1 1.

BISCUIT PLANT Introduction

Biscuit making is a conventional activity in many parts of the country. Despite the advent of modern, large capacity and automatic biscuit making plants, large section of people especially in semi-urban and rural areas still prefer fresh biscuits from local bakery as they are cheap and offer many varieties. These manufacturers are able to cater to some typical local palate as well. Thus, they are able to withstand competition from organised sector units. 1.2 Objective

The primary objective of the model report is to facilitate the entrepreneurs in understanding the importance of setting up unit of biscuit plant. This model report will serve as guidance to the entrepreneurs on starting up such a new project and basic technical knowledge for setting up such a facility. 1.3 Raw Material Availability

The basic raw material for the manufacture of biscuits is wheat flour. Major wheat producing districts in the state are Hosangabad (4.19 lakh MT production), Ujjain (3.85 lakh MT), Dhar (3.51 lakh MT), Indore (3.34 Lakh MT) etc. 1.4 Suitable Location

The suitable recommended location of the biscuit plant is Hoshangabad, Ujjain, Dhar, Indore, Vidisha, Sehore etc. There is already a food park at Hosangabad, 1.5 Market Opportunities

Market for biscuits is scattered all over the country. There are three distinct market segments viz. urban, semi-urban and rural. Urban and semi-urban markets are dominated by many national and regional brands but even then many local manufacturers have also carved a special niche as their products are fresh, they offer many varieties and they are cheaper. 1.6 1.6.1 Project description Applications

Biscuits are eaten by all sections of people across the board round the year. They are, thus, mass consumption items with number of varieties and shapes. The market is scattered. There are some dominant national and regional brands. Biscuits can be manufactured at a location which is close to the market. 1.7 Capacity of the Project
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The capacity of the project is 50 tonnes of biscuits per year. 1.8 Critical success factors

Rural and certain semi-urban markets are mainly captured by small manufacturers. This note primarily suggests entering this market. Apart from domestic customers, there is a vast market at bus and taxi stands, railway stations, weekly hats or bazaars, highway eateries or dhabas and melas or fairs. A small delivery vehicle can take care of destinations located in the vicinity of about 50-60 km. Attractive margins to traders/retailers will be crucial. 1.9 Manufacturing process

The process is conventional and easy. Wheat flour along with other ingredients is mixed with water and dough is prepared. Then it is kept at a normal room temperature for about couple of hours to allow proper fermentation. Then it is placed in biscuit moulding trays and these trays are placed in oven for baking. After requisite baking, trays are taken out, cooled and biscuits are packed. The process flow chart is as under:

Mixing and Dough Making

Fermentation

Baking

Packing

1.10 Project component and cost

PARTICULARS
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Unit
2

Qty

Cost/unit

Total

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LAND & BUILDING Land Land Development Land Area Building Production Block Main Production Area Store cum packing room & Sales Counter Misc Handling Area Contingencies PLANT & MACHINERY Flour Sifter Dough Kneader Electrically Operated Oven Biscuit Moulding Tray Contingencies MISCELLANEOUS FIXED ASSETS Furniture and Fixture Sealing and wraping machine Vehicles-Delivery LCV Weighing Scale Others Contingencies PRE-OPERATIVE EXPENSES Establishment Professional Charges Security Deposits TOTAL

SqM

400 400

250.00 500.00 5,000.00 5,000.00 2,000.00 70,000.00 50,000.00 250,000.00 30,000.00 40,000 50,000 200,000 25,000 20,000 230,000 200,000 160,000

13.45 1.00 2.00 5.00 2.50 2.00 0.95 28.98 0.70 1.00 2.50 21.00 3.78 6.73 0.40 1.00 4.00 0.25 0.20 0.88 5.90 2.30 2.00 1.60 55.06

SqM SqM SqM LS

100 50 100 10% 1 2 1 70 15% 1 2 2 1 1 15% 1 1 1

LS No No No LS

1.10.1 Building The building development cost will be around Rs 10.45 lakhs. 1.10.2 Plant and Machinery It is suggested to have installed production capacity to manufacture 105 tonnes of biscuits per year assuming working for about 330 days for 12 hours every day. This would require flour sifter, dough kneader, electrically operated oven, biscuit moulding tray and sealing and wrapping machine. All these machineries will cost around Rs. 28.98 lakhs. 1.11 Miscellaneous Assets The miscellaneous assets will cost around Rs. 6.73 Lakhs. 1.12 Preliminary & Pre-operative Expenses A provision of Rs. 5.90 lakhs would take care of pre-production expenses like establishment, professional charges, security deposits etc.

1.13 Working Capital Requirement

(RS IN LACS) ITEMS
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Year 1

Year 3

Year 5

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STOCK OF RAW MATERIAL & PACKING MATERIAL SUNDRY DEBTORS TOTAL MARGIN MPBF INTEREST ON WC

2.59 10.24 12.82 3.21 9.62 1.06

3.98 15.75 19.73 4.93 14.80 1.63

3.98 15.75 19.73 4.93 14.80 1.63

1.14 Means of Finance

EQUITY CAPITAL MOFPI SUBSIDY TERM LOAN FINANANCIAL INSTITUTIONS -Payable half yearly Installments TOTAL 25% 10 50.00 10.00% 2.30 35.00% 25.00% 40.00% 100% 20.39 14.57 23.31 58.26

1.15 Cash flow statement

PARTICULARS SOURCES OF FUNDS EQUITY CAPITAL SUBSIDY NET PROFIT (INTEREST ADDED BACK) DEPRECIATION PRELIMINARY EXP.W/O INCREASE IN TERM LOAN INCREASE IN BANK BORROWINGS-WC TOTAL Year 1 1.21 3.87 0.84 9.62 1 5.54 Year 3 9.06 3.87 0.84 1.48 15.25 Year 5 8.23 3.87 0.84 12.94 Year 7 7.47 3.87 0.84 12.18

1.16 Projected balance sheet

PARTICULARS LIABILITIES EQUITY CAPITAL RESERVES & SURPLUS TERM LOAN BANK BORROWINGS-WC TOTAL Year 1 20.39 12.39 21.01 9.62 63.40 Year 3 20.39 21.65 11.81 14.80 68.65 Year 5 20.39 33.67 2.61 14.80 71.46 Year 7 20.39 45.74 0.00 14.80 80.93

1.17 Projected profit and loss account

PARTICULARS NET REVENUE REALISATION TOTAL EXPENSES GROSS PROFIT DEPRECIATION INTEREST PRELIMINARY EXP.W/O PROFIT BEFORE TAX RETAINED PROFIT Year 1 37.54 31.62 5.92 3.87 3.39 0.84 (2.18) (2.18) Year 3 57.75 43.98 13.77 3.87 3.15 0.84 5.90 5.90 Year 5 57.75 44.81 12.94 3.87 2.23 0.84 5.99 5.99 Year 7 57.75 45.57 12.18 3.87 1.63 0.84 5.84 5.84

1.18 Key Indicators

NET PRESENT VALUE at current Inflation (Rs. in lakhs) INTERNAL RATE OF RETURN % AVERAGE DSCR
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54.85 21.79 1.97

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BREAK EVEN POINT % PAY BACK PERIOD ( YEARS)

80.23 5.06

1.19 Man power requirement

PARTICULARS SUPERVISORY STAFF Production Supervisors Accountant WORKERS Skilled Workers Semi-Skilled Labour Salesman Driver TOTAL NOs. 2 1 2 4 2 2 13

1.20 Assumptions
Project & Financing Contingencies on Building Contingencies on Equipment Term Loan Rate of Interest on Term Loan Subsidy Considered Subject to ceiling Expected time of Installation Moratorium CAPACITY Rated Capacity Per Annum 80% of Installed capacity Number of Operational Days DAYS Working Hours Per day Hrs CAPACITY UTILIZATION Year I Year II Year III SALES PRICE W S Price OTHER EXPENSE Commission Marketing Expenses POWER Connected Load HP DEPRICIATION AS PER COMPANYS ACT BUILDING PLANT & MACHINERY MISC. FIXED ASSETS LAND & SITE DEVELOPMENT MAINTENANCE BUILDING PLANT & MACHINERY MISC. FIXED ASSETS LAND & SITE DEVELOPMENT 10% 15% 40% 10% 25% 10 6 105 330 12 65% 90% 100% 55,000 5.0% 2.5% 40 3.34% 10.34% 7.07% 1.63% 1.00% 2.00% 1.50% 1.00%

Months Months TPA

1.21 Sources of technology Master Mechanical Works Pvt Ltd, 75,Link Road, Lajpat Nagar 3, New Delhi- 110024 Nagpal Brothers, C-127, Phase 2, Mayapuri Industrial Area, New Delhi- 110064
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Delight Engg. Works, Lane No. 8 Aslat pura, Moradabad-244001. Tel No. 2498398/2491687, Fax: 2494378 Foodmac Engg. Pvt. Ltd. 37038, Sector 2, Parwanoo-173220 (HP). Tel No. 233294/233295, Fax: 233296 KGN Engg., Plot No. 174, Old Airport Road, Secunderabad-500011. Tel No. 27952147

The actual cost of projects may deviate on change of any of the assumptions.

Project Profiles - MP Agros

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