3rd Year 4th Year 5th Year
20
Statement of Depreciation
Particulars Amounts Contingencies Total Depreciation% Depreciation Rs
Land 3000 0 3000 0% 0Mill Building 6340 145 6485 5% 324Building (Admin Block) 1660 25 1685 5% 84Machinery 9575 Carriage +Electric connection 1350 135 11160 10% 1116
Furniture & Fixture 150 15 165 10% 17Supply Vehicles 2000 30 2030 10% 203
Total 24175 350 24525 1744
Direct Cost 1660
Administrative Expenses 84====== 1744======
Closing Inventory
The closing inventory is estimated at 3 days cost of the production. Annual cost of the inventory is estimated as under:
3 days cost of production 1127 1240 1352 1465 1577
Nida Mohammad, Khalid khan, Tamoor Shah, Waqas Ahmed, Saadat ali, Nida Ishfaque
1st Year 2nd Year 3rd Year 4th Year 5th Year
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Operation Expenses
General Administrative Expenses:
Salaries & wages855 941 1035 1139 1253
Printing & Stationary 30 33 36 39 42Traveling & Conveyance 100 110 120 130 140Tel. Telegraph& postage 60 66 72 78 84Power and fuel 100 110 120 130 140Entertainment expenses 50 55 60 65 70Legal & Audit fees 20 20 20 20 20Insurance & Bank charges 148 162 176 191 206Amortization of pre-op. exp. 30 30 30 30 30Depreciation 84 84 84 84 84Miscellaneous expenses 50 55 60 65 70
Total = 1527 1666 1813 1971 2139____________________________________________________________________________
Selling & Distribution Expenses:
Selling expenses are estimated at 2% of annual sales revenue.
23922631 2870 3109 3348
Financial Expenses: 1064
851 639 426 213
Amortization: preliminary startup expenses are amortized over a period of 10 years annual cost of amortization is estimated as under:
Annual cost of amortization
Pre-operation & startup expenses 375Annual Amortization @ 10 % 38
Amortization (Manufacturing) 8Amortization (Administrative) 30
Nida Mohammad, Khalid khan, Tamoor Shah, Waqas Ahmed, Saadat ali, Nida Ishfaque
1st Year 2nd Year 3rd Year 4th Year 5th Year
1st Year 2nd Year 3rd Year 4th Year 5th Year
1st Year 2nd Year 3rd Year 4th Year 5th Year
22
NET INITIAL WORKING CAPITAL (Rs.ln 000)
Raw Materials 10 Days 3555 3911 4267 4623 4979
Finished Goods 3 Days 1127 1240 1352 1465 1577
Packing Materials 15 Days 60 66 72 78 84
Debtors 3 Days 1196 1315 1435 1554 1674
Cash Lump sum 25 27 30 32 35
_____________________________________________________________
5963 6559 7155 7751 8347
_____________________________________________________________
Less:
Accounts Payable @ of 3 days of annual
Requirement of raw material 1067 1174 1281 1388 1495
_______________________________________________
Net Working Capital 4896 5385 5874 6363 6852
_______________________________________________
Nida Mohammad, Khalid khan, Tamoor Shah, Waqas Ahmed, Saadat ali, Nida Ishfaque
Particular Tied up 1st Year 2nd Year 3rd Year 4th Year 5th Year period
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Cost of Goods Sold
______________________________________________________________________________
Year of Operation 1st Year 2nd Year 3rd Year 4th Year 5th Year
_______________________________________________________________________________
Capacity utilization 50% 55% 60% 65% 70%
Production in tones 9600 10560 12520 12480 13440
Direct Cost:
Raw Material 106656 117326 127996 138666 149336
Packing Material 1196 1316 1434 1555 1674
Labor 645 710 774 839 903
Overheads:
Utilities 1695 1780 1865 1950 2035
Other overheads 968 1065 1162 1259 1356
Depreciation 1660 1660 1660 1660 1660
Amortization 8 8 8 8 8
Miscellaneous 50 55 60 65 70
_______________________________________________________
Total Cost 112878 123920 134960 146002 157042
_______________________________________________________
Add: Opening stock (2days) 0 1127 1240 1352 1465
Less: Closing Stock (3days) 1127 1240 1352 1465 1577
_______________________________________________________
Cost of Sales 111751 123807 134848 145889 156930
_______________________________________________________
Unit Cost (Per ton) 11.64 11.72 11.71 11.69 11.68
Nida Mohammad, Khalid khan, Tamoor Shah, Waqas Ahmed, Saadat ali, Nida Ishfaque
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Forecast of Income Statement
_______________________________________________________________________________
Year of Operation 1st Year 2nd Year 3rd Year 4th Year 5th Year
_______________________________________________________________________________
Seles 119616 131580 143544 155508 167472
Cost of Goods Sold 111751 123807 134848 145889 156930
_______________________________________________________
Gross Profit 7865 7778 8696 9619 10542
Operating Expenses
Gen. & Admin Expenses 1527 1666 1813 1971 2139
Selling & Distbu. Expenses 2392 2613 2870 3109 3348
Empty Bardana Sales (2400) (2640) (2880) (3120) (3360)
______________________________________________________
Operating Profit 6346 6134 6893 7659 8415
Financial Expenses
Payment & Market up on
Bank Finance @ 11% 1064 851 639 426 213
Profit before Tax 5282 5283 6254 7233 8202
Income Tax @ 35% 1849 1849 2189 2532 2871
Net Profit after Tax 3433 3434 4065 4701 5331
Proposed Dividend @ 30% 1030 1030 1220 1410 1599
Un-Appropriated Profit 2403 2404 2845 3291 3732
Un-Appropriated Profit
Opening Balance 0 2403 2404 2845 3291
Un-Appropriated Profit
Nida Mohammad, Khalid khan, Tamoor Shah, Waqas Ahmed, Saadat ali, Nida Ishfaque
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Carried Forward 2403 4807 5249 6136 7023
Profitated Ratio (%)
Gross Profit 6.57 5.91 6.06 6.19 6.29
Operating Profit to Sales 5.31 4.66 4.80 4.93 5.02
Pre-Tax Profit to Sales 4.42 4.02 4.80 4.93 4.80
Net-Profit to Sales 2.87 2.61 2.83 3.02 3.18
Return on Total Assets 10.57 10.32 12.69 15.06 17.62
Retrun Owners Equity 15.18 13.64 15.86 17.78 19.61
Return on Equity before Tax 23.36 20.98 24.40 27.36 30.17
Nida Mohammad, Khalid khan, Tamoor Shah, Waqas Ahmed, Saadat ali, Nida Ishfaque
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Gross Profit to sale = Gross profit Sales
= 7865 119616
= 6.57%
Operating profit to sale = operating profit Sales
= 6346 119616
= 5.13%
Pre- Tax profit to sale = pre tax profit Sales
= 5282 119616
= 4.42%
Net profit to sale = Net profitSales
= 3433 119616
= 2.87%
Average Equity = equity at the end of the construction period + equity at the end of year12
= 20121 + 22524/2 = 213222.5
Return on Owner Equity = Net ProfitAV. Equity
= 3433 21322.5
= 15.18%
Return on total Assets = ProfitTotal Assets
= 3433 29796 + 32361
2= 10.57
Nida Mohammad, Khalid khan, Tamoor Shah, Waqas Ahmed, Saadat ali, Nida Ishfaque
X 100
X 100
X 100
X 100
X 100
X 100
27
____________________________________________________________
1st Year 2nd Year 3rd Year 4th Year 5th Year____________________________________________________________
Operating Income 6346 6134 6893 7659 8415Add Depreciation 1660 1660 1660 1660 1660
____________________________________________________________Net income 8006 7794 8553 9379 10075
Land 3000Building (75%) 6000Machinery (50%) 4838Net Working Capital 4896
Net cash inflow for 5th Year 28809=====
1. Pay Back Period:
Cash out flow-29796
Cash inflow
1. 80062. 77943. 85534. 93795. 28809
x = 3 + 5443 9379
= 3 + 0.58= 3.58 years
Nida Mohammad, Khalid khan, Tamoor Shah, Waqas Ahmed, Saadat ali, Nida Ishfaque
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2. Discounted pay Back Period
IRR = 121Cash out flow = 29796
Discounted cash in flow:-
1. 71482. 62133. 60884. 59605. 16347
x = 4+ 4360 16347
= 4 + 0.26x = 4.26 years
3. Profitability Index
= sum of p.v of cash inflow Initial cash out flow
= 4175629796
= 1.40
4. Net present value
NPV = sum of P.V – Initial less flow= Rs 41756- Rs29796= Rs 11960
Nida Mohammad, Khalid khan, Tamoor Shah, Waqas Ahmed, Saadat ali, Nida Ishfaque
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IRR
NPV @ 20% = Rs 3338NPV @ 25% = (742)
IRR = 20% + x
X = amount at lower rate – initial cash outflowAmount at lower rate – amount at higher rate
= Rs 33134- Rs29796 Rs 33134 -Rs29054
= 3338 4079
= 0.0409* 100x = 4.09%
IRR = 20% + 4.09%IRR = 24.09%
Nida Mohammad, Khalid khan, Tamoor Shah, Waqas Ahmed, Saadat ali, Nida Ishfaque
X 0.05
X (0.05)
30
Forecast of Balance Sheet
_______________________________________________________________________________
As on Const. Period 1st Year 2nd Year 3rd Year 4th Year 5th Year
_______________________________________________________________________________
Current Assets
Cash & Bank Balance 4896 3297 5023 4978 5377 5776
Stock 4682 5150 5618 6086 6554
Packing Material 60 66 72 78 84
Debtors 1196 1316 1435 1555 1674
________________________________________________________________
Total Current Assets 4896 9235 11555 12103 13096 14088
Fixed Assets Net 24900 23126 21382 19638 17894 16150
________________________________________________________________
Total Assets 29796 32361 32937 31741 30990 20238
Current Liabilities
Account Payable 1067 1174 1281 1388 1495
Proposed Dividend 1030 1030 1220 1410 1599
________________________________________________________________
Total 2097 2204 2501 2798 3094
Bank Finance
LMM Finance 9675 7740 5805 3870 1935 0 Running Finance 0 0 0 0 0 0
Total Bank Finance 9675 7740 5805 3870 1935 0
__________________________________________________________
Total Liabilities 9675 9837 8009 6371 4733 3094
Nida Mohammad, Khalid khan, Tamoor Shah, Waqas Ahmed, Saadat ali, Nida Ishfaque
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Owner Equity
Paid up Capital 20121 20121 20121 20121 20121 20121
Un-Appropriated Profit 2403 4807 5249 6136 7023
__________________________________________________________
Total Equity 20121 22524 24928 25370 26257 27144
__________________________________________________________
Total LiabilitiesAnd Equity 29796 32361 32937 31741 30990 30238
===================================================
Nida Mohammad, Khalid khan, Tamoor Shah, Waqas Ahmed, Saadat ali, Nida Ishfaque
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Forecast statement of Changes in financial Position
_______________________________________________________________________________Year Ending End of cost 1st Year 2nd Year 3rd Year 4th Year5th Year
Period_______________________________________________________________________________
Cash Flow from Operating Activities
Profit before taxation 0 5282 5283 6254 7233 8202
Depreciation (Total) 0 1744 1744 1744 1744 1744
Amortization 0 38 38 38 38 38
__________________________________________________________
Operating Profit before
Working Capital changes 0 7064 7065 8036 9015 9984
(Increase)/Decrease in
Current Assets 0 (4339) (2320) (548) (933) (992)
(Decrease)/Increase in Current Liabilities
(Other than Bank Borrowing) 0 2097 107 297 297 296
__________________________________________________________
Cash Generated
From Operating 0 4822 4832 7785 8319 9984
Income Tax paid 0 1849 1849 2189 2532 2871
(Decrease) in Bank
Borrowing 9675 (1935) (1935) (1935) (1935) (1935)
(Inerease in Paid up Capital 20121 0 0 0 0 0
_________________________________________________________________
Net Cash from (Used in
Operating Activities) 29796 4908 4938 7531 7725 8355
Nida Mohammad, Khalid khan, Tamoor Shah, Waqas Ahmed, Saadat ali, Nida Ishfaque
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Cash Flow from Investing Activities
Fixed Capital Expenditures 24900 0 0 0 0 0
Advance & other Invetsments 0 0 0 0 0 0
________________________________________________________________
Net Cash used in
Investing Activities 24900 0 0 0 0 0
Cash Flows from Financinq Activities
Dividend Paid 0 0 1030 1030 1220 1440
________________________________________________________________
Net Cash used in
Financing Activities 0 0 1030 1030 1220 1440
Net (Decrease) in
Cash & Bank Balance 4896 (1599) 1726 (45) 399 399
Cash & Bank Balance 0 4896 3297 5023 4978 5377
______________________________________________________________
Cash & Bank Balance
At Closing 4896 3297 5023 4878 5377 5776
_______________________________________________________________
Nida Mohammad, Khalid khan, Tamoor Shah, Waqas Ahmed, Saadat ali, Nida Ishfaque
34
Economic Evolution
Contribution to the Gross National Product:__________________________________________________________________________________
1st Year 2nd Year 3rd Year 4th Year 5th Year__________________________________________________________________________________
Value of Production 119616 131580 143544 155508 167472
Less: Intermediate Inputs
Raw Material 106656 117326 127996 138666 14933
Packing Material 1196 1316 1433 1553 1670
Water, Power & Fuel 1795 1878 1961 2044 2128
Other Mfg. Overheads 968 1065 1162 1259 1350
Printing & Stationary 30 33 36 39 42
Traveling & Conveyance 100 110 120 130 140
Tel. Tlgph. &Postage 60 66 72 78 84
Entertainment Expenses 50 55 60 65 70
Legal & Audit Fee 20 22 24 26 28
Markup on Bank Borrowing 1064 581 639 426 213
Insurance Expenses 148 162 176 191 2
Selling & Distb. Expenses 2392 2631 2870 3109 3348
Miscellaneous Expenses 50 55 60 65 70
__________________________________________________________________________________Total Intermediate Outputs 114529 125515 136609 147651 158691__________________________________________________________________________________Value Added 5087 6065 6935 7857 8781Value Added% 4.25% 4.61% 4.83% 5.05% 5.24%__________________________________________________________________________________
Nida Mohammad, Khalid khan, Tamoor Shah, Waqas Ahmed, Saadat ali, Nida Ishfaque
35
Break Even Analysis
Operational Year 1:
__________________________________________________________________________________
Item Total Fixed Variable Fixed% Var.%__________________________________________________________________________________
Raw Material 106656 0 106656 0 100%
Packing Material 1196 0 1196 0 100%
Salaries and Wages 645 387 258 60% 40%
Depreciation 1660 1660 0 100% 0%
Amortization 8 8 0 100% 0%
Utilities 1695 508 1187 30% 70%
Other Mfg. Overheads 968 468 500 48% 52%
Markup on BankLong Term Loan 1064 1064 0 100% 0%Miscellaneous Expenses 50 18 32 36% 64%
Markup on Running Finance 0 0 0 0% 0%
Gen. Administrative Expenses 1527 855 672 56% 44%
Selling & Distb. Expenses 2392 0 2392 0% 100%
__________________________________________________________________________________
117891 4998 112893__________________________________________________________________________________
Net Sales @ 50% Capacity : 119616
Total Expenses @ 50% : 117891
Break-Even Sales : Fixed Expenses/(1-Variable Expenses/ Sales)
= 4998/(1-112893/119616)
= 83300
Capacity Utilization = 83300*50/119616
= 34.82
Nida Mohammad, Khalid khan, Tamoor Shah, Waqas Ahmed, Saadat ali, Nida Ishfaque
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