Honey Processing Unit Model DPR

Submitted by:

Directorate of Horticulture,

Government of Bihar

January 2021

Disclaimer: This is just a model DPR prepared based on assumptions for reference purpose only.

The project cost and financial projections may vary project to project as per technology selection,

nature of civil work, price of raw materials etc.

Table of Contents

1. Project at a Glance ........................................................................................................... 4

2. Introduction ..................................................................................................................... 6

3. Background ..................................................................................................................... 7

1. Global Scenario ......................................................................................................................................... 7

2. Indian Scenario .......................................................................................................................................... 7

3. State Scenario ........................................................................................................................................... 7

4. Project Background ......................................................................................................... 9

5. Organization and Promoter Details .................................................................................. 10

1. Organizational details ............................................................................................................................. 10

2. Promoters’ Background .......................................................................................................................... 10

6. Project Description and Flow Sheet ..................................................................................12

1. Project components ................................................................................................................................. 12

2. Honey processing unit 10 tons /day capacity ......................................................................................... 12

3. Automatic filling, labeling, packing line ................................................................................................... 12

4. Location of the Project ............................................................................................................................. 12

5. Raw Material Availability .......................................................................................................................... 12

7. Technology and Process Description .............................................................................. 14

1. Technology ............................................................................................................................................... 14

2. Process description .................................................................................................................................. 14

7.2.1. Collection and storage of honey ...................................................................................................... 14

7.2.2. Pasteurization ................................................................................................................................... 14

7.2.3. Storage tank and bottling labeling ................................................................................................... 14

7.2.4. Cooling and Packaging .................................................................................................................... 14

8. Procurement Strategy of Raw Materials and Other Inputs ................................................... 15

1. Backward Linkages: ................................................................................................................................. 15

2. Forward Linkages ..................................................................................................................................... 15

9. Marketing Plan ............................................................................................................... 16

1. Market Segments ..................................................................................................................................... 16

2. Product packing ........................................................................................................................................ 16

10. Land Details ................................................................................................................... 17

1. Land Details .............................................................................................................................................. 17

11. Project Cost and Means of Finance ................................................................................. 18

1. Project Cost ............................................................................................................................................. 18

2. Site renovation ......................................................................................................................................... 18

3. Civil construction ..................................................................................................................................... 18

4. Equipment ................................................................................................................................................ 18

5. Miscellaneous Fixed Assets / Utilities ..................................................................................................... 19

6. Preliminary & Pre-operative Expenses ................................................................................................... 19

7. Working Capital Requirement ................................................................................................................. 19

8. Contingencies .......................................................................................................................................... 20

9. Means of Finance .................................................................................................................................... 20

10. Business Plan ...................................................................................................................................... 20

11. Operating Cost Assumptions ............................................................................................................... 21

11.11.1. Packaging material ....................................................................................................................... 21

11.11.2. Power Load Requirement ............................................................................................................. 21

11.11.3. Employee Cost .............................................................................................................................. 21

11.11.4. Cost of insurance and Maintenance ........................................................................................... 22

11.11.5. Admin & Selling Overheads Costs .............................................................................................. 22

12. Financial Assumptions ........................................................................................................................ 22

11.12.1. Depreciation Rates ...................................................................................................................... 22

11.12.2. Interest .......................................................................................................................................... 22

13. Revenue Assumptions ........................................................................................................................ 22

14. Capacity Utilization .............................................................................................................................. 23

12. Financial Analysis .......................................................................................................... 24

1. Projected Profitability Statement ............................................................................................................ 24

2. Financial Performance indicators ........................................................................................................... 25

3. Projected Cash Flow Statement ............................................................................................................. 25

4. Projected Balance Sheet ........................................................................................................................ 26

13. Schedule of Implementation ........................................................................................... 28

14. Project Impact ............................................................................................................... 29

1. Project at a Glance

1. Project at glance

1. Name of the Unit :

2. Constitution :

3. Date of Incorporation :

4. CIN :

5. PAN :

6. GST

7. Registered Office :

8. Factory Address :

9. Name of Directors :

10. Type of Unit :

11. Nature of Project : Honey Processing Unit

12. Installed Capacity at 100%

Capacity Utilization

: 10 MT per Day

13. Cost of the Project : INR 124.45 Lakh

14. Promoter’s Contribution : INR 31.11 Lakh

15. Proposed Term Loan : INR 93.34 Lakh

16. Requirement of Working Capital

: INR 34.14Lakh

17. Proposed Employment : Direct Employment - 14 nos.

18. Power Load : 150kVA

2. Introduction

Honey has historical importance since it is being used from pre-historic time as natural sweetener agent. With rising awareness on health benefits of honey and health consciousness among people across world, honey has gained importance in recent decades. Its use is not only limited to food for human consumption rather it is also being used in various industries such as- cosmetics, and medicines. This has also led to large consumer appeal. Honey products such as- wax, Bees Wax, Bee Venom, Propolis, Royal Jelly & Pollen has high demand in pharmaceutical industries. It also helps in generating substantial foreign exchange through export market due to its high demand at global level.

Bihar is among the key honey producing states in the Country. It produces approximately 4000 MT of honey each year and accounts for 50% of the total honey production in the country. A large base of Bihar’s rural population is engaged in the collection of honey from the Litchi/Mango orchards and farmland but in the absence of a modern processing facility, honey collectors are forced to outsource processing function to other States or sell it at throw away prices. Raw honey has a market price of 55-65 per kg while processed honey has a market price ranging from 150-175 per kg in the market.

Assessing the State’s potential of capitalizing on the surplus production of honey and the potential of increasing the level of processing, value addition, employment generation, creating self-reliance and promote focused sector growth under honey, Bihar Government has launched- Bihar Agri Investment Promotion Policy 2020 (BA-IPP 2020). The policy identifies honey as one of the core sector among six other in agriculture and aims to create an ecosystem for developing and creating enterprises across honey processing and value addition activities.

The policy shall provide capital subsidy to the eligible individual investors / entrepreneurs or registered farmer-based companies for setting up / modernization / diversification/ expansion of agro processing units in the identified sectors of Agriculture, in the state of Bihar. The investors/ entrepreneurs may set-up their units as Proprietorship, Partnership firm, Limited Liability Partnership (LLP), Company including Farmer Producer Company (FPC).

3. Background

Honey and beekeeping have a long history in India. Honey was the first sweet food tasted by the ancient Indian inhabiting rock shelters and forests. The raw materials for the beekeeping industry are mainly pollen and nectar that come from flowering plants. Both the natural and cultivated vegetation in India constitute an immense potential for development of beekeeping. About 500 flowering plant species, both wild and cultivated, are useful as major or minor sources of nectar and pollen. There are at least four species of true honeybees and three species of the stingless bees. Several sub-species and races of these are known to exist. In recent years the exotic honeybee has been introduced. Together these represent a wide variety of bee fauna that can be utilized for the development of honey industry in the country. There are several types of indigenous and traditional hives including logs, clay pots, wall niches, baskets and boxes of different sizes and shapes.

Rapeseed / Mustard Honey, Eucalyptus Honey, Lychee Honey, Sunflower Honey, Karanj / Pongamea Honey, Multi-flora Himalayan Honey, Acacia Honey, Wild Flora Honey, Multi and Mono floral Honey are some of the major varieties of Natural Honey.

1. Global Scenario

The global market size of honey is around US$ 8.4 billion, and it is projected to reach US$ 10.3 billion by 2025, with an expected CAGR of around 4.8%. Globally 1,779.6 metric tons of honey is produced. China produces almost 28% of world’s honey, followed by Turkey (5.9%), Iran (4.5%) and US (4.1%). India is the 6th largest producer of honey, accounting for 3.5% of global production.

As per the information available from Agricultural & Processed Food Products Export Development Authority, India has exported 51547.31 MT of Natural Honey to the world for the worth of Rs. 653.58 crore/ 101.32 USD Million during the year of 2017-18 and the Major Export Destinations (2017-18) are USA, Saudi Arab, UAE, Canada and Qatar.

As consumers across the globe are becoming health conscious, they are increasingly inclined towards healthy and natural alternatives over artificial sweeteners. Burgeoning awareness about the benefits of honey is providing an impetus to the global honey market.

2. Indian Scenario

1With 3.5% of contribution to global honey production. India has a honey market worth Rs. 15,579 Million in 2018 with a CAGR of 10.9% during 2012-2018. The market is further projected to reach a value of INR 28,057 million, at a CAGR of 10.2% in next five years.

2As per the report of National Bee Board, there are 9698 registered bee keepers and 1559771 bee colonies in India by 2019. Bihar is top five State in terms of bee farming for honey. In addition to it, other States such as- Kerala, Tamil Nadu, West Bengal, Odisha, Himachal Pradesh, Kashmir, Punjab, Meghalaya, Andaman and Nicobar islands are also important states in which beekeeping has been given prime importance.

In India’s case, the per capita honey consumption is as low as 50 grams per year; globally, it ranges from 250-300 gm(anonymous). In Asia, Japan is the biggest consumer of honey, with per capita consumption of up to 2 pounds per year.

3. State Scenario

3Beekeeping in Bihar is an old practice under which Apis cerana, used to be farmed. The industry flourished well but due to by TSBV (Thaisac brood virus), there was a setback to this industry in the 1980s. Further to to rejuvenate the industry, Apis mellifera bees were introduced in Bihar during In 1987-88 as an All India Coordinated Research Project on Honeybee, DRPCAU, Bihar, Pusa centre. The bees adopted themselves quiet well in different agro climatic conditions prevailing in the state and from there, the bee industry has been flourishing. (Source: Dr. Rajendra Prasad Central Agricultural University)

Bihar is located in the eastern part of the country and has the advantage of rich flora and ecological conditions for beekeeping and has high potential for beekeeping and production of beehive products. The weather conditions prevailing in the state are more conducive for beekeeping as the favorable temperature (25-35ºC) prevail throughout the year except during the months of May – June and December-January, for few weeks. The adverse weather conditions are easily overcome by proper management of colonies. Though, Apis mellifera unlike Apis cerana is free from any dreaded diseases the colonies suffer from the attack of wax moths,

1 Status Report on Bee Keeping and Honey Processing, GoI 2018-19 2 National Beed Board, 2019 3https://www.rpcau.ac.in/beekeeping/

wasps, mites and ants but beekeepers adopt successfully preventive control measures to check the loss of colonies from natural enemies. (Source: Dr. Rajendra Prasad Central Agricultural University)

The litchi honey has gained high momentum of growth in Bihar due to its better taste, color and flavor than the honey produced in other states due to variation in ecological conditions. Litchi honey is very popular and has high demand nationally and internationally. The State is endowed with three to four honey flow season (Litchi, Mustard, Mix honey of Mung, Till, Jamun and Drumstick) compared to one or two in other states. There is a vast area of litchi orchards in the state and more than four varieties of litchi are found extending the flowering period for about a 20-25 days to a month. (Source: Dr. Rajendra Prasad Central Agricultural University)

Honey is a major consumable in the international market both as a food item as well as in industries such as Pharmaceuticals, Cosmetics and Confectionary. The demand is especially high for refined, high quality honey free pesticides, insecticides and other agrochemicals. (Source: Dr. Rajendra Prasad Central Agricultural University)

Bihar Potential

• Largest producer of Litchi honey at par with premium honey in world

• Endowed with 3-4 honey flow season with litchi, mango guava and mustard

• 20K MT honey production per annum and involves >50K directly or indirectly

• State of Art apiary with beekeeping research laboratories available

• Mellifera bee-keeping has already popularized in short span of time

• Farming by most deprived section of community mostly women and landless farmers

• Ensure household engagement in atleast 2 season

• High value crop with market of Rs.500-Cr per annum at individual level

4. Project Background

The Unit propose to install a modern Honey processing unit having an installed capacity of 10 MT/day in ………... Total raw material requirement of the proposed unit, during the peak season of its production, will be about 80MTs (estimated figure). The processing will be done for about 8 months in a year.

The capacity of the unit has been arrived at after giving due consideration to the market demand, the capacity of the promoters to procure raw material, and forward linkages of the promoters.

Current status of the unit:

a. Items to be manufactured: Processed Honey

b. Capacity of the plant: 10 MT/hr.

c. Source of power generation/electricity: Electricity form BSPHCL/SBPDCL, DG Set

d. Source of water supply: Own Borewell

e. Connectivity to road/railways: NH/SH details along with distance

f. Mode of transport: Pickup/Truck/Others

g. Market: Details of local market/other market

h. Employment Generation:18 nos.

i. Marketing:

j. Waste disposal: ETP/STP

A Calendar of Bee Flora in Bihar

Flora

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Mustard X X X

Mango X X X

Litchi X X

Karanj X X

Guava X X X X X

Pineapple X X X

5. Organization and Promoter Details

1. Organizational details

The M/s XYZ is a proprietorship/partnership/private company is associated with ……………. for about 10 years. The unit was incorporated on ……………… as private limited company under Company’s Act. The authorized capital of the company is Rs. ….. lakh and the paid-up capital is Rs. ….. as on ………….The details of the unit as per MCA website (only for private/public ltd. companies) are given below:

Company Master Data

CIN

Company / LLP Name

ROC Code

Registration Number

Company Category

Company Sub-Category

Class of Company

Authorized Capital(Rs)

Paid up Capital(Rs)

Number of Members(Applicable in case of company without Share Capital)

Date of Incorporation

Registered Address

Email Id

Whether Listed or not

Date of last AGM

Date of Balance Sheet

Company Status(for e-filing)

Directors/Signatory Details

DIN/PAN Name Begin date End date

2. Promoters’ Background

The unit is a proprietorship/partnership/private limited company/ firm and the proprietor/partners/promoters of the firm has experience in trading/processing of………………… and is associated processors. He/They has/have identified Honey Processing a profitable business seeing its ever-increasing demand in the local market as well market in the neighboring districts and States. Brief profile of the proprietor/partners/promoters is given below:

a) Mr. ABC

b) Mrs. XYZ

c) Mr. DEF

Net-worth: The details of the net-worth of the unit is given below:

Particulars Rs. In lakh

Movable assets A

B

C

Subtotal (A)

Immovable assets A

B

C

Subtotal (B)

Total

The total net-worth is more than the proposed grant of the unit.

6. Project Description and Flow Sheet

Proposed project aims for the setting up of modern honey processing unit and for expansion of existing honey processing unit from 200 kgs to 10 tons /day. This unit will be equipped with state of art honey processing, filtration and labeling, packing machines. Promoters have also interest in exporting processed honey from this unit of various fruit flavors.

The society plans to procure raw honey from local producers as well as from producers of other districts. After procurement the raw honey will be processed and will be packed in bottles of different sizes ranging from 50gms to 5kgs.While the small size bottles will be used for meeting local demands the big packs will be sold to corporate houses like Dabur, Baidya Nath, Ayurveda Bhawan (Patna), etc.

1. Project components

The project will have following components

• Modern Honey Processed processing unit 10 tons /day capacity

• Cleaned and purified bee wax

• Automatic bottling, labeling line

• Allied products

2. Honey processing unit 10 tons /day capacity

The Unit would install a modern Honey processing unit having an installed capacity of 10 MT/day in ……………. Total raw material requirement of the proposed unit, during the peak season of its production, will be about ………. The processing will be done for about 8 months in a year.

The capacity of the unit has been arrived at after giving due consideration to the market demand, the capacity of the promoters to procure raw material, and forward linkages of the promoters.

3. Automatic filling, labeling, packing line

An automatic Bottling line for filling of honey, labeling and packing is proposed to match the processing capacity of honey. It would reduce the losses of filling, spillage etc and improve the visual appeal of the product in national and international market

4. Location of the Project

The unit is set up in a land area of ……………(preferably in 15,000 sq. ft. as illustrative) in ……. The land is located along the two lanes all weather main road. The site is around …. Km from ……….

The selection of the location has been done in consideration with the various favorable aspects related with the plant such as:

• Raw material availability

• Connectivity

• Linkages with markets/procurement center

• Availability of infrastructure such as water

• Availability of manpower

5. Raw Material Availability

Bihar is one of the leading honey producing states in India. The main regions in which beekeeping are done are the districts of Muzaffarpur, Vaishali, Sitamarhi, Champaran, Madhepura, Katihar and Begusarai. Approximately 3,900 MT of honey was produced in the state out of the total country’s production of 8,400 MT in 2002. Bihar is the only state producing litchi honey on commercial scale, and it should rank at par with some of the premium honey in world market such as the Block Forest Honey of Germany and the Spanish Orange Honey in terms of its uniqueness and quality.

The processing industry has not kept pace with the increase in beekeeping in the state with no large processing unit within the state. There are a handful of processing units in the organized sector with most of the processing happening in the unorganized sector with the main being the processing plant run by …………...

Processing of Honey (Illustrative)

7. Technology and Process Description

Technology for the unit has been chosen carefully keeping in mind the best practices observed in India and local processes that may add unique value to the final produce. The proposed technology has also taken into consideration the market factors affecting the quality of the final produce. The technology has been arrived at after detailed discussion with the experts and local stakeholders. Details of the technology and process are given below:

1. Technology

The unit shall use modern technologies such as liquefier, auto moisture removal from honey, homozoniser and auto filling, labeling and packing line. This has been done to improve the quality of the final produce and overcome quality constraints.

The technology to be used in the unit is well-proven. Plant and machinery for the unit shall be procured from reputed suppliers of India. Technological improvements, in the proposed unit, in comparison to the traditional honey processing technique are summarized below.

Parameter Current Practice Technological Improvement envisaged in the unit

Removal of moisture at specific temperature and time

It is done manually During Processing auto control measures has been installed to monitor temperature and time of moisture removal

Homogenizing of honey This practice of homogenizing is not into practice

State of art machine for homogenizing the honey is used.

Auto packing line Bottles are packed manually Automatic bottling machines will be used which not only is efficient but also avoids fly menace in the campus. linked to DG sets

Value addition No value addition is being done Different flavored honey will be packed separately

2. Process description

Important processes are described below:

7.2.1. Collection and storage of honey

Raw honey is collected in cleaned plastic containers and stored in fly proof storage rooms which have definite system of controlling fly, mosquitoes, ants, cockroaches, rats and other insect which contaminate the product.After receiving product (Raw Honey) is transferred in SS tanks which has proper closers and went which can be cleaned nicely after every usage

7.2.2. Pasteurization

Honey is pasteurized in order to slow down the natural process of granulation, in order to allow it to remain in a liquid (or pourable) form longer, which is particularly useful if it is dispensed from squeeze bottles or poured for easy measurement when cooking or baking. Honey is heated to a minimum temperature. This honey is treated in a registered pasteurizing plant by the controlled application of heat so that the honey is free of viable sugar-tolerant yeasts.

7.2.3. Storage tank and bottling labeling

Honey after homogenization is kept in storage for a little while to bring down the temperature to the filling level. Glass bottles may break and handling of hot product is not easy but same time honey is kept worm (around 70 degree C) at the time of filling in Bottles.

7.2.4. Cooling and Packaging

After temperatures has come down to less than 50 degree C , cooled and labeled bottles may be packed in cartons, labeled and stored for further dispatches.

8. Procurement Strategy of Raw Materials and Other Inputs

The unit will require approximately 10 Tons of raw honey per day, The promoters have existing linkages with farmers of nearby areas to procure the required honey. They have also developed linkages with farmers in other parts of the state which includes bee keeping area of……………. Promoters to begin with will concentrate mainly on the nearby areas of ……………. to procure raw honey for the unit.

1. Backward Linkages:

The promoter has well established backward linkages for its proposed units and it is expected that the raw material can be procured from the local area.

2. Forward Linkages

Food product such as processed honey, wax, royal honey, etc. has a great demand in the metro and urban centers. There exist a growing market of honey products globally and India is a leading exporter of honey. The availability of honey processing unit with state of the art technologies are few in region and State and hence concentrated effort needs to be given to build up the forward linkages of processed honey.

9. Marketing Plan

The unit, shall sale its produce to the lead honey marketing companies i.e., Dabur, Baidya Nath and other exporters of Punjab, Mumbai and Delhi. Promoters are also planning to export their produce in near future for that they have export license.

The promoters have existing tie-ups which will be leveraged for selling the produce. The promoters propose to seek the help of the existing marketing intermediaries to develop the market. However, in the future they intend to develop their own marketing team to ensure direct contact with markets for their products.

1. Market Segments

The promoters shall target two market segments for marketing of honey. These are:

1- Lead dealers/ companies in India 2- Direct exports

2. Product packing

The company will have bottles of varying weights which is suitable for the retail market. It will also use different packing materials for its product. The product mix is given below:

Product Targeted customer segment

50 grams bottles For medicinal and for puja usage

100 grams bottles For occasional usage

250 grams bottles Frequent users

1 kg pack bottles For regular usage

5 kg Bulk pack For industrial pack( for confectionery and pharmacy )

10. Land Details

1. Land Details

In order to set up a modern biscuit manufacturing unit of the proposed capacity, a land size of approx. 18 to 20 Decimal would be ideal however this may vary with increase in capacity.

The land proposed for the unit Details of the proposed land is given below:

Sale deed dated 18.10.2016 in the name of M/s XYZ with sale value Rs. 0.00/-

Khata no. Plot no. Area Boundary

Total 19 decimals

The total land area is …… decimal and is in the name of the of the proprietor/firm/company. The proposed land of the unit is an industrial land as per CLU dated …… Character of the land. The cost of the land is Rs. ……. lakh/ the proposed land is a leased land for a period of …………. years.

11. Project Cost and Means of Finance

Details of the project cost and means of finance are given below:

1. Project Cost

The Project is estimated to cost Rs. 124.45 lacs. The cost estimates are provided by ……………………. on the basis of quotations received from suppliers and estimates given by chartered engineers. The detailed breakup of the cost of the Project is given below:

Rs in Lacs (Rounded off)

Description Amount

Land Nil

Land and Site Development Cost 6.00

Plant Area & Building Development Cost 10.00

Plant and Machinery 56.22

MFA (Including DG set, Transformer, Furniture etc.) 10.68

Preliminary and Pre-operative Expenses 2.00

Contingency 3.00

Margin Money for Working Capital 36.55

Total Project Cost 124.45

2. Site renovation

Promoters propose renovation of the existing site which shall be used for further expansion of the project (if any). Total investment proposed for site renovation is Rs.6.00 lakhs.(Factory building either be RCC or PEB structure so the layout plan and cost may vary project to project same will be captured in an applicant’s DPR)

3. Civil construction

Promoters propose to invest Rs.10.00 lakhs in civil construction as a part of the proposed expansion. Details of the civil construction are annexed to this report.

4. Equipment

The break-up of the estimated cost of major machinery is provided below:

Rs in Lacs

Machinery &Equipment Nos. Rate/ Unit Amount

Liquefier with all accessories 1 10.00 10.00

Moisture removal chamber 1 8.82 8.82

Homogenizers 1 5.63 5.63

Storage tank,( Capacity 20 ton) 1 8.37 8.37

Accessories 1 3.41 3.41

Auto filling/bottling/labeling/ 1 20.00 14.37

Strapping machine 1 5.62 5.62

Total 56.22

*The make and specification of P&M may vary project to project based on the quotations from different suppliers.

Details of the plant and machinery are given below:

Machine Supplier Specifications Remarks

10 tone honey processing plant with moisture reduction unit, and bottling, packing strapping

Major Honey machine manufactures in India are the reputed supplier.

The unit will have Honey liquefier, Moisture removal system, with auto heating control system,

Homogenizer, cooling, auto filling in bottles, capping and labelling

The plant is well-equipped to take care of good quality honey production.

The equipment are based on ….technology

The quoted price is exclusive of taxes and other charges

The plant and machines to be procured by the promoters are suitable for the design of the project and balances each of the production stages. The suppliers have prior experience in installing similar type of units. The final prices of the equipment may vary depending on the prevailing tax rate at the time of delivery.

Quotation provided by the promoters have been duly verified by ………. team and found to be satisfactory both in terms of cost and technical specification.

5. Miscellaneous Fixed Assets / Utilities

The breakup of the estimated cost of the miscellaneous fixed assets and utilities is provided below:

Rs in Lacs

Misc. Fixed Assets/ Utilities Nos. Rate/ Unit Amount

Computer 2 0.54 1.08

Pick up van 1 4.60 4.60

Other office equipment LS LS 5.00

Total Misc. Equip 10.68

6. Preliminary & Pre-operative Expenses

The provision towards preliminary & pre-operative expenses includes expenditure towards like salaries & administrative expenses, travel expenses, market development expenses, interest during construction period etc. The Miscellaneous charges include the cost incurred towards Administration, Travelling, Market development and other marketing activities.

7. Working Capital Requirement

Rs in Lacs

Sl No Particular Stocking Period in

Month

IstYr 2nd Yr 3rd Yr 4th Yr 5th Yr

1 Raw Materials 1.00 189.81 205.63 221.45 237.26 253.08

2 Consumable Stores & Packing Material

1.25 0.01 0.01 0.01 0.01 0.01

3 Finished Goods 0.50 98.80 110.96 120.08 127.68 136.80

4 Receivables 0.25 49.24 55.32 59.66 63.97 68.21

5 Expenses for One Month 0.50 4.32 4.75 5.22 5.75 6.32

Total Current Assets

342.18 376.67 406.42 434.67 464.42

6 Less: Sundry Creditors 1.00 205.63 206.95 222.76 238.58 254.40

7 Working Capital Gap

136.55 169.72 183.65 196.08 210.02

Sl No Particular Stocking Period in

Month

IstYr 2nd Yr 3rd Yr 4th Yr 5th Yr

8 Total Required Margin

34.14 42.43 45.91 49.02 52.51

8. Contingencies

The amount is calculated at 5% of the cost incurred towards land development, building, plant & machinery and

Miscellaneous fixed assets excluding cost of land. It amounts to Rs. 3.00 Lacs in current case.

9. Means of Finance

The cost of the project is proposed to be financed through a mix of equity, grant from Govt. of Bihar and term loans.

Rs in Lacs

Source Share Amount

Equity* 25% 31.11

Debt** 75% 93.34

Total 124.45

*- Promoters propose to bring approximately Rs.31.11 lakhs as their equity contribution. Promoters have the required financial strength to bring an equity capital of this amount.

**- Promoters propose to bring in long term debt to the tune of 93.34 lakh for financing the project. They also propose to bring in Rs.34.14 lakh as margin money towards working capital financing.

Note-1. Govt. of Bihar has recently launched a Bihar Agriculture Investment Promotion Policy (BA-IPP 2020) with capital subsidy of 15% for individual investors, partnership firms, LLP, companies and 25% for Farmer Producer Companies.

2. The figures are only tentative and may change depending upon the processing infrastructure capacity and promoter’s requirement.

10. Business Plan

The business plan of the Company has been prepared considering its business model, which covers the following stages:

• The Company will process raw honey and sell it in different pack sizes

• Company will procure the raw material from various sources during season and process the same as when

it deems fit

• The existing storage capacity shall be used for storing both raw and processed honey

• The infrastructure will be used mainly by the company

The key operating assumptions underlying the business plan of the Company are described below:

• 10MT/day of processing capacity

The key operating assumptions underlying Business plan are described below:

Particulars Annexure-"II"A

Double shift

Litre/hr Hours

Production per day from Plant 625 16 10 MT

No. of Working Days in a year 300 Days

Total Production per annum @ 100% Capacity Level 3000 MT

Total Installed Capacity 3000 MT

Calculation of Product Mix:

Installed Capacity - @ 100 % Installed Capacity 3000 MT

Product Mix:- 100.00%

Finished goods- Honey 90.00%

Loss 10.00%

Production:

Finished goods- Honey 2,700.00

Loss 300.00

Total Installed Capacity (MT) 3,000.00 -

At 100% capacity utilization the plant would produce 3000 MT of finished Honey.

For the proposed plan, the cost of the ingredients to be utilized in the Poultry feed mix is as below:

Sl No Particulars

IstYr 2nd Yr 3rd Yr 4th Yr 5th Yr

1 Installed Capacity (In MT) 3000 3000 3000 3000 3000

2 Capacity Utilisation 60% 65% 70% 75% 80%

3 Actual Total Production (In MT) 1800 1950 2100 2250 2400

4 Raw Material requirement per MT of FG Produced (In MT)

1.11 1.11 1.11 1.11 1.11

5 Total Requirement of Raw Material 1998 2164.5 2331 2497.5 2664

6 Cost per MT of Raw Material ( In Rs.) 114000 114000 114000 114000 114000

7 Total Cost of Raw material Consumed (Rs. In lacs)

2,277.72

2,467.53

2,657.34

2,847.15

3,036.96

8 Less: Opening Stock ( in Lacs) 0

189.81

205.63

221.45

237.26

9 Add: Closing Stock (in Lacs)

189.81

205.63

221.45

237.26

253.08

10 Value of Raw Materials to be Purchased (Rs. In lac)

2,467.53

2,483.35

2,673.16

2,862.97

3,052.78

11. Operating Cost Assumptions

11.11.1. Packaging material

The unit shall use glass bottles of different sizes for packing the produce. It is assumed that on an average Rs.5000/MT would be required to pack the processed honey. The assumptions are based on prevailing industry conditions.

11.11.2. Power Load Requirement

In case of the proposed unit - power load of 150kVA from BSEB has been proposed to be taken. It is estimated to cost Rs. 10.08 Lacs per annum at 60% capacity utilization and Rs. 14.55 lacs per annum at 80% capacity utilization. The unit would also be requiring power back-up for the plant hence has proposed to have a D. G. Set of capacity 270 kVA.

11.11.3. Employee Cost

The employee cost has been assessed based on an organization structure prepared by the Company which considers the managerial and the support staff required for its proposed level of operations. Total manpower cost per annum is estimated at Rs.19.46 lakhs as detailed out below:

Sl No Particulars No of Employee

Monthly Salary

Total Salary Per

Month

Total Salary Per Annum

A Technical Staff

1 Manager 1 15,000 15,000 180,000

2 Storekeeper 2 10,000 20,000 240,000

3 Accountant 1 10,000 10,000 120,000

4 Operator, fitter, electrician 4 12,000 48,000 576,000

5 Helper/ Skilled worker 4 8,000 32,000 384,000

B Unskilled Staff

6 Peon/Security Guard 2 8,000 16,000 192,000

Total 14 1,692,000

PF, ESI & Other benefits etc @20% 253,800

Total Direct Wages 1,945,800

Total Direct Wages ( Rs. In lacs) 19.46

The manpower planning has been done after analyzing similar units. Proposed manpower will be sufficient to carry out the operation.

11.11.4. Cost of insurance and Maintenance

The cost of insurance has been assumed as 1% of cost of Building, Plant & Machinery & Miscellaneous Fixed

Assets. Cost of maintenance has been assumed at 3.5% of the value of fixed assets. The costs are at par with

industry standard.

11.11.5. Admin & Selling Overheads Costs

Admin overhead Cost has been assumed @ 2.5% of revenues.

12. Financial Assumptions

11.12.1. Depreciation Rates

Depreciation has been provided on straight-line method, as per the Companies Act, 1956, for book purposes, whereas for tax purposes, written down value method is employed. The rate of depreciation for plant & machinery and miscellaneous fixed assets is taken as 10% for book purposes and 15% for tax purposes.

11.12.2. Interest

Interest would be charged to the Project at 9% p.a. for Term Loan and working capital loan. A repayment period of 6 years including a moratorium of 6 months has been considered for financial projections.

13. Revenue Assumptions

It is assumed that at 80% capacity utilization the unit would generate revenue of Rs.3274.08 lakhs. The assumption is based on

1- Net realization would be 95% of the raw honey

2- The average selling price of final produce is Rs.1,52,000/MT

Sl No Particulars IstYr 2nd Yr 3rd Yr 4th Yr 5th Yr

1 Installed Capacity (In MT) 3000 3000 3000 3000 3000

2 Product Mix

100% 100% 100% 100% 100%

Finished goods- Honey 90% 90% 90% 90% 90%

Loss 10% 10% 10% 10% 10%

3 Product wise capacity

3,000

3,000

3,000

3,000

3,000

Honey--90%

2,700

2,700

2,700

2,700

2,700

Loss-10%

300

300

300

300

300

4 Capacity Utilisation 60% 65% 70% 75% 80%

Production (In MT)

Honey

Actual Production

1,620.00

1,755.00

1,890.00

2,025.00

2,160.00

Add: Opening Stock of FG (In MT)

-

65.00

73.00

79.00

84.00

Less: Closing Stock of FG (In MT)

65.00

73.00

79.00

84.00

90.00

Value of Opening Stock (Rs. In lacs)

-

98.80

110.96

120.08

127.68

Value of Closing Stock (Rs. In lacs)

98.80

110.96

120.08

127.68

136.80

Quantity to be sold (In MT)

1,555.00

1,747.00

1,884.00

2,020.00

2,154.00

Selling Rate per MT

152,000

152,000

152,000

152,000

152,000

Sales Value (Rs. In lacs) (A)

2,363.60

2,655.44

2,863.68

3,070.40

3,274.08

5 Total Sales Value (Rs. In lacs) (A)

2,363.60

2,655.44

2,863.68

3,070.40

3,274.08

6 Closing Stock of Finished Goods (Rs. In lacs)

98.80

110.96

120.08

127.68

136.80

14. Capacity Utilization

Year Capacity utilization

Year I 60%

Year II 65%

Year III 70%

Year IV 75%

Year V onwards 80%

The project has assumed 60% capacity utilization in the first year, which may be regarded as conservative. The actual capacity utilization may be higher than the projected one.

(Note: The figures are only tentative and may change depending upon the processing infrastructure capacity and requirements)

12. Financial Analysis

The projected profitability statement, cash flows and balance sheet of the proposed project of M/S …………………. are given below.

1. Projected Profitability Statement

Rs in lacs

Particulars IstYr 2nd Yr 3rd Yr 4th Yr 5th Yr

Sales

2,363.60

2,655.44

2,863.68

3,070.40

3,274.08

Less- Duty & Taxes - - - - -

Net Sales

2,363.60

2,655.44

2,863.68

3,070.40

3,274.08

Other Income - - - - -

Total

2,363.60

2,655.44

2,863.68

3,070.40

3,274.08

Variable Cost

Raw Materials Consumed

2,277.72

2,467.53

2,657.34

2,847.15

3,036.96

Consumables & Packing Materials

0.06

0.07

0.08

0.09

0.11

Wages & Salary

19.46

19.46

21.40

23.54

25.90

Power

10.08

11.14

12.24

13.37

14.55

Repair & Maintenance

3.00

3.30

3.63

3.99

4.39

Other Manufacturing Expenses

12.00

14.40

17.28

20.74

24.88

Cost of Production

2,322.32

2,515.89

2,711.97

2,908.89

3,106.79

Add: Opening Stock of Finished Goods -

98.80

110.96

120.08

127.68

Less: Closing Stock of Finished Goods

98.80

110.96

120.08

127.68

136.80

Cost of Sales

2,223.52

2,503.73

2,702.85

2,901.29

3,097.67

Gross Profit :-

140.08

151.71

160.83

169.11

176.41

Selling & Administrative Expenses

59.09

66.39

71.59

76.76

81.85

- Other Selling & Adm. Exps.

59.09

66.39

71.59

76.76

81.85

Preliminary Exps W/o - - - - -

Profit before Interest & Depreciation

80.99

85.32

89.24

92.35

94.56

Depreciation

11.28

9.72

8.38

7.23

6.24

Profit before Interest & Taxation

69.72

75.60

80.86

85.12

88.31

Interest on

Term Loan

8.40

7.20

6.00

4.80

3.60

Working Capital

9.00

9.00

9.00

9.00

9.00

Particulars IstYr 2nd Yr 3rd Yr 4th Yr 5th Yr

Total Interest

17.40

16.20

15.00

13.80

12.60

Profit before Taxation

52.32

59.40

65.86

71.32

75.71

Current Tax

16.32

18.53

20.55

22.25

23.62

Deffered Tax - - - - -

Profit after Tax

35.99

40.87

45.31

49.07

52.09

Add: Profit B/f from Previous Year -

35.99

76.86

122.17

171.24

Balances transfer to Reserve & Surplus

35.99

76.86

122.17

171.24

223.34

2. Financial Performance indicators

Year 1 2 3 4 5

Gross Profit Ratio 5.93 5.71 5.62 5.51 5.39

Net Profit Ratio 1.52 1.54 1.58 1.60 1.59

Current Ratio 1.24 1.36 1.47 1.58 1.68

DSCR 2.49 2.59 2.67 2.74 2.77

BEP 0.49 0.46 0.44 0.42 0.40

Average DSCR 2.65

Project IRR 31%

The IRR and DSCR of the project look promising and the prospects of the project are supposed to be financially sound.

From the analysis of above indicators, the financial health of the projects seems good. The project is earning good returns and profit margins. The ability of project to re-pay its debt liabilities also looks strong. Moreover, the time series analysis of debt-equity ratio shows that project will be easily able to reduce debt burden from its capital structure.

3. Projected Cash Flow Statement

SL. NO. PARTICULAR IstYr 2nd Yr 3rd Yr 4th Yr 5th Yr

1 Profit before Tax 52.32 59.40 65.86 71.32 75.71

2 Add:- Depereciation 11.28 9.72 8.38 7.23 6.24

3 PrilimineryExps. W.O. - - - - -

4 Cash Accurals (1+2+3) 63.59 69.12 74.24 78.55 81.96

5 Receipt of capital subsidy from Bihar Govt.

6 Increase/(Decrease) in C.L. 205.63 1.32 15.82 15.82 15.82

7 Contribution by Shareholder/Promoter 31.11 - - - -

SL. NO. PARTICULAR IstYr 2nd Yr 3rd Yr 4th Yr 5th Yr

8 Increase in Term Loan from Bank 93.34

9 Increase in Un. Sec. Loan

10 Increase in Working Capital 100.00 - - - -

A.Total (Rs.)(4 to 14) 493.67 70.44 90.06 94.37 97.78

1 Preliminary & Preoperative Expenses -

2 Increase in Current Asset 367.86 34.06 49.28 57.73 49.18

3 Increase in Cap. Expenditure 84.07

4 Decrease in Term Loan 13.33 13.33 13.33 13.33 13.33

5 Investment - - - - -

6 Dividend Paid - - - - -

7 Income Tax Paid 16.32 18.53 20.55 22.25 23.62

B.Total (Rs.) (1 to 9) 481.58 65.93 83.16 93.31 86.14

C.Surplus/Deficit from Project (A-B) 12.08 4.51 6.90 1.06 11.64

D. Opening Balance of Cash & Cash Equivalent - 12.08 16.60 23.50 24.56

E. Closing Balance of Cash & Cash Equivalent(C+D) 12.08 16.60 23.50 24.56 36.19

Balance Sheet Cash & Bank 12.08 16.60 23.50 24.56 36.19

4. Projected Balance Sheet

Particulars IstYr 2nd Yr 3rd Yr 4th Yr 5th Yr

Liabilities

Capital 31.11 31.11 31.11 31.11 31.11

Reserve & Surplus 35.99 76.86 122.17 171.24 223.34

Term Loan 80.00 66.67 53.33 40.00 26.67

Bank Borrowing for Working Capital 100.00 100.00 100.00 100.00 100.00

Sundry Creditors 205.63 206.95 222.76 238.58 254.40

Provision for Taxation 16.32 18.53 20.55 22.25 23.62

Total 469.06 500.12 549.93 603.19 659.14

Assets

Particulars IstYr 2nd Yr 3rd Yr 4th Yr 5th Yr

Gross Block 84.07 84.07 84.07 84.07 84.07

Less- Accumulated Deprection 11.28 21.00 29.38 36.61 42.85

Net Block 72.79 63.08 54.69 47.46 41.22

Current Assets

Inventory

Raw Materials 189.81 205.63 221.45 237.26 253.08

Consumables Stores & Packing Materials 0.01 0.01 0.01 0.01 0.01

Closing Stock 98.80 110.96 120.08 127.68 136.80

Receivables 49.24 55.32 59.66 63.97 68.21

Other Current Assets

Taxation Advance 16.32 18.53 20.55 22.25 23.62

Other Current Assets 30.00 30.00 50.00 80.00 100.00

Cash & Bank Balances 12.08 16.60 23.50 24.56 36.19

Miscellaneous Expenditure (not w/o) - - - - -

Total 469.05 500.13 549.94 603.19 659.13

The unit will be equipped with some of the best and modern plant and machinery available today for honey processing. Equipment providers for the unit are reputed firms in their industry. Technology for the unit has been chosen carefully keeping in mind the best practices observed in India.

Note: The figures are only tentative and may change depending upon the processing infrastructure capacity and promoter’s requirement.

13. Schedule of Implementation

The total time for implementation of project has been estimated at approximately 6 months. The critical time in completion of project is influenced by:

• Obtaining necessary statutory approval

• Resource mobilization

• Civil construction

• Machinery order

• Installation and commissioning of machinery

• Commercial trial runs

Month-wise schedule of implementation is given below:

Month

1 2 3 4 5 6

Activity

Arranging necessary approvals

Civil construction

Site renovation

Order for plant and machine

Procurement of plant and machinery

Installation of plant and machinery

Trial production

Commercial production

14. Project Impact

As discussed earlier, the project will have various positive impacts such as:

Infrastructure for value addition: This unit would aim to integrate and streamline existing value chains in the region by creating centralized infrastructure for value addition and preservation. The unit will thus provide benefits on cost, quality and convenience for sustainable growth in the market driven economy. The unit has been envisaged in a way that it would ensure better returns to all players in each level of value chains ranging from procurement, storage, processing, packaging to distribution of food commodities through vertical integration of functions and horizontal linkages of destinations.

Reduction of Wastages: The infrastructure created at the unit along with the integration of backward and forward linkages would lead to more efficient supply chains and reduction of wastages. This would provide higher value realization to all players in the supply chain including the farmers.

Creation of employment: The project shall generate employments. It is estimated that the it would generate direct employment of about 14 workers and indirect employment of another 30 workers. Most of the manpower requirement will be met from the local area.

Return to farmers: The unit will be benefiting farmers in the region by increasing the returns for farmers by decreasing wastages and increasing demand of the agricultural produce