“ Our Lord! Condemn us not If we forget or fall Into error; our Lord! Lay not on us a burden Like that which Thou Didst lay on those before us; Our Lord! Lay not on us A burden greater than we Have strength to bear. Blot out our sins, And grant us forgiveness. Have mercy on us Thou art our Protector; Help us against those Who stand against Faith” We must not be arrogant, and think that because God has granted us His favor and mercy we have no need to exert ourselves, or that we are ourselves superior to those before us. On the contrary, knowing how much they failed, we pray that burdens should be lightened, and we confess our realization that we have all the greater need for God’s mercy and forgiveness.
(Surah-e-Bakarah (Surah-e-Bakarah 286)
Recommended Proverb
“Forget your own happiness by trying to create A little happiness for the others. REMEMBER… When you are good to others, You are best to yourself”
DEDICATION
To our loving, caring and great teachers and parents, whose prayers have been a force behind all our inspiration, and whose guidance, motivation and support has made us able to be successful in all the fields of life.
PROJECT REPORT ON POTATO CHIPS MANUFACTURING UNIT
“Potato chips manufacturing unit”
SUBMITTED TO:
Mr. JAVAID IQBAL (chairman)
SUBMITTED BY:
ZEESHAN SAEED
ROLL NO.17
ADEELA AKHLAQ
ROLL NO.48
MADEHA NAZZ
ROLL NO.33
MSC 3rd SEMESTER AFTERNOON THE ISLAMIA UNIVERSITY OF BAHAWALPUR PAKISTAN
PREFACE
It is stated that the students of Department of Commerce presently in MSC 3rd has given a project on “POTATO CHIPS MANUFACTHURING UNIT”. Department of Commerce is being aware of the importance of practical training, requires every Msc student to make a project Assignment. A ssignment. We have visit a local chips manufacturing unit in Lahore City. We have tried our best to collect the knowledge and information. It has broadened our knowledge and vision about the market. This Report is the Explanation of all work done by project Team.
PROJECT TEAM BACKGROUND ZEESHAN SAEED
Project Manager
ADEELA AKHLAQ
Survey Monitor
MADEHA NAZ
Data analysts
AKNOWLEDGEMENT
Up and above everything, we are thankful to ALMIGHTY ALLAH, the most Beneficent and merciful, and His Holy Prophet (Peace be upon him) Who is forever a true torch of guidance for whole humanity. We are greatly obliged to “ALLAH” by Whom grace we have been able to complete this Project Report successfully. We want to pay our thanks to Honorable Mr. Javaid Iqbal for providing us a chance to work in such a Profitable Industrial Project. We also pay our thanks to loving Parents for being supported us financially and mentally to co mplete our work
EXECUTIVE SUMMARY
Project Assignment: Each student of MSC 3rd semester required to prepare a sold Project Assignment. The Project assignment is given to Increase our kno wledge about “Project Management”.
Objectives:
SWOT analysis of chips industry industry
Identifying the important points of chips industry
How chips manufacturing unit works
What is production process
What is cost of unit
Approach to Project: The Team of project will, analyze, summarize, and interpret the data which is collected different primary and secondary sources.
Data Collection:
Both primary and secondary means of data will be used to collect the Data. Like Books, internet, personal visits, teacher guidance etc.
Market Analysis: Introduction To Chips Industry:
• • • • • • •
Demand & supply conditions…………………… conditions……………………… … Target customers………………… customers………………………………….. ……………….. SWOT Analysis of snacks industry……………… industry……………….. .. Market Entry timing……………………………… timing……………………………… Market information about Potatoes……………… Market information about Potato Chips………… Production Process…………………… Process………………………………. ………….
“Potato Chips Manufacturing Unit”
PAKISTAN AND CHIPS INDUSTRY
Third world countries are very habitual to adopt the western culture therefore; Pakistan is also in line with those countries. Big potential do exist for investment in this industry in Pakistan as the Demand or growth rate is very high. Annual Growth Rate of snacks industry is estimated at the rate of 20% to 30% 3 0% per annum.
Children, teenagers and young people are the target market of the product and we have the experience that the eating habits of the target market is rapidly changing and they like to have have snac snacks ks all all the the time time.. Futu Future re Pota Potato to and corn snac snacks ks are are label labeled ed as a meal meal replacement and being a light fast food is becoming popular.
Another plus point for the investment in this industry is that the life style is improving and going to be changed and also because of satellite invasion the demand is bound to register a considerable boost.
DEMAND & SUPPLAY: According to the industry findings carried out the market mix in respect of the potato chips is as follows:
Market Mix: Age Group (Years) 5 – 10 11 – 20 21 – 35 36 – above
Market Mix 30 % 35 % 20 % 15 %
The demand of the present market is met by the mix of Branded and Unbranded Chips available in the Market. There is 60% of the population which is Brand Loyal. However remaining 40% of the Un-branded Market can be attracted through heavy Advertisement Campaign. The analysis is as follows:
Growth in Snacks Industry: Supplier Branded Unbranded
Market 60 % 40 %
Market 70% 60% % e 50% r a h 40% s t e 30% k r a 20% M
Market
10% 0% B randed
Unbranded
Brand Type
Leading Exporting Countries of Potato Chips in the World: Export prospects for the next decade are very promising given the sustained and continued expansion of the Fast Food Industry abroad. Further Tariff cuts under Trade Agreements are anticipated. Low per Capita consumption of Fries in the overseas market is a strong indication of future demand. United States of America is a major exporting co untry of the Potato Chips in the World.
Supply Quantity Analysis: Presently, Triple Em which produces major share that is about 58.33 % and is a market leader. Good potential exists for a new brand to compete and fetch a market share provided that: • • • • • • •
Having good quality of product Unique Packing A market Network Industry Understanding Financial Soundness Feed back of Information preferring the taste of the Market
Target Customers: Children, teenagers and young people are the target market of the Potato Chips Line. Home, rather than school, is the most popular destination for eating crisps and savory snacks, with seven in ten children (70%) consuming them at home, against around half (48%) who eat such snacks at school, After school, when children tend to choose their
own snacks snacks,, 70% select select crisps crisps and savory savory snacks snacks compar compared ed to lunchbo lunchboxes xes,, which which mothers generally pack, where the most popular item is a savory sandwich or roll. Some 44% of consumers prefer to buy children’s snacks in multitasks while nearly half of all consumers say they are price motivated in their snack purchasing.
SWOT Analysis: Before making the decision, whether to invest in the Potato Chips Manufacturing or not, one should carefully analyze the associated risk factors. A SWOT analysis can help in analyzing these factors, which can play important role in making the decision.
Strengths:
•
Continuous availability of Raw Material in the form of Fresh Potatoes.
•
Totally automated plant and hence require the involvement of less local labor.
•
Availability of Cheaper Labor.
•
Tariff cuts under Trade Agreements are anticipated wh ich may result in Increase in the Export Market of the Potato Chips.
•
The life style of the people is improving and going to be changed and also because of satellite invasion the demand is bound to register a considerable boost.
•
Attractive brand name
•
Depth in product range
•
Distribution channel is strong all over the Pakistan
•
Good quality product
•
Freshness
•
Direct supply to retailers
•
Latest automatic plant
•
Availability
•
Differentiated features (like nitrogen gas in packing)
Weaknesses: •
Strict controls over the Labor efficiency need to be observed to reduce the Waste Production at the minimum level.
•
Expected loss at the initial stages of the operation op eration as a result of Sales return from the distributors.
•
In -experienced Technical Staff as compared to the Units currently in Operation.
•
Low trade margin
•
Strict discount policies
•
No prize scheme for available for retailers and distributors
Opportunities: •
•
Changes in the current eating habits hab its of the People. About 40% of the Potato Chips Market comprises un-branded chips which can be attracted through Heavy marketing Campaign.
•
Attraction amongst the Younger consumers to products identified with Western Lifestyles and Tastes and general trend towards more Snacking.
•
A large number of people which are not Brand Loyal can be attracted through heavy Marketing Campaign.
•
Low per Capita consumption of Fries in overseas market is a strong indication of future demand.
•
New horizons are opening for the company
•
Attractive market size
•
Can export their product
•
Diversification into related product line.
Threats: •
Monopoly of Multinationals currently in the business of Potato Chips Manufacturing.
•
Imbalanced Prices of Potatoes due to lack of o f adequate Storage Facilities as a result of which large Production is wasted.
•
Quality of the Potato Chips need to be considered very closely as the people are more directed towards Health and Safety issues.
•
Low saving and low holding capacity of General Public as a result of which there is increasing level of poverty.
•
High Promotional activity by the Competitors and increased competition.
•
Chances of price cut from the existing players of the Potato Chips
•
Manufacturers to keep the new product out of market
Market Entry Timing: Various Products and Services have high dependence d ependence on their commercialization timing and delivery to the Customers but the Chips Manufacturing Unit can be started at any an y time during the year due to the availability of Raw Material (Fresh Potatoes) throughout the year.
Proposed Business Legal Status: The said project can be b e a proprietorship or a partnership and even it can be registered under the Companies Ordinance, 1984 with the Securities & Exchange Commission of Pakistan. The selection totally depends upon the choice of the Entrepreneur. we selected the proprietorship .
Market Information About Potato: Pakistan is a large Potato producing Country yet it has very limited and adequate Storage and Processing facilities. Due to the lack of adequate Storage facilities a substantial
proportion of Production is wasted. The combination o f inadequate Storage facilities and an under-developed Processing Industry leads to volatility in prices as not all excess production can be Stored or Processed for consumption during the Off season. The following Analysis will illustrate the current state of the Potato production in Pakistan . along with the potential that exists ex ists in both Farming and Processing of Potatoes .
Pakistan Potato Production : Potato is grown in Pakistan on about 111,000 Hectares distributed over eight different Agro-ecological Zones. About 70 - 80% of the production is concentrated in the Irrigated Plains of the Central Punjab and Southeast North West Frontier Province (NWFP). There are three seasons of Potato cultivation, Autumn, Spring and Summer.
20% of above Production Quantity is wasted against Post Harvest Loses primarily due to improper handling and lack of proper Cold Storage facilities. Potatoes are improperly stored at Temperatures negative 3-4 Celsius mainly for seed storage purpose. These temperatures are maintained only to avoid sprouting since no humidity levels are administered, which is a vital factor for proper storage o f Potatoes for Table Consumption and Processing. About 5% of Total Potato Production is being exported. About 18% of the Production is stored for Potato Seeds. Pakistan produces three Potato Crops per year. The major produce of the Potato Crop is harvested in the autumn season.
Crop Seasons: Pot Potato Corp Season
Sowing – Month
Harvesting - Month
Autumn Crop Summer Crop Spring Crop
October January April – May
January May – June August – September
Major Varieties And Characteristics Of Potato Grown In Pakistan:
Variety
Shape
Color Of Flesh
Diamante Oval Light Yellow Cardinal Oval Light Yellow Desiree Long Oval Light Yellow
Cooking Type Utilization
Mealy Firm + Mealy Firm + Mealy Firm +
Common Scab
French Fries Just Resistible French Fries Quite Resistible French Fries Just Resistible
Potato Whole - Sale Price P rice Trends Tr ends: In the absence of adequate Storage facilities, at the time of harvest, there is a huge supply of potatoes, which drives prices down. If Storage facilities are available price volatility could be stabilized through consistent supply year around. The following Graph shows prices begin to fall as Harvesting begins, wh ich is January and continue to fall to the lowest level until April after which they begin to rise again.
Market Information About Potato Chips: Chips Manufacturing Plants Currently in Operation:
Following are the major and leading Producers of Potato Chips (Crisps) in Pakistan. The Crisps are being produced by direct Potato Cuts/slices and also by Extrusion Process. However, there is not a single Frozen French-Fries Producing Company / facility in Pakistan.
COMPANY NAME Standard Foods (Pvt.) Limited Tripple EM (Pvt.) Limited Kohinoor Smith (Pvt.) Limited Consolidate Trading Enterprises
BRAND NAME Golden Chips Super Crisps Smiths Kolson Krincles
Sector Characteristics: Potato and Other Corn Products are considered a part of Snack Food Industry. Although, the concept of snacks particularly packed Snacks Meals is not old in Pakistan. Infact these products consumption is a result of adoption to Western Culture and eating habits. A research made in U.K and published by DATA MONITOR is an example of the growth in the Snack Food Industry. The figures in this survey stood at £ 816.7 million in 1996 compared to £ 481.2 Millions in 1995 with break up as follows:
Description Chips Snacks Pop Corns Total
£ (Millions) 618.50 148.20 50.00 816.70
£ (Millions) h 900 p 800 a r G700 y r 600 t s 500 u d 400 n 300 i s p 200 i h 100 C 0
£ (Millions)
Chips
Sna Snacks cks
Pop Pop Corns
Total
Market share in Million
Market Research, Trend & Analysis: Sales of crisps and snacks increased by 10.1% between 2000 and 2003 to peak at £2,386 million. A decline of 3.5% in 2004, however, took retail sales to £2,303 million. The key factor currently impacting on the Crisps and Savory Snacks market is public consideration towards health issues. The Crisps sector accounts for just over 56% of total Crisps and Savory Snack Sales. Within the Crisps sector, sales of added value/premium Crisps saw their share of sales increase from 20% in 2000 to 26% in 2004.4 In addition to the local Market, Gulf and Central Asia are yet to be explored. It is estimated that 2,500 Tons of Chips can be exported to these countries if proper efforts are being made.
Technical Analysis Production Process: PRODUCTION PROCESS: The production process goes through the following steps:•
Washing & Shelling Machine - suitable for washing of Fresh Potatoes
•
Peeling Machine - suitable for peeling of Potatoes
•
Slicing Machine - suitable for slicing Potatoes into Chips
•
Chips Washing Machine - suitable for washing and rinsing of Potato Chips in hot water for excessive starch removal before frying .
STORE POTATO OO
WASHER
PEELER
SLICING
STEAM WASHING
FRYING
PACKING
INITIAL STAGE OF PROCESS
FLAVORING
PRODUCTION PLANT
FINAL STAGE BEFOR PACKING
PACKING
INDRODUCTION OF PRODUCT MY CHOICE POTATO CHIPIS
TYPES OF PRODUCT LUXURY
Level And Type Of Competition: Competition: Their competition strategies are based on the competitor’s strategies. They don’t follow the price war competitive strategy. They follow the standard of product and quality in competition. Their competition type is oligopoly.
Competitors: One can’t imagine about a business without competition. My choice potato chips Pvt limited has also some competitor’s major threats to My choice potato chips are Lays, Pringles, Kalson and Supper chips which has almost 45% of the market share. But as quality of the product play an important role that is not up to the standard by the competitors. So My choice is outstanding in all ways to the competitors like quality, quality and price of the product and etc.
Competitors Product And Activates: Following competitor’s product is being sold in the market bu t their product availability is not that good. The only reason for their presence is the credit facility and margins
• • • • • • • • • •
Lays Nirrala Smith Bunny Sadiq dry fruits Sherry Pace Golden Pak food Supper chips
Competitors:
• • • • • •
Triple EM Lays Kalson Golden Smith Others
45% 15% 15% 8% 5% 12%
INDRODUCTION OF PRODUCT MY CHOICE POTATO CHIPIS
TYPES OF PRODUCT LUXURY
A-SWOT Analysis B-Company profile • • • • • • • • • • • • • •
1-Name…………………………………………… 2-Mission statement………………… statement………………………………. ……………. 3-Scope of company……………………… company……………………………….. ……….. 4-Vision of company……………………… company……………………………… ……… 5-Head office………………… office……………………………………… …………………… 6-Branches……………………………………….. 7-Location……………………………………….. 8-Contact………………………………………… 9-Site…………………………………………….. 10-Product………………………………………. 11-Board of directors……………… directors…………………………… …………… 12-Banks………………………………………. 13- Certificates…………… Certificates………………………………… …………………… 14-Estimated Statements…………… Statements…………………….. ……….. Cost and means of finance Assumptions of project Income statement Profit & loss Account Financial Analysis Balance sheet
A-SWOT ANALYSIS
Strengths: •
Highly Technical Process of Production.
•
Company is equipped with the New Technology.
•
Economics of Scale.
•
Registered as private. Company.
•
Good Quality Products.
•
Skilled Labour
•
Good Management
Weaknesses: •
Company never compromise on the Quality Qu ality aspects.
•
Company has a fixed rate to sell product.
•
Strict controls over the Labor efficiency need to be observed to reduce the Waste Production at the minimum level. Expected loss at the initial stages of the operation op eration as a result of Sales return from the distributors.
•
Opportunities: •
Changes in the current eating habits of the People.
•
Attraction amongst the Younger consumers to products identified with Western Lifestyles and Tastes and general trend towards more Snacking
•
Low per Capita consumption of Fries in overseas market is a strong indication of future demand.
Threats: o
o
o
o o
The political Conditions Monopoly of Multinationals currently in the business of Potato Chips manufacturing. Imbalanced Prices of Potatoes due to lack of adequate Storage Facilities as a result of which large production is wasted. Chances of price cut from the existing players of the Potato Chips Manufacturers to keep the new product out of market. market.
B- COMPANY PROFILE Mission Statement: Statement: “To be the best chips manufacture in the chips industry and all over the world”
Scope of company: “To deals in a number of flavored snacks”
Vision of company:
“Best quality producer and exporter all over the world”
Head office: “P.O. BOX. 1245 Small-Industries Bahawalpur”
Branches: Rahim yar khan
“ P.O.Box. 845 Defense Road Rahim yar khan”
Location: “Bahawalpur Pakistan”
Site “Small Industries”
Products:
Salted Snacks
Sweet chilli snacks
Lemon Flavored Snacks
Chilly Flavored Snacks
Board of directors: Zeeshan Saeed(chair person) Adeela Akhlaq Madeha Nazz
Banks: HBL MCB
Certificate:
Multan chamber of commerce Small- Industries Bahawalpur •
PROMOTION AND ADVERTISMENT
My choice potato chips almost use all the Medias for advertisement and promotions of their consumer products. The main advertising and promotional Medias used by the packages are as under: • • • •
Television (GEO and ARY Digital) Cable (World call and NBC) Urdu newspapers (Daily jung, Nawa-e-waqat, Kabrain) English newspapers (Daily Dawn, The News)
Govt Regulation: Different kinds of taxes are imposed by the Govt on different things. These taxes effect the pricing of these goods and services. Supper chips being a product has to pay 15% a Govt sales tax which is taken directly to the customers. These taxes are include in the price of the product and different promotional offers of supper crisps. Other than this is a deduction of 35% of net income is made as a tax deduction on income of the company
Problems: Food industry faces problems at pre-establishment and post-production stage. Investment climate, political changes, market, labor, documentation and guidance problems do not attract potential investors. Sanctioning of project, fuel, water, electricity, raw material, credit facilities, imports of machinery, low capacity utilization, export restrictions, production cost, defective market systems, transport and Govt policies are major problems after productions
Personal Analysis: Requirement Of Staff: axbx12
Factory staff(including managerial, Technical, Skilled and Un- Skilled) Type Of Staff Plant Manager Supervisor Shift in charge Machine operator Security guard Driver Sweeper Total Add fringe benefit
Nos
Per Month 1 3 3 3 2 2 1 50%
Per year 30000 14000 10000 8000 5000 5000 3000
360000 504000 360000 288000 120000 120000 36000 1788000 894000
2682000
Total Salary of Factory Staff Yearly Increased by
10% 1st
2nd 2682000
Administrative and General Staff: Type Of Staff Chief Accountant Assistant Accountant Office Boy Receptionist
3rd 2950200
axbx12 Per Month
Nos
Per year
1 1 2 2
25000 10000 5000 6000
300000 120000 120000 144000
684000
Total Add fringe benefits Total salary of admin and general staff
50%
Yearly Increased by
10% 1st
342000 1026000
2nd 1026000
Sales Staff: Type Of Staff Sales representative Helper
3245220
3rd 1128600
axbx12 Per Month
Nos 3 3
1241460
Per year 8000 5000
288000 180000
468000
Total Add fringe benefits
50%
234000
702000
Total sales staff Yearly Increase by
10% 1st
2nd 702000
3rd 772200
849420
Financial Analysis:
Cost of the Project: Land and its Development Building and Civil Work Machinery and Equipment
Local Rs 2255000 4934000 15500000
Foreign Rs
Total Rs 2255000 4934000 15500000
Engineering and Technical fee Furniture and Fixture Vehicles Preproduction Expense Office Equipment Contingencies Others Interest During Construction Total Fixed Cost Initial Working Capital Total Cost of the Project Net fixed Assets
50000 166000 11600000 1925000 61000 600000 400000 7540000 45031000 19969000
50000 166000 11600000 1925000 61000 600000 400000 7540000 45031000 19969000
65000000
65000000
43106000
Means Of Finance
Total
Debt Bank Name ( Habib Bank Limited) Total Debt
60%
39000000
Equity
40%
26000000
65000000
Total Equity and Debt
Land and its Development Cost of Land Size Land Cost of Registration Cost of Transfer Boundary Wall and Main Gate Legal Charges Brokerage Fee
Acre 1 5% 3%
Cost per acre 1500000
Total 1500000 75000 45000 560000 70000 5000
2255000
Total
Building and Civil Works Factory Building Plant Hall Packing room Store Room Changing Room Office Meeting Room
Area Sq ft 3520 1200 500 1100 150 200
Rate per Sq ft
Cost 200 200 200 200 200 200
704000 240000 100000 220000 30000 40000
Total Air Conditioning and Electricity Furnishing and Water Supply Total
1334000 3000000 600000 3600000
Total
4934000
Machinery and Equipment Item Washing & Shelling Machine Peeling Machine Slicing Machine Chips Washing Machine Boiler
Cost 3 2 5 10 1
2500000 500000 1000000 150000 500000
Total Cost 7500000 1000000 5000000 1500000 500000
15500000
Total
Furniture and Fixture Qty Executive Table and chair Visitors and Employees Chair File Cabinet Steel Safe Office Table
Cost/Qty
Total
1 50 3 3 3
30000 2000 3000 5000 4000
30000 100000 9000 15000 12000
166000
Total
Office Equipment Item Office Computer Office Printer Computer table and Chair Office table and Telephone
Cost/ item 3 2 3 2
Total 10000 5000 5000 3000
61000
Total
Estimated Initial Networking Capital Current Asset: Cash Account Receivable Locally raw material (1 month) Advances and deposits Total Current Liabilities: Account payable Short term Loan Total
30000 10000 15000 6000
Rs 7000000 4069000 5000000 5000000
21069000 Rs 600000 500000 1100000
19969000
Initial Net working Capital
Pre Production Expenses:
Rs
Project examination fee Legal documentation fee Commitment Charges Traveling Expenses Wapda Gass Office fuel and telephone
150000 120000 300000 5000 200000 1000000 150000
1925000
Total Pre production expenses
Vehicles
Item
Car Van Truck Buss
Cost/ item 3 2 1 1
Total
500000 800000 5000000 3500000
1500000 1600000 5000000 3500000
11600000
Total
Assumptions Underlying Financial Statement:
Income Statement Sales Cost of Goods sold: Raw Material Labour Manufacturing Expenses Depreciation Cost of Goods sold: Gross Profit Operating Expenses: General and Admin expenses Selling expenses Total Operating expenses
336375000
399625000
428375000
138739500 2682000 1416000 2987700 145825200 190549800
149681000 2950200 1486800 2987700 157105700 242519300
149781000 3245220 1561140 2987700 157575060 270799940
1026000 702000 1728000
1128600 772200 1900800
1241460 849420 2090880
Operating Profit Non Operating Expenses
188821800
240618500
1,675,91 Financial expenses Amortization of production expenses
7
Workers welfare fund
2%
Total operating Expenses
3
Profit before Tax
7
5,731,26 7 385000
3776436 5,837,35
4812370 10,928,63 7
Net Profit after tax
Ratios:
%
Gross Profit Margin: Net Profit Margin:
91,875,94 5
109,790,66 8
137,813,91 8
155,146,65 7
%
% 61 34
Per year 360000 504000 360000 288000 120000 120000 36000 1788000 894000
2682000
Total Salary of Factory Staff Yearly Increased by
10% 1st
2nd
103,431,10
5
Per Month 30000 14000 10000 8000 5000 5000 3000
50%
258,577,76 2
Factory staff(including managerial, Technical, Skilled and Un- Skilled) 1 3 3 3 2 2 1
10,131,29
9
57 33
Nos
1
229,689,86
axbx12
Type Of Staff Plant Manager Supervisor Shift in charge Machine operator Security guard Driver Sweeper Total Add fringe benefit
385000 5,374,18
8
3 73,193,77
40%
4,372,11 7
385000
182,984,44
less tax
268709060
3rd
63 36
2682000
Administrative and General Staff: Type Of Staff Chief Accountant Assistant Accountant Office Boy Receptionist
Nos 1 1 2 2 50%
Yearly Increased by
10%
axbx12 Per Month 25000 10000 5000 6000
Per year 300000 120000 120000 144000 342000 1026000
1st 1026000
2nd 1128600
3rd 1241460
Nos
axbx12 Per Month 8000 5000
Per year 288000 180000
Sales Staff:
Total Add fringe benefits
3245220
684000
Total Add fringe benefits Total salary of admin and general staff
Type Of Staff Sales representative Helper
2950200
3 3
468000 50%
234000
702000
Total sales staff Yearly Increase by
10% 1st 702000
2nd 772200
3rd 849420
5% 10% 10% 15% 10%
1st 246700 1550000 1160000 24900 6100
Depreciation Expenses: Building Machinery Vehicle Furniture Office Equipment
4934000 15500000 11600000 166000 61000
2nd 3rd 246700 1550000 1160000 24900 6100
2987700 2987700
Total
Manufacturing Expenses: 65%
70%
75%
246700 1550000 1160000 24900 6100
2987700
Electricity Generator Maintance Expenses Carriage in Carriage out
8000 10000
400000 500000 300000 96000 120000
420000 525000 315000 100800 126000
441000 551250 330750 105840 132300
1416000 1486800 1561140
Total
Pre Production expenses Amortization 1st 20%
2nd
385000
385000
3rd
385000
Sales: Salted snakes Salt free Snakes
2750000 4000000
Salted snakes Production of salted snakes Add beginning Available for sale Less ending Sales
65% 1787500 0 1787500 178750 1608750
70% 1925000 178750 2103750 192500 1911250
75% 2062500 192500 2255000 206250 2048750
65% 2600000 0 2600000
70% 2800000 260000 3060000
75% 3000000 280000 3280000
Salt free snakes Production of salt free snakes Add beginning Available for sale
10%
Less ending Sales
Sales Revenue: Export of salted snakes Export of salt free snakes Export rebate
10%
260000 2340000
280000 2780000
300000 2980000
80 60 25%
128700000 140400000 67275000
152900000 166800000 79925000
163900000 178800000 85675000
3363750 75000 399 399625000 5000 4283750 75000
Total Sales
Cost OF Production: Potatoes Frying oils
2438000 1695000
Potatoes Frying oils
65% 1584700 1101750
70% 1706600 1186500
75% 1828500 1271250
2686450
2893100
3099750
15847000 121192500 400000 300000 500000 500000
17066000 130515000 500000 400000 600000 600000
18285000 139837500 600000 500000 700000 700000
Total
Cost Of Raw Material: Potatoes per kg Frying oil per liter Artificial flavors Food colors Preserving chemicals Packing Material
10 110
1387395 39500 149 149681000 1000 1497810 81000
Total
Financial Charges: Name of Bank Amount of loan Rate Of Interest Period Of Loan Repayment of Interest Repayment of Installment Date of Disbursement of Loan Completion of the Project Date of Commercial Production Date of Repayment of principle No of Days
Due Dates 3/31/2010
0
Principle Installment 0
The Bank Of Punjab 39,000,00 0 17% per Annual 5 Years Quarterly Installment Half Yearly 3/31/2010 31/12/2010 31/3/2011 30/6/2011 6 Amount Total of Interest Installment 0
360
Installment Outstanding Principle 39,000,00
0 9 6/30/2010
1,675,91
1
0
7
9 9/30/2010
0
3
9 2
3/31/2011
0
6/30/2011
1
0
9
1,675,91
3,900,00 0
2
3/31/2012
1
6/30/2012
1
9/30/2012
2
3,900,00 0
2
6/30/2013
1
9/30/2013
2
12/31/2013
2
3,900,00 0
9
6/30/2014
3,900,00 0
1 2
12/31/2014
2
3/31/2015
0
3,900,00 0
3,900,00 0
1
9/30/2015
3
12/31/2015
2
3,900,00 0
3
4,235,18
39000000
3
3,900,00 0
169,43 3
169,43
3,900,00 0
4,069,43 3
23,551,23 Total
7,800,00 0
3
3 9
7,800,00 0
331,50
169,43
2
0
0 335,18
9
11,700,00
4,408,30
331,50
9
0
0
0
11,700,00
508,30
508,30
9
0
0
0
15,600,00
4,570,36 7
0
15,600,00 0
663,00
508,30
9
6/30/2015
4,747,16
0
7
19,500,00 0
7
670,36
9 9/30/2014
847,16
847,16
0 9
19,500,00 0
7
663,00
0
23,400,00 0
0
7
9
0
4,905,55
847,16 3,900,00 0
23,400,00
994,50 0
7 9
3/31/2014
5,086,03
1,005,55 0
27,300,00 0
3
0 9
27,300,00 0
1,186,03
994,50
0
0
3
3
31,200,00
5,240,73
1,186,03
9
0
3 1,186,03
3,900,00 0
31,200,00
1,340,73
1,340,73
3 9
0
3
3
35,100,00
5,424,90 0
3
9
3/31/2013
0
0
35,100,00 0
1,524,90
1,340,73
9
12/31/2012
5,575,91
1,524,90
9
39,000,00 0
7
0 9
12/31/2011
1,657,50
1,524,90
2
39,000,00 0
0
7
9
0
3
0
39,000,00
1,694,33
1,657,50 0 3,900,00 0
0
3
3
39,000,00
1,694,33
1,694,33
9
9/30/2011
7 1,694,33
2
12/31/2010
1,675,91
62,551,23
3
Interest during Construction 6,722,08 from
3/31/2010 2011
to 2012
3/31/2011 2013
3 2014
2015
Interest Installments
1,675,91 7 3,900,00 0
5,731,26 7 7,800,00 0
4,372,11 7 7,800,00 0
3,027,70 0 7,800,00 0
1,683,28 3 7,800,00 0
Balance Sheet: Cons Year
1st
2nd
3rd
Owner Equity and Liability: Capital and Reserves: Capital Retained Earning
26000000 0
26000000 43,916,26 7
26000000 99,041,83 5
69,916,26 Sub total Long term Liabilities:
26000000
7
39000000
5
0
39000000
0
15,600,00 0
23,400,00 0
3,900,00 current maturity of l term Loan
7
0
0
187,100,49
23,400,00
31,200,00 Sub total Current liabilities:
7 125,041,83
31,200,00 Habib Bank limited loan
26000000 161,100,49
15,600,00 0
3,900,00 0
3,900,00 0
Account payables Workers welfare fund Acuured expenses Tax payables
0 0 0
Sub total
0
0 3,900,00 0
0
105,016,26 65000000 7
Total Equity and Liability:
0 3,900,00
0 3,900,00 0
152,341,83 5
206,600,49 7
Assets: Fixed Assets: Fixed Assets Less Accumulated Depreciation Net fixed assets Pre-Production expense Less Amortized Net pre-production expense Sub total Current Assets: Debtors Stores and Spares Advance deposits Short term investment
43106000 0 43106000 1925000 0 1925000 45031000
43106000 2987700 40118300 1925000 385000 1540000 41658300
40118300 2987700 37130600 1540000 385000 1155000 38285600
37130600 2987700 34142900 1155000 385000 770000 34912900
0 0 0 0 63,357,96
Cash and bank balance
19969000
7
114,056,23 5
63,357,96 Sub total
19969000
7
Total Assets
7 114,056,23
5
105,016,26 65000000 7
171,687,59 171,687,59 7
152,341,83 5
206,600,49 7
Ratios: Current Ratio:
16.2
29.2
44.0
Cash Flow: Cons Year
1st
2nd
3rd
Sources 182,984,44 Operating Profit Add:Dep. & Amort. Equity Other Sources
0 0 26,000,00
7
229,689,86 3
3372700
258,577,76 2
3372700
3372700
0 39,000,00
Long Term Loans
0 65,000,00
Total Uses
0
7 43,106,00
Fixed Asset
0
186,357,14
233,062,56 3
261950462.1
1,925,00 Pre-Production Exp.
0 3,900,00
Long Term Loans Re-Payment of:. Financial Exp.
0 0
Tax Paid
0
0
7,800,00 0
73,193,77 9 1 0 45,031,00
Total
0
Net Cash Inflow/(Outflow)
0
91,875,94 82,688,35
142,968,18
182,364,29
43,388,96
Balance Closing
0
19,969,00 0
0
50,698,26
7
57,631,36 3
63,357,96 7
63,357,96
204,319,09 9
7 19,969,00
Balance Opening
93,087,99 4
6
7
103,431,10 5
1
0 19,969,00
0
5 65,874,40
Profit Distribute Inc/(dec) in Current asset
7,800,00
114,056,23 5
Conclusion Current Ratio The current ratio for chips manufacturing is 1.51 the end of the of the year 1st and 1.79 at the end of the 2nd year and 1.82 at the end of 3rd year. It is increasing and shows the strength of the company. Current ratio de termines the short term debt paying ability of the company. .
Net profit Margin The net profit margin for chips manufacturing is 3 2.63% at the end of the year 1st and it was 34.48% in the 2nd year and in the 3rd year it is 36.22%. Net profit margin improves substaintly. This ratio measure of net income in rupee generated by each rupee of sales.
114,056,23 5
171,687,59 7
Gross profit It is the cost of product sold during the period. The gross profit margin for chips manufacturing is 56.64 at the end of 1st year 60.68 for 2nd year 63.22 3rd years. It improves over three year period so it is better b etter indicator. It is also used in cost control.
Operating profit 56.13 in 1st year, 60.21 in 2nd year,62.72 in 3rd year it shows significant increase during three year period. It is better for company.
Debt to equity The bebt to equity ratio is 20.73% in the 1st year it is12.97% in the 2nd year and 7.93% in the 3rd year. It shows the creditor is protected in case of insolvency.
Conclusion And Recommendation Recommendation We conclude on the basis of field work and survey of chips manufacturing unit that the demand of chips increase day by day and it is profit motive business. We can earn money by very low investment. We would like to suggest that investor invest in chips manufacturing unit that contribute in growing economy of the country.
