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M/S SRIKANTH TRADERS Peragalapudi.

_________ PROJECT REPORT

July 15, 2008

M/S SRIKANTH TRADERS, PERAGALAPUDI.

SYNOPSIS 1. 2. Line of activity Promoter : : Rice milling (Job works) Smt V. Padmarani, W/O Sri B. Dasu, Chukkapalli vari palem village, Peragalapudi Post, Duggirala mandal, Guntur District. Mobile: 99635 15538. M/S Srikanth Traders S. No. 19 B, Peragalapudi village, Duggirala mandal, Guntur District. 2 Tons per hour Rs 21.50 Lakh Rs 3.50 Lakh Rs 18.00 Lakh Rs 7.000 Lakh 16.27 % 7 14.5 % p. a. 60 monthly instalments @ Rs 42,351/1.800 1.633 27.68 %

3. 4.

Name of the unit Proposed location

: :

5. 6. 7.

Installed capacity Project cost Means of finance a) Promoters contribution b) Loan from APSFC Investment subsidy from Govt. of A.P. Promoters margin Employment potential Rate of interest Repayment Debt - equity ratio Debt service coverage ratio Breakeven point

: : : : : : : : : : : :

8. 9. 10. 11. 12. 13. 14. 15.

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M/S SRIKANTH TRADERS, PERAGALAPUDI.

1.

INTRODUCTION

India is the second largest producer of rice in the world with an annual production of more than 120 million tonnes. Paddy occupies the first place both in area and production in India. Rice is the staple food for 65% of the population in India. It is the largest consumed calorie source among the food grains.

Andhra Pradesh is the third largest producer of paddy in the country. India is also one of the leading exporters of rice in the world market. Indian rice has become highly competitive and has been identified as one of the major commodities for export. This provides us with ample opportunity for development of rice based value added products for earning more foreign exchange.

Paddy or rice grain consists of husk and brown rice. Brown rice, in turn, contains bran which comprises the outer layer and the edible portion. Rice milling is removal or separation of husk and bran to obtain the edible portion for consumption. Processing of rice bran for oil extraction is also an important agro processing activity for value addition, income and employment generation.

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2.

THE FIRM

The proposed unit is to be established as a sole proprietary concern in the name of M/S Srikanth Traders with its works to be located in Peragalapudi village of Duggirala mandal in Guntur district.

3.

PROMOTER

Smt V. Padmarani is the promoter of the proposed unit. Aged about 40 years, she has graduated in Agricultural Sciences and has got sound business acumen. Her husband, Sri V. Dasu, is a Postgraduate and has fair knowledge of the production process. He has been in the business field for the past five years and has got wide contacts in and around Duggirala mandal. Moreover, he is dynamic, can work vigorously to attract new works and can run the unit successfully.

4.

MARKET POTENTIAL

Rice is the staple food diet in most parts of India and Andhra Pradesh. The proposed location of the present unit, Peragalapudi is in the midst of paddy cultivation area. Paddy is the most important agricultural commodity in and around Duggirala mandal. The mill acts as a service unit for custom milling. Wide range of contacts for the promoters family in and around Peragalapudi village can attract good

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M/S SRIKANTH TRADERS, PERAGALAPUDI.

proportion of service milling business. Moreover, The by-product, Rice bran is a source of valuable edible oil.

5.

MANUFACTURING PROCESS

Paddy in its raw form cannot be consumed by human beings. It needs to be suitably processed for obtaining rice. Rice milling is the process which helps in removal of hulls and barns from paddy grains to produce polished rice. Rice forms the basic primary processed product obtained from paddy and this is further processed for obtaining various secondary and tertiary products.

The basic rice milling process consists of: 1. Pre cleaning: 2. De-stoning: 3. Husking: 4. Husk aspiration: 5. Paddy separation: 6. Whitening: 7. Polishing: Removing all impurities and unfilled grains from paddy Separating small stones from paddy Removing husk from paddy Separating the husk from brown rice / un husked paddy Separating the un husked paddy from brown rice Removing all or part of the bran layer and germ from brown rice Improving the appearance of milled rice by removing the remaining bran particles and by polishing the exterior of the milled kernel

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M/S SRIKANTH TRADERS, PERAGALAPUDI.

8. Length Grading:

Separating small and large broken rice from head rice

9. Blending:

Mixing head rice with predetermined amount of broken rice, as required by the customer

10. Weighing & bagging:

Preparing the milled rice for transport to the customer

6.

POLLUTION CONTROL

There is no major pollution problem associated with this industry except for disposal of waste which should be managed appropriately. The unit is proposed to be set up in a non residential area. The entrepreneur is advised to take consent for establishment and operation from the Pollution Control Board.

7.

ENERGY CONSERVATION

Only electricity is used as the source of energy. General precautions for saving electricity are required to be followed by the unit by adopting energy conservation techniques. This will conserve power and save considerable expenditure for the promoter but also serves the interest of the nation as a whole.

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RAW PADDY PRE CLEANING DE STONING HUSKING HUSK ASPIRATION PADDY SEPARATION WHITENING POLISHING LENGTH GRADING BLENDING Mixing WEIGHING & BAGGING

Flow chart of the process

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M/S SRIKANTH TRADERS, PERAGALAPUDI.

8.

PRODUCTION CAPACITY

Product Installed capacity Workers Working days Motive Power

: : : : :

Rice milling 2 MT per hour 10 300 p. a. (1 shift) 55.20 KW

Capacity utilization 1st year 45% 2nd year 50% 3rd year 55% 4th year 60% 5th year 65% : : : : : 2160 MT 2640 MT 3120 MT 3660 MT 4080 MT

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PROJECT COMPONENTS

a) Land

About 20 Cents

b) Civil works

Cleaning unit Drier and necessary supporting structures such as blower system etc. Milling section Machine rooms Office room Toilet Miscellaneous space Boundary wall and gate Paddy stone pre-cleaner with dust blower Rubber roller Sheller Husk aspirator Paddy separator--4trays Rice whitener Bran processing system Rice sieve aspirator Modified double elevators--3 no & Electricals (AC-3 phase induction motors for each machine, DOL starters, control panel, internal wiring and lighting) Fixtures, steel ladders and platforms for cleaning of machines, fire fighting arrangements etc. Deep tube well and pump Generator Office furniture etc. Manager / Entrepreneur Supervisor Skilled workers Unskilled workers Watchman 1 1 2 2 1 no no no no no

c) Machinery

e) Other Equipment

f) Man power

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M/S SRIKANTH TRADERS, PERAGALAPUDI.

g) Utilities

i) Electricity ii) Water

: :

Estimated power load from grid is 74 HP Water is required for domestic consumption purpose only. A deep tube well is proposed to be dug up in the premises to meet the requirement of water.

10. APPROVALS REQUIRED


1. Entrepreneurs memorandum Part-1 from DIC 2. Approval from Gram Panchayat 3. Power connection from AP TRANS Co 4. Acknowledgement from APPCB 5. Licence from Factories Department

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11. TENTATIVE IMPLEMENTATION SCHEDULE


a) Filing Entrepreneurs memorandum Part-1 with District Industries Centre & b) Submitting application for financial assistance to APSFC c) Sanction of loan from APSFC d) Getting necessary approvals through single window scheme of Govt. of AP e) Arrangement of margin money f) Release of loan g) Development of site & construction of building h) Purchasing machinery and installation i) Trial production 7 days

30 days 45 days

10 days 10 days 45 days 30 days in 7th month

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12. FINANCIAL ASPECTS

I) FIXED CAPITAL a. Land & Building S No 1 2

Description Land 20 cents Civil works Total

Value in Rs. Lakh 1.000 8.000 9.000

b. Machinery & equipment

S No 1 2 3 Machinery

Description

Value in Rs. Lakh 8.100 0.400 0.500 9.000

Electrical accessories like induction motors, starters, control panel, internal wiring & lighting Freight, taxes, erection and commissioning charges Total

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c. Other fixed assets

S No 1 2 3 4

Description Cost of office furniture & accessories Security deposit to Transco etc Cost of deep bore well, pump, pipelines & overhead water tank Preliminary & preoperative expenses including project preparation, technical consultancy, contingencies & miscellaneous expenses Total

Value Rs Lakh 0.100 1.500 0.750 0.150 2.500

Total Fixed Capital (a + b + c)

20.500

II) RECURRING EXPENDITURE PER ANNUM

a. Personnel

S No 1 2 3 4 5

Designation Manager Supervisor Skilled workers Unskilled workers Watchman Total

No Salary p.m Rs Amount Rs Lakh 1 1 2 2 1 7 4000 3000 2500 1000 1000 0.480 0.360 0.600 0.240 0.120 1.800

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b. Utilities

Utilities Power charges


74x0.746x8x300 KW Hr x 3.75

Amount Rs Lakh 4.969

c. Other contingent expenses

S No 1 2 3 4 5 6 7

Description Interest on loan Depreciation Insurance @ 3% Repairs & maintenance Telephone Publicity Miscellaneous expenses Total

Amount Rs Lakh 2.585 1.250 0.495 0.100 0.036 0.050 0.100 4.616

Total recurring expenditure (a + b + c) Working capital for 1 month Say

Rs. 11.194 Lakh Rs. Rs. 0.933 Lakh 1.000 Lakh

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13. COST OF PROJECT

S No 1 2 3 4 5

Description Land Civil works Plant & Machinery Other Fixed Assets Working capital Total project cost

Rs. Lakh 1.000 8.000 9.000 2.500 1.000 21.500

14. MEANS OF FINANCE

S No 1 2 3

Description Total project cost Equity Debt

Rs. Lakh 21.500 3.500 18.000

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15. INCENTIVES FROM GOVERNMENT


Government of Andhra Pradesh, vide its GO no 267 dtd 06-10-2007 has extended the certain subsidies/concessions to Scheduled caste entrepreneurs under Industrial Investment Promotion Policy 2005-2010.

a)

100% reimbursement of stamp duty and transfer duty paid by the industry on purchase or lease of land/shed/buildings meant for industrial use.

b)

100% reimbursement of stamp duty and transfer duty paid by the industry on financial deeds and mortgages etc.

c)

35% subsidy on fixed capital investment to men and 40% to women entrepreneurs up to a maximum of Rs 50 Lakh

d)

Reimbursement of power cost @ Rs 1/- per unit consumed for 5 financial years.

e) f)

50% reimbursement of sales tax paid in a financial year for 5 financial years. 5% interest subsidy on the interest paid over and above prime lending rate (PLR) will be given on the term loan and working capital loans taken by new Tiny/SSI industrial units subject to a maximum of Rs5.00 Lakh per year for a period of 5 years for SC entrepreneurs

g)

50% subsidy on expenses incurred for quality certification limited to Rs. 1.00 Lakh.

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The promoter of the proposed project being an SC entrepreneur will be greatly benefited by the above incentives of the Government.

Total fixed capital investment of the project Investment subsidy @ 40% Estimated power cost reimbursement

Rs. 17.500 Lakh Rs. 7.000 Lakh Rs. 1.320 Lakh p.a

These incentives definitely go a long way in reducing the debt component of the project to 51.16 % of the total project cost. Moreover, the investment subsidy shall be released as soon as the term loan is disbursed and all these subsidies shall be credited to the loan account of the unit.

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16. DEPRECIATION STATEMENT


a) Building Value Rs. Lakh 8.000 7.600 7.220 6.859 6.516 6.190 Depreciation @ 5 % Rs. Lakh 0.400 0.380 0.361 0.343 0.326 Insurance @ 3 % Rs. Lakh 0.240 0.228 0.217 0.206 0.196 -

Period At start End of 1st year End of 2nd year End of 3rd year End of 4th year End of 5th year

b) Machinery Value Rs. Lakh 8.500 7.650 6.885 6.196 5.576 5.018 Depreciation @ 10 % Rs. Lakh 0.850 0.765 0.689 0.620 0.558 Insurance @ 3 % Rs. Lakh 0.255 0.230 0.207 0.186 0.168 -

Period At start End of 1st year End of 2nd year End of 3rd year End of 4th year End of 5th year

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17. REPAYMENT SCHEDULE


Term loan Rate of interest Repayment period Repayment mode : : : : 18.000 Lakh 14.5 % 5 Years Monthly

Month

Beginning Balance

Payment

Principal

Interest

Ending Balance

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

1800000 1779399 1758549 1737447 1716091 1694476 1672600 1650460 1628052 1605373 1582421 1559191 1535680 1511885 1487803 1463429 1438762 1413796 1388528 1362955 1337074 1310879 1284368 1257536 1230381 1202897 1175081 1146929 1118437 1089600 1060415 1030878

42351 42351 42351 42351 42351 42351 42351 42351 42351 42351 42351 42351 42351 42351 42351 42351 42351 42351 42351 42351 42351 42351 42351 42351 42351 42351 42351 42351 42351 42351 42351 42351

20601 20850 21102 21357 21615 21876 22140 22408 22679 22953 23230 23511 23795 24082 24373 24668 24966 25268 25573 25882 26195 26511 26831 27156 27484 27816 28152 28492 28836 29185 29538 29894

21750 21501 21249 20994 20736 20475 20211 19943 19672 19398 19121 18840 18556 18269 17978 17683 17385 17083 16778 16469 16156 15840 15519 15195 14867 14535 14199 13859 13514 13166 12813 12456

1779399 1758549 1737447 1716091 1694476 1672600 1650460 1628052 1605373 1582421 1559191 1535680 1511885 1487803 1463429 1438762 1413796 1388528 1362955 1337074 1310879 1284368 1257536 1230381 1202897 1175081 1146929 1118437 1089600 1060415 1030878 1000983

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33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 1000983 970728 940106 909115 877749 846005 813876 781360 748450 715143 681434 647317 612787 577841 542472 506676 470448 433781 396672 359114 321103 282632 243696 204290 164407 124043 83191 41845

M/S SRIKANTH TRADERS, PERAGALAPUDI.


42351 42351 42351 42351 42351 42351 42351 42351 42351 42351 42351 42351 42351 42351 42351 42351 42351 42351 42351 42351 42351 42351 42351 42351 42351 42351 42351 42351 30256 30621 30991 31366 31745 32128 32517 32909 33307 33710 34117 34529 34946 35369 35796 36229 36666 37109 37558 38012 38471 38936 39406 39882 40364 40852 41346 41845 12095 11730 11360 10985 10606 10223 9834 9441 9044 8641 8234 7822 7405 6982 6555 6122 5685 5242 4793 4339 3880 3415 2945 2469 1987 1499 1005 506 970728 940106 909115 877749 846005 813876 781360 748450 715143 681434 647317 612787 577841 542472 506676 470448 433781 396672 359114 321103 282632 243696 204290 164407 124043 83191 41845 0

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18. PROJECTED PROFIT & LOSS ACCOUNT STATEMENT RECEIPTS


S No 1 2 3 4 5 5 Particulars Installed capacity in MT Operating capacity % Service in MT Service charge per MT in Rs. Lakh Revenue from sale of rice bran and husk Rs. Lakh Total income 1st year 4800 45 2160 0.005 4.000 14.800 2nd year 4800 55 2640 0.005 5.000 18.200 3rd year 4800 65 3120 0.005 6.000 21.600 4th year 4800 75 3600 0.005 7.000 25.000 5th year 4800 85 4080 0.005 8.000 28.400

EXPENDITURE & PROFIT S No 1 2 3 4 5 6 7 8 9 10 11 12 Particulars Utilities Interest Salaries & wages Depreciation Insurance Maintenance Misc expenses Publicity Telephone Total expenditure Gross profit Tax provision Net profit 1st 2nd 3rd 4th 5th year year year year year 4.969 5.963 7.156 8.587 10.304 2.439 1.800 1.250 0.495 0.100 0.100 0.005 0.036 11.194 3.606 0.210 3.396 2.030 2.160 1.115 0.458 0.200 0.200 0.005 0.060 12.191 6.009 0.450 5.559 1.556 2.592 1.050 0.424 0.300 0.300 0.005 0.072 13.455 8.145 0.660 7.485 1.100 3.111 0.963 0.392 0.400 0.400 0.005 0.096 15.054 10.018 0.850 9.168 0.378 3.734 0.884 0.364 0.500 0.500 0.005 0.120 16.789 11.611 1.000 10.611

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19. PROJECTED CASHFLOW STATEMENT

S No 1 2 3 4 5

Source of funds Opening balance Capital Term loan Sales revenue Total

Start 3.500 18.000 21.500

1st year 14.800 14.800

2nd year 2.212 18.200 20.412

3rd year 6.238 21.600 27.838

4th year 11.861 25.000 36.861

5th year 18.747 28.400 47.147

S No 1

2 3 4 5 6 7 8 9 10 11

Application of funds Land, Building, Plant & machinery Initial working capital Salaries & wages Utilities Maintenance Insurance Loan repayment Interest Misc & other expenses Total expenditure Cash on hand

Start 17.500

1st year -

2nd year -

3rd year -

4th year -

5th year -

1.000 3.000 21.500 -

1.800 4.969 0.100 0.495 2.644 2.439 0.141 12.588 2.212

2.160 5.963 0.200 0.458 3.053 2.030 0.310 14.174 6.238

2.592 7.156 0.300 0.424 3.527 1.556 0.422 15.977 11.861

3.111 8.587 0.400 0.392 4.074 1.010 0.546 18.144 18.747

3.734 10.304 0.500 0.364 4.705 0.378 0.670 20.655 26.492

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20. DEBT SERVICE COVERAGE RATIO


Particulars Net profit Add: depreciation Total cash accruals Term loan instalment Interest Total Repayment obligation Debt service coverage ratio 1st year 3.396 1.250 4.646 2.644 2.439 5.083 0.914 2nd year 5.559 1.115 6.674 3.053 2.030 5.083 1.313 3rd year 7.485 1.050 8.535 3.527 1.556 5.083 1.679 4th year 9.168 0.963 10.131 4.073 1.010 5.083 1.993 5th year 10.611 0.884 11.495 4.705 0.378 5.083 2.262

Minimum debt service coverage ratio Maximum debt service coverage ratio Average debt service coverage ratio

0.914 2.262 1.633

21. DEBT EQUITY RATIO


S No 1 2 3 Item Term loan Equity Debt equity ratio Start 18.000 3.500 5.143 1st year 15.356 6.806 2.256 2nd year 12.303 12.365 0.995 3rd year 8.776 19.850 0.442 4th year 4.703 29.018 0.162 5th year 39.629 -

Average Debt Equity ratio

1.800

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22. BREAKEVEN ANALYSIS


A. Sales revenue B. Expenses S No 1 2 3 4 5 6 7 8 Particulars Salaries & wages Utilities Maintenance Depreciation Insurance Interest on term loan Interest on working capital loan Miscellaneous expenses Total Fixed cost Rs. Lakh 1.383 1.074 1.050 0.424 1.556 5.487 Variable cost Rs. Lakh 1.209 6.082 0.300 0 0.422 8.013 = Rs. 27.838 Lakh

(For calculating breakeven point 3rd year of operations is considered) Fixed cost ____________________________ Sales revenue Variable cost = Breakeven sales = 27.68 % Rs. 7.705 Lakh

Breakeven point

X 100

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