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1
ALLANA INSTITUTE OF MANAGEMENT STUDIES1
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ON
ALLANA INSTITUTE OF MANAGEMENT STUDIES2
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SUPERVISED BY:
GROUP MEMBERS:
Mukhtar Kasmani 23
MMS FINANCE (4th semester)
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OUR PARENTS
AND
TEACHERS
ALL OUR
WELL WISHERS
AND SPECIALY
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Almighty ALLAH is the entire source of knowledge and wisdom endowed to mankind
and His dearest Nabi, MUHAMMAD (PBUH) is a light of guidance and knowledge for
humanity as a whole.
Everyone has a long list of individuals to whom he is indebted. We are no exception. We are
firstly, with humble gratitude bow our heads before Almighty ALLAH for giving us strength,
courage, patience and inspiration, and enable us to complete this project. To work for this
project, was a difficult task, because it is about
“Ice Manufacturing”
We acknowledge with thanks and admiration, our dependence on all of our respondents on
their nice co-operation and giving us their loyal time. We feel Great pleasure and honors to
express our gratitude from the citadel of hearts to our respected and dignified instructor
SIR.JAVAID IQBAL
Without whose guidance it would have been difficult for us to achieve
Our objectives He provide us, his in-depth approach of the subject
“Project Management“
And taught us a lot of tell analysis techniques which we have applied during data analysis. His
sympathetic behavior has an ever lasting impression on the page of our memory.
THANKS:
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Sr. No Descr ip t i on Page #
1. Executive summary 7-10
2. Introduction 11
3. Market Analysis 11
4. Technical Analysis 12-17
5. Personnel Analysis 18
6. Financial Analysis 19-25
7. SWOT Analysis 25-26
8. Conclusion & Recommendations 26
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The Project:
Most of areas of India have long duration of summer due to which demand for ice is high for more than six months of the year. As in India demand for ice is more due to GOLAWALA during summer. Other growing markets for ice plant are industries linked to FOOD PRODUCTS i.e. fish, dairy, packaged food, restaurants etc. With this growing demand a large number of ice plants are operating in the country.
Harnai is a small town next to Dapoli city of Ratnagiri state in India. My proposed project is useful and beneficial in this town. Food products industries like fish, dairy, packaged food, restaurants are linked to this industry. Mainly it produces for the “Cold Storage” purpose. So we generate the idea to set up an ice plant according to the requirements of the people of this town as this town has a beach wherein the fish products are delivered daily in tons of volumes. Depending on the facts this area of opportunity has not been exploited properly. We primarily focused on developing an idea to set up a ice manufacturing plant for business purpose or to be known as “X ICE PLANT”.
This project is related to setting up an ice plant of 50-tons capacity per day to cater to the needs of the associations such as fish sellers, hotels, restaurants, dairy, etc. The proposed project will manufacture ice blocks varying from 130 kg to 150 kg in weight.
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Ice plant requirements
Space
Modern icemakers are compact in comparison with block ice equipment, but it is not always possible to compare directly the space occupied by different types; for example they may not be available in the same unit sizes. However some guidance on the space requirements for icemakers with a nominal capacity of 50 tons a day is given in Table 1.
Space required for an icemaker producing 50tons/day
Type of ice Floor area m2 Height m
Block 190 (5000 sq ft approx) 5.0
Rapid Block 30 3.5
Tube 3.3 6.6
Flake 2.7 3.7
Power
Average power and peak power requirements may be different, and both have to be considered at the planning stage. The average power relates to the energy consumed in making a ton of ice, and this is important in calculating operating cost. Peak power is important to the designer since it will determine what electrical supply is required, and may also affect operating cost if a peak demand factor is applicable.
The energy required to make a tons of ice is not constant. It varies widely depending on a number of factors, the most important of which are
Type of ice unitsOperating temperatureMake-up water temperatureCooling water temperatureAir temperatureSize of plantUtilization of plantMethod of refrigeration
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Energy consumption figures quoted by manufacturers for unspecified operating conditions should be used only as a general guide. The values given in table 2 show how energy requirements can increase considerably in warm climates.
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Energy required to manufacture ice kWh/ton of ice made
Type of ice Temperate area Tropical area
Block 40-50 55-70
Flake 50-60 70-85
Tube 40-50 55-70
The values in Table 2 are for icemaker and refrigeration machinery only. Some additional allowance must be made for conveyors, crushers and other equipment.
Water
In addition to water for making ice, water may be required for cooling, as in a refrigeration plant condenser, or for heating, as in a warm water defrosting system.
The amount of water required for making ice is roughly equal to the amount of ice being produced plus some allowance for wastage and for prevention of buildup of solids in the water circulating system.
Fresh water for making ice for use with fish must satisfy the requirements for drinking water. In addition, the chemical composition of water for making ice must meet the equipment manufacturers' requirements; hard water containing excessive amounts of solids may foul the icemaker and may also yield a soft wet ice. On the other hand pure water may cause problems, particularly in flake ice plants, because the ice sticks hard to the drum; the remedy is to fit a dosing device that puts 200-500 g salt into each tons of water to improve release of the ice without making the ice detectably salty when used on fish.
It is inadvisable to use shell and tube condensers in a refrigeration system where cooling water is run to waste, unless a plentiful supply of cheap water is available, independent of the domestic drinking water supply; otherwise water costs may be prohibitive, since 15 tons of cooling water at 10°C or 60 tons at 25°C are required for each tons of ice produced. Other factors can affect cooling water consumption, and manufacturers' precise figures should be used at the detailed planning stage.
Air cooled condensers can be used on small plants, but for most commercial installations evaporative condensers, or shell and tube condensers with a cooling tower, are more likely to be supplied. Evaporative condensers and cooling tower cooling systems normally use less than 1/2 tons of water for each tons of ice, plus
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some small additional allowance if an overspill is necessary to prevent build up of solids in the recirculated water.
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Block ice
Tapered rectangular metal cans filled with water are immersed in a tank containing refrigerated sodium chloride brine. The dimensions of the can and the temperature of the brine are usually selected to give a 24 hour production time, and batches of cans are emptied and refilled in sequence during that period. Ice block weight can range from 12 to 150 kg depending on requirements; 150 kg is regarded as the largest size of block one man can conveniently handle. A block ice plant requires continuous attention and is labour intensive. The icemaker and the store require a good deal of floor space and impose heavy loads on the building structure. For these reasons block ice plants are going out of use, and more modern automatic plants are replacing them.
Location:
We would set up our ice plant 10-15 minutes walking distance from Harnai Beach, Harnai, Taluka-Dapoli, Dist-Ratnagiri - 415713. As ice is not easily available in this area and people of this area bears a lot of transportation expenses to get ice, so we are selecting this area to set up our ice plant.
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Product’s Range and Plant Capacity:
We will be producing block ice only. The proposed project has a capacity of producing 350 ice blocks on the basis of 2 shifts of 12 hours. The maximum capacity of plant is 12000 tons per annum. Estimated capacity during:
Market Entry Timing:
The ice plant should be started up when the season begins in mid Sep and closed when it end up in mid June. The peak season is of four months i.e. from March to mid June. The rest of the period is moderate season. The best time to enter into this business is in the month of March.
Raw Material Requirement:
The basic raw material required for producing ice blocks is water, common salt. These raw materials are readily available in the local market. Replenishments needed during maintenance are ammonia gas and compressor oil.
Machinery Requirements:
The main equipment required for running the ice plant is compressor, capacitor, condenser, and electric motors, power etc.Name of civil contractors:
XXXX
Machinery Suppliers:
XXXX.
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Years 2013 2014 2015 2016 2017 2018Capacity
(In tons)
9600 10200 10800 11400 12000 12000
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Project Engineering:
The machinery of the proposed project will be purchased from any experienced engineer or a specialized ice making machine manufacturer.
Implementation Stage:Total time period for the starting of project is estimated to be 1 year from the date of approval of finance.
Sponsors:The sponsors to this project of Ice Manufacturing Plant are a group of two highly enthusiastic people who are committed to providing ice at fair prices with equally perfect services. The sponsors of the project are professionally qualified in their fields namely Mukhtar Kasmani (MMS Finance) resident of Mumbra Thane, Vinod Chaudhary (Pharmacist) resident of Mumbra Thane. The overall management and control of the firm will be actively managed by its partners who will actively participate in management decisions and control the affairs of the firm.
Cost of the Project:
The total cost of the project is estimated to be Rs. 10786178. The fixed cost of the project is Rs. 10511478 which are financed locally. The amount of initial permanent net working capital required is Rs. 274700.
Means of Finance:
Forty Percent (40%) of the estimated cost of the proposed project will be obtained through loan and the remaining 60%will be contributed by the Owners.
Financial Plan:
The total cost of the project is estimated to be Rs (10786178). Forty percent Rs (4314471)of the estimated cost of the proposed project will be obtained through loan from Habib Bank Ltd and the remaining 60% Rs (6471707) will be contributed by the owners.
Implementation Schedule:
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Financial Ratios:
The Debt Equity ratio (67%),(39%) , (20%), (8%) Net Profit Margin ratio (39%) (34%) (43%) (42%) for the given three years (2010) (2011) (2012) (2013) respectively. Ice manufacturing Plant’s financial position is significantly strong as compared to the industry because it earns a huge profit and short term liquidity position is very good. So ice Plant has no bankruptcy chances.
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S.NO ACTI V I T IES MONTH YEAR
1 Order for Local Machinery November 2009
2 Arrival of Local Machinery at site December 2009
3Construction of Building and Civil Works: Start September 2009
Complete October 2009
4 Erection &Installation of Machinery Start December 2009
Complete January 2010
5 Order for Raw Materials February 2010
6 Start of Commercial Production March 2010
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1) Market AnalysisTarget Customers:
The target customers for ice plant can be divided into two categories:
Domestic users, such as ice cream sellers. Second category is institutional buyers, who buy in bulk, such as exporting
organizations, hotels, restaurants, fish sellers, dairy plants etc.
Description of Market:
Institutional buyers buy the bulk of the block ice production, in institutions related to food industry. Business sectors, which utilize ice in the country, include the following:
For the protection of fish, Meat and also for Dairy Plants.
Other potential institutional buyers of ice are bakeries, confectioners, hotels which buy ice blocks in bulk. There are more than 500 boats in Harnai Beach where as approximately 100 boats arrive daily to deliver fishes. One boat requires minimum 15-20 blocks of ice as the fishing activity continues for around 1 week to even 1 month.
Present Demand:
In market our production’s demand is more than 1200 ice blocks per day. Which is already served by our competitors, but we are having location advantage and we can take over the market.
Demand Supply Gap:
Our production of ice blocks is 350 ice blocks per day and there is demand of 1200 ice blocks per day. So there is demand supply gap of 850 blocks.
Ex-factory price:Our whole sale price is Rs. 180 per ice block
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Retail price: Our retail price is Rs. 200 per ice block.
Distribution Channel:Ice blocks are supplied to supplier through trucks, tempo, bullock cart etc.
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2) Technical Analysis:Block ice is the most popular type of ice sold for a variety of reasons. It melts more slowly than other types of ice and thus lasts longer. It can be placed in open truck with only a tarpaulin to protect it from the elements and shipped to a location of four hours away. Its rectangular shape makes it easy to stack of up to 15 meters and store large amounts. Block ice has merits of easy to transport and separate as well. Other types of ice have the tendency to freeze into a solid mass, making it difficult to work with.
Manufacturing Process: Production Process Flow
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Cleaning of SheetSteel Ice Containers
Placing of Containersin Water Tankcontaining Nacl
Filling of Sheet SteelIce Containers withwater while verticallyfloating in Nacl Tank
Extracting of Ice Blocksfrom Sheet SteelContainers
Movement of Ice Blocks by hooks
Delivery of Ice Blocks
Temp Reduced to –17°C to –20°C
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Flow Chart:
Ice cans are placed in can grids and moved to beneath the filling tank which automatically fills each can with proper level of pre-cooled water and then stop. Filtered water must be used to make ice intended for human consumption. The cans are then hoisted and carried to the brine tank and immersed inside. The brine, which is a calcium chloride solution kept at a temperature of -10 degree, is constantly circulated by agitator in order to keep the temperature consistent throughout the tank. Air is blown into the center of the can to induce a swirling motion. This causes any impurities and air bubbles in the water to be collected in the center of cans. Prior to finish freezing, this core is removed by a suction pump and replaced with fresh pre-cooled water. The time required for the water to be frozen varies according to the size of cans being used, 150lbs. block requires 24 hours, 300 lbs. Takes 48 hours. When the ice has completely formed, the grids are lifted up from the brine tank and moved to place in the thawing tank. Using the warm water, which heats the can until the ice allowed to be slid out. The block ice is then removed from the can by a can dumper.
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The empty cans are returned to filling tank for next ice making cycle. The ice is moved to ice storage and stacked by an ice stacker, or it can be delivered to customer right away upon requested.
List of Machinery:
DescriptionQuantity Cost/Unit TOTAL
Ammonia Compressor (8x8) , Driven Wheel 1 300,000 300,000Ammonia Condensor Atmosphere type with 2" pipe 1200 ft 8 56,400 451,200Electric Motor 100 H.P.1450 RPM 1 95,000 95,000Brine Tank for 720 Ice cans, 4mm local made 1 25,000 25,000Cooling Coil V-type 4" pipe & 1800 ft 1 318,000 318,000Brine Agitator 18" Fan Metal 1 20,000 20,000Accumulator for parallel supply of ammonia 1 10,000 10,000Crane & Trolley with Railing Channel & Girder 1 40,000 40,000Ammonia Valves for Complete Plant 1 16,000 16,000Ammonia Pipes for Complete Plant 1 40,000 40,000Oil Separator Buffer Type 1 16,000 16,0004 gauge Suction, Discharge, Oil Pressure 4 1,000 4,000Wood work for Ice Cans, Tank Cover 400 750 300,000'Ice Cans of 1.5 mm British Gauge 400 2,600 1,040,000Nuts, Bolt etc. 1 15,000 15,000Receiver Fittings with all Safety Measure Ammonia Inspection 1 45,000 45,000Bends, Union, Nipples, Tee & flange etc. 1 6,550 6,550Rubber pipes, Brass Valves 1 18,000 18,000Water Fitting Complete 1 30,000 30,000Electric Motor 7.5" 2 16,000 32,000Switch Gins Starters & Switch board with local Cable 1 95,000 95,000Centrifugal Pump 2.5"x3" 1 25,000 25,000Erection Charges of the Plant 1 60,000 60,000 Grand Total 3,001,750
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Cooling coil Gas transfer pipe
Receiver Cool water pump
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Condenser Raw water pump
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Other Equipment
Other Equipment Details Quantity Cost/Unit TOTALGenerator 100 KVA (Engine Bus) 1 175,000 175,000Transformer 100 KVA 1 400,000 400,000Water Bore Diameter 3” – 4” 1 200,000 200,000Total Equipment Cost 775,000
Furniture & Fixture
Description Qty Cost/Unit Total CostTables 3 5,000 15,000Chairs 12 1,500 18,000Fans 4 1,800 7,200Lights 12 350 4,200Computer 1 20,000 20,000Telephone 1 2,500 2,500 Total Furniture & Fixtures 66,900
Office Vehicle
Description Qty Cost/Unit Total CostSuzuki Pick-up 1 500,000 500,000Motorcycle (Honda 70) 1 58,000 58,000Bicycle (Chinese) 1 4,000 4,000 Total Vehicle Cost 562,000
LAND & BUILDING REQUIREMENT
Description Land CostLand Price Per Kanal 4,000,000Total Land Requirement (Sq . ft) 4,500Total Land Required in Kanals 1 Total Land Cost 4,000,000
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Input Requirement:
The basic raw material required for producing ice blocks is water, common salt. These raw materials are readily available in the local market. Replenishments needed during maintenance are ammonia gas and compressor oil.
Raw Material
Description 2,010 2,011 2,012 2,013Ammonia consumption @ Rs. 26 21,840 24,960 28,080 31,200Nacl consumption @ Rs. 85 5,950 6,800 7,650 8,500Compressor oil for Rs. 19,600 22,400 25,200 28,000 TOTAL 47,390 54,160 60,930 67,700
Factory overhead:
a) FIXED COSTS -Power KW 600 10 72,000-Insurance @ 0.50% on Fixed Assets 32,557-Repairs &Maintenance: - Machinery @ 2.34% installed cost 70,241- Building @ 1% construction cost 16,720- Vehicles @ 5% of cost 28,100 Total Fixed cost 219,618 b) VARIABLE COST Power KW 25000 10 KW/Month 1,500,000GAS 6 40000 Rs. 240,000 Total 1,740,000
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Water and Gas:
Equipment detail unit Cost/unit Total costWater Bore Diameter 3” – 4” 1 200,000 200,000GAS 6 40000 240,000
Electricity:
10% PER ANNUM. 2010 2011 2012 2013Direct Electricity 1,500,000 1,650,000 1,815,000 1,996,500Fixed Electricity Expense 72,000 79,200 87,120 95,832
Technology involved:
Technology/Process Options
The machinery used for the ice plant is local. It includes compressor, condenser, water tanksuitable for 350-700 ice cans, brine agitator, accumulator for parallel supply of ammonia, crane and trolley, oil separator, ice cans of size 11” x 22” x 48”, electric motor 75 HP etc.
Merits & demerits of a particular technology
The local machinery is readily available in the market at a very reasonable price. One of the benefits of using locally manufactured machinery is availability of spare parts and it’s easier to find operators to operate these machines.
Machine Maintenance
The maintenance process starts after mid of July. Normally, it takes one month for the overhauling of plant, during which the plant is closed for one month.
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3) Personnel analysis:
Factory staff:
S.NO Type of Staff Number required
Basic salary per Person, per month
Total salaries per year
1 Tank man 6 5,000 180000
2 Machine Operator
1 6000 36,000
ADMINISTRATION AND GENERAL STAFF
Description Qty Salary Monthly Annual Salary CostAccounts Officer 1 7,000 7,000 42,000Security Guard 1 6,000 6,000 36,000Driver 2 5,000 10,000 60,000Office Boy 1 3,000 3,000 18,000Total Administrative Expenses 156,000
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4) Financial analysis:
Cost of Project
Description LOCAL FRGN TOTAL Land Cost 4,000,000 0 4,000,000Building/Infrastructure 1,672,000 0 1,672,000Machinery & Equipment 3,001,750 0 3,001,750Office Equipment 775,000 0 775,000Furniture & Fixture 66,900 0 66,900Vehicle 562,000 0 562,000Pre-operating Costs 433,828 0 433,828
Total Capital Expenditure 10,511,478 010,511,47
8Working Capital Cash 200,000 0 200,000Raw Material Inventory 67,700 0 67,700Equipment Spare parts Inventory 7,000 0 7,000 Total Working Capital 274,700 0 274,700 TOATL COST OF THE PROJECT: 0
10,786,178
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Means of Finance:
Description Percentage Amount in Rs
D e b t 40% 4,314,471E q u i t y 60% 6,471,707 TOTAL DEBT & EQUITY 10,786,178 ======
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Sponsors stake:60%
Requirement of Initial Working Capital
A) CURRENT ASSETS AmountCash in Bank 200,000Raw Material Inventory 67,700Machine Spare parts Inventory 7,000Accounts Receivable 0 Total Assets 274,700 B) Current Liabilities Accounts Payable 0Total Current Liabilities: 0 INITIAL NET WORKING CAPITAL (A -B) 274,700
Assumptions underlying financial statements:
ESTIMATED INCOME STATEMENTS
For the year ending Sept. 30, 2011 2012 2013Efficiency Assumed : 80% 90% 100%
SALES 12,600,00
014,175,00
015,750,00
0COST OF GOODS SOLD : Raw Material Cost 54,160 60,930 67,700Direct Labor (Production Staff) 237,600 261,360 287,496Direct Electricity 1,650,000 1,815,000 1,996,500
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GAS 264,000 290,400 319,440
Total 2,205,76
02,427,69
02,671,13
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G R O S S P R O F I T 4,194,24
04,772,31
05,328,86
4OPERATING EXPENSES Administration Staff 171,600 188,760 207,636Machine Maintenance Cost 70,000 70,000 70,000Fixed Electricity Expense 79,200 87,120 95,832Communication Expense (Telephone, Fax, Internet etc.) 33,000 36,300 39,930Depreciation expense 711,798 711,798 711,798Amortization of pre-operating costs 43,383 43,383 43,383Selling Expenses 66,000 72,600 79,860 Total Operating Expenses 237,600 261,360 287,496 Operating Income (Earning Before Interest & Taxes)
3,956,640
4,510,950
5,041,368
Interest expense on long term debt 604,026 604,026 604,026
Earning Before Taxes 3,352,61
43,906,92
44,437,34
2Taxes 40% 838,154 976,731 1,109,336
Net Profit After Taxes 2,514,46
12,930,19
33,328,00
7
ESTIMATED BALANCE SHEETS
As on Sept. 30, 2010 2011 2012 2013CURRENT ASSETS Cash in Bank 274700 2419639 4619084 7395168Raw Material Inventory 54160 60930 67700Machine Spareparts Inventory 7000 7000 7000Accounts Recievable 0 0 0
Total Current Assets 274700 2480799 4687014 7469868
FIXED ASSETS Land Cost 4000000 4000000 4000000 4000000Building & Infrastructure 1672000 1504800 1337600 1170400
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Machinery & Equipment 3001750 2551488 2101225 1650963Other Equipment 775000 713840 707070 700300Furniture & Fixtures 66900 56865 46830 36795Vehicle 562000 477700 393400 309100
Total Fixed Assets 10077650 9304693 8586125 7867558
INTANGIBLE ASSETS Pre-Operational Costs 433828 390445 347063 303680Total Intangible Assets 433828 390445 347063 303680 Total Assets: 10786178.3 12175937 13620202 15641105
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LIABILITIES & EQUITY Current Liabilities Accounts Payable 0 0 Current maturity of long term loan 539309 539309 539309Total Current Liabilities: 0 539309 539309 539309 OTHER LIABILITIES Long-term Liabilities 4314471 3235853 2157236 1078618Total Long-term Liab.: 4314471 3235853 2157236 1078618 SHAREHOLDER'S EQUITY Paid-up Capital 6471706.98 6471707 6471707 6471707Retained Earnings 1929067 4451950 7551471Total Equity: 6471706.98 8400774 10923657 14023178 Total Liab. & Equity: 10786178.3 12175937 13620202 15641105
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ESTIMATED CASH FLOWS
For the year ending Sept. 30, 2010 2011 2012 2013 Operating activities Net profit 2572090 3363843 4132695Add: Depreciation expense 711798 711798 711798Amortization of pre-operating costs 43383 43383 43383Other Resources 0 0 0Accounts payable 0 0 0equity 4314471 Long term Loan 6471707 Total 10786178 3327270 4119024 4887875 Uses Fixed Asset 10077650 Priliminary Exp. 433828 Long term Loan 539309 1078618 1078618Repayment of:. Financial Exp. 643022.4738 840961 1033173.745Profit Distribute Inc/(dec) in A/R 0 Total 10511478 1182331 1919579 2111792Cash inflow / Outflow 274700 2144939 2199445 2776084Balance Opening 274700 2419639 4619084Balance Closing 274700 2419639 4619084 7395168
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Loan Repayment Schedule
Name of the Bank Habib Bank Limited
Amount of loan 4,314,471Date of sanction of loan 1/1/2009Date of disbursement of loan 3/31/2009Payment of mark up/profit/interest
Quarterly Installments
Payment of participle amount
Half Yearly six months after the commercial
productionRate of mark up/profit/interest 20%Period/Tenor of loan 4Date of Commercial production 3/31/2010 Date of Repayment of Principal 6/30/2010Due No. of Amount Principle Total Outstanding Dates Days of mark up Installment Installment Principle
6/30/2009 0 4,314,4719/30/2009 92 217,497 217,497 4,314,471
12/31/2009 92 217,497 217,497 4,314,4713/31/2010 90 212,768 212,768 4,314,4716/30/2010 91 215,133 539,309 754,441 3,775,1629/30/2010 92 190,310 190,310 3,775,162
12/31/2010 92 190,310 539,309 729,618 3,235,8533/31/2011 90 159,576 159,576 3,235,8536/30/2011 91 161,349 539,309 700,658 2,696,5459/30/2011 92 135,935 135,935 2,696,545
12/31/2011 92 135,935 539,309 675,244 2,157,2363/31/2012 91 107,566 107,566 2,157,2366/30/2012 91 107,566 539,309 646,875 1,617,9279/30/2012 92 81,561 81,561 1,617,927
12/31/2012 92 81,561 539,309 620,870 1,078,6183/31/2013 90 53,192 53,192 1,078,6186/30/2013 91 53,783 539,309 593,092 539,3099/30/2013 92 27,187 27,187 539,309
12/31/2013 92 27,187 539,309 566,496 0
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Financial Ratios:
R A T I O S 2010 2011 2012 2013Debt Equity Ratio 67% 39% 20% 8%Net Margin (%) 34% 39% 43% 42%
Project Returns
Description IRR 28%Pay Back Period 1.143516173Sponsors stake
Commentary:Our Debt Equity Ratio is decreasing yearly and our Net Profit Margin is
increasing yearly. Which represents the company is financially strong.
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5) SWOT Analysis
Strengths:
The labor to manufacture ice is easily available we can reach easily to low cost labor. Moreover the location advantage for our project is very much attractive. We can avail maximum advantage from this market.
Weaknesses:
Our weakness is that we are not producing ice up to the present demand of the consumer. Because we have one unit to produced ice if we increase the plant in to 2 then we increase the production.
Opportunities:
Duration of summer doesn’t matter because the packaged food exporting business keeps on going for almost whole year and the fishing activities keeps going on for almost 7-8 months a year. Due to which demand for ice is high for more than 7 months a year. Growing market for ice plants are industries linked to food products i.e. fish, dairy, bakeries, restaurants etc. With this growing demand a large number of ice plants are operating in the country.
There are approximately 1,300 ice plants operating in the Punjab, catering to the needs of different institutional and domestic buyers. The total installed capacity of ice plants in Punjab is approximately 432,669-tons of ice blocks per day2. The need of ice blocks is increasing due to economic growth, as major buyers are institutional buyers (dairy, bakery, hotel, etc.), who buy in bulk.
Threats:
Competitive Structure of the marketThe market of the ice plant is highly competitive; therefore if the entrepreneur is not well responsive and fulfilling the demand of the consumer he/she may not be able to capitalize the opportunity properly.
Selection of the wrong venueSelection of the wrong venue can be a major hurdle in achieving the desired business objectives. The clientele taste should be properly tracked.
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Conclusion & Recommendation: The location plays an important role, as finished ice blocks should be easily accessible to dealers .
It is important that solid ice blocks are produced through proper freezing time utilization as solid ice blocks are much heavier, more transparent and provides higher price in the market.
Weather factor plays an important role, due to seasonal nature of the business i.e. In summers the demand for ice blocks increases, while after mid September the temperature starts changing & demand starts to fall, which means the entrepreneur should reduce the production according to the demand of ice.
One of the most important aspects for success of any business is minimizing the cost of production, in case of ice plant this can be achieved by proper training of workers,
which would ensure reduction in raw material wastage and better maintenance of machinery etc.
It is advisable to run the plant on natural gas, rather than electricity, as the major expense in production of ice is electricity. The use of natural gas instead of electricity will reduce the electricity expense approximately by half.
In order to sell the ice blocks, it is recommended to develop a chain of dealers who buy the ice blocks on regular basis. The dealer deposits a guarantee in the shape of cash security, keeping in view the number of blocks to be purchased on daily basis. In case the dealer is unable to pick the agreed number of blocks on a particular day, the amount is deducted from his security.
ALLANA INSTITUTE OF MANAGEMENT STUDIES35