1 Pak Animal Feed Mill

A Project on:

Pak Animal Feed Mill

Submitted To: Sir Javeed Iqbal Submitted By: Muhammad Arshad Muhammad Qasim Irfan Siddique Muhammad Younis M. Com 4th (Morning) Session 2008-2010 72 113 73 65

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2 Pak Animal Feed Mill

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Preface Dedications Acknowledgement Executive Summary: Company Profile a. Address of Company b. Location of Project c. Product Range Mix d. Installed Capacity e. Capacity achieved Estimated Cost of Project f. Fixed Cost g. Initial Working Capital Means of Finance Names of Financiers Names of Civil Contractor Names of Machinery Suppliers Machinery Detail Machinery Implementation Schedule SWOT Analysis Market Analysis Technical Analysis Personnel Analysis

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4 Pak Animal Feed Mill 18 19 20 21 22 23 Financial Analysis Schedule of Cost of Project Assumptions Project Return and Ratios, Means of Finance Project Visit Highlights End words

Project Management is an integral part of M.com Specialization in Finance, because it gives us the practical knowledge of what we have learnt during our study period. Now a day the business environment keeps on changing everywhere. New dimensions of business are coming before us. These dramatic and dynamic changes in business world require the specialties about the all aspects of business of today. Because of these requirements business knowledge became important and business education becomes the need of time. The person with latest knowledge can survive in this vast field. The purpose of the project feasibility is to broaden the vision of practical experiences with theoretical knowledge as it increases one’s capabilities to handle problems at various stages and the ability of decision. We have tried our best to collect the valuable information and its relevant facts regarding the animal’s feed mill plant. We also have visited the plant working at Industrial State Multan (food & feed mills) for making our project reliable and successful. This project concerning with animal food production namely “PAK ANIMAL

FEED MILL”.
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Muhammad Arshad Muhammad Qasim Irfan Siddique Muhammad Youni

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We pay our humble gratitude, with humility and submission, to ALLAH, the Almighty, the Omniscient, the Omnipotent & the Omnipresent, who bestowed our potential to accomplish this task. The completion of this issue is, mere, the blessing of ALLAH and Holy Prophet Hazrat Muhammad (S.A.W).

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Secondly, we must mention “Sir Javed Iqbal” for being kind enough to extend his baseline guidance in the completion of this project report. We also thank everyone else including our respectable teachers and outspoken friends of the Department who helped in one way or another in the completion of this project.

Title “PAK ANIMAL FEED
Project Assignment:

MILL”

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Each student of M.com. (Finance) 4rd semester required preparing a sold Project Assignment. The Project assignment is given to increase our knowledge about “Project Management”. Objectives: SWTO analysis of Cattle Feed. 2. Identify and list down the all aspects and important points of Feed Industry. 3. What is a Production Process. 4. What is Cost of unit, Means of finance, Estimated income statement, Estimated Balance sheet, etc.
1.

Approach to Project: The Team of project will, analyze, summarize, and interpret the data, which are 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. Primary Sources: The Team of Project personally visited the FOOD & FEED MILL for practical view: Unit selected is; ‘PREMIUM FEED MILL MULTAN’ Questionnaire:
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Project Team has prepared a Questionnaire that contains 100 Questions and exists on 15 pages for Management of ‘PREMIUM FEED MILL MULTAN’ . Data Preparation & Analysis: After collection of all the data through both primary & secondary means, team will used MS. Word, MS. Excel, MS. Power point etc. Time Frame: Time period is allowed is one month 10/8/2010 to 15/06/2010. Limitation: Team has visited the various people but the information given by them is just based of approximation.

Name of Project
‘PAK ANIMAL FEED MILL’

Location of Project
Head office:
Tel:
9 P.O. BOX. 1245 SAMA SATHA ROAD Bahawalpur 0622-88595

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10 Pak Animal Feed Mill

Fax: Contact Person: E-mail: Branch:

+92-62-88834, 777523 Hasan Qureshi ( CEO) arshad_14u11@ yahoo.com Muhammad Arshad Sama Satta Link Road Bahawalpur.

CITY
“ Bahawalpur”

LOCATION
“At K.L.P road near Asia Ghee mill”

PRODUCTS
1. Milky Wanda 2. Fat Wanda

Installed Capacity
The capacity of projected plant produces 364,454 Bags at 100% Efficiency per Year.

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Cost of Project

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Fixed Cost Initial Working Capital +

46,229,877 23,770,123 70,000,000

Means of Finance
Debt Equity 60% 40%

Names of Lender
Muslim Commercial Bank Ltd. Bahawalpur.

Names of
A.M.ARSHAD B.M.QASIM
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C.IRFAN SADIQUE D.YOUNIS KANJO

Name of Civil Contaractor
“Amin & Co. LDA Plaza, Lahore” .

Name of MachinerySupplier
“Uzair & Co. Engineering Limited,Lahore” Implementation Schedule

Implementation Schedule:
Over project is constructed with in months and the construction period is start for May 30th 2010. The estimated implementation Schedule is as follows. Selection, Purchase and the Registration of Land. 1st June to 20th June Construction of Building 25th June to 25th November. Arrival and installation of Machinery 10th July to 15th December The production of the firm is now started January 1st 2011 and they work properly for fulfill the demand of the animal feed.
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Address of Company:
At K.L.P road near Asia Ghee mill Head Office of Pak Animal Feed Mill is Located in the heart of Bahawalpur city which is easily approachable by key regions of Punjab.

The processing unit is located in Ashraf Abaad near Ashraf Suga Mills 2 Km From Khanga Shreef.

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Unit is producing two basic types of “Pak Wanda” for different categories of Animal i.e. 1. Pak Milky Wanda for Milky Animals

2. Pak Fat Wanda

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Installed capacity of our processing unit is 100 percent, which is 41tonns per day

Currently the unit is achieving the capacity of 75 percent, which is 30 tonns per day

Total Estimated cost of project is Fixed Cost 15 Rs
46,229,877

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16 Pak Animal Feed Mill Initial Working Capital
Total cost of project

Rs
Rs

23,770,123 70,000,000

Mixture

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18 Pak Animal Feed Mill is a pre-requisite in profitable dairy and livestock farming. • Feed Processing Unit establishing according to modern techniques with proper utilization of locally available cheaper feedstuffs leads to success in dairy and livestock farming hence for feed business too.

Weaknesses
• Limited availability of protein sources of standard quality due to low or limited production, processing technology, variable composition and adulteration. • • • Comparatively poor nutrient composition of home-grown feed ingredients due to differences in varieties and use of improper soil fertilizers. Improper use of pesticides, the residues of which result in poor feed utilization. Lack of proper storage facility. Due to this fact various agricultural products when produced under quite high moisture content, thus liable to be affected with insect damage, auto-oxidation and fungal contamination. • Lack of nutritional data of indigenous feed ingredients particularly for amino acids, energy, vitamins, minerals and by pass protein value especially in high producing cattle/buffalo. • Improper storage, transfer, grading, feed milling and mixing of feed ingredients may also affect the quality of feed.

Opportunities
• The annual growth rate in livestock population of Pakistan was 3.8 percent (Economic Survey of Pakistan, 2007-08) due to which there is demand for compound feed. The increased productivity would require better feed utilization and increase in overall feed availability both from fodder crops and formulated compound feed. 18

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19 Pak Animal Feed Mill • • The agro industrial by products can be better utilized in formulated compound feed. In order to meet the rapidly increasing demand for the various kinds of livestock products (Milk & meats), the better rations with improved feed formula are needed to get more meat and milk, for the same feed supplies. By increasing livestock numbers, rather than their average weight, the feed requirements are much larger.

Threats
• • Implementation of WTO. Open and competitive commodity pricing There is no feed ingredient quality control program as improper storage, transfer, grading, feed milling and mixing of feed ingredients may also affect the quality of feed. • • The prices of different feedstuffs vary through out the year. Improper storage of raw material can affect its nutritional value. There is limited availability of protein sources of standard quality due to low or static production, processing technology, variable composition and adulteration. • Lack of awareness among dairy and livestock farmers to use compound feed for the high production of their animals is a constant threat for feed mill business as well.

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The size of this sector is still growing. Animal feed mills have been set up around the areas where the livestock are kept in abundance. Feed is a major cost (about 70%) in livestock and dairy farming. The processing and manufacturing of feed along with the efficient use of feed by cattle also contribute to the cost of feed. NWFP is a relatively poor province with average income levels estimated to be about 10% lower than the rest of country. The provincial economy is mostly agrarian with a limited industrial base. The Agriculture sector contributes 30% of GDP and out of this sub sector Livestock alone contributes 18% to GDP. The demand for compound feed and Urea Molasses Blocks (UMB) is increasing day by day with the increase in awareness among farmers. No animal feeds a mill is operating in the surrounding areas of the project, therefore it is obvious that the project shall yield better results The trend for concentrate feeding to livestock is changing from the conventional concentrate feeding to a formulated compound feed. Nowadays, compound feed is used by many livestock and dairy farmers to get the maximum potential in terms of milk and meat. Compound feed and UMB are very beneficial as both provide all essential nutrients to the animal. PRODUCT MANUFACTURING PROCESS
The compound feed preparation process requires. a) High accuracy and precision of weighing b) feed ingredient handling and processing c) Mixing

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d) Packing e) Labeling

A liquid storage and a direct-weight system for adding fat, molasses, and water is required. Grain processing is done through hammer mill grinding. Mixed feed is delivered in bags or bulk load out to livestock farms.

Raw Material Requirement:
Cattle are ruminant animals with four compartment stomach, capable of utilizing fibrous feedstuffs (forages, roughage, and by product feeds) and Non-Protein Nitrogen (NPN) source like urea that humans cannot utilize. By producing a high-quality protein from these resources otherwise unusable by humans, cattle make a positive contribution to human nutrition in terms of meat and milk

Suggested marketing pattern should be as follows

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Product Motton Beef Milk

Demand 820 999 15044

Supply 723 1087 28624

Gap (97) 88 13580

% Surplus/Deficit (13)% 8% 90%

Target Market:
The target markets of our project national market. Initially we will sell our product to target region of Multan, Lodharan, Bahawalnagar, Rahim yar khan and Bahawalpur. Punjab, the nutritional requirements are mainly met through fodder crops, shrubs, grasses, and agro industrial wastes. Punjab produces about 45 million tonnes of fodder from 2.03 million hectares of land with an average yield of 22 tonnes/ha (Younas and Yaqoob, 2005). The existing available feed resources can only fulfill the maintenance requirements of animals. Improving the quantity and quality of feeds could substantially enhance livestock production from the existing genetic pool of animals. The gap between the requirement and availability ofnutrients could be minimized both through proper

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23 Pak Animal Feed Mill fodder research and extension policies in terms of better quality seed, seed rate and improved agronomic practices. The National Commission on Agriculture (NCA) 1988 suggested that "if all animals in milk receive full diet which meets their daily appetite without changing the feed mix i.e. maintaining the present poor nutritional requirement balance, this alone could increase milk yield by 100 per cent."

Table 4-3 Livestock (Population Growth) (Numbers in Millions)
Fiscal Year 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 Buffaloes 23.3 24.0 24.8 25.5 26.3 27.3 28.2 29.0 Cattle Goats Sheep Poultry 22.4 49.1 24.2 292.4 22.8 50.9 24.4 330.0 23.3 52.8 24.6 346.1 23.8 54.7 24.7 352.6 24.2 56.7 24.9 372.0 29.6 53.8 26.5 433.8 30.7 55.2 26.8 443.2 31.8 56.7 27.1 510.1

Opportunity Rationale
Livestock production is an integral part of Pakistan's agriculture sector and plays a vital role in national economy. At present, livestock is contributing about 52% to the agricultural sector and 10.9% to the GDP. Pakistan is geographically located close to the Middle East and South-East Asia. Both of these regions are deficient in livestock products and depend upon import from other countries. The livestock industry in most of the developed world is highly subsidized. With reduction of subsidies in the wake of WTO, the local livestock sector should have better opportunities to compete. Livestock registered a strong growth of 4.30% over the last year’s impressive growth of 7.5% due to increase in the livestock and poultry products. The role of livestock in rural economy may be assessed by the fact that 30 to 35 million of the total rural population is engaged in livestock farming, having 2 to 3 23

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24 Pak Animal Feed Mill cattle/buffalo and 5 to 6 sheep/goats per family deriving 30% to 40% of income from it. During year 2007-08, the total red meat production was 1.55 and 0.58 million tons for beef and mutton, respectively. The per capita consumption indicates a growing demand of meat in the years to come. Calves for F attening may come from the dairy herd
Duping machin Chain convener Hopper Rotary chain Mixture Evulator Pilot machin Roster Boilor Cooler Grander machine Packing hoper Electronic Genrator Generator 1 1 2 1 1 1 1 1 1 1 1 1 1 400000 50000 55000 25000 150000 130000 250000 150000 90000 100000 160000 100000 100000 400000 50000 55000 25000 150000 130000 250000 150000 90000 100000 160000 100000 100000

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Major machinery of Pak Animal Feed Mill is brought from Germany and France. But we have also acquired the local machinery which is easily available and economical in Pakistan. Hooper Elevator and Grinding Machine, Motors, Items of local Machinery Sr.# Name of Machinery 1 Duping machine 2 Chain convener 3 Hopper 4 Rotary chain 5 Boilor 6 Cooler 7 Grander machine 8 Packing hoper 9 Electronic Genrator Items of foreign Machinery Sr.# Items 1 Mixture 2 Elevator 3 Pilot machin 4 Roster Qty 1 1 1 1 Qty 1 1 2 1 4 1 1 1 5

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Boiler

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Elevator

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Packing machine

Animal Food Process
A. Factory Staff (Including Managerial, Technical, Skilled and un-skilled ).
Annual Salary 2011 780000 720000 1200000 600000 2520000 792000

1 2 3 4

Designation CEO G.M(Doctor) Techical manager Financial manager Doctors Supervisor

number 1 1 2 1 6 3

Salary Pm 65000 60000 50000 50000 35000 22000

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5 6 7 8 9 10 Shift Incharge salary& wages of workers Machine Operator Security Guard Driver Mali Sweeper 1 3 3 3 2 2 16000 3000000 13000 8000 8000 5000 6000 Total A 192000 36000000 468000 288000 288000 120000 144000 44112000 22056000 66168000

Add Fringe Benefits 50% of total

B. Administrative and General Staff Designation Chief Accountant Assistant Accountant Office Boys Receptionist Nunber 1 3 2 1 Add Fringe Benefits 50% of Total Salary PM 55000 35000 10000 15000 Total B Annual salary 2011 660000 1260000 240000 180000 2340000 1170000 3510000

1 2 3 4

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C. Sales Staff
Desinations marketing mangere Assistnats of M.M Sale Manager Advertising number 1 3 1 Salary PM 50000 35000 40000 240000 Total C A.salary 2011 600000 1260000 480000 240000 2580000 1290000

1 2 3 3

Add Fringe Benefits 50% of Total

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Ratio
Gross profit Margin Operating Profit Margin Net Profit Margin
40% 36% 18% 48% 44% 25% 50% 47% 27%

Assumption
OPERATING ASSUMPTIONS Working days in a year Shifts Operational Hours per shift Initial year Capacity utilization Production Capacity (Tons per Anum) Annual Production Capacity (Tons) One bag contain Maximum Capacity utilization Accounts receivable

301 1 8 60% ( Ton per day) kg 40 12,040 37 90% 10%
1 ton= 1man= 1 bg of sale

COST OF SALES ASSUMPTIONS Raw Material Cost growth rate Wastage Packing cost groth rate Packing Cost (Rs./Bag) Electricity Growth rate Salaries Growth rate Repair and Maintenance (as percentage of machinery) Repair and Maintenace Growth Rate Depreciation on Plant and Machinery Depreciation on Land and Building Depreciation on Furniture and Fixture Deperciation on Office Equipment Ending inventory other munfaturig expenses erection and installation chages of machinery Depreciation on Motor Vehicle (Straight Line method) Operating Assumptions Telephone and Telex (per month) Rs. 3,000 )

5% 2% 3% 25 8% 10% 5% 5% 10% 5% 10% 10% 10% 10% 20% 4500

2011 25

2012 25.75

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Administrative Expense growth rate 10% Printing and Stationery (per month) Rs. 2,000 Legal & professional charges (annual) Rs. 10,000 Traveling & conveyance (per month) Rs. 5,000 Marketing and Promotional Expenditures Rs. 5,000 Amortization of pre-operating expenses yrs. 5 Tax rate 35% Account payable Dividend of profit
retained earning Accured Expense Account Receiveable

10% 2,500 10000 60000 80000
15%

35% 10% 40%
60% 5% 10% 20 700

of rawmaterial

of sale of sale

Assumption of Revenue Sale price per kg kg RS Sale price per bag(37 kg)

Means of Finance
Debt 60% Equity 40% 42,000,000 28,000,000 70,000,000

Initial working capital

Current Assets
Cash Account Recivable Raw material inventoru Advances and Deposits Total Current liabilities Account Payable Notes Payable Total Intial Working Capital

RS
8000000 13,776,363 3000000 3993759 28,770,1 22

2000000 3000000 5000000 23,770,1 22

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Cost of the project
Cost of The project local Foreign Total

Land and it divelopment Building and civil worker local Machinery Foreign Machinery Marine insurance,imoprt lience fee Clearance and internal fees l frieght Import and Ipra Surcharge Furniture and Fixture Vehicles Pre-production Expense Engineering and Technical Fee Office Equipment Others contigenies Intrest During Construction Errection and instalation Total fixed Cost intial working capital 33

13110000 12850000 820000 940000 3% 20% 1% 28200 188000 9400 226000 12220000 324000 150000 103500 1273709 3,811, 068 176, 000

13110000 12850000 820000 940000 28200 188000 9400 226000 12220000 324000 150000 103500 1273709 3,811,068 176000 46,229,877 23,770,122

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34 Pak Animal Feed Mill Total cost of the project

70,000,000

Income statement
For the year ended sales Cost of Sales Gross Profit Operating Expense a)Admenisrative&General expenses b)selling expenses Total operating expense Operating Profit Non operating expense Financial Expense Worker particaption fund Worker welfare fund Amortization Total non operating expense Profit Before taxation Income tax Net Profit after tax Dividend Retained earnings 2 13,602,16 6 25,261,16 6 10,104,46 6 15,156,70 0 3 6 25,776,59 9 17,184,39 0 42,960,98 60% 2011 70% 2012

137,763,632 82,109, 813 55,653,820 4394000 1290000 5684000 49,969,820 7,560, 000 2,498, 491 999, 396 48600 11,106, 487
38,863,33 9

174,500, 601 90,724,066 83,776,535 4715600 1419000 6134600 77,641,935 6,064, 570 3,882, 097 1,552, 839 48600 11,548, 105
66,093,82 23,132,84

80% 2013 201,134, 903 100,086,974 101,047,929 5122312 1560900 6683212 94,364,717 4,536, 000 4,718, 236 1,887, 294 48600 11,190, 130 83,174, 587 29,111, 105 54,063, 482 21,625, 393 32,438, 089

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Balance sheet
As on Rs. Assets Current Assets Cash balance Account recievble ending inventory Advances deposits & other short term investment Cash &bank balance Total current Assets Fixed Assets Fixed assets Less:Acc. Dep. Net Fixed Assets Pre-Production Exp. Less Amortized Net Pre-Production Exp. Sub total Total Assets Liabilities and owner's equity Current liabilities Account payables current maturity of L.T. loan Notes payable intrest payable Accrude expense worker paticaption fund Worker welfare fund 23 ,770,122 4,787,438 13776363 15,307,070 63,218,2 29 47,911,8 41 20113490 22,348,3 23 2010 Rs. 2011 Rs. 2012 Rs. 2013

0 23,770,12 2 45,905,87 7 45,905,87 7 324,000 324,000 70,000,00 0 63,218,2 29 42,610,4 27 3,295,45 0 39,314,9 77 275,40 0 48600 226,80 0 102,760,0 06 90,373,6 54 39,314,9 77 3,295,4 50 36,019,5 27 226,80 0 48600 178,20 0 126,571,3 82

33,870,872

45,905,877 3,295,450 42,610,427 324,000 48600 275,400

76,756,699

0

226,713. 20 8,400,00 0

8,400,0 00

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tax payable Total Current liablities Long Term Liabilities 42,000, MCB Sub Total Total liabilities Owner's equity Capital & reserves: Capital Retained earning 28,000, Sub Total Total Liabilities & Equity 000 70,000, 000 76,756,699 06 43,156,699 93 102,760,0 000 000 42,000, 000 42 ,000,000 33,600,000 13 33,600,000 00 33,826,7 00 33,600,000 00 25,200,0 00 25,200,0

0

0

8626713 25,200,0 00

8400000 16,800,0 16,800,0

28,000, 28,000,000 15,156,700 00 93

28,000,0 00 40,933,2 68,933,2

28,000,0 73,371,3 82 101,371,3 82 126,571,3 82

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Cash flow statement
For the Year Ended Rs. Sources Net profit before tax Add:Dep. & Amort. Equity Other Sources Long Term Loans increase in Current liabilities Decrease in Current assets Total Uses Fixed Asset Pre-Production Exp. Long Term Loans 2010 Rs. 38,863,332 3344050 28,000,000 42,000,000 8,626,713 29083434 107148026.2 (226,713) 2011 Rs, 66,093,829 3344050 2012 2013 Rs. 83,174,587 3344050

70,000,000 45,905,877 324,000

42,207,382

86291923.83

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Re-Payment of:. Amounnt of loan paid Financial charges Workers particaption fund Workers welfare fund Tax Paid Profit Distribute Dec in liability Inc in Current asset Total Net Cash Inflow/ (Outflow) Balance Opening Balance Closing

8,400,000

8,400,000

8,400,000

0 0 46,229,877 23, 770,122 0 23,770,122

13,602,166 10,104,466 29083434 61,190,066 (18,982,684) 23,770,122 4,787,438

23,132,840 17,184,396 48,717,236 58,430,790 4,787,438 63,218,229

29,111,105 21,625,393 42461813 101,598,311 (15,306,387) 63,218,229 47,911,841

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