PR3043 Project Management, T.Y. B.Tech.

Production, Lab Assignments, [Faculty: Rajesh Dhake]

Vishwakarma Institute of Technology, Pune

Industrial & Production Engineering Department, Pune 411037

Course Code: PR 3043

Course Name: Project Management
Class: T.Y. B.Tech. Production
A.Y. 2019-20 Sem II

Lab Assignment 1

Financial Projections

Submitted By:

Roll No. GRN Name of Student

__44__ 1710736 _Roshni Mutha__

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 PR3043 Project Management, T.Y. B.Tech. Production, Lab Assignments, [Faculty: Rajesh Dhake]

Lab Assignment 1:
Financial Projections for XYZ Project

This agricultural project consists of cultivation of “XYZ” medicinal herb at AB farms. This
medicinal herb has a great demand in today's world. The herb has large number of uses and
has been traditionally used curing ailments related with digestion systems.

The promoters have carried out various negotiations with the farmers in that region and have
procured 1acre land at a cost of Rs. 450,000. The company is in the initial stages and is
scheduled to undertake basic operations like fencing of land, getting MSEB and telephone
connections, motor pipes, developing office site and furniture etc. The company will be
shortly registered. Labor requirement will be 8 out of which 5 are skilled and 3 unskilled.
Based on soil testing and climate considerations the location is ideal.

AB Farms will be concentrating on servicing any number of clients according to availability

of product. The promoters have obtained knowledge regarding the preparation of the special
land bed required for effective production of the herb and plan to prepare it for increasing the
yield. The government rules and regulations have always been in favor of agricultural sector
and thus a lot of subsidy and wavier is offered to our company.

Sales are based on the various contracts anticipated. Sales may vary on a moderate to high
scale. However, the aim is to continuously increase them over the time period. Sales will also
depend on the rainfall and climate, which are directly connected with the total quality

Information about capital cost of project:

a) Land – 1 acre @ Rs. 450,000 per acre
b) Plant and Machinery includes
i. Fencing (Rs 15000) (Depreciation: 15%)
ii. Disintegrator (Rs 35000 per unit, 1 unit) (Depreciation: 10%)
iii. Pulverizes (Rs 35000 per unit, 1 unit) (Depreciation: 10%)
iv. Packing machine (Rs 30000 per unit, 1 unit) (Depreciation: 10%)
v. Electrical / Electrical equipment (as specified in excel sheet)
(Depreciation: 15%)
vi. Furniture (as specified in excel sheet) (Depreciation: 30%)
vii. Motor pipes – electric fittings, etc. (Rs 15000) (Depreciation: 10%)
c) Preliminary & pre-operative expenses include
i. Registration costs (as specified in excel sheet)
ii. MSEB & telephone connection (as specified in excel sheet)
iii. Technical know-how (Rs 30000)
iv. Site development & land preparation (Rs 10000)
v. Plantation material for cultivation (Rs 150000)
d) Working Capital Requirement (12 months of recurring expenses, 1 month of
raw material)

Information about capital:

Term Loan @ 11%, 60 installments: 600,000
Subsidy (13% of Cost of Project)
Owner’s Capital: Balance Amount

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 PR3043 Project Management, T.Y. B.Tech. Production, Lab Assignments, [Faculty: Rajesh Dhake]

Owner’s will be withdrawing Rs, 5L, 7L, 9L, 11L, 13L at the end of year 1, 2, 3, 4, 5
respectively from the business

Information about revenues and costs:

a) Sales: 70000 kg @ Rs 50 per kg in the first year (Increase of 10% every year)
b) Raw Material (as per excel sheet) (Increase of 5% every year)
c) Labor (as per excel sheet) (Increase of 10% every year)
d) Labor – Gratuity and PF Provision (15%) of Labor Cost (Increase of 10% every year)
e) Electricity (Rs 1800) (Increase of 10% every year)
f) Water Utilities (Rs 8000) (Increase of 10% every year)
g) Miscellaneous: Rs 2000 (Increase of 10% every year)
h) Promotional Expenses: Rs 10000 (Increase of 10% every year)
(All costs from b to h are on monthly basis)
Based on the above information, prepare following detailed statements in MS Excel:
1. Capital Cost of Project

Land (1 acre)     4,50,000

Depreciable Assets Unit Rate Qty Total
Plant & Machinery      
Fencing 15,000 1 15,000
Disintegrator 35,000 1 35,000
Pulveriser 35,000 1 35,000
Packing Machine 30,000 1 30,000
Electrical / Electronic Equipment     80,000
Furniture     1,75,500
Motor Pipes-Electric Fittings etc     15,000
Total - Depreciable Assets     3,85,500
Preliminary & Preoperative Costs (Apportioned over 8 years)    
Registration Costs     27,500
MSEB & Telephone Connection     90,000
Technical Know How     30,000
Site Development & Land Preparation     10,000
Plantation Material for Cultivation     1,50,000
Total (Preliminary & Preoperative Expenses)     3,07,500
Working Capital (Cash & Bank Balance)     7,98,300
Total Cost of Project     19,41,300

Electric/Electronic Equipment Rate Per Unit Units Amount

Ceiling Fans 1,200 25 30,000
Exhaust Fans 500 15 7,500

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 PR3043 Project Management, T.Y. B.Tech. Production, Lab Assignments, [Faculty: Rajesh Dhake]

Tube Lights 350 50 17,500

Safety Electrical Equipment 2,000 1 2,000
Water Pump 3,000 1 3,000
Wiring for Connections     20,000
      80,000
Furniture      
Tables 2,000 20 40,000
Cupboards 2,500 10 25,000
Sofa Sets 1,500 1 1,500
Pull Overs 300 40 12,000
Chairs 275 20 5,500
Partition 10,000 4 40,000
Computers Tables 2,500 5 12,500
Cabins 12,000 2 24,000
Lockers 1,000 15 15,000
      1,75,500
Particulars Unit Rate Qty Total
Registration Costs      
Stamp Duty and Registration 5% of land cost   22,500
Legal Fees 5,000   5,000
      27,500
MSEB & Telephone Connection      
MSEB 80,000   80,000
Telephone and Internet 10,000   10,000
      90,000

2. Means of Finance

Means of Finance  
Owner's Capital 10,88,931
Term Loan @11% 6,00,000
Subsidy 13% 2,52,369
Total 19,41,300

3. Revenues & Operating Expenses

Rate Per
Revenue Unit Quantity Total

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 PR3043 Project Management, T.Y. B.Tech. Production, Lab Assignments, [Faculty: Rajesh Dhake]

Sales 50 70000 3500000

Rate Per
Total Expenses Unit Quantity Total
Raw Material (Annual Expenses) 300 5000 1500000
Operating Expenses      
Labour Unskilled 36000 3 108000
Labour Skilled 50000 5 250000
Labour - Gratuity & PF Provision (15%)     53700
Electricity     21600
Water Utilities     96000
Miscellaneous Expenses     24000
Promotional Expenses     120000
Total Operating Expenses (Annually)     673300

12 months of Recurring Expenses     6,73,300

1 month of Raw Material     1,25,000
Working Capital Requirements     7,98,300

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 PR3043 Project Management, T.Y. B.Tech. Production, Lab Assignments, [Faculty: Rajesh Dhake]

4. Schedule of Fixed Asset

    Year 1 Year 2 Year 3 Year 4 Year 5

Capital
Machinery Cost Depreciation WDV Depreciation WDV Depreciation WDV Depreciation WDV Depreciation WDV
Fencing 15,000 1,500 13,500 1,350 12,150 1,215 10,935 1,094 9,842 984 8,857
Disintegrator 35,000 3,500 31,500 3,150 28,350 2,835 25,515 2,552 22,964 2,296 20,667
Pulveriser 35,000 3,500 31,500 3,150 28,350 2,835 25,515 2,552 22,964 2,296 20,667
Packing Machine 30,000 3,000 27,000 2,700 24,300 2,430 21,870 2,187 19,683 1,968 17,715
Electrical / Electronic Equipment 80,000 12,000 68,000 10,200 57,800 8,670 49,130 7,370 41,761 6,264 35,496
Furniture 1,75,500 52,650 1,22,850 36,855 85,995 25,799 60,197 18,059 42,138 12,641 29,496
Motor, Pipes, Electric Fittings,
etc 15,000 1,500 13,500 1,350 12,150 1,215 10,935 1,094 9,842 984 8,857
Total Assets 3,85,500 77,650 3,07,850 58,755 2,49,095 44,999 2,04,097 34,905 1,69,191 27,435 1,41,756
Capital
Machinery (Depreciation) Cost Year 1 Year 2 Year 3 Year 4 Year 5

Fencing 15,000 1,500 1,350 1,215 1,094 984

Disintegrator 35,000 3,500 3,150 2,835 2,552 2,296
Pulveriser 35,000 3,500 3,150 2,835 2,552 2,296
Packing Machine 30,000 3,000 2,700 2,430 2,187 1,968
Electrical / Electronic Equipment 80,000 12,000 10,200 8,670 7,370 6,264
Furniture 1,75,500 52,650 36,855 25,799 18,059 12,641
Motor, Pipes, Electric Fittings,
etc 15,000 1,500 1,350 1,215 1,094 984
Total Assets 3,85,500 77,650 58,755 44,999 34,905 27,435

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 PR3043 Project Management, T.Y. B.Tech. Production, Lab Assignments, [Faculty: Rajesh Dhake]

Depreciation Rate
Machinery 10%
Fencing 10%
Electrical Equipment 15%
Furniture 30%

5. Schedule of Term Loans

Year Interest Principal

1 -61,293 -95,253
2 -50,270 -1,06,275
3 -37,972 -1,18,573
4 -24,251 -1,32,295
5 -8,942 -1,47,604

Sr. Mont Principal Balance

no. h Principal EMI Interest paid repaid Principal
1 Jan 6,00,000 -13,045 -5,500 -7,545 5,92,455
2 Feb 5,92,455 -13,045 -5,431 -7,615 5,84,840
3 Mar 5,84,840 -13,045 -5,361 -7,684 5,77,156
4 Apr 5,77,156 -13,045 -5,291 -7,755 5,69,401
5 May 5,69,401 -13,045 -5,220 -7,826 5,61,575
6 Jun 5,61,575 -13,045 -5,148 -7,898 5,53,677
7 Jul 5,53,677 -13,045 -5,075 -7,970 5,45,707
8 Aug 5,45,707 -13,045 -5,002 -8,043 5,37,664
9 Sep 5,37,664 -13,045 -4,929 -8,117 5,29,547
10 Oct 5,29,547 -13,045 -4,854 -8,191 5,21,356
11 Nov 5,21,356 -13,045 -4,779 -8,266 5,13,089
12 Dec 5,13,089 -13,045 -4,703 -8,342 5,04,747
13 Jan 5,04,747 -13,045 -4,627 -8,419 4,96,329
14 Feb 4,96,329 -13,045 -4,550 -8,496 4,87,833
15 Mar 4,87,833 -13,045 -4,472 -8,574 4,79,259
16 Apr 4,79,259 -13,045 -4,393 -8,652 4,70,607
17 May 4,70,607 -13,045 -4,314 -8,732 4,61,875
18 Jun 4,61,875 -13,045 -4,234 -8,812 4,53,064
19 Jul 4,53,064 -13,045 -4,153 -8,892 4,44,171
20 Aug 4,44,171 -13,045 -4,072 -8,974 4,35,197
21 Sep 4,35,197 -13,045 -3,989 -9,056 4,26,141
22 Oct 4,26,141 -13,045 -3,906 -9,139 4,17,002
23 Nov 4,17,002 -13,045 -3,823 -9,223 4,07,779
24 Dec 4,07,779 -13,045 -3,738 -9,307 3,98,472

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 PR3043 Project Management, T.Y. B.Tech. Production, Lab Assignments, [Faculty: Rajesh Dhake]

25 Jan 3,98,472 -13,045 -3,653 -9,393 3,89,079

26 Feb 3,89,079 -13,045 -3,567 -9,479 3,79,600
27 Mar 3,79,600 -13,045 -3,480 -9,566 3,70,034
28 Apr 3,70,034 -13,045 -3,392 -9,653 3,60,381
29 May 3,60,381 -13,045 -3,303 -9,742 3,50,639
30 Jun 3,50,639 -13,045 -3,214 -9,831 3,40,808
31 Jul 3,40,808 -13,045 -3,124 -9,921 3,30,886
32 Aug 3,30,886 -13,045 -3,033 -10,012 3,20,874
33 Sep 3,20,874 -13,045 -2,941 -10,104 3,10,770
34 Oct 3,10,770 -13,045 -2,849 -10,197 3,00,573
35 Nov 3,00,573 -13,045 -2,755 -10,290 2,90,283
36 Dec 2,90,283 -13,045 -2,661 -10,385 2,79,898
37 Jan 2,79,898 -13,045 -2,566 -10,480 2,69,419
38 Feb 2,69,419 -13,045 -2,470 -10,576 2,58,843
39 Mar 2,58,843 -13,045 -2,373 -10,673 2,48,170
40 Apr 2,48,170 -13,045 -2,275 -10,771 2,37,399
41 May 2,37,399 -13,045 -2,176 -10,869 2,26,530
42 Jun 2,26,530 -13,045 -2,077 -10,969 2,15,561
43 Jul 2,15,561 -13,045 -1,976 -11,069 2,04,492
44 Aug 2,04,492 -13,045 -1,875 -11,171 1,93,321
45 Sep 1,93,321 -13,045 -1,772 -11,273 1,82,048
46 Oct 1,82,048 -13,045 -1,669 -11,377 1,70,671
47 Nov 1,70,671 -13,045 -1,564 -11,481 1,59,190
48 Dec 1,59,190 -13,045 -1,459 -11,586 1,47,604
49 Jan 1,47,604 -13,045 -1,353 -11,692 1,35,911
50 Feb 1,35,911 -13,045 -1,246 -11,800 1,24,112
51 Mar 1,24,112 -13,045 -1,138 -11,908 1,12,204
52 Apr 1,12,204 -13,045 -1,029 -12,017 1,00,187
53 May 1,00,187 -13,045 -918 -12,127 88,060
54 Jun 88,060 -13,045 -807 -12,238 75,822
55 Jul 75,822 -13,045 -695 -12,350 63,471
56 Aug 63,471 -13,045 -582 -12,464 51,008
57 Sep 51,008 -13,045 -468 -12,578 38,430
58 Oct 38,430 -13,045 -352 -12,693 25,736
59 Nov 25,736 -13,045 -236 -12,810 12,927
60 Dec 12,927 -13,045 -118 -12,927 0

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 PR3043 Project Management, T.Y. B.Tech. Production, Lab Assignments, [Faculty: Rajesh Dhake]

6. Projected Profit & Loss Account

  PROFIT AND LOSS ACCOUNT    

  1st Year 2nd Year 3rd Year 4th Year 5th Year
Net Sales 35,00,000 38,50,000 42,35,000 46,58,500 51,24,350
Total Expenses          
Material Cost 15,00,000 15,75,000 16,53,750 17,36,438 18,23,259
Operating Expenses 6,73,300 7,40,630 8,14,693 8,96,162 9,85,779
Preliminary & Preoperative Expenses (Amortized) 38,438 38,438 38,438 38,438 38,438
Total Expenses 22,11,738 23,54,068 25,06,881 26,71,037 28,47,475
PBDIT(operating profit) 12,88,263 14,95,933 17,28,120 19,87,463 22,76,875
Interest on Term Loans -61,293 -50,270 -37,972 -24,251 -8,942
PBDT 12,26,970 14,45,662 16,90,148 19,63,212 22,67,933
Depreciation 77,650 58,755 44,999 34,905 27,435
PBT 11,49,320 13,86,907 16,45,149 19,28,306 22,40,498
Income Tax (@30%) 3,44,796 4,16,072 4,93,545 5,78,492 6,72,149
PAT(net profit) 8,04,524 9,70,835 11,51,604 13,49,815 15,68,349
Drawings (Amt Withdrawn) 500000 700000 900000 1100000 1300000
Retained Earnings 3,04,524 2,70,835 2,51,604 2,49,815 2,68,349
Add: P & P Expenses 38,438 38,438 38,438 38,438 38,438
Add: Depreciation 77,650 58,755 44,999 34,905 27,435
Cash Profit 4,20,611 3,68,028 3,35,040 3,23,157 3,34,221

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 PR3043 Project Management, T.Y. B.Tech. Production, Lab Assignments, [Faculty: Rajesh Dhake]

7. Projected Cash Flow Statement

Cash Flow Statement

    1st Year 2nd Year 3rd Year 4th Year 5th Year

Op. Balance 7,98,300 7,98,300 11,23,659 13,85,411 16,01,878 17,92,741

Retained Earnings   3,04,524 2,70,835 2,51,604 2,49,815 2,68,349

Depreciation   77,650 58,755 44,999 34,905 27,435

P & P Expenses (Amortized)   38,438 38,438 38,438 38,438 38,438

(-) Principal Repaid   -95,253 -1,06,275 -1,18,573 -1,32,295 -1,47,604

Net Cash Inflow   3,25,359 2,61,752 2,16,467 1,90,863 1,86,617

Cl. Balance 7,98,300 11,23,659 13,85,411 16,01,878 17,92,741 19,79,358

8. Projected Balance Sheet

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 PR3043 Project Management, T.Y. B.Tech. Production, Lab Assignments, [Faculty: Rajesh Dhake]

Balance Sheet
  0th Year 1st Year 2nd Year 3rd Year 4th Year 5th Year
LIABILITIES            
Capital (Opening Balance)   10,88,931 13,93,455 16,64,290 19,15,894 21,65,709
Net Profit   8,04,524 9,70,835 11,51,604 13,49,815 15,68,349
Less :Drawings   5,00,000 7,00,000 9,00,000 11,00,000 13,00,000
Retained Earnings   3,04,524 2,70,835 2,51,604 2,49,815 2,68,349
Capital (Closing Balance) 10,88,931 13,93,455 16,64,290 19,15,894 21,65,709 24,34,058
Subsidy 2,52,369 2,52,369 2,52,369 2,52,369 2,52,369 2,52,369
Term Loan 6,00,000 5,04,747 3,98,472 2,79,898 1,47,604 0
Total Liabilities 19,41,300 21,50,571 23,15,131 24,48,162 25,65,682 26,86,427
ASSETS            
Land 4,50,000 4,50,000 4,50,000 4,50,000 4,50,000 4,50,000
Depreciable Assets (Op Bal)   3,85,500 3,07,850 2,49,095 2,04,097 1,69,191
Less Depreciation   77,650 58,755 44,999 34,905 27,435
Written Down Value (Cl Bal) 3,85,500 3,07,850 2,49,095 2,04,097 1,69,191 1,41,756
Preliminary & Preoperative Expenses 3,07,500 2,69,063 2,30,625 1,92,188 1,53,750 1,15,313
Cash & Bank Balance 7,98,300 11,23,659 13,85,411 16,01,878 17,92,741 19,79,358
Total Assets 19,41,300 21,50,571 23,15,131 24,48,162 25,65,682 26,86,427

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