A PROJECT ON CONSOLIDATED

FISH IMPORT FROM ANDHRA

PRADESH TO GUWAHATI CITY

SUBMITTED BY

BIBHU DEB, ROLL NO. 29

DEEPAK KACHARI, ROLL NO. 25
KENEDY BRAHMA , ROLL NO. 21

DEPARTMENT OF BUSINESS ADMINISTRATION

GAUHATI UNIVERSITY
INTRODUCTION

Present scenario

According to the Department of Fisheries the state’s ultimate potential is 400,000 tonnes annually.
The existing production level is 160,000 tonnes. 20,000 tonnes of fish are imported, from Andhra
Pradesh. The estimated demand at the current market price is about 180,000 tonnes. With
population growth and increase in per capita incomes demand over the next five years can increase
by 20,000 tonnes.
The sizeable import of fish in Assam indicates the high cost of fish production in Assam. The
acidic soil of Assam does impose a burden on fish producers.

UNDERSTANDING THE BUSINESS

At present all the Fish traders buys the Fish from the Vijawada district of Andhra Pradesh. At Andhra
Pradesh there are large numbers of Fish traders who runs big fisheries with the help of Govt. Of
Andhra Pradesh. The fish have a great economic importance as they grow quickly with little
maintenance. The Local supply cannot meet the increasing demand.

WHY CONSOLIDATION & HOW WILL IT EARN PROFIT?

 Better bargaining with the traders at Andhra Pradesh

 Scope of going for business partnership with Dept to fisheries, Govt of Andhra Pradesh
 Discount can be obtained from the transporting agency
 Mass purchase will earn discounts
 Price can controlled in a better way at Guwahati
 Structured project can qualify for Loans from the Govt.
 Warehousing can be done
 The same infrastructure & business setup can be used for exporting other items to Andhra
Pradesh

PART A

1. Market and demand analysis

1.1 Collection of Secondary Information:

The secondary information is collected from various sources, especially, the Govt. Of Assam Report
on Fisheries & Development. The total productions of the state sponsored fisheries are collected
from the Official sources. The information about the Excise Duty and other toll taxes were collected
from the present business men. Mr. Rajesh Kashi Reddy a well known businessman from Andhra
Pradesh, Settled in Guwahati was contacted primarily.
 1.2 Market Survey

The market survey was done on judgemental basis. As the number of people engaged in this
business is low there was no requirement of going for sampling. A few Proprietors were contacted
for the purpose. The information sought was:

 Total market area

 Quantity imported
 Numbers of truck owned by the proprietors
 Supply to other markets like shillong & nearby markets
 Amount of excise Duty levied
 Toll tax charges
 Packaging style & Ice packing method
 Cold storage charges

1.3 Effective Demand ( Past & Present)

Nature of Product: Perishable commodity

Consumer Groups: Regular consumer & Bulk purchase consumer

Nature of Demand: Demand for daily consumption & Demand for Bulk consumption (includes
marriage parties and other social events)

Price: Variable (depending on demand & availability)

DEMAND FORECASTING

Trend projection method

The trend projection method involves determining the trend of consumption by analysing past
consumption statistics and projecting the future consumption by extrapolating the trend.

The employed relationship is the linear relationship

Y t =a+bt

Where Y is the demand for year t, t is the time variable, a is the intercept of the relationship, and b is
the slope of the relationship.
DEMAND DATA

MONTH DEMAND('000 kilos)

2003 6500
2004 6000
2005 6100
2006 6150
2007 6300
2008 6300
2009 6500

(collected from MR. Rajesh Kassi Reddy, Fancy Bazar)

CHANGE IN TIME AXIS

MONTH OF
MONTH ANALYSIS DEMAND('000 kilos)
2003 0 6500
2004 1 6000
2005 2 6100
2006 3 6150
2007 4 6300
2008 5 6300
2009 6 6500

year of analysis(T) Y TY T²
0 6500 0 0
1 6000 6000 1
2 6100 12200 4
3 6150 18450 9
4 6300 25200 16
5 6300 31500 25
6 6500 39000 36
∑T= 21 ∑Y= 43850 ∑YT= 132350 ∑T²= 91
T̅= 3 Y̅= 6264.2    
According to the least square method, the linear relationship is chosen in such a manner that the
sum of the squared deviations of the observations from the line is minimized. The parameters, a and
b, of the linear relationship are estimated with the help of the following equations:

∑YT- nT̅ Y̅

B= -------------------------

∑T²- n T̅²

A= Y̅-b T̅

Therefore, b= (132350- 131548)/28= 28.64

And a= 6264.2-28.64X3= 6178.28

So, Y ( 2011)= a + bt

= 6178.28+ 28.64X9= 6436.04(‘000) kilos

EXPERT OPINION: As per experts in this business per Year about 600 trucks enter Guwahati market.
However, the demand during season is much higher.

So we take 630 trucks per year for the practical purpose.

Loading Facts: (Collected from industry expert)

Number of cartoons loaded in a truck: 250

Quantity of Fish accommodated in each Cartoon: 40 kilos (for normal breeds)

However, more than 250 cartoons can be accommodated in a truck if the loading technique is
properly reviewed as there is lack of efficient space management in the trucks. Also the size of the
trucks varies from model to model.
CHARACTERIZATION OF THE MARKET

1. DEMAND: The demand for Imported Fish at Guwahati market varies from season to season.
It is low during the summers when the local varieties are available. The demand increases
after the rainy season at reaches the peak during January. The demand for imported fish is
increasing year after year because of increase in population and non- availability of local fish.

2. SUPPLY: the present supply to the market on a yearly basis is 600 to 650 trucks. With the
use of consolidated Import facility the supply can be dramatically improved.

3. GAP BETWEEN DEMAND AND SUPPLY: There is a big gap between the demand and supply.
It is due to this gap the traders are enjoying high profit margin.

4. FOCUS: The Focus is on making the full use of the business set up to maintain constant
supply of Fish

5. DIFFERENTIATION: As the Fish is a perishable commodity with very low life, our focus should
be to minimize the storage & transportation period and ensure freshness of the Fish

6. PRICING DECISION: The fish will be priced at a slightly lower price that the market price. Can
be priced at about Rs 70to Rs 90 per kilo depending upon the supply of the Fish in the
market

7. MARKET PLANNING: we will look to set up a warehouse at the Fish market. Along with the
warehouse we need a small ice making unit. The warehouse will have an office where the
daily prices of the Fish will be fixed. The whole sellers will be given the Fish both on cash
mode & credit mode. In this business, credit lending of Fish is almost mandatory. We will fix
the credit limit based on the capacity of the whole seller. Term of the credit will be one week
so that we do not block huge amount of capital.
PART B

2. TECHNICAL ASPECTS

2.1 TRADING PROCESS/TECHNOLOGY: No technology is employed in this project except for a

simple warehouse to store Fish for 2-3 days at Guwahati. Transport system needs to be
constantly monitored. Efficiency of the business depends on the speed of transport.

2.2 MATERIAL INPUT & UTILITIES: Fish of specific breed. For Guwahati market typically “rohu”.

2.3 PRODUCT MIX: we will import mainly “rohu” & other breeds of that category.

2.4 BUSINESS CAPACITY: 630 trucks will be imported on a yearly basis. Out of this amount of
Fish the portion that will not be sold on the very day will be stored in the warehouse. The
capacity will depend on the season & market conditions.

2.5 LOCATION & SIZE: Choice of location, obviously, is Guwahati. The warehouse will be built at
or near Fancy bazaar area. The area is well connected by roads.

2.6 SKILL OF MANPOWER: There is no need of skilled labour in this business. The type of man power
required is mainly labourers & supervisors.

2.7 WAREHOUSE: 500squarefeet of area is required for the warehouse & a additional 100 square
feet for ice making & packaging unit. The ware house will be taken on a monthly rent basis.

2.8 In- City Transportation: For in city transportation we will purchase 5 mini trucks. These trucks
will carry the product to the big wholesalers & also carry the ice & thermocol required for
packaging purpose.
 THE MODEL

MASS PURCHASE AT WEIGHING HANDING OVER THE

&PACKAGING OF FISH CONSIGNMENT TO THE
ANDHRA PRADESH IN THERMOCOL TRANSPORT AGENCY
BOXES WITH ICE

MONITORING THE
MOVEMENT OF TRUCKS

PRICE MONITORING
& DISTRIBUTION TO WAREHOUSING & ICE PACKING
RECIEVING THE
THE WHOLE SELLERS
CONSIGNMENT AT
GUWAHATI

CONTRACTING &
SALES
MONITORING THE
CREDIT POLICY FOR THE
WHOLE SELLERS
PART C
MEANS OF FINANCE

1. Bank Loan (From commercial banks)

2. Loans from Financial Institutes (NEDFi)
3. Owners contribution

The demand per months as has been calculated is 6500,000 kilos per Year

Each truck contains 250-300 cartoons

Each cartoons contains= 40 kilos

COST ESTIMATES

1. Mini trucks for Distribution purpose = Rs 800,000 per trucks

Total cost = Rs (800,000X5) = Rs. 4000000

2. Cost of transportation ( by trucks)= 630 trucks (Per year)

Each truck charges Rs. 80,000 per trip (as per current rate)

Total cost of transporting by truck = Rs (630X80,000)= Rs. 50400000

3. Cost of Purchase at Andhra Pradesh= Rs 55 per kilo (present rate)

Therefore, total cost of purchase= Rs( 55X6500,000)= Rs. 357500000

4. Cost of Labour= Rs 120 per labour per day

No. of labour per truck ( both at Loading & Unloading ends) = 10

Total number of man-days= 630X10= 6300

Total labour expense= Rs (6300X120) = Rs. 756000

OTHER EXPENSES

1. Toll taxes + Excise Duty= Rs. 7000 per truck

Therefore, total expense= Rs (630X7000)= Rs. 4410000

 2. Cost of Ice feeding and Packaging = Rs. 10000 per truck

Therefore, total cost = Rs. (630X10,000)= Rs. 630,0000

3. Warehousing charges= Rs 20,000 per truck per day

Total expense= Rs (630X20000)= Rs 12600000

4. Administrative & selling Expense = Rs 70,000 per year

WORKING CAPITAL ESTIMATE

ITEMS Year 2011

Cost of Purchase of Fish (Rs 55 per kilo) 357500000
Book Debts (25% of total Sales) 121875000
Total Current Assets 479375000
Less :merging money from long term sources (25% of CA) 11,98,43,750
Less :Trade credit (25% of the cost of purchase) 89375000
Bank finance for working capital 27,01,56,250

PROJECT COST

DESCRIPTION AMOUNT
WARE HOUSE CHARGES 12600000
PRELIMINARY & PRE OPERATIVE
EXPENSES 1000000
FIXED CAPITAL (cost of purchase of 5 mini
trucks & cost of transport) 54400000
WORKING CAPITAL 11,98,43,750
CONTINGENCIES 500000
TOTAL 188343750
SOURCE OF FINANCE

% AGE
DESCRIPTION CONTRIBUTION AMOUNT
Business Partners 30% 56500000
Term Loans (Short term) 60% 113000000
Incentives from Govt. 10% 18830000

INTEREST ON TERM LOAN

Loan at the beginning of

Time Year Loan O/S at the end of one year Total Int for term loan
2011 113000000 113000000 14690000
2012 113000000 103583333.3 14690000
2013 103583333.3 94166666.6 13465833.33
2014 94166666.6 84749999.9 12241666.66
2015 84749999.9 75333333.2 11017499.99
2016 75333333.2 65916666.5 9793333.316
2017 65916666.5 56499999.8 8569166.645
2018 56499999.8 47083333.1 7344999.974
2019 47083333.1 37666666.4 6120833.303
2020 37666666.4 28249999.7 4896666.632
2021 28249999.7 18833333 3672499.961
2022 18833333 9416666.3 2448333.29
2023 9416666.3 0 1224166.619

TAX CALCULATION
 Tax Calculation
Items Yea Yea year Yea year year year year year year year year year  
r r 201 r 201 201 201 201 201 202 202 202 202
201 201 3 201 5 6 7 8 9 0 1 2 3
1 2 4
PBT 8,54 8,54 8,66 8,79 8,91 9,03 9,15 9,28 9,40 9,52 9,97 9,76 9,89  
,55, ,55, ,79, ,03, ,27, ,51, ,76, ,00, ,24, ,48, ,72, ,96, ,21,
202 202 369 535 702 869 035 202 369 535 702 869 035
Add: 3,20 3,20 3,20 3,20 3,20 3,20 3,20 3,20 3,20 3,20 3,20 3,20 3,20  
Dep for ,000 ,000 ,000 ,000 ,000 ,000 ,000 ,000 ,000 ,000 ,000 ,000 ,000
company
Law
  8,57 8,57 8,69 8,82 8,94 9,06 9,18 9,31 9,43 9,55 9,71 9,80 9,92  
,75, ,75, ,99, ,23, ,47, ,71, ,96, ,20, ,44, ,68, ,22, ,16, ,41,
202 202 369 535 702 869 035 202 369 535 543 869 035
Less: 400 360 324 291 262 236 212 191 172 154 139 125 112  
Dep for 000 000 000 600 440 196 576. 318. 186. 968. 471. 524. 972
Tax 4 8 88 2 4 24
purpose
Gross 8,53 8,54 8,66 8,79 8,91 9,04 9,16 9,29 9,41 9,54 9,69 9,78 9,91  
Total ,75, ,15, ,75, ,31, ,85, ,35, ,83, ,28, ,72, ,13, ,83, ,91, ,28,
Income 202 202 369 935 262 673 459 883 182 567 072 345 063
Income 256 256 260 263 267 271 275 278 282 286 290 293 297  
Tax 125 245 026 795 555 307 050 786 516 240 949 674 384
@30% 60.6 60.6 10.7 80.5 78.6 01.9 37.6 65 54.6 70 21.4 03.4 18.9
8

PROFITABILITY ESTIMATES
DESCRIPTION Year 2011 Year 2012 year 2013 Year 2014 year 2015 year 2016 year 2017 year 2018 year 2019 year 2020 year 2021 year 2022 year 2023
A. Sales (selling price = Rs 80) 520000000 520000000 520000000 520000000 520000000 520000000 520000000 520000000 520000000 520000000 520000000 520000000 520000000
B. Cost of Purchase 357500000 357500000 357500000 357500000 357500000 357500000 357500000 357500000 357500000 357500000 357500000 357500000 357500000
C. Labour 756000 756000 756000 756000 756000 756000 756000 756000 756000 756000 756000 756000 756000
D. Warehouse expense 12600000 12600000 12600000 12600000 12600000 12600000 12600000 12600000 12600000 12600000 12600000 12600000 12600000
E. Packaging 63,00,000 63,00,000 63,00,000 63,00,000 63,00,000 63,00,000 63,00,000 63,00,000 63,00,000 63,00,000 63,00,000 63,00,000 63,00,000
F. Toll charges 4410000 4410000 4410000 4410000 4410000 4410000 4410000 4410000 4410000 4410000 4410000 4410000 4410000
G. Admin & Selling Exp 70,000 70,000 70,000 70,000 70,000 70,000 70,000 70,000 70,000 70,000 70,000 70,000 70,000
H. Gross Profit before Int 13,83,64,000 13,83,64,000 13,83,64,000 13,83,64,000 138364000 138364000 138364000 138364000 138364000 138364000 138364000 138364000 138364000
I. Int on term loan 14690000 14690000 13465833.3 12241666.6 11017499.9 97,93,333 85,69,167 73,45,000 61,20,833 48,96,667 3,72,500 24,48,333 12,24,167
J. Int on bank Borrowing 37821875 37821875 37821875 37821875 37821875 37821875 37821875 37821875 37821875 37821875 37821875 37821875 37821875
Depriciation( @8%) 3,20,000 3,20,000 3,20,000 3,20,000 3,20,000 3,20,000 3,20,000 3,20,000 3,20,000 3,20,000 3,20,000 3,20,000 3,20,000
Operating Profit 8,55,32,125 8,55,32,125 8,67,56,292 8,79,80,458 8,92,04,625 9,04,28,792 9,16,52,958 9,28,77,125 9,41,01,292 9,53,25,458 9,98,49,625 9,77,73,792 9,89,97,958
Prelim expense writen off 76,923 76,923 76,923 76,923 76,923 76,923 76,923 76,923 76,923 76,923 76,923 76,923 76,923
PBT 8,54,55,202 8,54,55,202 8,66,79,369 8,79,03,535 8,91,27,702 9,03,51,869 9,15,76,035 9,28,00,202 9,40,24,369 9,52,48,535 9,67,34,214 9,76,96,869 9,89,21,035
Provision for Tax 25636560.6 25636560.6 26003810.61 26371060.62 26738310.6 27105560.6 27472810.6 27840060.6 28207310.6 28574560.6 29020264.2 29309060.6 29676310.6
PAT 5,98,18,641 5,98,18,641 6,06,75,558 6,15,32,475 6,23,89,391 6,32,46,308 6,41,03,225 6,49,60,141 6,58,17,058 6,66,73,975 6,77,13,950 6,83,87,808 6,92,44,725
Retained Profit 59818641 59818641 60675558 61532475 62389391 63246308 64103225 64960141 65817058 66673975 67713950 68387808 69244725
Add: Dep 3,20,000 3,20,000 3,20,000 3,20,000 3,20,000 3,20,000 3,20,000 3,20,000 3,20,000 3,20,000 3,20,000 3,20,000 3,20,000
Add: prelimexpense written off 76,923 76,923 76,923 76,923 76,923 76,923 76,923 76,923 76,923 76,923 76,923 76,923 76,923
Net Cash Accural 6,02,15,564 6,02,15,564 6,10,72,481 6,19,29,398 6,27,86,314 6,36,43,231 6,45,00,148 6,53,57,064 6,62,13,981 6,70,70,898 6,81,10,873 6,87,84,731 6,96,41,648

Selling Price: @ Rs. 80 per kilo to the whole salers

CALCULATION OF NPV:

Discount rate= K (1- tax rate)

 = 13%X(1-.3)= 13X.7%= 9.1%= 9%(approx)

Initial Investment= Rs 188343750

Present Value of Cash Flows

CASH FLOWS DISCOUNT RATE PRESENT VALUE

60215564 0.971 58469312.64
60215564 0.842 50701504.89
61072481 0.772 47147955.33
61929398 0.708 43846013.78
62786314 0.65 40811104.1
63643231 0.596 37931365.68
64500148 0.547 35281580.96
65357064 0.502 32809246.13
66213981 0.46 30458431.26
67070898 0.442 29645336.92
68110873 0.388 26427018.72
68784731 0.356 24487364.24
69641648 0.326 22703177.25
  TOTAL 480719411.9

NPV = Present Value of Cash flows – Initial investment

= 480719411.9- 188343750= 292375661.9

IRR= 32%

COMMENTS: The IRR is much more than the cost of the Capital, so, the project is very much feasible
with respect to the present scenario.

The NPV also is highly positive.