LIST OF CHAPTERS

SUBJECT

CHAPTER NO. PAGE NO.

PROJECT DETAILS
LOCATIONAL BACKGROUND &OVERVIEW
PROMOTERS

1-2

II

3-6

III

7-8

PROJECT COST & PROPOSED MEANS OF FINANCE IV

9-10

COST OF PRODUCTION & PROFITABILITY

11

SOME FINANCIAL INDICATORS & SCHEDULES

OF IMPLEMENTATION
VI
12-13

LIST OF ANNEXURES
SUBJECT

ANNEXURE NO.

PROJECT COST
PROPOSED MEANS OF FINANCE
DETAILS OF BAKERY EQUIPMENTS
DETAILS OF FURNITURE & FIXTURES
DETAILS OF FINISHED PRODUCTS
DETAILS OF RAW MATERIALS
INDICATOR RATIO
INCOME ESTIMATION
DIRECT EXPENSES ESTIMATION
PROJECTED BALANCE SHEET
PROJECTED TRADING & P& L ACCOUNT
DEPRECIATION
COST OF PRODUCTION
AND PROFITABILITY SUMMARY
CASH FLOW STATEMENT
FUND FLOW
SALARY AND DIRECT LABOUR
CALCULATION OF BREAK EVEN
PAY BACK PERIOD
CALCULATION OF REAPYMENT
DEBT SERVICE COVERAGE RATIO
WORKING CAPITAL REQUIREMENT
COMPUTATION OF INTEREST LIABILITY
FUND POSITION
INTEREST EARNING

PAGE NO.

I
II
III
IV
V
VI
VII
VIII
IX
X
XI
XII

14
15
16
16
17
18
19
20
21
22-27
28-33
34-36

XIII
XIV
XV
XVI
XVII
XVIII
XIX
XX
XXI
XXII
XXIII
XXIV

37
38
39
40-42
43
44
45
46
47
48
49
50

CHAPTER I
INTRODUCTION
PROJECT AT A GLANCE
1. Name of the Project

M/s E & Ks Bakery

2. Address

Near Lagun Bridge, Naharlagun,

Dist:Papum-pare, Arunachal Pradesh

3. Project Objective

To set up a self-sufficient Bakery Unit

along with all the modern amenities.

4. Promoter

Mr. Toko Tatung

5. Project Cost

(Rs. In lakhs)

Land, Building and others

10.00

Plant and Machinery

23.60

Furniture & Fixture

02.70

Office Equipments

01.20

Other Assets

00.70

04.40

07.00

Preliminary and
Pre-operative Expenses
Margin Money for
Working Capital

49.60
6. Proposed means of finance

:Promoters contribution Rs 49.60 Lakhs

Long Term Loan

7. Some financial indicators

Rs 00.00 Lakhs

a) Debt Equity ratio

: N.A ( As whole of the Project has been

financed by the Promoter)

(b) Percentage of promoters

Contribution with Project cost

: 100 %

1st Year

2nd Year

3rd Year

4th Year

5th Year

b) Total revenue

: 49.83

62.37

78.38

94.88

122.40

PBIDT

: 9.77

11.55

13.82

16.56

22.57

PBIT

: 5.07

7.24

9.84

12.89

19.18

: 10%

12%

13%

14%

16%

11.55

13.82

16.56

22.57

PBIT Ratio

Net cash Accruals : 9.77

c) Debt service coverage ratio :

Maximum

N.A

(As there is no debt

component for project financing)

d) Break Even Point

Safety Margin Available
In first year of operation

Average

N.A

Minimum

N.A

Rs 47.84 Lakhs (Turnover)

Rs 1.98 Lakhs

e) Pay Back Period

3 Years 10 months

f) Cash surplus at the end of 5th year:

Rs. 22.57 lakhs

g) Repayment Period

:N.A

h). Employment Generation

:11 persons (In the first year of operation)

CHAPTER II
Locational Details and Overall Potential
Arunachal Pradesh, situated in the north eastern part of India, is a developing
state endowed with abundance of natural beauty and having largest area (nearly
84000 sq km in area) among all the north-eastern States including Assam. Due to its
sparse population of merely 11.25 Lakhs, the State has bigger land man ratio as well.
The State carries importance due to its strategic location of being on the border. It
shares long international border with Bhutan to the west (160 km); China to the north
and north-east (1080 km) and Burma to the east (1440 km) .It stretches from snowcapped mountains in the north to the plains of the Brahmaputra valley in the south.
It is endowed with immense tourism potential due to its virgin and unexploited natural
beauty.
Due to greater exposure during the current period towards developmental
activities undertaken by the central and State Government both on account of poverty
eradication and tourism development, it is witnessing a spurt of business and
commercial activities on different fronts. These activities are more palpable within the
twin Capital complexes of Itanagar and Naharlagun.

People from all over the country are thronging to the State as a result of this
exposure to exploit the various opportunities available here inter-alia business and
commercial avenues.
Increased level of business opportunities has its impact on the Social dimension
as well and it can be witnessed through the increased buying power of the common
mass and different community activity taking a new shape and dimension.
Erstwhile it was secluded from the outside world due to tough hilly terrain and
difficult approaches. But continuous developmental efforts by Government of India
and various economic packages bestowed up on the region has turned around the life
style and living standard of the people of the place. Influx of people from different part
of the nation in connection with business activity and governmental jobs has brought
along the changes to the place.

POTENTIAL FOR BAKERY UNIT:Proposed venture is the outcome of the foresighted efforts initiated by
M/s E&Ks Bakery under the able patronization of upcoming first generation
businessman Mr. Toko Tatung.
Bakery industry comprises an important segment of activity in food
processing industry due to its nutritional value and outreach to common
households in the city, town and even the villages. Its cost affordability is
within the range of even poorest class of our Society. Items like bread and
biscuits are finding it s increased utility not only in day to day household
consumption but even for various functions and seminars. Items like Burgers,
Pizzas, Tarts, Sandwiches are gaining its popularity among the younger
generations and are even serving to office goers offering a quick-bite in case of

time constraint. Thus it has tremendous sales potential which is witnessing a

continuous upward growth chart.
Its strategic location offers easy access to the customers as it is situated
in the heart of Naharlgun whereby all types of business activities, shopping
complexes and office complexes are coming up. Place witnesses tremendous
population growth due to continuously increasing growth of commercial
activities within the near vicinity of the proposed site.
These types of commercial avenues have added advantage of reduced cost
on account of administrative and maintenance cost.
It is further preferred due to existence of better scope for establishing
common facilities like, sanitation, mail box, telephone services, water and
safety reasons.
As regarding the safety, the proposed site has added advantage of being
close to Arunachal State Assembly which is within the earshot of the chosen
location.
The proposed unit will not only provide a cost effective and profitable
fusion of commercial and administrative advantages but will have an apparent
edge over the scattered small units around the capital complex.
The site for proposed complex have been thoughtfully chosen Near Lagun
Bridge, Naharlagun where the promoter is already running a restaurant under
the anme and style of E&Ks Restaurant and it has sufficient area for the
bakery unit (2000 sq ft). Promoter has rental agreement with the owner of the
building and same approves running of the proposed unit as well. It is
strategically located at a place having vast business opportunities. Several
academic and administrative offices like, State Assembly, MLA Cottage, Govt.
Guest House, Takar Marketing Complex and several other private residential
units are located within the walking distance of the proposed site.

Considering the overall scenario with a keen approach towards

profitability and cost reduction factor the proposed unit will satisfactorily cater
to the potential needs of the consumers of the State.
With all these advantages the proposed unit will be utilizing its profitable
potential and no extra marketing effort is needed to bring it to the full capacity
utilization. Its rates have been rationally envisaged keeping in view its
locational advantages and prevailing market rates.
Gradual diversification with a well balanced approach towards horizontal
growth along with vertical growth have been envisaged and adequately reflected
in the project proposal.

SERVICE

FACTOR

&

EMPLOYMENT

GENERATION:Lack of educational awareness and resulting constricted employment

opportunity has confined the opportunity among the youth as Government
service and supply contractor to various Government departments. This
vicious circle is creating a heavy burden on the Government to cater to the
employment needs of the state.
Since austerity measures proclaimed by Ministry of Finance has banned
further post creation in Government departments, it is further aggravating the
employment scenario in the state.
In the present situation worst sufferers are the poor and marginally educated
populace of the region who are neither qualified enough nor have enough
capital to set up their own business.
The proposed unit will effectively cater to their needs as it does not
require highly professional or higher educational background to cater to its
manpower need.

During its initiation year it will provide direct employment opportunity to

11 persons which will further rise with increased business activities.

CHAPTER III
PROMOTERS

GENERAL BACKGROUND:The proposed project has been envisaged to be floated by a dynamic and
overtly recognized businessperson Mr. Toko Tatung. He is a well established
businessman and commands high esteem with the business fraternity of the
region.
The proposed project will be a proprietorship concern under direct
command of Mr. Toko Tatung who has adequate business experience and
expertise.
The project envisages having sufficient cushion for accommodating
professionals and able candidates on its pay roll for further expansion and
effective running of the concern.

PROFILE-Mr. Toko Tatung:

i)

Name

Mr.Toko Tatung

ii)

F /Name

Late Toko Erki

iii)

DOB / Age

31 Yrs

iv)

Education

B.A. Hons(History) from

St. Stephens College Delhi University

v)

Communication Address:

A Sector, Industrial Area

Naharlagun-791110

vi)

Experience & Present Status :

1)

Proprietor
M/s E & K Enterprises ( Established in 2006)

(a) As Tata Sky Distributor

(b) As Installation Service Provider of Tata Sky

2)

Proprietor
M/s E & Ks Restaurant ( Established in 2006)

(a) Restaurant and catering Services

It is one of the leading caterer within the State of Arunachal
Pradesh, which can boast of rendering its services to all important
and historic events taking place within the State after it came in to
existence. Few of the important events which are indicative of its
Brand name and reputation within the State of Arunachal can be
cited whereby it successfully rendered its services as a caterer
during :
i. Buddha Mahotasava in 2007
ii. Prime Ministers Visit in Nov08.
iii. Spiritual Leader Dalai Lamas Visit in Nov09
iv. Lunch and dinner for official guests of Governor, Arunachal
Pradesh and other functions hosted the Raj Bhawan,
Arunachal Pradesh.
v. Lunch and dinner for official guests of Honorable Chief
Minister and other functions hosted by the Office of HCM.
vi. Other occasions whenever Central Ministers and other
dignitaries visit capital complex.

3)

Proprietor

Govt. Order Supplier and contracts as P.A. Holder of various firms

CHAPTER IV
PROJECT COST AND PROPOSED MEANS OF FINANCE.
The total cost of the project has been estimated at Rs 49.60 Lakhs , the details of which
has been given below:-

Land, Building and others

Cost in Rs lakhs
10.00

Plant and Machinery

23.60

Furniture & Fixture

02.70

Office Equipments

01.20

Other Assets

00.70

04.40

07.00

Preliminary and
Pre-operative Expenses
Margin Money for
Working Capital

49.60
The promoter has already arranged a plot of land and building at the proposed
site Near lagun Bridge, Naharlagun duly registered in favour of the Owner with the
Government of Arunachal Pradesh. The promoter proposes to set up the proposed
mechanized bakery unit thereat.
The location is within the walking distance from the various academic and
Government offices situated nearby, viz, Arunachal Government Assembly, Takar
Complex, Govt. Higher Secondary School, M.L.A Cottage, Old Secretariat, Govt. Guest

House etc. Thus, it is located at an ideal strategic location from Commercial opportunity
point of view.
The cost of electrification and interior decoration for the proposed unit along with
provision for water supply arrangement as well as removal of garbage has worked out
to be Rs. 10.00 Lakhs. Design and estimates have been worked out as per the
approved departmental rates of PWD92 along with proper adjustment for cost inflation
index.
Provision for plant and machinery amounting Rs. 23.60 lakhs have been kept for
facilitating the smooth functioning of the proposed unit. Its details as to number and
individual cost per unit has been attached as Annexure-III.
The total cost on furniture & fixtures required under the project have been kept
basically to serve the administrative need of the promoter and hence it is kept on the
bare minimum of Rs 2.70 lakhs Only. Costing details per unit have been given as
Annexure-IV
The main item of Pre-operative expenses are the administrative and other misc.
expenses during the construction period and it includes Travelling & other Expenses
incurred for procurements & other Works, Project Preparation cost and miscellaneous
expenses amounting Rs. 4.40 Lakhs the details of which are given in Annexure I.
Provision for Rs 7.00 lakhs have been kept for working Capital which will be the
core working capital and will remain floating in the business permanently as investment
in stock, debtors etc.
The proposed means of finance of the project is as below:_
Promoters contribution

Rs 49.60 lakhs.

Long Term Loan

Rs 00.00 lakhs

The debt equity ratio will be not be applicable under the present case as there is
no outside debt arrangement envisaged for the proposed unit and percentage of
promoters contribution with the project cost is 100% appears to be reasonable
considering the background of the project and the entrepreneur being a first generation
local entrepreneur with wide range of experience and expertise in running different kind
of business ventures. Considering the financial details it can reasonably be expected

that the promoters will be able to recover the cost component of the project amounting
Rs. 49.60 lakhs in 3 years 10 months of the operation.

CHAPTER V
COST OF PRODUCTION AND PROFITABILITY
The detail estimate of cost of production and profitability is given in Annexure
XIII. The statement of total revenue is given is in Annexure XI(a) to XI(e). Income
estimations from Sales, incidental common services and miscellaneous income have
been given in Annexure VIII, While detailed computation of direct expenses
components have been given in Annexure-VI Also included therein is computation for
all the five years as to creditors turn over, debtors turn over etc.
Miscellaneous income has been computed for sales of the by-products arising
during the course of the business. Revenue generated has been computed on the
average basis for the various by-products.
The total manpower requirement is 11 persons in the first year of its operation
and the detail calculation of salary and wages is given is Annexure XVI. Adequate
increment for wages of employees has been envisaged for every year based on the
expected business volume. The total power requirement and the administrative &
miscellaneous expenses has been considered adequately.
The rate of interest for long term investment and deposits has been considered
@ 6.5% per annum. The detailed calculation is given in Annexure XXIV.
The depreciation has been calculated in written down method and the detailed
calculation is given in Annexure XII.

CHAPTER VI
SOME FINANCIAL INDICATORS AND SCHEDULE OF
IMPLEMENTATION
From the calculation of cost of production and profitability, debt service coverage
ratio, break even point analysis, cash flow statement and pay back period it appears
that the project is economically viable and the unit will be in a position to generate
projected sales revenue and expected profits without any trouble. Some of the important
financial indicators of the proposed firm are given below:A)

Debt Equity ratio

:
N.A
This is because of nil outside investment in the proposed unit. Break Even

Analysis envisages sufficient sales cushion even in the first year of operation for the
project to endure fluctuations in the market. While calculating the financial requirement
sufficient cushion have been left for utilizing the business leverage in future.
B)

Percentage of promoters contribution

With project cost

100%

1st Year

2nd Year

3rd Year

4th Year

5th Year

C) Total revenue

: 49.83

62.37

78.38

94.88

122.40

PBIDT

: 9.77

11.55

13.82

16.56

22.57

PBIT

: 5.07

7.24

9.84

12.89

19.18

PBIT Ratio

: 10%

Net cash Accruals : 9.77

12%

13%

14%

16%

11.55

13.82

16.56

22.57

D) Debt service coverage ratio :

Maximum

N.A

(As there is no debt

component for project financing)

E)

Average

N.A

Minimum

N.A

Rs 47.84 lakhs.

Break Even Point on sales

These analyses have been calculated on the basis of its operation during the
projected 3rd financial year thus choosing the middle year of its operation. It is further
calculated that the total safety margin available during its first year of operation is Rs.
1.99 lakhs, thus leaving a sufficient margin for the unforeseen eventualities.
F)

Cash surplus at the end of the 5th year :

Rs 22.57 lakhs

G)

Pay back period

3 years 10 months.

ANNEXURE-X
PROJECTED BALANCE-SHEETS
CONTENTS
BALANCE SHEETS ASON
1. 1st Year
2. 2nd Year
3. 3rd Year
4. 4th Year
5. 5th Year

PRESUMPTIONS
I.

Projections have been made treating this project as a

distinct and separate profit-centre.

II.

Provisions for liabilities have been made for 1 month of

the selected operating expenses.

III.

Creditors turnover have been considered as 30 days of the

purchases of direct expenses.

IV.

Debtors collection have been considered as 30 days of

services & operations.

V.

Working days have been considered as 300 during the

year in regard to the services for the unit.

ANNEXURE-XI
PROJECTED TRADING & PROFIT AND LOSS
ACCOUNT
CONTENTS
TRADING & PROFIT & LOSS ACCOUNT FOR THE YEAR ENDING
1. 1st Year
2. 2nd Year
3. 3rd Year
4. 4th Year
5. 5th Year

PRESUMPTIONS

I. Projections have been made treating this project as a

distinct and separate profit-centre.
II. Sales on account of Sale services will grow horizontally and
vertically, thereby increasing the product line as well as price
as per the demand and supply position within the Complex.

III.Creditors turnover have been considered as 30 days of the

purchases for direct expenses.
IV. Debtors collections have been considered as 30 days of
supply of services within the complex and the Receivables
are presumed to accrue at the month end.
V. Working days have been considered as 300 during a year.