Course Name: Project Planning Appraisal and Control

Code No:020242210
Project name: Project report on Pineapple Processing
Programme: MBA-AB

Batch: 2009-11 [Fresh]

Season: March 2010.

Semester- II
Seat No.
Name of the Student: Divya Boddu
PRN: 09020242007

Submitted to
Prof.. Chitragar
Submission date:
[to be written by receiver at the time of submission only]
PART- I
PROFILE OF PROJECT REPORT FOR PROPOSED

DIVIN FRUIT PROCESSORS, Dinajpur,WB

(UNDER THE SCHEME OF NHB)

Name of the Partners :

DIVYA BODDU

Residential Address :

At Post RK Puram, Tapan, Dist.- Dinajpur

Mobile No - 9665379697

Name of the Partners :

VINEET JHA

Residential Address :

At Post RK Puram, Tapan, Dist.- Dinajpur

Mobile No - 9971617209

Qualification & Exp. :

DIVYA BODDU- MBA. (Agri Business.)

VINEET JHA- M.B.A. (Operations)

Business Address :

At Khaboi Nagar ,Tapan, Dinajpur

Status of the Firm :

Partnership Firm.

Nature of Business :

Processing (canned and juice) of Pineapple to

sell in the retail market.

Cost of Project :

Rs. 15750000/- (Rs. One crore fifty seven

lakhs and fifty thousand only)

DETAILS OF INVESTMENT:

A) Land and Building

B) Plant and Machinery

1950000
10000000

C) Power and water

1200000

D) Misc. Assets

800000
Total Fixed Assets :

E) Preliminary and Pre-operative Expenses

F) Working Capital for Commencement of the

13950000

1000000
800000

business in 1st year (promoters margin) (60%

utilization of capacity)
Total Project Cost :

*The details of the investments are given in the report.

PART-II

15750000

PROJECT DETAILS
1.0 INTRODUCTION
Pineapple is one of the popular fruits and is liked by majority of the people
irrespective of their age group. As is the case with most of the fruits and
vegetables, their availability is limited during the year. Many techniques have
been developed to make available seasonal fruits as well as vegetables even
during off-season. Canned pineapple slices and juice are such products.
Pineapple is consumed as dessert, in fruit salads, while making cakes and
pastries etc. Thus, there are a large number of consumers who would like to
consume pineapple slices or juice.
2.0 PRODUCT
2.1 Applications
Pineapple products intended to be processed by Divin Fruit Processors include
pineapple slices and juice. In order to increase the shelf life and to make
pineapple juice and slices even during off-season, canning is the most popular
method.
2.2 Availability of technology and compliances
CFTRI, Mysore, have developed the process know-how. Certification under
FPO and compliances with various provisions therein is compulsory.
2.3 Manufacturing Process
CFTRI, Mysore has developed technology for these products. The
manufacturing process of the proposed pineapple products viz. Slices and
Juice involves many steps and different sub-processes. The average yield is
around 80%. The Process Flow Chart is as under:

WASHING , GRADING AND PEELING OF

PINEAPPLES

FOR JUICE

FOR CANNED
SLICES

CRUSHING

SLICING

BOILING WITH
PRESERVATIVES

DIPPING IN SUGAR
SYRUP (3-4 HRS)

COOLING AND
BOTTLING

CANNING AND
STERILIZATION

SEALING AND
LABELING

3.0 MARKET POTENTIAL

3.1 Demand and supply
Fruits provide important proteins as well as minerals and they are being
consumed by human beings since many centuries. The major drawback of any
agriculture/horticulture produce is seasonal availability. Several techniques to
preserve these perishable commodities have been developed during last few
decades and canning is one such reliable method. Pineapples are very popular
amongst consumers and their availability in the form of juice or slices round
the year would enable the consumers to enjoy them whenever they want.
Pineapples are grown in large quantity in West Bengal, North Eastern States
including Assam. If fresh pineapples are processed and canned, then there is
large market scattered throughout the country. There are also very good export
prospects if international quality is achieved and sustained. Countries like the
USA, UK, Germany, Holland etc. are regular importers of pineapple products.
.

3.2 Details about competition:

At present, in Dinajpur district, there is no such plant, which processes
pineapples for canning and juice. In fact, there is no such plant in West Bengal.
Hence, competition will be almost nil.
3.3 Marketing Strategy
The first generation entrepreneur has to be extra careful while approaching
export markets and ideally he should have excellent contacts either with
foreign buyers or some intermediaries. India itself is a very large and growing
market and once quality of the product is established in the domestic market,
efforts can be made to branch out to foreign markets.

PART III- FINANCIAL ASPECTS OF THE PROJECT

1) INVESTMENT:
A) Land and Building
B) Plant and Machinery

1950000
10000000

C) Power and water

1200000

D) Misc. Assets

800000
Total Fixed Assets :

E) Preliminary and Pre-operative Expenses

F) Working Capital for Commencement of the

13950000

1000000
800000

business in 1st year (promoters margin) (60%

utilization of capacity)
Total Project Cost :

15750000

2.0 DETAILS OF THE INVESTMENT

2.1 Land and Buildings
A plot of land, of 1000 sq.mts., with built up area of 600 sq.mts., would be
required. The main factory operations would need around 350 sq.mtrs. of built
up area whereas balance area will be needed for washing, storage of raw
materials and finished goods and packing. 5000 ltrs. capacity water storage
tank shall also be needed. Cost of land is estimated Rs.3.00 lacs whereas that
of civil works Rs.16.50 lacs.

2.2 Plant and Machinery

The requirement of plant and machinery for the project could be divided into
five lines as under.
1. Washing and preparation
2. Slice line
3. Juice line.
4. Syrup line.
5. Packing line.
It is suggested to have installed processing capacity of 3600 tonnes per year
considering double shift working and 300 working days. This would require
following machinery.
No.

Particulars Quantity/

Washing and
preparation
(a)

No

1 No.

(b)

Channel system for unloading and washing

pineapples
Discharge Elevator

(c)
(d)
(e)
(f)

Graders
Belt Conveyors
Chutes
Pineapple Peelers

1 No.
2 No.
2 No.
2 No.

Slice Line
(a)
(b)

Single Knife Slicers

Corner and Can Loaders

1 No.
2 No.

(c)
(d)
(e)
(f)

Resizer/Corners
Can Loaders
Pieces Cutting Machines
Vaccum Filling Machine

2 No.
1 No.
2 No.
1 No.

(g)
(i)
(j)

Seaming Machine
Tunnel Pasteurizer/Cooler
Can Dryer

1 No.
1 No.
1 No.

(k)

Belt Conveyors

2 No.

Juice Line

1 No.

4.
5
6

(a)
(b)
(c)

Disintegrator 1
Vessels
Pumps

1 No.
2 No.
2 No.

(d)
(e)
(f)
(g)

Packing Press
Tubular Preheater
Separator
Vacuum Filling Machine

1 No.
1 No.
1 No.
1 No.

(h)
(i)
(j)

Seaming Machine
Tunnel Pasteurizer/cooler
Can Dryer

1 No.
1 No.
1 No.

(k)
Syrup Line
Labeling and Packing
Line
Miscellaneous
Equipment and
Accessories

Belt Conveyors

1 No.
1 No.
1 No
-

The total cost of machinery and equipments would be Rs.100.00 lacs.

2.3 Miscellaneous Assets:
Other assets like belts, pulleys, pumps, furniture and fixtures, storage racks
and bins, plastic crates and tubs, etc would cost Rs.8.00 lacs.
2.4 Utilities
The power requirement shall be 100 HP whereas water requirement will be
10,000 litres every day. The total cost of power and water would be Rs.12.00
lacs per year.
2.5 Raw and Packing Materials
Yearly requirement of pineapples will be 3600 tonnes. West Bengal alone
grows more than 75,000 tonnes of pineapple every year and availability of 300
tonnes every month will not be a problem. Other materials like preservatives,
sugar etc. shall be available locally. Packing materials shall be lacquered tins,
labels, corrugated boxes, BOPP tape etc. for which it is advisable to have
confirmed prior arrangements.
2.6 Miscellaneous Assets

The provision for miscellaneous assets has been made to the extent of Rs. 8.00
lacs. These include assets like belts, pulleys, pumps, furniture and fixtures,
storage racks and bins, plastic crates and tubs, etc The details are furnished
earlier.
2.7 Preliminary and Pre-operative Expenses:
The registration charges, establishment expenses, trial run expenses, interest
during implementation etc would be around Rs. 10.00 lacs.
2.8 Working Capital Requirement
At 60% utilization in the first year, the total working capital needs shall be as
under:
Particulars

Period

Margin

Total

Stock of Raw and

Packing Materials

Month

3,000.%

6.3

4.4

1.9

Stock of Finished
Goods
Receivables

Month

2,500.%

7.4

5.55

1.85

Month

2,500.%

9.

6.75

2.25

Working Expenses

1 Month

10,000.%

2.

--

2.

24.7

16.7

8.

Total

Bank

Promoters

3.0 MANPOWER REQUIREMENTS

No.

Particulars No
1
2.
3.
4.
5.
6.

Plant Operators
Skilled Workers
Semi-skilled Workers
Helpers
Clerk
Salesman

4
6
4
6
1
2

4.0 TENTATIVE SCHEDULE

Monthly
Salary (Rs.)
3500
2500
1750
1250
2500
2500
Total

Total
Monthly
14000
15000
7000
7500
2500
5000
51000

Activity

Period (in
months)

Application and sanction of loan

Site selection and commencement of civil work

Completion of civil work and placement of

orders for machinery

Erection, installation and trial runs

5.0 FINAL COST OF PROJECT AND MEANS OF FINANCE SHEET

Items
Land and Building
Plant and Machinery
Miscellaneous Assets
Preliminary and Pre-operative Expenses
Contingencies @ 10% on land and
building and machinery
Working Capital Margin
Total
Means of Finance
Promoter's Contribution
Bank Loan/ Financial Institutions
Total
Debt Equity Ratio
Promoters Contribution

Amount
19.5
100
8
10
12
8
157.5

47.5
110
157.5
2.37 : 1
30%

Financial assistance in the form of grant is available from the Ministry of Food
Processing Industries, Govt. of India, towards expenditure on technical civil
works and plant and machinery for eligible projects subject to certain terms
and conditions.

6) Sources of Finance:
Partners Capital

4750000=00

Bank Term Loan

Total Project Cast :

11000000=00
15750000=00

7.0 PROFITABILITY CALCULATIONS

7.1 Production Capacity and Build-up
The installed production capacity of canned pineapple products would be 3600
MTA. The capacity utilization of 60% and 70% is planned during the first two
years.
7.2 Sales Revenue at 100%
Product

Qty Selling
(Tonnes)

Price
Per Ton.

Value

Pineapple Slices

1350

11000

148.5

Pineapple Juice

1550

14000

217

Total

365.5

7.3 Raw and Packing Materials Required at 100%

Products

Quantity

Rate

Value

(Tonnes)

per ton

Pineapples

3600

2000

Sugar

Preservatives, essence, etc.

--

Packing materials@Rs.3000/Ton

--

--

87

Total

210

72
45

7.4 Utilities
The annual cost of utilities at 100% capacity level would be Rs. 12 lacs.

7.5 Interest
Interest on term loan of Rs. 110.00 lacs is calculated @ 14% per annum
assuming repayment in 6 years including a moratorium period of one year,
whereas on bank finance for working capital, it is taken @ 14% per annum.

6.6 Depreciation
It is calculated on WDV method and rates considered are 10% on buildings
and 20% on plant and machinery and other assets.
8.0 PROJECTED PROFITABILITY
No.

Particulars

Installed Capacity

1st Year

2nd Year

------ 3600 MTA-----

Capacity Utilization %

60%

70%

Sales Realization (Rs.Lacs)

219.3

255.85

Raw and Packing Materials

126

147

Utilities

7.2

8.4

Salaries

6.12

7.25

Stores and Spares

2.4

3.6

Repairs and Maintenance

3.6

4.8

Selling Expenses @ 10%

21.9

25.6

Administrative Expenses

3.6

4.8

Total

170.82

201.45

Profit before Interest &

Depreciation
Interest on Term Loan

48.48

54.4

14

11.9

Interest on Working Capital

2.35

2.95

Depreciation

17.85

15.25

Net Profit

14.28

24.3

Income Tax @ 20%

2.25

4.85

Profit after Tax

12.03

19.45

Cash Accruals

29.88

34.7

Repayment of Term Loan

--

20

Cost of Production
B

9.0 BREAK EVEN POINT ANALYSIS

No.

Particulars

A
B

Sales
Variable Cost

Amount
219.3

Raw and Packing Materials

Utilities (70%)
Salaries (70%)
Stores and Spares
Administrative Expenses (50%)
Selling Expenses (70%)
Interest on Working Capital
Total
Contribution
Fixed Cost
Break Even Point (D/ C)

C
D
E

126
5.04
4.28
2.4
1.8
15.33
2.35
157.2
62.1
37.82
61%

10. Debt Service Coverage Ratio (DSCR)

Particulars

1st Yr

Cash Accruals
Interest on Term Loan
Total (A)

2nd Yr

3rd Yr

4th Yr

5th Yr

6th Yr

29.88
14
43.88

34.7
11.9
46.6

38.64
9.1
47.74

43.19
6.3
49.49

47.02
3.5
50.52

50.28
1.9
52.18

14

11.9
22

9.1
22

6.3
22

3.5
22

1.9
22

14

33.9

31.1

28.3

25.5

23.9

Interest on Term Loan

Repayment of Term
Loan
Total (B)

--

DSCR (A) (B)

Av. DSCR

3.13
1.37
1.53
1.74
2.02
2.18
-----------------------------------2.00----------------------------------------------------

11. IRR
Year
1
2
3
4
5
6
7

Cash Accruals

16%

29.88
34.7
38.64
43.19
47.02
50.28
52.73
296.44

25.76
25.78
24.77
23.84
22.38
20.61
18.67
161.81

18%
25.31
24.91
23.53
22.29
20.55
18.6
16.56
151.75

20%
24.89
24.08
22.37
20.82
18.9
16.84
14.71
142.61

The IRR is around 17%.

IV) CONCLUSIONS:
1.

The business is related with basic market segmentation, i.e. Food in the
premium (canned pineapple slices) and middle (pineapple juice) class
category. A health conscious target market thus ensures sustainability of

2.

the business.
This business is using standardized processing procedures; it will
provide high quality of processed pineapple slices and juice.

3.

Partners of this business have agriculture and operations background,

4.

which is an essential aspect for smooth functioning of the business.

Gross Profit is reasonably high, as compared with other businesses to

7.

cover increasing administrative costs in future.

Partners are ready to offer security for loan as per the terms and
conditions of the Bank.
After studying all above financial analysis and practical aspects of this

project, it is feasible and profitable for the partners and is very secure and
beneficial for financial institutions for offering term loan.
-------//////------