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Feasibility Report on

United Flour Mill

(AL-ALAQ)

READ! AND THY LORD IS THE MOST


BOUNTENOUS, WHO TEACHETH
BY THE PEN, TEACHETH MAN THAT
WHICH HE KNEW NOT.

ALLAH DOES NOT LOOK AT YOUR


FORMS AND POSSESSIONS
BUT HE LOOKS AT YOUR HERTS AND
DEEDS.
(MUSLIM)

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Session 2008-10

Feasibility Report on

United Flour Mill

SMALL INDUSTRIAL ESTATE

BAHAWALPUR

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Feasibility Report on

United Flour Mill

DEDICATED TO
OUR PARENTS
&
RESPECTED TEACHER

MR JAVED IQBAL

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Session 2008-10

Feasibility Report on

United Flour Mill

PREFACE

Department of Commerce, The Islamia University Bahawalpur has


always been admirable in its efforts to equip the future executives with arms
of creativity, flexibility and adaptability to meet the challenges offered by
fast changing business environment.
To achieve the above goals the department is providing both text and
practical knowledge to its students with its available resources. Text
knowledge is very well transferred to the students within the premises of the
department; Practical knowledge requires the kind co-operation of various
business organization of the country. Faculty members are always trying
their best to ask the students to explore the market by assigning these
different field activities and to conduct the Feasibility Report.

This report has been made on

UNITED FLOUR MILLS


The key function of our work was to make Feasibility study and Feasibility
Report.
We have done our best efforts to complete this report efficiently and
effectively with all abilities. We hope this report fulfills the criteria and
expectations of Department of Commerce. We have tried our best to make it
analytical as well as informative.
May Allah help us in this world.

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Feasibility Report on

United Flour Mill

ACKNOWLEDGMENT
We first thanks to Allah, The Almighty who bestowed knowledge,
health, vigor, to complete this report.
Life is a learning experience. We have learned the validity of this
statement time and time again. Every time we think we know something, we
look back a year later and realize how little we know and how much we
have learned. This Feasibility Report has convinced us again, not in the
learning but also in terms of the vast team of talented people that take part
in creating this report. We believe each person plays a piece of a puzzle to
make the complete picture, some pieces are bigger then others, but without
anyone piece the picture would not be completed.
We feel great pleasure and honor to express our gratitude from the
citadel of our hearts to the people whom we met, for their cooperation.
Their sympathetic behavior has an ever-lasting impression on the pages of
our memory.
We also give honor to (In charge of Project Appraisal) Mr. Javed
Iqbal who provide us an opportunity to get practical experience in fieldwork
and whose guidance remained with us during completing this report.
We are specially thankful to Ch Masood Majeed (owner of ASIA
Flour Mill located in state of small industries Bahawalpur)who provide us
necessary information and show us the working of flour mill.
We also wordless to pay our humble gratitude to our parent, who
have supported us to reach the point where we stand now and have been a
great and enormous source of inspiration for us throughout the life.

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Feasibility Report on

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TABLE OF CONTENTS

Sr#

Name

Page No

PROJECT SUMMARY

ASSUMPTIONS

EXECUTIVE SUMMARY

MANAGEMENT

10

Estimated Cost of Land

11

Estimated Cost of Civil Works

Estimated Cost of Machinery

12

Estimated cost of the Project and interset during


construction

13

Initial Net Working Capital Requirement

14

10

Estimated Income Statement

15

11

Production at 100% Capacity

16

12

Capacity Utilized

17

13

Raw Material:

18

14

Estimated Cost of Labour

18

15

Year Wise Wages of Labor:

19

16

Manufacturing Overhead Cost:

20

17

Administrative And General Expenses

21

18

Year Wise Administrative Salaries:

22

19

Year Wise Depreciation:

23

20

Pre-Production Expenses:

23

21

Cash Flow Statement

24

22

Balance Sheet

25

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23

Calculation of Internal Financial Rate of Return


and Loan Repayment Schedule

26

24

Financial ratios

27

25

Financial Plan

28

27

Market Analysis

29

28

Technical Analysis

30

29

Manufacturing process/flow chart/diagram

31

30

Personel Analysis

33

31

SWOT Analysis

34

32

List of Machinery

35

33

Conclusion and Recomendations

34

Special Thanks

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Feasibility Report on

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PROJECT SUMMARY
Name of Project.

Unitied Flour Mills

Location.

Small industries estate bahawalpur

Nature of Industry.

Flour Mills - A new Project

Product range

Flour,Maida and bran

Installed Capicity

8 body flour mill

1.M.FARHAN KHIZAR
2.Amir Fraz
3 humaira kanwal
Purpose of Loan.

To meet the Capital cost of the Project.

Brief Description of Ma
chinery

Machinery would be purchased from local suppliers


of machinery having good reputation in market in
this regard.

Estimated cost of the project

Debt
60%
40,6870
00

Eqyity
40%
27,1250
00

total
67,8120
00

Names of loans

Picic
Long term loan

Name of civil contractor

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Name of machinery supplier

United Flour Mill


M younas malik
Satluj industries
Small industries estate shop 56
Cell no: 03017711033

Introduction
Wheat is one of the most important products for all of region of the world. Without wheat
human life is uncompleted. It is become more important not only by the fact of
improvement international value. Its a first food item that an important for all over the
world. That business also important for a Pakistan. And last decades the flour mill are
increase due increase in demand of flour.

Reasons for Motivation


1. Availability of raw material
2. Availability of utilities
3. Availability of labor
4. Technical facilities
5. Whole year producing process
6. Large demand of the people.
7. Profitable Business

Proposed Location
The most feasible location for the plant would be in or near the wheat producing regions
of Punjab. This is advisable as transportation costs would be reduced and contact with
growers/farmers directly can be made. It is usually the case that the farmers are willing to
approach the manufacturing plant directly if it is located near to their lands. However, the
availability of trained personnel in the locality has to be kept in mind as well as the
availability of suitable residences because costs could rise if there was a problem in the
accessibility of the location from other urban area.

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Feasibility Report on

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Decide Location
When we make investment and open a plant than we first decide the location and study
some regard about the location. The best location of any plant is important and greater
effect on business. The business can run if all input is available. We decide location the
small industrial area of Bahawalpur followings factor should be examined.
1. Availability of raw material
The location that we decide, in that location the raw material of our plant is available.
And we also examined the input constraint. And study any short and fall of raw material
and how we can avoid that.
2. Availability of utilities
After the analyses of the raw material then we examine the utilities. For example power
water telecommunication road and other facilities. If the all facilities are available than
open a project other wise rejects.
3. Availability of labor
Then we examine labor. The workers are available for running a project.

Available of skilled labor.

Available of unskilled labor.

Wage rate.

Training of employees.

Nature of the Business


The nature of the business is partnership. Although selection totally depends upon the
choice of entrepreneur. This business is based on the partnership and registered under
partnership act 1932.
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Name
We decide that the name of our flour mill is Bahawal Flour Mill.

Covered Area
The total area, which we want to establish a Flour mill, is 2 acres. The cost of one acre is
5million. The area required to the machinery building is 2kenal.

Human Resource Required


Labor
There are three types of the labor are required
1. Technical Labor
2. Supervisors
3. Loaders
Technical Labor
Technical labor is a permanent employee of the factory. 15 to 20 employees are required.
1.

Miller.

2.

Manager.

3.

Shift Incharge.

4.

Rule man.

5.

Washer Man.

6.

Silk Man.

7.

Accountant.

8.

Packers.

9.

Others Helper.

Supervisors
These are also the permanent employee of the factory.10 to 15 employees are required.
Loaders
Loaders are the contractor employee of the company. 15to20 employees are required.

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Feasibility Report on

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What legal aspects do I need to consider while starting my business?


While starting your business, government regulations need to be considered. These
regulations may also cover special incentives offered by the government for that
particular sector and other laws that may govern the business. You also must decide
about the form of your organization (sole proprietorship, partnership etc). Establish Flour
Mill following legal procedure is follows.

Legal Procedure
Application for license to Establish Flour Mill
Applications for licenses shall be made in Form B (annexed herewith as annex A) to
the Licensing Authority of the district in which the applicant carries on or intends to carry
on business involving the purchase, sale or storage for sale of food grains in wholesale
quantities. To obtaining license applicant have to undertake on the application Form that
he agrees to abide the conditions of license given in Form A (annexed herewith as
annex B). If any applicant carries on such business or intends to carry on such business
in more than one district he shall apply to the District Magistrate of the district in which
he usually resides. A single application may include a request to carry on business in a
number of districts.

APPLICATION FORM FOR LINCENSE


1. Applicant's name.
2. Applicant's profession.
3. Applicant's residence.
4. Situation of applicant's place(s) of business with full particulars regarding the number
of house or premises, which he wants to get this license.
5. Place (s) of storage.
6. How long has the applicant been trading in food grains mentioned in the Schedule I to
this order and any other food grains.
7. Quantities of foodgrains handled annual during the past three years.

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Feasibility Report on

United Flour Mill

8. Food grains in respect of which license is required.


9. I have carefully read the conditions of license given in Form 'A' in Schedule II
appended to the West Pakistan Foodgrains (Licensing Control) Order, 1957 and I agree to
abide to them.
Date..

Signature of the applicant.

9. Issuance of License
On receipt of application and on payment of a license fee of Rs. 10 for one district and
Rs. 2 for each subsequent district the licensing authority shall issue license.
10. Renewal of License
A license granted under this order shall, unless suspended, withdrawn or cancelled
continue to be in force for one year from the date of the issue of the said license but shall
be renewable annually by the licensee to the licensing authority by which the license was
granted and on payment of the renewal fee of Rs. 5 for the first district and Rs. 1 for each
subsequent district. Renewal of licenses shall be granted on the Renewal Endorsement
Form shown in Form C (annexed herewith as annex D). If any person fails to apply
and to deposit the renewal fee before the date when it is due to expire the license shall not
be renewed
Unless: A. the licensing authority is satisfied that there were good and sufficient reasons for the
delay; and
B. the licensee pays an extra fee of Rs. 5 for the first district and Rs. 1 for each
subsequent district.

11. Duplicate License


In the case of lost or damage of the license, a duplicate license shall be issued on payment
of Rs. 5 for one district and Rs. 1 for each subsequent district when it is proved to the

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Feasibility Report on

United Flour Mill

satisfaction of the licensing authority that the original license was lost or damage in a
bona fide manner.

No Objection Certificate. (NOC)


After the issue of license the owner get the No Objection Certificate (NOC) from the
following department.
1-Industry Department
2- Environment Department
After the issue of (NOC) the owner starts the business properly.

No Objection Certificate Fee. (NOC)


No Objection Certificate Fee (NOC) pay the to the Industry Department and Environment
Department is Rs.25000

Food Department
Food Department gives the permission of quota of wheat on the base of urban bodies live
in the district.

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Feasibility Report on

United Flour Mill

ASSUMPTIONS

1.

Direct labour will increase every year 20%.

2.

Administration salaries will be increase 20% per year.

3.

Selling expense are 5% of sales revenue.

4.

Depreciation will be constant over the life of assets.

5.

The economic life of the project would be 10 year.

6.

The entire capital outlay would be incurred one year prior to the
commencement of commercial operation.

7.

Motor vehicles, furniture, fixtures, and equipments would be replaced


after 10 years.

8.

Salvage value at the end of the life of the project represents recovery
of working capital original value of land, book value of land and book
value of building.

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Feasibility Report on

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EXECUTIVE SUMMARY

We are the fresh graduates of MSc A/c & Finance double specialization.
We are going to start a new business. We have made a research and seek
different type of investment opportunities in Bahawalpur region. As
Bahawalpur is an agricultural area having two major crops wheat and
cotton. We have decided to invest the flour mill because there is much
potential in this business and raw material is easily available.
As population is increasing day by day so the demand of flour is increasing
day by day so it is a very profitable project and it will contribute in the
industrial sector of Bahawalpur region.
United Flour Mill is a registered firm established with the objective of
providing flour and to fulfill the increasing demand of Bahawalpur region.
The two buy products are Maida and Bran. The mill is intending to starts it
operations initially with one plant in Chak 12BC Yazman road Bahawalpur.
It plans to expand its network latter in others Tehsils of Bahawalpur.
Initially United Flour Mill operates at 75% of the capacity. United Flour
Mill will starts its operations in September 2010.

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Feasibility Report on

United Flour Mill

MANAGEMENT

1. Mr. Amir Fraz

CEO

2. Mr. Farhan Khizar

GM

3. Miss. Humaira kanwal

MD

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Annexure - I
UNITED FLOUR MILL
Estimated Cost of Land

Sr.
No.

Description

Area in

Unit
Cost

Rs
("000")
Total
Cost
8,16
0

Marlas
1

120

Land
Registratioin & Legal Requirements 1% of cost of
Land

3
4

Stamp Duty 2% of Cost of Land


District Council Fee 1% of Cost of Land

120
120

68,00
0

120

680
1,36

82

163
82
8,48

680

Total Cost of Land

Annexure - II
UNITED FLOUR MILL
Estimated Cost of Civil Works
Sr. No.
1
2
3
4
5
6

Description
Machinery Hall(4 floor)
Ware House(single story)
office
garage
mchinery store
work shop
boundry wall
main gate
Total Cost of Civil Works

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Type of
Unit of
Covered Rate Per Rs ("000")
Building Construction
area
Unit
Total Cost
RCC
RCC
RCC
RCC
RCC
RCC

Square feet
Square feet
Square feet
Square feet
Square feet
Square feet

11

10,880
5,440
2,720
2,720
2,720
2,720
1
1

700
400
550
350
350
350
130000
30000

Session 2008-10

7,616
2,176
1,496
952
952
952
130
30
9,792

Feasibility Report on

United Flour Mill

UNITED FLOUR MILL


Estimated Cost of Machinery
Rupees ("000")
Qty Unit Cost Total Cost

Sr.No. Description
Grinding Section
1 Ruler bodies(USSR type)(1000mm Ruler size with ruler)
8 700,000
2 Plant Shifter(4 Section each)
4 470,000
3 Bran Finisher
1 255,000
4 High Pressure Suction Fan
1 300,000
5 Battery Cyclone
1 300,000
6 Air lock with Cyclone with Dividing Walls
20 155,000
7 Main Pipe(size 24inch,lenth 50feet)
8 Purification Machine
1 450,000
9 Low Pressure Suction Fan
1 200,000
10 Cyclone with Pipe(size 4*8)
1
11 Flour,Maida,sujji,Chollar Packing Bin(Steel)
8 155,000
12 Conveyor Werm 9" Size(feet)
2000
1,000
13 Lift Pipe(4 inch with band,8 gage)
1500
1,000
14 Ruler Body Receiver with Happer
20
5,000
15 Production Pipe(5 inch, 16 gage)
1500
500
Cleaning Section
1 Washing Machine Full Size USSR type Steel
1 550,000
2 Elevators with belt with bucket 56 feet length
5 312,000
3 Seperater Polland Type
4 300,000
4 Scorer
2 270,000
5 Suction Fan with Cyclone with Suction Pipe
4 325,000
6 Cocle Salender Polland type
2 550,000
Others
Nut Bolt,Angle,Steel Sheet,Belt,Steel Jalli,Resham Jalli,etc
Total Cost of Machinery

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5,600
1,880
255
300
300
3,100
2,300
450
200
200
1,240
2,000
1,500
100
750
550
1,560
1,200
540
1,300
1,100
100
26,525

Feasibility Report on

United Flour Mill


Annexure - III

UNITED FLOUR MILL


Estimated cost of the Project
Sr.No.
1
2
3
4
5
6
7
8
9
10
11
Add:

Description
Land
Building
Machinery
Installation & Erection of Machinery
Insurance 10% of Cost of Machinery
Transportaion 10% of Machinery
Vehicles
Furniture and Fixture
Office Equipment
Pre-operating expenses
Interest during construction
Estimated fixed cost
Net Initial Net Working Capital
Total Estimated Cost of Project

LCY
FCY Total cost ("000")
8,486
8,486
9,792
9,792
26,525
26,525
5,305
5,305
2,653
2,653
2,653
2,653
1,400
1,400
900
900
3,320
3,320
2,580
2,580
1,846
65,459
2,352
67,812

interest during construction


total cost of project
loan

"000"

67812
loan
equity

40687
27125

interest during construction

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interest
60% 1845.964
40%

1846

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Feasibility Report on

United Flour Mill

UNITED FLOUR MILL


Initial Net Working Capital Requirement
Rs. "000"
A.
1

Current Assets:
Inventories:
a) Raw Material 5 Days Requirement:
I)Wheat

2
3
4

B.

134

b) Finished Goods
Total Cost of Inventory
Advances and Deposits, & Prepayments
Accounts Receivables (2% of Sales)
Cash 1% of Amount withdrawn from Bank for Inventory
Total Current Assets

2,721
2,855
4
1,613
21
4,494

Possible Current Liabilities:


Less: Bank Borrowing 75% of Inventories
Initial Net Working Capital

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2,141
2,352

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Annexure-VI

UNITED FLOUR MILL


Estimated Income Statement
Years ending September 30 :

2009

Sales
COST OF SALES
Raw Material
Labor
Manufacturing Overheads
Depreciation
Total Cost of Goods Manufactured
Inventory Adjustment - Less
Cost of Sales
Gross Profit
OPERATING EXPENSES:
Administrative Expenses
General Expenses
Seling Expenses
Total Operating Expenses
Operating Profit
OTHER EXPENSES:
Financial Charges on:
Long Term Loan
Amortization of Pre-Production Expenses
Total Other Expenses
Profit Before Tax and Worker's Fund

2010

80,669

Profit/(Loss) Before Tax


Tax Provisions @ 40%
Net Profit

2011

95,010

100,985

16,536
15,439
22,450
2,576
57,001
5,700
51,301
29,368

17,633
18,527
23,356
2,576
62,093
509
61,583
33,426

18,742
22,232
24,263
2,576
67,814
6,272
61,541
39,444

3,780
1,750
4,033
9,563 #
19,804

4,536
2,100
4,750
11,386 #
22,040

5,443
2,520
5,049
13,012
26,431

6,103
860
6,963
12,841

5,493
860
6,353
15,687

4,882
860
5,742
20,689

12,841
5,136 #
7,705

15,687
6,275 #
9,412

20,689
8,276
12,413

36.41
24.55
15.92
9.55
22

35.18
23.20
16.51
9.91
21

Ratios:
1 Gross Profit/Sales
2 OperatingProfit/Sales
3 Pre-Tax Profit/Sales
4 Net Profit/Sales
5 Net Profit/Equity

39.06
26.17
20.49
12.29
22

Annexure-VI-A
Production at 100% Capacity

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Crushing Of Wheat:
6400kg Kg of Wheat/day/machine
Flour
Maida
Bran
Total

No. of Machines
1
1
1

% Output
80
10
10
100

Quantity (000)
256
32
32
320

Annexure-VI-A

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Year ending 30th September:

2009
75%

Capacity Utilized

2010
80%
Quantity ("000")

2011
85%

Production of Flour:
a)
Number of Units Manufactured
Add: Opening Inventory
Total Units available for Sales
Less: Closing Inventory 10% of Production
Units Sold

192
192
19
173

205
19
224
21
204

218
21
238
22
217

24
24
2
22

26
2
28
3
25

27
3
30
3
27

24
24
2
22

26
2
28
3
25

27
3
30
3
27

Production of Maida:
b)
Number of Units Manufactured
Add: Opening inventory
Total Units available for Sales
Less: Closig Inventory 10% of Production
Quantity Sold
c)

Production of Bran:

Number of Units Manufactured


Add: Opening Inventory
Total Production available for Sales
Less: Closing Inventory 10% of Production
Quantity Sold

Sales Revenue:
Description

Unit Price

a
Flour
b
Maida
c
Bran
Total Sales (a+b+c)

420
250
120

75%
72,667
5,407
2,595
80,669

Rupees
80%
85,585
6,368
3,057
95,010

85%
90,968
6,768
3,249
100,985

Annexure-VI-A

Raw Material:
Years
Capacity Utilized

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2009
75%

17

2010
80%

2011
85%

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Feasibility Report on

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Consumption of Raw Material:


Description

Quanity ("000")

Wheat 6400kg/day/Machines

240

256

272

Cost of Raw material:


Description

Rs. ("000")

Wheat @ 40/kg
Packing material
Total Cost

9,612
6,924
16,536

10,253
7,380
17,633

10,894
7,848
18,742

Annexure-VI-A
UNITED FLOUR MILL
Estimated Cost of Labour
Labour Cost:
a) Direct Labor:
Sr. No. Milling Staff
1 Miller
2 Shift Incharge (Asst. miller)
3 Ruleman
4 Washing man
5 Silk man
6 Helper
7 Unskilled labour
Total
Add: Fringe Benefits (40% of Basic Salary)
Total Cost of Milling Staff

Sr. No. Office Staff & Production Staff


1 Manager
2 Accountants
3 Cashier
4 Production Clerk
5 Wheat Clerk
6 Field Supervisor
7 Gunman/Chowkidar
8 Peon

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No. of
Employees
1
1
2
1
1
8
12
26

Salary/Month
/Worker
35,000
25,000
20,000
25,000
22,000
24,000
25,000
176,000

Annual
Salary ("000")
420
300
480
300
264
2,304
3,600
7,668
3,067
10,735

No. of
Employees
1
2
1
2
2
1
3
1

Salary/Month
/Worker
35,000
25,000
20,000
23,000
22,000
26,000
15,000
14,000

Annual
Salary ("000")
420
600
240
552
528
312
540
168

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Feasibility Report on
Add:

United Flour Mill

Total
Fringe Benefits (40% of Basic Salary)
Total Cost of Office Staff & Production Staff

13

180,000

3,360
1,344
4,704

Assumptions:
1 Direct labor will increase every year @ 20%.

Year Wise Wages of Labor:


Sr. No.

Description

2009

1 Milling Staff
2 Office Staff & Production Staff
Total Cost of Labor

10,735
4,704
15,439

Years
2010
Rs ("000")
12,882
5,645
18,527

2011
15,459
6,774
22,232

Annexure-VI-A
Manufacturing Overhead Cost:
Description

Rs ("000")

a) Fixed Cost:
Power: @ 288/400/KW/Month
Insurance: @ 10% of Fixed Assets Cost

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2,765
4,923

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United Flour Mill

Maintenance and Depreciation:


Overhauling Expenses @ 40000 Per machine
Maintenance of Building @ 10% of Cost of Building
Maintenance of Vehicles 10% of Cost of Vehicles

40
979
140

Total Fixed Cost


b) Variable Manufacturing Expenses:

8,847

Power: @ 7.71/unit of 400/KW/Month 85% of which will be utilized


Machinery Re. 3.00 Per 40/Kg on Crusing of wheat

18,119
18

Total Variable Cost

18,137

Year ending Manufacturing Overheads as per Different Capacities:


Description

Years
2010
Rupees ("000")
75%
80%
8,847
8,847
13,603
14,510
22,450
23,356

2009

Fixed Cost
Variable Cost
Total Cost of Manufacturing Overheads

2011
85%
8,847
15,417
24,263

Annexure-VI-A

Administrative And General Expenses

Sr. No.

No. of
Employees

Designation

1 Manager
2 Accountants
3 Production Clerk
4 Cashier
5 Chowkidar/Gunman

U 4 YOU

1
2
2
1
3

20

Salary/
Month
40,000
30,000
20,000
25,000
15,000

Rupees ("000")
Annual
Salary
480
720
480
300
540

Session 2008-10

Feasibility Report on

United Flour Mill

6 Peon/Sweeper
Total
Add: Fringe Benefits @ 40%
Total Cost of Administrative Staff

1
9

15,000
145,000
58,000
203,000

180
2,700
1,080
3,780

General Expenses:
Sr. No. Description
1 Travelling Expenses
2 Printing & Stationary
3 Telephone, Telex, Postage
4 Rents, Rates and Taxes
5 Entertainment
6 Legal & Audit
7 Miscellaneous
Total

Year Exp. ("000")


300
200
250
300
200
250
250
1,750

Year Wise Administrative Salaries:


Sr. No.
1
2
3
4
5
6

Designation

No. of
Employees

Manager
Accountants
Production Clerk
Cashier
Chowkidar/Gunman
Peon/Sweeper

1
2
2
1
3
1
10

Total
Add:
Fringe Benefits @ 40%
Total Administrative Salaries per Year

U 4 YOU

21

2009

Rupees ("000")
2010

2011

480
720
480
300
540
180
2,700
1,080
3,780

576
864
576
360
648
216
3,240
1,296
4,536

691
1,037
691
432
778
259
3,888
1,555
5,443

Session 2008-10

Feasibility Report on

United Flour Mill

General Expenses:
Sr. No.
1
2
3
4
5
6
7
Total

Description
Travelling Expenses
Printing & Stationary
Telephone, Telex, Postage
Rents, Rates and Taxes
Entertainment
Legal & Audit
Miscellaneous

300
200
250
300
200
250
250
1,750

Rupees ("000")
360
240
300
360
240
300
300
2,100

432
288
360
432
288
360
360
2,520

4,033

Rupees ("000")
4,750

5,049

Selling Expenses:
Selling Expenses are assumed to be 5% of Sales Revenue
Sr. No.
1

Description
Selling Expenses 5% of Sales Revenue

Annexure-VI-A

Depreciation Schedule of Fixed Assets:

Sr. No.
1
2
3
4

Description
Plant & Machinery
Building
Vehicles
Furniture & Fixture
Total

Note:-

Total Cost
(Rs.)
37,135
9,792
1,400
900
49,227

Rs. ("000")
1,857
490
140
90
2,576

Depreciation will be constant over the life of assets.

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United Flour Mill

Year Wise Depreciation:


Description
Depreciation

2009
2,576

Years
2010
Rupees ("000")
2,576

2011
2,576

Pre-Production Expenses:
Sr. No.
1
2
3
4
5
6
6

Description
Rs. ("000")
Registration Charges
400
Sales Tax Registration Charges
300
Consultancy & Report Preparation Charges
350
Printing & Stationary
250
Conveyance Charges
280
Telephone & Postage
300
Salaries and Wages during Construction
700
Total Preproduction Expenses
2,580

AnnexureVII

UNITED FLOUR MILL


Cash Flow Statement
End of
Construction
years ending 30th September:

Operating Years

2008

2009

2010

19,804
2,576
22,381

22,040
2,576
24,616

2011

SOURCES OF FUNDS:
Operating Profits
Add: Depreciation
Total Funds from Operation
Other Sources:
Long Term Loan
Paid-Up Capital

U 4 YOU

40,687
27,125

23

Session 2008-10

26,431
2,576
29,008

Feasibility Report on

United Flour Mill

Total Sources of Funds

67,812

22,381

24,616

29,008

APPLICATION OF FUNDS:
Investment in Fixed Assets
Financial Charges during Construction
Pre-Production Expenses
Repayment of:
Long Term Loan
Bank Borrowings
Financial Charges On:
Long Term Loan
Bank Borrowings
PAYMENT OF:
Taxes
Dividends

57,713
1,846
2,580

6,103
-

4,069
-

4,069

5,493

4,882

6,275
10,000
438
25,664
3,344
18,347
21,691

short term investment


Increase in Current Assets (Other than Cash)

3,000
138

4,811

5,136
5,000
573

Total Application of Funds


Cash Surplus/(Deficit)
Cash at the Beginning of the Year
Cash at the end of the year

65,277
2,535
2,535

10,914
11,467
2,535
14,002

20,271
4,345
14,002
18,347

Annexure-VIII

UNITED FLOUR MILL


Balance Sheet
Year ending 30th September:

End of
Construction
2008

ASSETS:
CURRENT ASSETS:
Cash and Bank Balance
Short Term Investment
Accounts Receivable
Inventories:
Wheat
Finished Goods
Advances, Deposits and Prepayments
Total Current Assets
FIXED ASSETS:
Fixed Assets at Cost
Accumulated Depreciation on Fixed Assets

U 4 YOU

Operating Years
2009
2010
Rupees ("000")

2011

2,535
3,000
-

14,002
3,000
1,613

18,347
8,000
1,900

21,691
18,000
2,020

134
4
5,672

481
2,850
4
21,950

513
3,105
4
31,868

545
3,391
4
45,650

59,559
-

59,559
2,576

59,559
5,153

59,559
7,729

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Session 2008-10

Feasibility Report on

United Flour Mill

Fixed Assets Net


Intangibles
Total Assets

59,559
2,580
67,812

56,983
1,720
80,653

54,407
860
87,135

51,830
97,480

5,136
4,069
9,205

6,275

8,276

4,069
10,344

4,069
12,344

40,687
40,687

36,618
36,618

32,550
32,550

28,481
28,481

27,125
27,125
67,812

27,125
7,705
34,829
80,653

27,125
17,117
44,242
87,135

27,125
29,530
56,655
97,480

LIABILITIES AND EQUITY:


CURRENT LIABILITIES:
Taxes Payable
Dividend Payable
Worker's Fund Payable
Current Maturity of Log Term Debt
Total Current Liabilities

LONG TERM DEBTS:


Long Term Debt
Total long Term Debt
EQUITY:
Paid-Up-capital
Retained Earnings
Total Equity
Total Liabilities and Equity

Annexure - XII

UNITED FLOUR MILL


Loan Repayment Schedule

Years
1
2
3
4
5
6
7
8
9
10

Opening
Balance
40,687
36,618
32,550
28,481
24,412
20,344
16,275
12,206
8,137
4,069

Interest Principle
6,103
5,493
4,882
4,272
3,662
3,052
2,441
1,831
1,221
610

4,069
4,069
4,069
4,069
4,069
4,069
4,069
4,069
4,069
4,069

Closing
Balance
36,618
32,550
28,481
24,412
20,344
16,275
12,206
8,137
4,069
-

Annexure-XI

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25

Session 2008-10

Feasibility Report on

United Flour Mill

UNITED FLOUR MILL


Calculation of Internal Financial Rate of Return
Years
1
2
3
4
5
6
7
8
9
10

Capital
Outlay
60,431
4,811
573
438
2,300
-

Operating
Worker's
Depreciation
Profit
Fund
19,804
2,576
22,040
2,576
26,431
2,576
26,431
2,576
26,431
2,576
26,431
2,576
26,431
2,576
26,431
2,576
26,431
2,576
26,431
2,576
-

IFRR

Taxes
5,136
6,275
8,276
8,276
8,276
8,276
8,276
8,276
8,276

Net Cash Net Cash Inflow


Return
(Outflow)
(60,431)
22,381
17,570
19,480
18,906
22,733
22,295
20,732
20,732
20,732
20,732
20,732
18,432
20,732
20,732
20,732
20,732
20,732
20,732
20,732
20,732

30%

RATIOS
Netprofit margin ratio
net profit
net sale
year
net profit
sale

2010
7704.727
80668.71

2011
9412.266
95009.81

2012
12413.34
100985.3

net profit margin ratio

9.551073

9.906625

12.29223

current asst
current liability
2010
21950.04
9205.197

2011
31868.3
10343.56

2012
45650
12344.27

2.384526

3.080981

3.69807

Current ratio

year
current asst
current liability

Current ratio

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Session 2008-10

Feasibility Report on

United Flour Mill

Debt/equity ratio
total debt
totalequity
year
total debt
totalequity

2010
45823.61
34829.48

2011
42893.26
44241.74

2012
40825.26
56655.09

Debt/equity ratio

1.315656

0.96952

0.720593

Sponsors stake
27124.75
Amir fraz
Farhan khizar
Humaira kanwal

U 4 YOU

10849.9
10849.9
5424.95
27124.75

27

40%
40%
20%

Session 2008-10

Feasibility Report on

United Flour Mill

Annexure - XIII
UNITED FLOUR MILL
Financial Plan
Rupees ("000")
Description
Total Fixed cost of the project
Initial Permanent working capital
Total cost of the project
Long Term Debt
Equity Participation
Total Capital Required
Debt/Equity Ratio

LCY
65,459
2,352
67,812

40,687
27,125
67,812

Debt-to-Equity Ratio:

U 4 YOU

FCY

60 :

28

Total cost
65,459
2,352
67,812
40,687
27,125
67,812

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Session 2008-10

Feasibility Report on

United Flour Mill

Market Analysis
Brief description of market:
Like every other industry, milling is subject to increased market pressures.
Customers demand consistent quality and product variety while production
efficiency must be maintained if not improved. A FOSS solution can prove an
important ally in walking such a tightrope.
Pakistan has a rich and vast natural resource base, covering various ecological
and climatic zones; hence the country has great potential for producing all
types of food commodities. Agriculture has an important direct and indirect
role in generating economic growth. The importance of agriculture to the
economy is seen in three ways: first, it provides food to consumers and
fibres for domestic industry; second, it is a source of scarce foreign
exchange earnings; and third, it provides a market for industrial goods

Production in Pakistan for the last 5 years (000 tons):

2004-05
21612

2005-06
21277

2006-07
23295

2007-08
20959

2008-09
23421

Present demand:
Present demand of flour is about 25525000 tons in this current year.
Demand supply gap:
The supply of flour is about 23225000 tons and demand is about 25525000 tons.

Ex-factory price(price which u will sell to whole sellers)


The ex-factory price of 20kg bag of floure is 540
The ex-factory price of 20kg bag of maida is 740
The ex-factory price of 20kg bag of bran is 220

Retail price
The retail price of 20kg bag of floure is 560
The retail price of 20kg bag of maida is 760
The retail price of 20kg bag of bran is 240
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Distribution channel:
First of all our salse man collect the orders from whole sale dealers than from
whole sale dealer the shop keeper collect the flour than ultimate consumers
purchase from retail store
Strategic Recommendations
Initially, the product would be launched in the local market. The
preferred mode of distribution is going directly to the wholesalers.
There is an option of having no involvement of any distributor between
the manufacturer and the wholesaler in the city where manufacturing
is being done. By giving healthier profit margins to the wholesalers,
the wholesalers will hence promote the product. This strategy is
important to introduce such a product and to create an extensive
distribution and sales channel. The company will later expand into
other cities through a distributor network.

Technical analysis
Brief description of technical aspects:
There are five roll systems in a flour mill: break, sizing, midds (for middlings), low
grade, and residue.
In the break system, the kernel is opened, the bran flattened and the endosperm
broken into large chunks. Al-though some flour is produced here, the goal in the
break system is not to produce a lot of flour but to maximize separation of bran
from endosperm. Because the break rolls are at the beginning of the milling
process, the quality of the work done here effects each subsequent step, thus
determining both the yield of flour and the quality of that flour. If the rolls are too
aggressive, portions of the bran may be torn or ground into dust that will be
impossible to separate from the endosperm in later steps.
In the sizing system, rolls are used to further flatten and separate bran and germ
from the endosperm. Sizing rolls are either finely corrugated or smooth. Coarse
and fine sizings are produced on these rolls.
Most of the high quality flour is produced in the midds reduction system. Here the
rolls are either very finely corrugated or smooth.
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United Flour Mill

Each time stock passes between a pair of rolls, the resulting milled stock is run
through a purifier, primarily gyratory bolters with stacks of sieves with different
screen and cloth meshes. Vibration and air flow contribute to stratification and
separation of the material. The material which will pass through ("thrus") the
finest (bottom) sieve cloth in the purifier is flour. Each set of rolls thus has its own
flour "stream," identified by the roll the stock came from before arriving at the
purifier: 1st Break, 2nd Break, 1st Midds, Sizings, etc.
The "overs" of each sieve (particles not fine enough to pass through) are directed
to another set of rolls for further reduction, or to one of the residue streams: bran,
germ, shorts, or red dog. None of these end up in the flour. Indeed, any part of
the wheat that does not enter one of the flour streams will be one of these four
"by-products." These materials, unless there is a specialty market for them, are
generally sold as feedstock.
The separation by size, grade, etc. at each stage of the milling process creates
many dozens of "streams" which wind their way through the mill.
In the end, the various streams are blended and mixed to make various grades of
flour, then treated with the addition of malted barley, bleaching agents,
enrichments, etc. before packaging. If all the flour streams are combined and
blended, the resulting flour is "Straight Grade." 'Patent" is the flour from those
streams containing the least bran and germ particles, thereby the whitest and
lowest in ash. "Clear" flour, on the other hand, is from the "dirtier" flour streams.
While straight and clear flours will have more protein than the patent flour from
the same wheat on the same mill run, this additional protein is from the aleurone
and germ, not gluten from the endosperm.

Area we will cover:


Our flour mill established in bahawalpur. We can supply of flour in bahawalpur
division. There are three district in this region in which we will supply our
products.

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Manufacturing process/flow chart/diagram:


Wheat received
in the Factory

Wheat is weighted
on the Plate Form

Elevator 1

Elevator 2

Elevator 3

Elevator 4

Wheat goes to
Separators for
Clearing

Separator 1
Wheat goes to Bin
to send it for
Washing

Washing
Machine
Wheat goes to Bin
to send it for
Grinding

Roller Body

Sifter

Packing

Output is send to
Market

Separator 2

Separator 3

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3)Personnel analysis:
Factory staff:
S.NO

Type of
Staff

Number
required

Basic salary
per Person,
per month

Total
salaries per
year

skilled

14

30000

4068000

Un-skilled

12

25000

3600000

ADMINISTRATION AND GENERAL STAFF


No. of
Salary/Month
Annual
Sr. No. Office Staff & Production Staff
Employees
/Worker
Salary ("000")
1 Manager
1
35,000
420
2 Accountants
2
25,000
600
3 Cashier
1
20,000
240
4 Production Clerk
2
23,000
552
5 Wheat Clerk
2
22,000
528
6 Field Supervisor
1
26,000
312
7 Gunman/Chowkidar
3
15,000
540
8 Peon
1
14,000
168
Total
13
180,000
3,360
Add: Fringe Benefits (40% of Basic Salary)
1,344
Total Cost of Office Staff & Production Staff
4,704
Assumptions:

SWOT Analysis
Strengths:

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United Flour Mill

The labor to manufacture flour is easily available we can reach easily to low cost labor.
Moreover the location for our project is very attractive. We can avail maximum
advantage from this market.

Weaknesses:
Our weakness is that we are not producing flour up to the present demand
of the consumer. Because we have dependend on govt for wheat and electricity problem
is also our weakness.

Opportunities:
Pakistan is an agricultureal country, the production of wheat is very high.flour is
neccessry for all kind of people so, demand of wheat is repedly increases.also there is no
enough flour mills to fullfill the demand so, there is great opportunity to establish flour
mill.

Threats:
Competitive Structure of the market
The market of the flour mills is highly competitive; therefore if the entrepreneur is
not well responsive and fulfilling the demand of the consumer he/she may not be able to
capitalize the opportunity properly.and the qotta system is used the supply of wheat not
provided to flour mills according to their demands.

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List of machinery
Now we will discuss the process of converting Wheat into Flour
There are two section of working area in the Hafiz flour mill
1. Washing section.
2. Grinding section.

Now we will discuss these sections and what is happening in these sections in
detail.

WASHING SECTION
There are few machineries are used for the processing of flour. We will
discuss these machineries in detail one by one. Following are the machineries.
1. SEPRATOR.
2. ELEVATOR.
3. SCOLDER MACHINE.
4. LOW PRESSURE FAN.
5. WASHING MACHINE.
6. STORAGE BIN.
7. MAGNETIC MACHINE.

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United Flour Mill

1. Seprator
separator is the first machine which is used in the washing section and the
person who operate this machine is roll man.
First when the wheat pool, there are lot of dust and mummnies in the wheat.
This machines main function is that to separate the dust and mummnies from
the wheat.

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United Flour Mill

2. ELEVATOR
Elevator is the machine which is help full for lifting the wheat at each section. it is
just like the lift and performing the same function of lift. There are two types of
elevator are used in the mill. First is traditional elevator and other is new
technological elevator. Traditional way is that the wheat is lift through the simple
belt.

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United Flour Mill

Scolder Machine.
With the help of elevator the wheat is shift to the scorer machine.The scorer
machine is one of the most important machines. The main function which is
performed by this machine is to put out the outer layer of the wheat. This is
necessary to understand that this machine put out the outer layer of dry wheat. It
is necessary that the wheat is dry at least twelve hours and then put into the
scorer machine.

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United Flour Mill

LOW PRESSURE FAN


Low pressure fan is the fan that pressurized the wheat for the purpose of
cleaning. This means that after outing the scorer machine some dust include and
this fan clean such dust. This fan is not too much power full as the high pressure
fan.

Low
pressure
Fan

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Session 2008-10

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United Flour Mill

WASHING MACHINE
Washing machine acutely performs three types of functions.
1. Wash with water.
2. Further put out the outer layer
3. To put out the stones.

Wash with water.


This machine firstly washed the wheat through
the water after passing the water the wheat will be too much clean and then
transfer for further process.

Further putout the outer layer of wheat


After wash with the water wheat is transferred for again
thrashing. In during the trashing again put out the outer layer of wheat.

Put out the Stones


Washing machine also performs the function
to put out the stones from the wheat.

Magnetic Machine

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Session 2008-10

Feasibility Report on

United Flour Mill

Magnetic machine is used to catch the iron particles included in the wheat. In this
machine magnets are installed which help to catch the iron particles.

Grinding Section
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United Flour Mill

Ruler Body
Ruler body is the machine through which grinding of wheat takes place. This is
the first step of grinding. Wheat comes after the washing section firstly put into
the ruler body for the grinding purpose.

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Shifter
The other machine which is used in the grinding section is the shifter.
This machine main function is that it shifts the flour into different categories.
Categories means that special type of flour is separate from the bran and suji.
There are separate boxes for each item.

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United Flour Mill

PURIFIER
Purifier machine is used to make the suji.It is independent from the shifter.purifier
has different boxes and each box has show different effect which means that
from one box wastage material is stored and other boxes are for the preparation
of suji.

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United Flour Mill

Air Lock

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Session 2008-10

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United Flour Mill

Air lock is used to cease the air because if the air is include in the production
then all the production may be destroy. So thats why air lock is used to cease
the air.

High pressure Fan

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United Flour Mill

High pressure fan has a same function as the low pressure fan but the main
difference is that the high pressure fan has a high voltage power full machine.

Battery Cyclones

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United Flour Mill

Battery cyclones is also help full for the cleaning and it take the pressure from the
low pressure fan and the high pressure fan.

Production worm

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United Flour Mill

Production worm is the line through which the final product is being passed at
the packing room.

The above all the machinery is used to convert the


wheat into flour. The above is all the process of
production of flour.

Conclusion and Recomendation

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Session 2008-10

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United Flour Mill

We conclude that on the basis of field work and surveu of flour


mills that the flour is neccessry product so its demand increse
day by day. There is no chance to decrease the demand of
flour. Pakista is an agricultural country and wheat is the one of
the major crop. Availability of raw material is very easy. So,
conclusion is that the flour mill is a profit motive business
because no chance of decrease of demand.
Our recommendation to new investors is that they must invest
in flour mill because from the last year there is the shortage of
flour in pakistan. So, they step forward to minimize this
shortage, and also contribute in the economic as well as social
groth of Pakistan.

Special Thanks

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United Flour Mill

We bow our head, before ALLAH Almighty, who blessed us with potential and
stamina to complete our fesibility report on flour mill.
First of all would like to pay our special regards to Respected Sir Mr. JAVED
IQBAL who provides us guidance at each and every step, in completion of all
this fesibility report. We are especially thankful to those personalities who help us
in collecting data during the fieldwork and also in our practical work.
In this regard our thanks goes to:
Mr:Arsalan rabbani, Mr: Jawad-ul-hasan, Mr: Hunain khan, Mr: hasan
qureshi, Mr: Farzan rafi, mr: Shakeel ahmed, Mr: Mohsin shazad, Mr:
Adnan ch and all of our class fellows.

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