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Pea-hut Private Limited
S.K.SCHOOL OF BUSINESS MANAGEMENT, PATAN Page 1
A
FEASIBILITY REPORT
ON
NEW BUSINESS DEVELOPMENT OF PEANUT PROCESSING
AT GOGAPURA IN BHILADI
SUBMITTED TO:
Mr. Shakti Dodiya
S.K.School of Business Management,
Hemchandracharya North Gujarat University, Patan
In Partial Fulfillment of Entrepreneurship and Innovation Management under Subject for
Requirement of Degree of
MASTER OF BUSINESS ADMINISTRATION
Submitted By:
Bhalabhai V. Bukoliya
(Roll No. 02)
MBA-IV
Academic Year 2014-15
Pea-hut Private Limited
S.K.SCHOOL OF BUSINESS MANAGEMENT, PATAN Page 2
PREFACE
Management education seeks to accomplish several objectives simultaneously. One is to develop
a set of concepts so that students can understand the framework in which business decisions are
made. The second is to operational those concept with specific tool of analysis.
In my opinion management education may be divided in to two broad categories, Theory and
practical. The more emphasis should be on practical portion of management. Management theory
is same everywhere, but not practice, what makes organizations different from each other course,
the way of practicing management concepts.
For the successful completion of the MBA programme, the students are required to complete the
Project. In the 4th semester of the programme, under the subject entrepreneurship and innovation
management one project carried for knowledge of practical implication of all the theory we have
study in the classroom. Under the project of new business development, it gives lot of idea for
establish new enterprise and how money pump-in and how all activity handled.
I got golden chance at shri s.k. school of business management under subject of entrepreneurship
and innovation management in my MBA programme. I have gone through new business
development for new peanut processing plant. It gives me lot of knowledge for applied a all
aspects of business like marketing analysis, technical analysis, financial analysis so on. I have
tried to best of my level for completing this project.
Pea-hut Private Limited
S.K.SCHOOL OF BUSINESS MANAGEMENT, PATAN Page 3
ACKNOWLEDGEMENT
I would like to sincere thanks to the S.K.School of Business Management, Patan, affiliated to the
HNGU University for giving us the opportunity to increase our practical knowledge in our
interest of management area.
I also would like to grateful thanks to Prof. Shakti Dodiya for motivated us to undertake this
project. He spent valuable time for suggesting and helped in modification during the project
work. I am thankful for her aspiring guidance, invaluably constructive criticism and friendly
advice during the project work.
I express my warm thanks to ms. Jyoti ghanci for her support and guidance at a time of project
report.
I would also like to thanks to Mr. Pravinbhai for providing lab facility whenever required.
Finally, I thanks to all people who helped me in the project.
Bhalabhai Bukoliya (02)
MBA-IV
Pea-hut Private Limited
S.K.SCHOOL OF BUSINESS MANAGEMENT, PATAN Page 4
EXECUTE SUMMARY
We have made a new business plan of new peanut processing. We find out great opportunity in
Gogapura area near Bhiladi (Deesa). Bhiladi is the centre of peanut which is produced by the
farmer of Deesa, Bhiladi and Lakhani district and also there is national highway of 14 no. is
passed through Bhiladi so there is huge chance of transportation. During end of summer there is
huge peanut come in the market and our plant producing mainly three item: Chikkis, Peanut
Butter and roasted peanut nut. The one important thing that we provide to people by peanut
processing is healthy peanut. That helps to people reducing a heart problem.
We decided name of our processing plant is ‘Pea-hut Pvt. Ltd.’ We have conducted marketing
analysis, financial analysis, technical analysis and other competitor analysis for our business. For
analysis of market we find out great opportunity for peanut butter and great chance of success in
the north Gujarat. How many is important for running business, we find out by the financial
analysis and the fluctuation in the cash flow, income statement, balance sheet and so on. Which
machinery we used in our plant we find out by technical analysis and total production capacity of
the machine is find out by the technical analysis and what would be total annually demand of the
raw material all thing like that we find out by the technical analysis. Besides that we made a
market plan and most of the profit spends behind promotion activity and for sales expenses. By
the competitors analysis we find out our strengths, weakness, opportunity and threats for our
business plan.
We have also seen our best qualitative suppliers and financial plan and we have seen all
information regarding use of capital and how can raised capital and how much amount should be
required for carrying out day to day activity by working capital analysis.
Pea-hut Private Limited
S.K.SCHOOL OF BUSINESS MANAGEMENT, PATAN Page 5
CHAPTER-1
GENERAL
INFORMATION
1.1 COMPANY PROFILE
Name : Pea-hut Private Limited.
Pea-hut Private Limited
S.K.SCHOOL OF BUSINESS MANAGEMENT, PATAN Page 6
Year of Establishment : 2015
Owner : Mr. Bhalabhai Bukoliya
Address : Pea-hut Private Limited
Nr. Gogapura Patiya,
Deesa Highway,
Bhiladi(Gujarat) -385344
Post Box No : 51,
Ph. +91-02742-268774/5,
Fax : +91-02742-265974
Business Type : food industry
Web Site : www.Pea-hut.com
Email : [email protected]
Quality standard : ISO 9001:2008
Slogan : ‘Testy he fir bhee healthy hee’
1.2 VISION & MISSION OF COMPANY
Our Way - Our Mission
Guided by the Our Way principles, our goal at Pea-hut is to cultivate a workplace that nurtures
and expects innovative solutions from all employees. The mission of Our Way is simple: As a
Pea-hut Private Limited
S.K.SCHOOL OF BUSINESS MANAGEMENT, PATAN Page 7
leading branded peanut processing company with a focus on profitable growth, and inspired by
our founder's charge to "originate, don't imitate," we market a balanced portfolio of highly
differentiated quality products. We engage our employees by creating an environment where
careers are fostered, people make a difference and integrity is absolute.
Our Vision
"Pea-hut responsibility is to continually improve all aspects of the peanut production in
which we operate – environment, social, economic - creating a better tomorrow than today."
Our vision is put into action through programs and a focus on environmental stewardship,
activities to benefit society, and a commitment to build shareholder value by making Pea-hut
a truly sustainable company.
1.3 HISTORY
Peanut is a mass consumption item and is used for extraction of oil, for making butter, chikki and
chocolates, as an ingredient in making several food and snack preparations, for munching and so
on. India is one of the largest producers along with the USA; China and Argentina. Gujarat,
Andhra Pradesh, Tamilnadu and Maharashtra are the main cultivating states. Peanuts from the
Pea-hut Private Limited
S.K.SCHOOL OF BUSINESS MANAGEMENT, PATAN Page 8
Saurashtra region of Gujarat are famous all over the world on account of their big size, nutty
flavor and crunchy taste. This note basically deals with processing for munching purpose for
which there is a vast demand all over the state. The market is primarily controlled by the small
and unorganized sector.
Peanuts have considerable nutrients and are consumed in different forms all over the world since
long. Peanut butter is one such product consumed in large quantities especially in western
countries since many years. It is not very popular in India and the domestic market is dominated
by milk butter. Hence, the promoters must target growing export market and should be
financially sound. The technology is available indigenously and it is advisable to engage a
technical consultant to ensure quality.
Peanuts are rich in unsaturated fats and other nutrient that may improve Glucose and insulin
homeostasis. It also helps in reducing diabetes. It can serve as substitute for red or processed
meats. It is very much popular in western countries. Americans eat almost 7 pounds of peanuts
and peanut butter per capita.
From the last three years (2011-14) many of the Banaskantha farmers have been cultivating a
peanut in huge volume. And here no any branded peanut processing plant. Some have, but in the
saurashtra. As earlier said saurashtra region is highest peanut manufacturing in Gujarat.
However, some region of north Gujarat like Deesa, Bhildi, West area of Diodar etc. are main
cultivating states in north Gujarat region.
I want to establish three main plants like:
1. Salted peanut,
2. Peanut Butter,
3. Assorted Chikki.
1.4 PRODUCT
Groundnut is an agriculture produce with 2 crops, with the winter crop contributing more than
the summer crop. Groundnuts in shell (pods) are de-stoned and then de-shelled to obtain peanuts.
After grading them as per different sizes (known as counts) they are sold in the market. The
product taken here is roasted and salted peanuts for direct consumption, Peanut Butter for snack
and Assorted Chikkis for teenagers. .
Pea-hut Private Limited
S.K.SCHOOL OF BUSINESS MANAGEMENT, PATAN Page 9
1.4.1 Roasted Salted Blanched Peanuts
We would be offer best roasted salted blanched peanuts. These peanuts are processed from raw
peanuts and are thoroughly tested for quality. Whole process is carried out in a hygienic
environment to retain quality and freshness. Moreover, offered product is available in various
customized packaging sizes.
Features:
Rich in taste
High nutritional value
High nutrition value
Customized packaging Available Packaging Sizes:
100 gm, 200 gm, 500 gm
1.4.2 Assorted Chikkis:
Chikki is a traditional ready-to-eat Indian sweet generally made from groundnuts and jaggery.
There are several different varieties of chikki in addition to the most common groundnut chikki.
Each chikki is named depending upon the ingredients used. Usually, ingredients such as puffed
Pea-hut Private Limited
S.K.SCHOOL OF BUSINESS MANAGEMENT, PATAN Page 10
or roasted Bengal gram, sesame, puffed rice, beaten rice, and Khobara (desiccated coconut) are
used.
Chikkis is very popular from the long time, people eat Chikki for the best and qualitative taste.
Most of the market of Chikki is children because they like sweet and dessert.
Ingredients:
Peanut, sugar/ jaggery/brawn sugar, cardamom powder
It is a very popular sweet item in both rural and urban South Asia (spanning India, Pakistan,
Bangladesh, Nepal and Sri Lanka). Some also add glucose to the chikkis, which are usual there.
It just started from a single flavor of jaggery and peanuts. But today there are many different
exotic flavors available in the market. In our plant we would use only peanut nut for chikkis.
1.4.3Peanut Butter:
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S.K.SCHOOL OF BUSINESS MANAGEMENT, PATAN Page 11
Basic Nutritional Information
A 2-tablespoon serving of peanut butter contains 188 calories, or 9 percent of the daily intake in
a standard 2,000-calorie diet. These calories come from a mix of carbohydrates, proteins and
fats. Each serving of peanut butter provides us with 7.7 grams of protein, which helps keep our
tissues strong and promotes immune function, as well as 16 grams of fat, a concentrated source
of energy. Peanut butter also offers 6.9 grams of carbohydrates per serving. Some of these carbs
break down into sugar and fuel our brain, liver and muscle tissue, while 2.6 grams comes from
heart-healthy dietary fiber. A serving of peanut butter contributes 10 percent toward the
recommended daily fiber intake for women and 7 percent for men.
Vitamin Content
Pea-hut Private Limited
S.K.SCHOOL OF BUSINESS MANAGEMENT, PATAN Page 12
Peanut butter serves as a rich source of vitamin E and niacin, or vitamin B-3. Vitamin E controls
inflammation in our body, aids in healthy cell-to-cell communication and helps prevent tissue
damage through its role as an antioxidant. Consuming 2 tablespoons of peanut butter boosts our
vitamin E intake by 2 milligrams, or 13 percent of the recommended daily intake. The niacin in
peanut butter helps our cells perform chemical reactions, including those needed for energy
production, and plays a role in cell development. A serving of peanut butter offers 4.4 milligrams
of niacin -- 28 and 31 percent of the recommended daily niacin intakes for men and women,
respectively.
Beneficial Minerals:
Reach for peanut butter as a source of beneficial minerals, especially magnesium and copper.
Our body relies on both minerals to help activate enzymes, the family of proteins that help drive
chemical reactions in our cells. Magnesium- and copper-dependent proteins support energy
production. Magnesium also contributes to healthy cell membranes, while copper controls gene
activity. A 2-tablespoon portion of peanut butter contains 51 milligrams of magnesium -- 12 and
16 percent of the recommended daily intakes for men and women, respectively -- as well as 185
micrograms of copper, or 21 percent of the recommended daily intake.
Ingradient:
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CHAPTER – 2
MARKET ANALYSIS
2 MARKET ANALYSIS
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S.K.SCHOOL OF BUSINESS MANAGEMENT, PATAN Page 14
2.1 Demand and Supply
Large quantity of roasted and salted peanuts is sold throughout Gujarat round the year. The
peanut butter is new for the north Gujarat region some of the manufacture of ahmedabad
producing a butter peanut. The market is completely scattered and controlled by tiny or cottage
units with few local established brands. In most of the cases, processing as well as handling is
unhygienic and volumes are very small. Pricing is very crucial as the average price is around
Rs.80/- per kg for the salted peanut. Assorted Chikki is famous in the Gujarat for teenagers.
Before the toffee and chocolate came, Chikki have good market. However in many semi-unban
and rural area have a good market for the assorted Chikki.
2.2 Marketing Strategy:
There are some locally famous brands at centers like Ahmedabad, Rajkot, Surendranagar etc for
salted peanute. Hence, while selecting location, care has to be taken to ensure smooth supply of
raw peanuts and lack of competition from regional established brands. Taluka place in Saurashtra
may satisfy these aspects. There is competition from unorganised sector units and reasonable
price, attractive packing, lucrative commission to retailers and consistent supply is the critical
factors. Fast turnover is very important.
Competitors Analysis:
Charbhuja Industries Pvt.Ltd.
C.Hema Agro
Macmoon Traders
Gormetious Foods Pvt. Ltd.
Das Foodtech Private Limited
Elite Green Pvt. Ltd.
2.3 Location strategy:
Therefore I have chosen Bhiladi for peanut processing plant because there is easily availability of
the raw material and the center of the plant in all cultivation of the north Gujarat region. The
other main benefit is most of the peanut cultivate in Deesa and Bhiladi and for the transportation
there is national highway 27 passing through so that is beneficial to the plant and also there basic
amenities are available.
There are some tiny manufactures in the Deesa but no one in the area of north Banaskantha like
Tharad, Diodar, Bhiladi, Lakhni, Vav, Suigam etc. so there is a huge chance of success.
2.4 MANUFACTURING PROCESS
Pea-hut Private Limited
S.K.SCHOOL OF BUSINESS MANAGEMENT, PATAN Page 15
Saurashtra region of Gujarat produces around 10-12 lac tones of groundnuts (in shell) every year.
Considering average recovery of peanuts at about 70%, more than 8 lac tones of peanuts are
available every year. Peanuts of medium size would be bought from market yards and then
roasted in electrically operated roaster. The roasting time will be around 90 minutes. These
roasted peanuts will be cooled and then salt will be mixed with it before packing them. The
process loss is about 2-3%.
2.4.1 Process for Salted Peanut
Peanuts of medium size would be come from size shaker machine and then roasted in electrically
operated roaster. The roasting time will be around 30 minutes. These roasted peanuts will be
cooled and then salt will be mixed with it before packing them. The process loss is about 2-3%.
2.4.2 Process for Peanut Better
1• Scatter a pod by processing
2• Roast in electrical roaster machine
3
• Roasted peanuts will out of peanut roaster machine and cool for 30 minute
4• Mixed with salt by mixer machine
5• Packaging
Pea-hut Private Limited
S.K.SCHOOL OF BUSINESS MANAGEMENT, PATAN Page 16
Shelling and processing
After harvesting, the peanuts are cleaned, shelled, and graded for size. Next, they are dry
roasted in large ovens, and then they are transferred to cooling machines, where suction
fans draw cooling air over the peanuts.
Unshelled peanuts is adjusted to avoid excessive brittleness of the shells and kernels and
to reduce the amount of dust in the plant. The size-graded peanuts are passed between a
series of rollers adjusted to the variety, size, and condition of the peanuts, where the
peanuts are cracked. The cracked peanuts then repeatedly pass over screens, sleeves,
blowers, magnets, and destoners, where they are shaken, gently tumbled, and air blown,
until all the shells and other foreign material (rocks, mud balls, metal, shrivels) are
removed.
The shelled peanuts are graded for size in a size grader. The peanuts are lifted and then
oriented on the perforations of the size grader. The larger peanuts (the "overs") are sent to
one trough, while the "troughs" are guided towards another trough. The peanuts are then
graded for color, defects, spots, and broken skins.
The peanuts are shipped in large bulk containers or sacks to peanut butter manufacturers.
(Inedible peanuts are diverted as oil stock in semibulk form.) To ensure proper size and
grading, the truckloads transporting peanuts to peanut manufacturers are sampled
mechanically. The sampler, testing two truckloads simultaneously, can quickly and
accurately assess size and grading by examining 10 samples per truckload.
After the peanuts are roasted and cooled, they undergo blanching—removal of the skins
by heat or water. The heat method has the advantage of removing the bitter heart of the
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S.K.SCHOOL OF BUSINESS MANAGEMENT, PATAN Page 17
peanut. Next, the blanched peanuts are pulverized and ground with salt, dextrose, and
hydrogenated oil stabilizer in a grinding machine. After cooling, the peanut butter is
ready to be packaged.
2.4.3 Process for Assorted Chikki:
The process is very simple. Groundnut kernels are roasted to remove the outer red skin and they
are split in the splitting machine. In case of sesame seeds or dry coconut they are roasted and
small pieces of coconut are made manually. Simultaneously, jaggery is boiled in water till thick
syrup is formed and then filtered to remove unwanted particles. This hot syrup is mixed with
groundnut splits or roasted sesame seeds or pieces of roasted coconut and then this mixture is
poured in trays for drying. After about couple of hours, small square sized pieces are cut and
individual piece is packed in plastic wrappers. The Process Flow Chart is as follows:
2.5 CAPITAL INPUTS
Pea-hut Private Limited
S.K.SCHOOL OF BUSINESS MANAGEMENT, PATAN Page 18
Land and Building Pricing is very critical as explained earlier. A plot of land of about 500 sq.mtrs. with built up area
of 300 sq.mtrs. is adequate. The production area would have two major sections. One would
have processing and the second one would accommodate for packaging and storing. A producing
room of about 150 sq.mtrs. and raw materials storage of 75 sq.mtrs. is sufficient. Finished goods
godown can be accommodated in 40-45 sq.mtrs. Land we taken as on lease. Price of land would
suppose to taken at Rs. 250000/- for ten year. Whereas average construction cost is considered @
Rs.2500/- per sq.mtr.
Plant Layout:
Process for Chikki: size grader – colour sorting – medium gridding – mixer – cooling – packaging
Process for butter: size grader – cooling – small gridding – mixer – packaging
1.Dry
roaster
2.
3.
Shelli
ng &
proce
ssing
Size
grader
Colour
sorting
Cooling P
Medium
Mixer Cooling
P Colour
sorting
Mixer Cooling
P
Finish
ed-
Stora
ge
Ra
w-
stor
age
Main office Employe
e’s room Entry
room Gate
Scrap
material
small
Rest
room
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S.K.SCHOOL OF BUSINESS MANAGEMENT, PATAN Page 19
CHAPTER - 3
TECHNICAL ANALYSIS
3 TECHNICAL ANALYSIS
Pea-hut Private Limited
S.K.SCHOOL OF BUSINESS MANAGEMENT, PATAN Page 20
3.1 Machinery
For a new entrant, initial producing capacity has to be moderate. Daily producing capacity of
roasted peanut will be 300 kg. Considering 8-10 hours working may be planned. With 300
working days, the annual capacity would be 90 tonnes. Chikki producing daily would be 20000
chikki from 200 kg peanut. And annual capacity would be 6000000 chikki producing from 60
tonnes. Peanut butter daily producing capacity would be 100 bottles of 500 grams from 50 kg
and annual consumption of peanut would be 15 tones peanut. This would need following
machines:
Item Qty. Price (Rs.)
Shelling machine 1 75000
Electrically-operated roaster 3 120000
Size shaker 1 25000
Colour sorting machine 2 80000
Gridding machine 2 80000
Mixer machine 2 40000
Packaging machine 3 60000
Other miscellaneous equipments -- 35000
Total -- 515000
(Table: 3.1 Machinery)
3.1.1 Peanut Sheller
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S.K.SCHOOL OF BUSINESS MANAGEMENT, PATAN Page 21
Peanut Sheller machine is very useful to shell a nuts and kernels and clean a peanut. Unshelled
peanuts is adjusted to avoid excessive brittleness of the shells and kernels and to reduce the
amount of dust in the plant. The size-graded peanuts are passed between a series of rollers
adjusted to the variety, size, and condition of the peanuts, where the peanuts are cracked. The
cracked peanuts then repeatedly pass over screens, sleeves, blowers, magnets, and destoners,
where they are shaken, gently tumbled, and air blown, until all the shells and other foreign
material (rocks, mudballs, metal, shrivels) are removed.
Features:
Economical
User-friendly
Superior performance
Specifications:
Capacity 150 to 200 kg/h
Voltage 380 v
Power 24 kw
3.1.2 Peanut Butter Machine
Pea-hut Private Limited
S.K.SCHOOL OF BUSINESS MANAGEMENT, PATAN Page 22
Peanut Butter maker machine is directly gridding peanut. This machine is user-friendly, resistant
to wear & tear and offers effective performance. This machine ensures operations under hygienic
parameters and is used for making peanut butter in food industry.
Features:
Maintains hygiene
Resistant to wear and tear
Effective performance
Specifications:
Model: Gms130 peanut butter machine
Capacity: 250 to 500 kg/h
Power: 11kw/380v/50hz/3-phases/2900rpm
Size: 1000x440x1050 mm
Net weight: 420 kg
3.1.3 Peanut Roasting Machine
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This machine is very helpful to roast peanut and maintaining the main form of peanut nut and its
colour. We choose this machine because we never compromise with our quality and we ensure
that the quality of roasted peanut would be as per consultant requirement with the low cost.
Features:
Longer service life
Superior performance
User-friendly
3.1.4 Color Sorter Machine for Peanuts
Color sorter machine is used for the color to the peanut and its nut we used this color sorting
machine in plant for only roasted peanut nut and for assorted Chikki.
3.1.5 Sizing shaker machine:
Pea-hut food corporation
S.K.SCHOOL OF BUSINESS MANAGEMENT, PATAN Page 24
Sizing shaker machine is helpful to separate a peanut by the nut size and remove a small and
scrap peanut. This machine helpful to separate small, medium and large size peanut. This
machine is required in our plant for separate peanut like large for roasted, small for peanut butter
so on.
Other machine:
1. Main other machine is like mixer machine that mixer the salt, sugar or jaggery with the
peanut nut for assorted Chikki and other mixer machine is for mixing small grader peanut
with the sugar, salt for peanut butter.
2. There would be main three packaging machine for roasted peanut nut, assorted Chikki
and for peanut butter respectively.
3.2 Miscellaneous Assets
Some other assets like furniture and fixtures, packing tables, SS utensils etc. shall be required for
which a provision of Rs. 45,000/- is made.
3.3 Utilities
Power requirement shall be 350 kw whereas water of around 1000 ltrs. shall be required for
potable and sanitation. The cost of utilities suppose to be 300000/- Rs.
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CHAPTER – 4
FINANCIAL ANALYSIS
4 FINANCIAL ANALYSIS
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4.1 Raw Materials
The most important raw material shall be good quality peanuts. Availability would not be a
problem as monthly requirement even at 100% utilisation would be just 14 tonnes. But care has
to be taken to select peanuts with uniform size and minimum moisture. Requirement may not
warrant direct procurement from the groundnut processor (due to low quantity) and hence the
trader has to be selected carefully as high moisture content reduces shelf life of the peanut and
may result in high level of aflatoxin which is harmful to human beings in the long run. Standard
packing of 100 gms and 200 gms. May be introduced for which printed polythene bags shall be
required for the roasted peanut and for Chikki and bottles producing within the plant, would be
initially 500 grams bottle for peanut butter.
4.2 Manpower Requirements
Particulars Nos. Monthly Salary (Rs.) Total Monthly Salary (Rs.)
Supervisor 2 9000 18000
Skilled Worker 3 10000 30000
Helpers 3 4500 13500
Salesman 3 9000 27000
Storekeeper 1 6000 6000
Gatekeeper 1 4000 4000
Total 98500
(Table:4.1 Manpower Requirements)
Other than that, one consultant required for the maintaining quality. So we keep 30000 for
manpower provision or for other fees.
4.3 Tentative Implementation Schedule
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Activity Period (In Months)
Application and sanction of loan 2
Commencement of civil work 1
Completion of civil work and placement of orders for machinery 3
Erection, installation and trial runs 1
(Table:4.2 Tentative Implementation Schedule)
4.4 Tentative Implementation Schedule
Building
A land and building would cost Rs.10.00 lacs as stated earlier.
Machinery
For installed production capacity of 165 tonnes per year, investment in machinery will be
Rs.5.15 lac as explained earlier.
Miscellaneous Assets
A provision of Rs. 45,000/- is sufficient under this head as described earlier.
Preliminary & Pre-operative Expenses
Pre-production expenses like registration, establishment and administrative charges, interest
during implementation, trial runs etc. may cost Rs. 50,000/-.
Working Capital Requirements
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Capacity utilisation in the first year is assumed to be 100% for which following working capital
shall be required:
(Rs. in lacs)
Particulars Period Margin Total Bank Promoters
Stock of raw and packing
materials
½ Months 30% 5.25 3.67 1.58
Receivables ½ Months 25% 3.00 2.1 .9
Working expenses 1 months 100% 1.14 -- 1.14
Total 9.39 5.77 3.62
(Table:4.3 Working Capital Requirements)
4.5 Cost of the Project & Means of Financing (Rs. in lacs)
Item Amount
Land and building 10.00
Machinery 5.15
Miscellaneous assets 0.45
Preliminary and Pre-operative Expenses 0.50
Contingencies @ 10% on land and building & plant and machinery 1.52
Working capital margin 3.62
Total 21.24
Means of Finance
Promoters contribution 6.372
Term loan from bank/ FI 14.868
Total 21.24
Debt equity ratio 2.33:1
Promoters’ contribution 30%
(Table:4.4 cost of project and means of financing)
Financial assistance in the form of grant is available from the Ministry of Food Processing
Industries, Govt. of India, towards expenditure on technical civil works and plant and machinery
for eligible projects subject to certain terms and conditions.
4.6 PROFITABILITY CALCULATIONS
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Production Capacity & Build-up
As against the rated annual capacity of 165 tonnes, actual utilisation is expected to be 100% in
the 1st year.
Sales Revenue at 100%
Revenue from roasted peanut:
Assuming selling price of Rs. 80/- per kg and the total annual production would be 90 tonnes as
per 100% capacity, the annual income would be Rs. 72.00 lacs.
Revenue from Assorted Chikki:
Assuming selling price of a Chikki Rs.1and the total annual production would be 6000000 chikki
for a year with 100% capacity and the annual income would be Rs. 60.00- lacs.
Revenues from peanut butter:
Assuming selling price of 500 grams per bottles of peanut butter would be Rs.180, annual
production of peanut butter would be 18000 bottles. And the annual income would be Rs.32.40
Total sales of all items would be Rs. 164.2 lacs.s
Raw and Packing Materials Required at 100%
(Rs. in lacs)
Product Qty. (Tonnes) Price/Ton (Rs.) Value
Medium-sized peanuts 165 30000 49.50
Salt 10 15000 1.50
Jaggery 12 20000 2.40
Packing Materials -- -- 4.00
Total 57.4
(Table:4.5 raw and packing materials )
Utilities
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Yearly cost of utilities at 100% will be Rs. 300000/-.
Selling Expenses
A provision of 22.5% of sales revenue every year is made which would take care of margins of
stockists and retailers, transportation costs and some publicity at retail counters.
Interest
Interest on term loan of Rs. 14.868 lacs is computed @ 12% per annum assuming repayment in 3
year. Interest on working capital of Rs.5.77 lacs from bank is calculated @ 14% per annum.
Depreciation
It is calculated on WDV basis @ 10% on building and 20% on machinery and miscellaneous
assets.
Years
Depreciation
Land and Building @10% Machinery and Misc.Assets@20%
1,000,000 560,000
1 (100,000) (112,000)
900,000 448,000
2 (90,000) (89,600)
810,000 358,400
3 (81,000) (71,680)
729,000 286,720
4 (72,900) (57,344)
656,100 229,376
5 (65,610) (45,875)
590,490 183,500
(Table:4.6 calculation of depreciation)
4.7 PROJECTED PROFITABILITY
Pea-hut food corporation
S.K.SCHOOL OF BUSINESS MANAGEMENT, PATAN Page 31
(Rs. in lacs)
No. Particulars Year
1 2 3 4 5
A Installed capacity --165 tonnes--
Capacity Utilisation 60% 75% 85% 95% 100%
Sales realisation 98.520 123.150 139.570 155.990 164.200
B Cost of production
Raw and packing Materials 34.440 43.050 48.790 54.530 57.400
Utilities 1.800 2.250 2.550 2.850 3.000
Salaries 0.771 0.964 1.092 1.221 1.285
Repairs & Maintance 0.480 0.600 0.680 0.760 0.800
Selling expenses @ 22.5% 22.167 27.709 31.403 35.098 36.945
Administrative expenses 0.300 0.375 0.425 0.475 0.500
Total 59.958 74.948 84.941 94.934 99.930
C Profit before Interest &
Depreciation 38.562 48.202 54.630 61.057 64.270
Interest on Term Loan 1.780 14.868 0.000 0.000 0.000
Interest on working capital 0.790 0.990 0.687 0.767 0.810
Depreciation on land and builing 1.000 0.900 0.810 0.729 0.657
Depreciation on machinery 1.120 0.896 0.717 0.573 0.459
Profit before tax 33.872 30.548 52.416 58.987 62.344
Income-tax @ 25% 8.468 7.637 13.104 14.747 15.586
Profit after tax 25.404 22.911 39.312 44.240 46.758
(Table:4.7 projected profitability)
4.8 LEVERAGES
Pea-hut food corporation
S.K.SCHOOL OF BUSINESS MANAGEMENT, PATAN Page 32
Financial Leverage
= EBIT/EBT (Rs. in lacs)
Year 1st year 2nd year 3rd year 4th year 5th year
EBIT 38.562 48.202 54.63 61.057 64.27
EBT 33.872 30.548 52.416 58.987 62.344
Financial Leverage 1.14 1.58 1.04 1.04 1.03
(Table:4.8 financial leverage)
Operating Leverage
= Contribution/EBT (Rs. in lacs)
Year 1st year 2nd year 3rd year 4th year 5th year
Sales 98.52 123.15 139.57 155.99 164.2
Less: Variable Cost
Salary 0.771 0.964 1.092 1.221 1.285
Raw And Packing
Materials 34.44 43.05 48.79 54.53 57.4
Repairs & Maintance 0.48 0.6 0.68 0.76 0.8
Selling Expenses @ 22.5% 22.167 27.709 31.403 35.098 36.945
Administrative Expenses 0.3 0.375 0.425 0.475 0.5
Total Variable Cost 58.158 72.698 82.39 92.084 96.93
Contribution 40.362 50.452 57.18 63.906 67.27
EBT 33.872 30.548 52.416 58.987 62.344
Operating Leverage 1.19 1.65 1.09 1.08 1.08
(Table:4.9 operating leverage)
Degree of Total Leverage
Pea-hut food corporation
S.K.SCHOOL OF BUSINESS MANAGEMENT, PATAN Page 33
= FL/OL (Rs. in lacs)
Year 1st year 2nd year 3rd year 4th year 5th year
Financial Leverage 1.14 1.58 1.04 1.04 1.03
Operating Leverage 1.19 1.65 1.09 1.08 1.08
Total Leverage 0.96 0.96 0.95 0.96 0.95
(Table:4.10 degree of total leverage)
4.9 Cash Flow Statement
Pea-hut food corporation
S.K.SCHOOL OF BUSINESS MANAGEMENT, PATAN Page 34
Projected statement of cash flow
For the year ended March. 31, 2015
(Rs. in lacs)
Particulars 2014-15
Cash inflows
Cash
Promoter contribution 6.372
Sales 164.2
Total cash inflows 170.572
Less: cash outflows
Purchased of fixed assets 15.6
Purchase of raw and packaging materials 57.4
Salaries and wages 1.285
Utilities 3.00
Repair and maintain 0.80
Promotional expenses 36.945
Interest on term loan 1.78
Interest on wc 0.81
Income tax 14.89
Total Operating Expenses 132.51
Cash balance 38.062
(Table:4.11 calculation of cash flow statement)
Assets 1st year 2nd year 3rd year 4th year 5th year
Pea-hut food corporation
S.K.SCHOOL OF BUSINESS MANAGEMENT, PATAN Page 35
4.10 BALANCESHEET
Pea-hut Private Limited
Balancesheet for the first five year
(Table:4.12 calculation of balance sheet)
Fixed Assets
Land & Building 10.000 9.000 8.100 7.290 6.561
Less: Depreciation 1.000 0.900 0.810 0.729 0.656
9.000 8.100 7.290 6.561 5.905
Machinery 5.600 4.480 3.584 2.867 2.290
Less: Depreciation 1.120 0.896 0.717 0.573 0.459
4.480 3.584 2.867 2.290 1.835
Total Fixed Assets 13.480 11.684 10.157 8.851 7.740
Current Assets
Cash 2.603 2.740 3.820 4.866 5.571
Inventory 34.440 43.050 48.790 54.530 57.400
Investment 5.500 1.900 5.100 3.100 2.500
Account Receivable 15.540 8.200 14.200 15.800 14.200
Total Current Assets 58.083 55.890 71.910 78.296 79.671
Total Assets 71.563 67.574 82.067 87.147 87.411
Liabilities
Owner Equity 6.372 6.372 6.372 6.372 6.372
Retaining Earning 25.404 22.911 39.312 44.240 46.758
Bank Loan 14.868 13.400 9.300 7.000 5.400
Current Liabilities
Interest 1.780 0.990 0.687 0.767 0.810
Tax 8.468 7.637 13.104 14.747 15.586
Salary 0.771 0.964 1.092 1.221 1.285
Account Payable 13.900 15.300 12.200 12.800 11.200
Total Current Liabilities 24.919 24.891 27.083 29.535 28.881
Total Liabilities 71.563 67.574 82.067 87.147 87.411
Pea-hut food corporation
S.K.SCHOOL OF BUSINESS MANAGEMENT, PATAN Page 36
BIBLIOGRAPHY
Books.
B.S.Shah Prakashan “Financial Management”, Seventh Edition:2009-2010.
‘Working Capital Management’ From 72 page no.
Prasanna Chandra. “Financial Management”, Sixth Edition. By Tata McGraw-Hill
Publishing Company Limited New Delhi.
Part VIII 26.Working Capital Policy,
Web Site :
http://www.livestrong.com/article/265211-peanut-butter-nutrition/ in project 1.4.3 peanut butter-
basic nutritional information
http://www.whfoods.com/genpage.php?tname=foodspice&dbid=101
http://trainer-kim.com/the-ugly-truth-about-peanut-butter-3-reasons-you-shouldnt-eat-it/ page 8 -
photo peanut butter ingredient
http://newelephant.en.made-in-china.com/product/SeoJsNbEfBYz/China-Jm-130s-Multifunctional-
Peanuts-Butter-Machine.html - page 18 - gridding machine
http://www.indiamart.com/nilkanthexport/search.html?ss=peanut
http://juicebaraustin.com/product/peanut-butter-solution/
: http://www.madehow.com/Volume-1/Peanut-Butter.html#ixzz3TtBopDBr http://www.madehow.com/Volume-1/Peanut-Butter.html page 12 - peanut butter process
http://en.wikipedia.org/wiki/Chikki 1.4.2 – Chikkis
http://dir.indiamart.com/impcat/peanutbutter.html
http://www.apsindustries.net/peanut-machines.html
http://www.alibaba.com/product-detail/Automatic-Peanut-Packaging-Machine-DXDK-
350W_703317251.html