CHAPTER –

FINANCIAL ANALYSIS

The financials of our project can be understood in following phases:

 The calculations of fixed investment, working capital and the capital infusion
requirement
 Calculation of total cost of project
 Projected statements like income expenditure, balance sheet and cash flow statement
 Interpretation of the profits and break even analysis

1. FINANCIAL ASPECTS

a) FIXED COSTS
Fixed costs include cost of land, utilities plant and machinery, office furniture,
preliminary expenses, pollution control expenses etc.
NOTE: Cost of farming land for beekeeping is not included because that farm is assumed
as a family business which one of the prporeitors own. Only the cost of their labour will
be included.

(i) Land & Building:(Rs. In lakh)

Sl.No. Description Value
1. Land 500 Sq. Mt. @ Rs.4.0 lakh per Sq.Mt. 20.00
2. Total Built up area 300 sq.mtr.@5000/ sq.mtr.– 15.00

iv. Processing & Packing Premises

v. Raw material, stock godown, packaging material godown etc.

vi. Office, Laboratory, for workers, etc.
3. Contingent- water boring and water storage tank, boundary 3.00

wall, gates & safety measures etc.

Total: 38.00
(ii) Cost of Machinery & Equipments
 Sl. Particulars of Machines Qty. Rate (Rs.) Amount
No (Nos.) (Rs.)

1. Receiving SS Tank Inner Shell made of 4 mm 2 437000 874000

thickness SS 304 , Bottom cone & top lid open
25%.
2. Primary Filter Shell made of 2 mm thickness SS 1 56000 56000
304, bottom cone 2 mm.

3. Gear Pump With Motor 1 95000 95000

Capacity: 130
4. Bag Filter (Dual Type): 1 Set 157000 157000

5. Moisture Reduction Tank 1 965000 965000

6. Jacketed Storage Tank 2 N0‘s 308000 616000
7. Modular Frame 1 95000 95000
Material of construction (MOC): MS
8. Hot Water Boiler (Wood Fired) 1 157000 157000
MOC: SS MS
9. Pipes & Fittings: 1 Set 157000 157000
10. Semi-Automatic Single head 1 Set 347000 347000
system Air
Compressor-3.0 HP
11. Misc. equipments Laboratory LS 500000
Equipments etc.
12. Packing, Forwarding, GST etc. @ 20% 803800
13. Erection & Electrification @ 10% LS 401900
Total Cost 5224700

Rs. In 52.25
lakhs

(iii) Office furniture & fixture (Table, Chair, Almirah, Computer etc.) 4.00 lakh

(iv) Pollution Control Equipme 1.00 lakh

(v) Preliminary & Pre-operative expens 1.50 lakhs

CALCULATION OF TOTAL FIXED COST

Fixed Investment : (Rs. In lakh)
Sl. No Description
1. Land & Building 38.00
2. Machinery & equipments 52.25
3. Office Furniture & Fixtures 4.00
4. Pollution Control Equipments 1.00
5. Preliminary & Pre-operative expenses 1.50
Grand Total Rs. 96.75

b) WORKING CAPITAL (PER ANNUM):

i. Raw Material Requirement: (Per Annum)

Sl. No. Description Qty. Rate in Value

(in tones ) lakhs (Rs./ (Rs. In lakh)
ton)
1. Raw Honey 312 1.5/ ton 468
2. Chemicals, LS - 2.00
Consumables
3. Packaging Material LS - 6.00
Total: 476.00

ii.Salary & Wages: (Per Annum)

Rat
Total
Sl. No. Designation No. e Month
(Rs. In lakh)
Rs.
1
Manager 1 40000 12 4.80
.
2. Plant Engineer/Chemist 1 25000 12 3.00
3. Cashier/Accountant 1 15000 12 1.80
4. Supervisor (Cane) 1 15000 12 1.80
5. Senior Mechanics 1 15000 12 1.80
 6. Assistant Mechanics 1 12000 12 1.44
7. Electricians 1 12000 12 1.44
8. Clerk (Office/Weighing) 1 10000 12 1.20
Skilled /Semi-skilled
9. 3 12000 12 4.32
workers
10. Unskilled Workers 5 9000 12 5.40
Marketing staff
11. Marketing Manager 1 50000 12 6.00
Marketing Supervisor-cum-
12. 1 30000 12 3.60
Area Manager
Total: 36.60

iii. Utilities (Per annum):

Sl. No. Description Value(LAKHS)

1. Electricity charges, Water & Other consumables 10.00
Total : 10.00
 iv. Misc. Expenses (Per Annum):
Sl. Description Value (Rs. In lakh)
No
1. Postage & Stationery 1.0
2. Telephone 1.0
3. Consumable Stores 5.0
4. Repairs & maintenance` 5.0
5. Transports, loading and unloading 8.0
6. Advertisement and publicity 8.0
7. Insurance 2.0
Total: 30.0

TOTAL WORKING CAPITAL REQUIREMENT

(Per Annum.):
1. Salary & Wages 36.60
2. Raw Materials 476.00
3. Utilities 9.00
4. Misc. expenses 30.00
Total: 552.20
Working capital for 03 month only 552.2/4 = Rs138.05 lakh

TOTAL CAPITAL INVESTMENT:

(Rs. In lakh)
Fixed Investment 96.75
Working Capital for 3 months 138.05
Total: 234.80

Since the capital to be infused in the business must meet the recurring exp. And fixed costs, so
the capital investment would be 234.80. The sources of capital will be discussed in the next
section.

2. FINANCIAL ANALYSIS
 a) Cost of Production (Per Annum) (Rs. In lakh)
Sl. No. Particulars Value

1. Recurring Expenditure 234.80

2. Depreciation on Building & others @ 5% pm 0.90

3. Depreciation on Machinery, laboratory & 4.02

Equipment etc. @ 10%
4. Depreciation, furniture & others @ 20% 0.80

5. Interest on Total Capital Investment @ 12% pm 28.17

Total: 268.69

b) Turnover (Per Annum)

S.No. Product Quantity Rate in Ton Amount
(in Ton) (Rs. In lakh) (Rs. In lakh)

1. Packed Honey in bottles of 310 2.0 620

different sizes.
Net Sale 620

Assuming that out of 312 tonnes of honey processed, we are able to sell 310 tonnes of honey in
the market.

(F) NET PROFIT (Per Annum) Before Taxation:

Turn Over (-) Cost of Production

620 (-) 586.09 = 33.91

PROJECTED INCOME EXPENDITURE STATEMENT FOR THE FIRST

THREE YEARS
 1ST 2ND 3RD
PARTICULARS
YEAR YEAR YEAR

A. Income/Revenue

Net sales revenue 620 678 684

B. Total expenses on Costs

Salary & Wages 36.60 36.60 39

Raw Materials 476.00 519.00 521.81

Utilities 9.00 9.00 9.2

Misc. expenses 30.00 31 32.00

Depreciation on Building & others @ 5% pm 0.90 .89 .85

Depreciation on Machinery,
4.02 3.95 3.67
laboratory & Equipment etc. @ 10%
Depreciation, furniture & others @ 20% 0.80 .77 .73

Interest on Total Capital Investment @ 12% pm 28.17 24.69 21.63

Total of expenses 586.09

Net profit/loss ( A-B) 33.91 52.10 58.73

PROJECTED BALANCE SHEET FOR 3 YEARS

in lakhs 1ST YEAR 2ND YEAR 3RD YEAR

LIABILITIES
Long term Loan @12% interest 28.17 24.69 21.63
Capital 234.80 234.80 234.80
Net Profit 33.91 52.10 58.73
Total sources 296.88 311.60 315.16
FIXED ASSETS
Land and building 38 36.5 35
Plant and machinery 52.25 49.48 47.15
Office Furniture & Fixtures 4.00 3.6 3.3
Pollution Control Equipments 1.00 .9 .8
CURRENT ASSETS
Cash in hand/bank 197.88 215.12 227.71
Closing Inventory 4 6 4.5
Total Assets 296.88 311.60 315.16

NOTES
 Depericiation is charged on the fixed assets as shown in the calculations above in earlier
sections.
 There is profit in the first year because whole of the honey processed was sold and thus
leading to profit generation.
 Cash in bank includes all the cash readily available for the working capital of first three
months.
3. SOURCES OF FUNDS

As per the above table, total Capital to be infused is 234.80 lakhs which is a huge amount. Out of
this amount, land worth 20 lakhs is brought in as capital which will show appreciation during the
years. Other than this, capital of 5 lakhs is brought in by each partner. Also the profits will then
be distributed in the same manner.

Moreover, if one cannot afford to arrange the funds then National Bee Board (a part of Ministry
of Agriculture) can provide you with subsidy and loan to start your business in bee keeping.
People have benefited from the various National Bee Board Schemes. Apart from National Bee
Board Schemes, it also provides training to people who have an interest in this Apiculture
Business. The Government is ready to provide 35 percent Subsidy on the Beekeeping Business
India. The ones who will get this subsidy have to invest only 5 percent from their pockets.

Among many banks, IDBI Bank is providing loan for Commercial Beekeeping in India. They
call it as Bee Keeping Madhu Makshika Palan. This Bank is providing loan for individual
farmers and also non-farmers. Apart from that, SHGs, NGOs can also get this loan. You have to
use this loan money only for setting up units for the production of Honey. You can get the
subsidy for this loan from the government bodies like KVIC / KVIB / DRDA. One has to pay
back this loan between 5-7 years. You can pay the loan in a quarterly or half-yearly installment.
For this loan, the IDBI Bank is giving 11 months gestation period.

Other than this, if the project is accepted by JKEDI then the loan can be financed easily. If no
financial aid will be available, changes will be made in the scope of production to reduce the
amount of honey processed so that it can be funded.

4. OTHER FINANCIAL INTERPRETATIONS

PROFIT RATIO ON SALES (Per Annum)(1ST YEAR):

Profit/annum X 100 33.91X 100

Turnover/Annum 620 =5.46/%
RATE OF RETURN (Per Annum):
Net Profit/annum X 100 33.91 X 100
Total Capital Investment 234.80 14.44%

BREAK EVEN POINT = Fixed Investment X 100 / Total sales – variable cost
= 96.75 x 100/ 620 – 268.69

= 27.53% of total capacity