India produces many varieties of juicy fruits but on account of

inadequate storage and transportation facilities, substantial

quantities are wasted.

Fruits are perishable having limited shelf life. Lack of proper
processing facilities results in considerable losses and invariably
fruit growers are at the receiving end.

Good quality oranges are grown in large quantities in the Nagpur
district of Maharashtra and they are famous all over the country.

There are very few orange processing units in the region and new
units can certainly come up in Nagpur and the adjoining district of
Amravati .

INTRODUCTION

Fruits are generally liked by majority of the people
irrespective of age. Oranges from Nagpur region (also
known as Nagpuri Mandarins) are popular over the country.

There are certain big companies offering natural as well as
synthetic products, like Haldiram, Pepsi, Rasna, Birla
Products, Godrej Foods etc.

But invariably their products are highly priced and more
than 70% of the population cannot afford it on a regular
basis.

There is a vacuum in the market and low cost good quality
product has ample space.

MARKET POTENTIAL
DEMAND AND SUPPLY
This project aims at the unexplored market of low
price high quality orange juices.


Concentrated and systematic efforts shall be required
to enter this market but once the consumers are
convinced about the quality, they would certainly prefer a
natural product than the synthetic ones.


Retail grocery shops, restaurants, ice-cream and cold
drink parlours, departmental stores, shops at picnic spots,
bus-stands and railway stations etc. shall be the potential
selling points.


MARKETING STRATEGY
Washing, grading and peeling of ripe oranges
Juice extraction and filtration
Processing and sterilization
Bottling
MANUFACTURING PROCESS
LAND AND BUILDING

A plot of land of about 400 sq.mtrs. with built-up area
of 200 sq.mtrs.

Land may cost Rs.3 Lacs whereas construction cost
would be Rs. 5.5 lacs.

There will be main production hall of 120 sq.mtrs.

In rest of the 80 sq.mtrs, a packing room and storage
facilities could be accommodated.

CAPITAL INPUTS
ITEM
QTY. PRICE (RS.)
Fruit Washing Tanks 3 15,000
Juice Extractors
3 1,80,000
Steam Jacketed Kettles- 50 Ltrs. 2 50,000
Stirrer 2 30,000
Baby Boiler- 50 Kgs. 2 1,20,000
Bottle Washing and Filling Machine 2 1,40,000
Testing Equipments & Weighing Scale - 60,000
TOTAL
5,95,000
PLANT AND MACHINERY

This is a seasonal business and the factory would work for around 6-7
months.

For the production of 300 tonnes following machine shall be required

MISCELLANEOUS ASSETS

A provision of Rs. 100000/- is made towards some other
assets like furniture and fixtures, aluminium top tables,
fruit crates, SS utensils, exhaust fans etc.


UTILITIES

Annual cost of utilities like power, water and hard coke
is likely to be Rs. 2 lacs.





RAW AND PACKING MATERIAL

The important raw material is fresh and ripe orange.

Nagpur and surrounding area produces around 3 lakh tonnes
of orange every year.

At 100% utilisation there will be requirement of less than
350 tonnes of orange.

Other items like sugar, salt and preservatives shall be
available locally without any difficulty.

Packing materials like food grade plastic or glass bottles,
labels, corrugated boxes, etc. shall be required.
MANPOWER REQUIREMENTS
PARTICULARS NOS.
MONTHLY
SALARY
(RS.)
TOTAL
MONTHLY
SALARY
(RS.)
Skilled Workers
4 5,000 20,000
Semi-skilled Workers
4 3,000 12,000
Helpers
8 1,500 12,000
Salesman
2 4,000 8,000
Supervisor
1
8,000 8000
Total 60,000
TENTATIVE IMPLEMENTATION
SCHEDULE
ACTIVITY PERIOD
(IN MONTHS)
Application and sanction of
loan
2
Site selection and
commencement of civil work
1
Completion of civil work and
placement of orders for
machinery
4
Erection, installation and trial
runs
1
DETAILS OF THE PROPOSED PROJECT
LAND AND BUILDING
PARTICULARS AREA
(SQ.MTRS)
COST (RS.)
Land
400 3,00,000
Building
200 5,50,000
MACHINERY
Total Cost of Machinery = Rs. 5.95 lakh
MISCELLANEOUS ASSETS

Provision for Rs. 1,00,000.
Expenses which will be incurred prior to commercial
production viz. registration and establishment charges, interest
during implementation, trial runs expenses etc.


An amount of Rs. 60,000/- would take care of these expenses.
PRELIMINARY & PRE-OPERATIVE EXPENSES
WORKING CAPITAL REQUIREMENT
(at 65% capacity utilisation)
PARTICULARS PERIOD MARGIN TOTAL BANK PROMOTERS
Stock of
Packing
Material
1
Month
30% 3.0 2.1 0.90
Stock of
Finished
Goods

Month
25% 2.0 1.5 0.5
Receivables
Month
25% 2.0 1.5 0.5
Working
Expenses
1
Month
100% 0.80 -- 0.80
TOTAL
7.80 5.1 2.7
(Rs. In Lakhs)
COST OF THE PROJECT AND MEANS OF
FINANCING
ITEM AMOUNT
Land and Building 8.50
Machinery 5.95
Miscellaneous Assets 1.0
P&P Expenses 0.60
Contingencies @ 10% on Building and Plant & Machinery 1.45
Working Capital Margin 2.70
Total 20.20
MEANS OF FINANCE
Promoters' Contribution 6.06
Term Loan from Bank/FI 14.14
Total 20.20
Debt Equity Ratio 2.33 : 1
Promoters' Contribution 30%
(Rs. In Lakhs)
PROFITABILITY CALCULATIONS
PRODUCTION CAPACITY AND BUILD-UP
Rated capacity of the plant will be 300 tonnes.

Actual capacity utilisation during first two years is assumed
to be 65% and 75% respectively.



SALES REVENUE AT 100%

PRODUCT
QTY.
(TONNES)
SELLING
PRICE/TON
(RS)
SALES
VALUE
Orange Juice 150 35,000 52.50
Orange Squash
150
45,000
67.50
(Rs. In Lakhs)
RAW MATERIALS REQUIRED AT 100%
PRODUCT
QTY.
(TONNES)
PRICE/TON
(RS)
VALUE
Oranges 330 10,000 33.00
Sugar
- -
4.25
Preservatives, Flavours,
etc.
-- --
1.50
Packing Materials @
Rs.7,000/Ton
-- --
21.0
Total 59.75
UTILITIES
Utilities like power, water & hard coke shall be
required.
Annual cost at 100% is likely to be Rs. 2.00 lakhs.
(Rs. In Lakhs)
SELLING EXPENSES
A provision of 20% of sales income is made towards selling
commission, transportation, sampling, publicity etc. therefore
annual selling expense at 100% capacity utilisation will be Rs
24,00,000.
INTEREST
Interest on term loan assistance of Rs. 14.14 lakhs is
computed @ 12% per annum.
The loan will be repaid in four equal installments payable at
the end of each of the four years.
Bank assistance for working capital is taken at 14% per
annum.
Year Beginning
(1)
Annual
Installment
(2)
Interest
(3)
Principal
Repayment
(2-3=4)
Balance
(1-4)
1 14.14 4.66 1.7 2.96 11.18
2 11.18 4.66 1.34 3.32 7.86
3 7.86 4.66 0.94 3.72 4.14
4 4.14 4.66 0.50 4.16 -0.02
CALCULATION OF INTEREST ON TERM LOAN
DEPRECIATION
It is calculated on WDV basis @ 10% on building and 20%
on machinery and miscellaneous

Dn = I (1- d)^n-1*d
FOR BUILDING
D1 = Rs 5.5( 1-0.1)^1-1*0.1 lacs
= Rs. 0.55 Lacs
D2 = Rs. 0.495 Lacs
D3 = Rs.0.445 Lacs
D4 = Rs. 0.40 Lacs



Cost Of Machinery = Rs.5.95 Lacs
Cost Of Miscellaneous Asset = Rs. 1 Lac
Combined Cost = Rs. 6.95 Lacs
D1 = Rs 1.39 Lacs
D2 = Rs.1.11 Lacs
D3 = Rs. 0.89 Lacs
D4 = Rs. 0.71 Lacs
Combined Depreciation for 1st year = Rs. 1.94 lacs
Combined Depreciation for 2nd year =Rs. 1.60 lacs
Combined Depreciation for 3rd year =Rs. 1.34 lacs
Combined Depreciation for 4th year =Rs. 1.11 lacs



PROJECTED PROFITABILITY
NO. PARTICULARS 1st yr 2nd yr 3
rd
yr 4
th
yr
A Installed Capacity ---- 300 Tonnes ---
Capacity Utilisation 65% 75% 85% 95%
Sales Realisation 78.0 90.0 102.0 114.0
B Cost of Production
Raw and Packing Material 38.84 44.81 50.79 56.76
Utilities 1.3 1.5 1.7 1.9
Salaries 4.68 5.4 6.12 6.84
Repairs & Maintenance (1Lacs) 0.65 0.75 0.85 0.95
Selling and Distribution @ 20% 15.60 18.0 20.40 22.80
Administrative Expenses (1.5 Lacs) 0.97 1.22 1.27 1.42
Total 62.04 71.68 81.21 90.58
C Profit before Interest & Depreciation 15.96 18.32 20.79 23.42
Interest on Term Loan 1.7 1.34 0.94 0.50
Interest on Working Capital 0.71 0.82 0.93 1.04
Depreciation 1.94 1.60 1.34 1.11
Net Profit 11.61 14.56 17.58 20.77
Income-tax @ 33.3% 3.87 4.85 5.85 6.92
Profit after Tax 7.74 9.71 11.73 13.85
Cash Accruals 9.68 11.31 13.07 14.96
(Rs. In Lakhs)
DEBT SERVICE COVERAGE RATIO
(DSCR)
PARTICULARS 1st yr 2nd yr 3rd yr 4th yr
Cash Accruals 9.68 11.31 13.07 14.96
Interest on TL 1.7 1.34 0.94 0.50
Total [A] 11.38 12.65 14.01 15.46
Interest on TL 1.7 1.34 0.94 0.50
Repayment of TL
2.96
3.32 3.72 4.16
Total [B] 4.66 4.66 4.66 4.66
DSCR [A] [B] 2.44 2.71 3.00 3.32
AVERAGE
DSCR
= 11.467 /4 = 2.866

Fixed cost : (In Rs. Lakhs)

1.Depreciation ------------ 1.94
a. Building
b. Plants & machinery
c. Misc. Assets

2.Fixed selling Exp.(35%) -------------- 5.46
3. Fixed Admn. Exp.(50%) ------------- 0.485
4. Salary (40%) -------------- 1.87
5.Fixed Utility (40%) -------------- 0.52
6. P & P Exp. ------------- 0.60
7. Interest on term loan ------ 1.70
-------------------
12.575

BREAK EVEN ANALYSIS
BREAK EVEN ANALYSIS
NO PARTICULARS
AMOUNT( Rs.
in lacs)
[a] SALES 78
[b] VARIABLE COSTS
RAW AND PACKING MATERIALS 38.84
UTILITIES (60%) 0.78
SALARIES (60%) 2.80
SELLING EXPENSES (65%) 10.14
ADMINISTRATIVE EXPENSES
(50%)
0.485
INTEREST ON WORKING CAPITAL 0.71 53.75
[c] CONTRIBUTION [A] - [B] 24.25
[d] FIXED COST 12.575
[e] BREAK-EVEN POINT (in Rs.) 40.45
NET PRESENT VALUE (NPV)
YEAR CASH
INFLOW
(Rs. In
lakhs)
PVIF
@14
%
PV
0 (20.20)
1 9.68 0.877 8.489
2 11.31 0.769 8.697
3 13.07 0.675 8.822
4 14.96 0.592 8.856
TOTAL
34.86
NPV at 14% =+14.66
INTERNAL RATE OF RETURN (IRR)
YEAR CASH
ACCRUALS
40%
42% 44%
0
( 20.20 )
1
9.68 6.91
6.81
6.72
2
11.31 5.77
5.60 5.45
3
13.07 4.76
4.56 4.37
4
14.96 3.89
3.67 3.47
TOTAL
21.33
20.64 20.01
NPV at 42% interest rate = + 0.44 Lakhs
NPV at 44% interest rate = - 0.19 Lakhs
IRR = 43.4%

LEVERAGES
Financial Leverage = EBIT/EBT
= 14.02 11.61
= 1.20
Operating Leverage = Contribution/EBT
= 16.58 11.61
= 1.428
Degree of Total Leverage = FL/OL
= 1.20 1.428
= 0.84
HOUSE HOLDS
HOTELS
RESTAURANTS
CATERERS
SWEET SHOP OWNERS
ORGANISED RETAILER
MOM & POP SHOPS
TARGET CUSTOMER

1. RETAILER - CONSUMER
2.OWN RETAIL OUTLET - CONSUMER.
3.DIRECT SALE TO HOTEL AND
RESTAURANT
4.DIRECT SALE TO ORGANIZED
RETAILER


MARKETING CHANNEL
Market Risk : change in Interest rate,
Inflation Rate
Competitive Risk : Presence of big brands in the
market like Coca cola, Dabur

Suppliers Risk

RISK