PROJECT REPORT

HANDMADE SOAP

PURPOSE OF THE DOCUMENT

T his particular pre-feasibility is regarding Handmade Soap

unit.
The objective of the pre-feasibility is primarily to facilitate potential
entrepreneurs’ in project identification for investment and in order
to serve this objective; the document covers various aspects of the
project concept development, startup, marketing, and finance and
business management.

[We can modify the project capacity and project cost as per your requirement. We can also
prepare project report on any subject as per your requirement.]

Prepared By:

Institute for Industrial development

A unit of M/S Samadhan Samiti

Email: support@iid.org.in

Phone: +91 7408733333, +91 7607655555

 HANDMADE SOAP

Introduction
Handmade soaps are generally made from plant-based ingredients like
natural oils & pure herbs of different flavours. They are produced by
using traditional methods in small batches.

Handmade Soap is a salt of a fatty acid used in a variety of cleansing

products. In a domestic setting, soaps are surfactants usually used for
washing, bathing, and other types of housekeeping. In industrial
settings, soaps are used as thickeners, components of some lubricants,
and precursors to catalysts.

Handmade soap contains glycerine and other natural ingredients which

is a natural by-product of the soap making process, an excellent
moisturizer and also one of the reasons that handmade soap is so good
for your skin. Not being real soap, they contain detergents which strip
skin of its natural oils. They use synthetic ingredients to achieve things
such as a thick lather or specific hardness of the bar. On top of being
moisturizing, handmade soap achieves these properties by having the
correct ratios of plant-based oils and other natural ingredients.

Benefits of using Handmade Soap

Handmade soap is all the rage these days. And you will find these soaps
in local farmer’s market, boutique stores, health food stores…etc. and
you will see colourful packaging and stunning artistic soap. So below
here are some of the benefits of using handmade soap

 Handcrafted cold process soap is free of synthetic foaming agents

and irritating detergents.

 You can get soap customized according to your skin type.

 Handmade soaps have natural ingredients such as coconut oil, olive

oil, and palm oil. These ingredients are gentle on the skin and provide
nourishment.

 Everyday use of anti-bacterial soap is not so good for you.

Designs & styles of Handmade Soap

There are so many designs that can be created with Handmade soap.
The ability to manipulate the texture from thick and pipeable to fluid and
pourable allows a wide variety of possible techniques. For example,
thin soap can be swirled in the mold to create a spin swirl. On the other
hand, extremely thick soap can be piped and manipulated to create
shapes and texture. If you can dream it, you can probably soap it!

Handmade Soap Market Analysis

Increasing demand for organic & herbal soaps from emerging markets
is presumed to foster the market growth in forecasting period. The time-
consuming production process is likely to hinder the market growth.
Handmade and Natural Soaps have a very bright future not only in india,
but globally also.

Soaps that are specifically made and marketed for men, women and
babies are all expected to enjoy a moderate rate of growth in the coming
years. These soaps are designed to offer specific benefits for each
group.

India’s soap market has a profound impact on the overall economy of

this region. The increased sales of soap products are accounting for
greater revenues that boost the economy of the country. Over the span
of the next few years, this market is expected to continue contributing to
the country’s economy on a whole.

Description of Tools & Equipment’s

No Machinery is required for Handmade Soap manufacturing unit, only

some equipment’s & tools are required to make the products. Which are
as follow:

 Microwave Oven
 Packaging Machine
 Refrigerator
 Other tools like: kettle, jars, container, different moulds etc.

Manufacturing Process

Handcrafted Soap can be one of the most involved yet personal and
versatile of the production methods.

The process includes the following steps:

1. Procurement of raw material and checking of all raw material.

2. Designing of the product.
3. Divide the soap Blocks into small pieces and then put into the vessels
& kept in the microwave for some time to melt.
4. After Melting process of soap base add essentials oil into the liquid
base and then add optimum quantity of aloe Vera gel into mix it
properly.
5. After mixing process add desired colour and fragrance into it and then
put the mixture into different moulds.
6. Then kept it into the refrigerator to freeze until the soap settled down.
7. After freezing u can pack it manually or through packaging machine.

Note: This process may vary according to the types of products

manufactured and the designing & styling of a particular product.

Land &Building required:

Land required 500 square feet

Approximate rent for the same is Rs. 8,000 - 10,000 per month

Machinery & equipment’s

Particulars Amount
Microwave oven 12000
Refrigerator 15000
Packaging machine (optional) 15000
Other Tools 10000
Sub-total 52000
GST @ 18% 9360
Total 61360

Raw material used for handmade Soap

Different types of ingredients are used for Handmade Soap products, like
for Herbal handcrafted soap you will require the following products:
 Soap Base
 Fragrance Perfume
 Soap Colouring Dies
 Aloe Vera Gel
 Anti-bacterial, fragrance and essentials oil
 Packaging material

S.N. Particulars Measurement Amount

1 Soap Base KG Rs. 140-200

2 Essential Oils Litre Rs. 1000-4000

3 Aloe Vera Gel KG Rs. 200-300

4 Fragrance Litre Rs. 500-1000

5 Colours Litre Rs. 500-2000

Note: Average raw material cost per soap is approx. Rs. 35-40 per piece
depends upon the quality.

Labour & Staff Requirement:

3 skilled Manpower is required for the handcrafted soap unit.

Handcrafted soap Unit license & registration

For Proprietorships:
 Obtain the GST registration.
 Additionally, obtain the Udyog Aadhar registration Number.
 License from Cosmetic and Drug Control Board.
 Choice of a Brand Name of the product and secure the name with
Trademark if required.
Implementation Schedule

S.N. Activity Time Required

(in Months)
1 Acquisition Of premises 1
2 Procurement & installation of Plant & Machinery 1
3 Arrangement of Finance 1
4 Requirement of required Manpower 1
Total time Required (some activities shall run 1- 2 Months
concurrently)
 PROJECT AT GLANCE

Own contribution Rs. 1.50 Lacs

(in Lacs)

COST OF PROJECT PARTICULARS AMOUNT

Building Civil Work owned/rented

Plant & Machinery 0.61

Furniture & Fixtures and Other Assets 0.14

Working capital 0.75

Total 1.50

MEANS OF FINANCE PARTICULARS

Own Contribution 1.50

Total 1.50
COMPUTATION OF PRODUCTION OF HANDMADE SOAP

Items to be Manufactured

Handmade Soap

Handmade Soap

Capacity per Day Per Labour 25 Pcs

Total Labour 3

Total piece per day 75 pcs

Production per annum 22500 Pcs

Production of Handmade Soap

Production Capacity Piece

1st year 60% 13,500

2nd year 65% 14,625
3rd year 70% 15,750
4th year 75% 16,875
5th year 80% 18,000

Raw Material Cost Of Handmade Soap

Year Capacity Per piece Amount

Utilisation (Rs. in lacs)

1st year 60% 40.00 5.40

2nd year 65% 41.00 6.00

3rd year 70% 42.00 6.62

4th year 75% 43.00 7.26

5th year 80% 44.00 7.92

Packaging Charges

Year Capacity Per piece Amount

Utilisation (Rs. in lacs)

1st year 60% 2.00 0.27

2nd year 65% 2.50 0.37

3rd year 70% 3.00 0.47

4th year 75% 3.50 0.59

5th year 80% 4.00 0.72

COMPUTATION OF SALE OF HANDMADE SOAP

Particulars 1st year 2nd year 3rd year 4th year 5th year

Op Stock - 675 731 788 844

Production 13,500 14,625 15,750 16,875 18,000

Less : Closing Stock 675 731 788 844 900

Net Sale 12,825 14,569 15,694 16,819 17,944

sale price per Piece 75.00 78.00 80.00 82.00 85.00

Sales (in Lacs) 9.62 11.36 12.56 13.79 15.25

BREAK UP OF LABOUR CHARGES

Particulars Wages No of Total

Per Month Employees Salary

Skilled 9000 3 27000

Total Salary Per Month 27000

Total Annual Labour Charges (in Lacs) 3.24

Utility Charges

Particulars value Description

Power connection required 2 KWH

consumption per day 16 units

Consumption per month 400 units

Rate per Unit 7 Rs.

power Bill per month 2800 Rs.

PROJECTED PROFITABILITY STATEMENT (in Lacs)

PARTICULARS 1st year 2nd year 3rd year 4th year 5th year

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

SALES

Gross Sale

Handmade Soap 9.62 11.36 12.56 13.79 15.25

Total 9.62 11.36 12.56 13.79 15.25

COST OF SALES

Raw Material Consumed 5.40 6.00 6.62 7.26 7.92

Electricity Expenses 0.34 0.37 0.41 0.45 0.49

Depreciation 0.11 0.09 0.08 0.07 0.06

Consumables 0.48 0.57 0.63 0.69 0.76

Repair & maintenance 0.24 0.28 0.31 0.34 0.38

Packaging Charges 0.27 0.37 0.47 0.59 0.72

Cost of Production 6.83 7.67 8.51 9.39 10.33

Add: Opening Stock /WIP - 0.34 0.38 0.43 0.47

Less: Closing Stock /WIP 0.34 0.38 0.43 0.47 0.52

Cost of Sales 6.49 7.63 8.47 9.35 10.29

GROSS PROFIT 3.13 3.73 4.08 4.44 4.97

Rent 1.20 1.32 1.45 1.60 1.76

Selling & adm Exp 0.19 0.23 0.25 0.28 0.31

TOTAL 1.39 1.55 1.70 1.87 2.06

NET PROFIT 1.74 2.18 2.38 2.57 2.90

Taxation

PROFIT (After Tax) 1.74 2.18 2.38 2.57 2.90

PROJECTED BALANCE SHEET (in Lacs)

PARTICULARS 1st year 2nd year 3rd year 4th year 5th year

Liabilities

Capital

opening balance 1.64 1.82 2.00 2.07

Add:- Own Capital 1.50

Add:- Retained Profit 1.74 2.18 2.38 2.57 2.90

Less:- Drawings 1.60 2.00 2.20 2.50 2.80

Closing Balance 1.64 1.82 2.00 2.07 2.17

Sundry Creditors 0.29 0.30 0.33 0.36 0.40

TOTAL : 1.92 2.12 2.33 2.43 2.57

Assets

Fixed Assets ( Gross) 0.75 0.75 0.75 0.75 0.75

Gross Dep. 0.11 0.20 0.27 0.34 0.40

Net Fixed Assets 0.64 0.55 0.48 0.41 0.35

Current Assets

Sundry Debtors 0.48 0.64 0.71 0.78 0.86

Stock in Hand 0.61 0.68 0.76 0.83 0.91

Cash and Bank 0.19 0.24 0.39 0.41 0.44

TOTAL : 1.92 2.12 2.33 2.43 2.57

PROJECTED CASH FLOW STATEMENT (in Lacs)

PARTICULARS 1st year 2nd year 3rd year 4th year 5th year

SOURCES OF FUND

Own Margin 1.50

Net Profit 1.74 2.18 2.38 2.57 2.90

Depreciation & Exp. W/off 0.11 0.09 0.08 0.07 0.06

Increase in Creditors 0.29 0.01 0.03 0.03 0.03

TOTAL : 3.63 2.29 2.49 2.67 2.99

APPLICATION OF FUND

Increase in Fixed Assets 0.75

Increase in Stock 0.61 0.07 0.07 0.08 0.08

Increase in Debtors 0.48 0.16 0.07 0.07 0.08

Drawings 1.60 2.00 2.20 2.50 2.80

Taxation - - . - -

TOTAL : 3.44 2.23 2.34 2.65 2.96

Opening Cash & Bank Balance - 0.19 0.24 0.39 0.41

Add : Surplus 0.19 0.05 0.15 0.02 0.03

Closing Cash & Bank Balance 0.19 0.24 0.39 0.41 0.44
COMPUTATION OF CLOSING STOCK & WORKING CAPITAL (in Lacs)

PARTICULARS 1st year 2nd year 3rd year 4th year 5th year

Finished Goods

0.34 0.38 0.43 0.47 0.52

Raw Material

0.27 0.30 0.33 0.36 0.40

Closing Stock 0.61 0.68 0.76 0.83 0.91

COMPUTATION OF WORKING CAPITAL REQUIREMENT

TRADITIONAL METHOD (in Lacs)

Particulars Amount

Finished Goods & Raw Material 0.61

Less : Creditors 0.29

Paid stock 0.32

Sundry Debtors 0.48

Total 0.80

Working capital 0.75

COMPUTATION OF DEPRECIATION (in Lacs)

Description Plant & Machinery Furniture TOTAL

Rate of Depreciation 15.00% 10.00%

Opening Balance - - -

Addition 0.61 0.14 0.75

Total 0.61 0.14 0.75

Less : Depreciation 0.09 0.01 0.11

WDV at end of Year 0.52 0.13 0.64

Additions During The Year - - -

Total 0.52 0.13 0.64

Less : Depreciation 0.08 0.01 0.09

WDV at end of Year 0.44 0.11 0.55

Additions During The Year - - -

Total 0.44 0.11 0.55

Less : Depreciation 0.07 0.01 0.08

WDV at end of Year 0.37 0.10 0.48

Additions During The Year - - -

Total 0.37 0.10 0.48

Less : Depreciation 0.06 0.01 0.07

WDV at end of Year 0.32 0.09 0.41

Additions During The Year - - -

Total 0.32 0.09 0.41

Less : Depreciation 0.05 0.01 0.06

WDV at end of Year 0.27 0.08 0.35

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