Professional Documents
Culture Documents
2020
By- Flying Zebra VaiRag Foods Pvt Ltd.
Report on Potato Chips & Snacks
LIST OF CHAPTERS
2. INTRODUCTION 02
3. PROJECT DESCRIPTION 03
4. MARKET PROSPECT 04
5. TECHNOLOGICAL PROCESS 05
8. INSTALLED CAPACITY 08
LIST OF ANNEXURES
H. BREAK-EVEN ANALYSIS 21
LIST OF APPENDICES
CHAPTER-1
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Report on Potato Chips & Snacks
CHAPTER-2
INTRODUCTION
2.1. Potato Chips and Snacks are popular processed food items resulting in substantial
value-addition. Chips are crispy, salty or spicy and consumers prefer fresh quality.
Chips are the most popular variety of snacks and they are consumed round the year by
people of all age groups and all income segments.
2.2. Potato Chips is an important crop among the horticultural crops in the Maharashtra region
of India. The state of Maharashtra has the maximum area and production under Potato
Chips crop within the west Zone. Potato Chips Chips is one of such value added
products which has a great potential as this is considered as one of the traditional
foods of India.
2.3. Considering the potential market opportunity of such units, the present detail project
report has been developed. The main objective of such initiative is to productively
utilize the abundantly available resources of the local area and to enable uninterrupted
supply of the products to market throughout the year.
2.4.1. A detailed analysis has been carried out considering mainly the aspects below:
2.4.6. Estimation of the cost of the project and working capital requirements.
2.4.8. Estimation of cost of operation, profitability and fund flow statements etc.
2.4.10. The total Project cost is estimated at Rs. 25.39 Lakhs which includes margin money
for working capital @ 25%.
2.4.11. The various profitability estimates and other financial indicators worked out as given
in the following pages are up to the satisfaction level.
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Report on Potato Chips & Snacks
CHAPTER-3
PROJECT DESCRIPTION
3.1. The proposed project is that of setting up of a Potato Chips and Snacks making unit at
suitable location.
3.3. Chips and fried snacks are very popular amongst all age groups and they are made from
various
materials. This industry is very large and is dominated mainly by local manufacturers.
Easy availability, freshness and competitive price are the main features. These
products can be made anywhere, where there are availability of raw material without
much difficulty.
3.4. The proposed project would procure the raw materials from the farm level available
locally. After processing, the products would be supplied to the market through
distributors/ wholesalers/retailers.
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Report on Potato Chips & Snacks
CHAPTER-4
MARKET PROSPECT
4.1. The popularity of snack foods is growing high day by day and Potato Chips chips & other snacks
have emerged as a potential snack food. There exists a very large market for chips and
they can be sold at various retail outlets, Paan shops, bus-stands, railway stations,
roadside eateries etc. The major market outlets are the “A” and “ B” class outlets,
departmental stores, super markets and self service counters. There also exists
institutional market consisting of clubs and other institutions, school & college
canteens, army establishments, bars & pubs, railway and airlines caterers etc.
Competition from organised sector may be there but local and small units have
distinct advantages in terms of less overheads, lower transportation costs, longer shelf
life, quick access to market and economy in terms of cost.
4.2. Market Promotion plays a vital role for the generation of the potential customers
therefore, application of marketing strategies are recommended. Marketing plan of the
proposed project may include good quality maintenance, promotional campaign like
offering special discounts, referrals, advertisement and tying up with buying houses.
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Report on Potato Chips & Snacks
CHAPTER-5
TECHNOLOGICAL PROCESS
RAW MATERIAL
SLICING/CUTTING
FRYING
SEASONING
PACKAGING
STORING/LOADING/SUPPLY
5.2. Potato Chips Chips:The Potato Chipses selected for wafers should be large oval shaped, free from
diseases and fully matured. Damaged Potato Chipses are taken out. They are
washed thoroughly in water and peeled manually with stainless steel knife or by
means of an abrasive Potato Chips peeling machine. The peelings are washed away
with sprays of water. They are then trimmed and placed in water to prevent browning.
They are sliced 0.4to
0.5 cm. thick in a slicing machine. The slices are again placed in cold water whenever
there is considerable delay in the subsequent operations of blanching. Then slices are
kept in water containing0.05% potassium metabisulphite to avoid oxidation. The
slices are blanched for 3to 5 minutes in boiling water and spread on trays at the rate of
4.88 kg. to 7.30kg. per square metre of tray surface. The blanched chips are then
subjected to hydro-extracting machine (centrifugal) to remove excess of water and
fried inedible oil at 180-240ºC, for 3-4 minutes. The fried Potato Chips wafers are then
kept on the sieve to remove excess of oil, cooled and other ingredients like salts,
spicy mixture is sprayed as per required taste. Cooled Potato Chips chip sare then
packed in polythene bags and sealed.
5.3. Moog dal & Chana Dal :The raw pulses are first washed thoroughly to remove any adhering
dirt or sand. The pulses thus prepared are then dipped in brine water to avoid
oxidation. Sometimes turmeric powder is also used for colouring the snacks or to
improve colour. The dried pulses are then fried in vegetable oil and cooled down to
the room temperature. These snacks are then packed in polythene bags of suitable
gauze and sizes to prevent spoilage.
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Report on Potato Chips & Snacks
CHAPTER-6
IS: 4626-1978
IS: 2860-1964
IS: 7254-1974
6.2. FSSAI LICENSE:FSSAI License is issued by the Food Safety and Standards
Authority of India (FSSAI), Ministry of Family Health & Welfare, Government of
India. Application to commence a food business must be made to the FSSAI in the
prescribed format. Based on the application and supporting documents, FSSAI will
accord approval. The Food Safety and Standards (Licensing and Registration of Food
Businesses) Regulations 2011introduced to improve the hygiene and quality of food
has brought about tremendous changes in the food industry. As per the Act, no person
shall commence or carry on any food business except under a FSSAI license or
FSSAI registration. Therefore, any food manufacturing or processing or packaging or
distributing entity is now required to obtain a FSSAI License or Registration.
6.3. POLLTUION CONTROL: There is no major pollution problem associated with this
project in terms of air and sound pollution except for disposal of waste water which
would be managed appropriately through recycling facility. However, entrepreneur
should obtain NOC from concerned State Pollution Control Board.
6.4. EFFLUENT DISPOSAL: Disposal of any effluent out of the project unit should be
treated with recycling facility or dumped in such a way that these does not cause
hazard in the vicinity of the site.
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Report on Potato Chips & Snacks
CHAPTER-7
3. Packaging Materials.
7.2. POWER:
The total requirement of power for the project is 16.92 KW. The total power supply
would be distributed in the following way;
7.3. UTILITY:
WATER: Constant flow of water would be necessary in the operation of the plant.
Water would be obtained from bore well and can be stored in an overhead tank, from
where it will be supplied to the required areas. Process water should be free of mud
and suspended particles. It should be available at a pressure of 3 Kg/sq.cm.
OTHER UTILITIES: Other utilities includes fuel etc. those should be locally
available. Detail expenditure against the head is shown in Appendix- C2.
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Report on Potato Chips & Snacks
CHAPTER-8
INSTALLED CAPACITY
8.1. In assessing the proposed plant capacity, due consideration has been given to
technological and financial factors, marketing considerations, availability of
consumables, infrastructure facilities and economic viability. The detailed
requirement of the plant and machineries to achieve the plant capacity is assessed by
the unit technician. While arriving at the requirement of various type of equipment
and machinery required for the unit, due considerations has been given to the
following points.
a) Minimum Wastage
b) High Productivity
c) Maximum flexibility in operation
d) Adequate stock by provision wherever necessary
For the purpose of carrying out this economic viability of the proposed project, it is
assumed that the plant will operate at following efficiencies during the first 5(Five)
years.
Year 01 02 03 04 05
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Report on Potato Chips & Snacks
CHAPTER-9
While deriving figures and projections in this Project report, following Basis and
Presumptions have been made.
9.1. The project is based on a single shift basis and 300 days of working schedule in a
year, working for 8 hours a day, 25 days a month.
9.2. The project cost and other projections etc. have been made on present market
conditions and the sources available within our sources only and therefore it may vary
on account of market fluctuations and with different suppliers and qualities.
9.3. The cost of machinery and equipment/materials indicated refer to a particular make
and the prices are approximate to these prevailing at the time of preparation of this
report.
9.4. Power rate is assumed at Rs.6.00 per unit and monthly fixed rental charges.
9.5. Water would be made available through bore well facility at the project site.
9.6. Manpower requirement for the project has been planned considering the size of the
unit.
9.7. Interest rates considered is 8% on term loan and 12.00% on Working capital loan for
financial assistance.
9.8. For repayment, a period of 6 years is planned with moratorium period of one year.
9.12. Non-refundable deposits, Preparation of detailed project report fees, Architecture fees,
traveling & Convenience amount, Know-how & Engineering fees, Application
processing fees, trial production, fees etc are considered under pre-operative
expenses.
9.13. Break Even Point & Rate of Return is calculated on optimum production condition
findings.
9.14. At the plant site, availability of unskilled labour is not a problem. Skilled and
unskilled labour can be recruited for operating the plant. Initial training will be
required for smooth and efficient running of the plant. It is felt that the skilled
manpower available locally having some experience in operation can be recruited to
satisfy the manpower need.
9.15. Project would be set up at a site that is well connected by road and there is adequate
supply of power and water.
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Report on Potato Chips & Snacks
CHAPTER-10
The Capital cost of the project has been estimated on the basis of installed capacity
assuming 200 working days per annum. The total cost of the Project including margin
for working capital has been estimated at Rs. 14,85,000.00 as detailed in Annexure-
A.
The total cost of Plant & Machinery has been estimated at Rs.5,37,000.00as detailed
in Appendix-A2.
The cost of Misc. Fixed Assets has been estimated at around Rs. 2, 09,000.00 as
detailed in Appendix-A3. These include cost of furniture and fixture’s and office
equipment.
This has been calculated @ 5% on Civil Work, Plant & Machinery and Misc. Fixed
Assets to provide safeguard against escalation of prices or any other unforeseen
expenditure. The total amount works out to Rs. 57,000.00.
The details of the Working Capital requirements of the proposed unit have been
shown in Annexure-C. In arriving at the working capital estimates, various
components vis Administrative Expenses/Consumables and Working Expenses have
been taken on the basis of usual norms. The Working Capital requirement is proposed
to be met from project margin money and cash credit loan borrowings from the
financial institution.
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Report on Potato Chips & Snacks
The Proposed Project Cost of Rs. 14.85 Lakhs would be financed under MSME
development schemes of financial institutions/commercial banks, in the following
manner as shown below.
Based on the above financing pattern, the Debt-Equity ratio of the Project is 1.5:1.
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Report on Potato Chips & Snacks
CHAPTER-11
ECONOMIC VIABILITY
AND
FINANCIAL ANALYSIS
The cost of production has been estimated annually for the first five years of
operation. The various cost components taken into account are cost of administrative
expenses, consumable stores, utilities, wages and salaries, repairs and maintenance,
insurance, interest rates, taxes etc. depreciation. The detailed cost of production has
been shown in Annexure-D.
Cost under Repair and Maintenance expenses have been assessed by charging 1% on
Land & Building, 2% on Machineries and 1.5% on Fixed Assets on first year with
increase of 2% on subsequent years as detailed in Appendix-D1.
This has been considered in the cost and profitability statement under other expenses
etc.
This has been considered in the cost and profitability statement under other expenses
etc.
11.5. DEPRECIATION:
In calculating the cost of operation, depreciation has been calculated under straight
line method after absorbing the pre-operative and contingencies expenses as shown in
Appendix-D4.
The interest on proposed term loan amount of Rs. 8.91 Lakhs has been calculated@
8% being the rate of interest. The interest calculation for various years after
considering the repayments due in respective years has been shown in Appendix-D3.
The total annual income of the Project is shown in Appendix-D2. Based on 70%
capacity utilisation, total turnover is estimated at Rs. 40.60 Lakhs on third year, the
sale for other years are estimated at different capacity utilisation as shown in
Appendix-D2.
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Report on Potato Chips & Snacks
The proposed project is expected to generate profit from the first year of operation
itself and will gradually increase with increase in capacity utilisation.
The net profit after tax with depreciation added back would make up sufficient
internal accruals to meet the term loan, working capital loan repayment obligations
without any liquidity problems.
The break-even point of the proposed project is 49.25%at 70% operating capacity on
third year as shown in Annexure-F.
The DSCR of the project has been worked out in Annexure-H with an average of
1:2.27, which is considered quite satisfactory to meet the repayment and interest
obligations in respect of the term loan.
The internal rate of return of the project works out to 23.00 %, which is
satisfactory.
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Report on Potato Chips & Snacks
ANNEXURE-A
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Report on Potato Chips & Snacks
ANNEXURE-B
EQUITY
A. Equity from Promoters 40% 5.94
B. Subsidy from Central/ State Govt. -
DEBT
Term Loan from Banks/ FIs 60% 8.91
TOTAL 100% 14.85
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ANNEXURE-C
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Report on Potato Chips & Snacks
ANNEXURE-D
(Rs. in lacs)
40 40 40 40 40 40
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Report on Potato Chips & Snacks
ANNEXURE-E
(Rs. in lacs)
LIABILITIES
Promoters Capital
Promoters capital 5.94 5.94 5.94 5.94 5.94 5.94 5.94
Profit from P&L 0.01 2.06 6.22 10.48 14.84 19.30
Sub Total 5.94 5.95 8.00 12.16 16.43 20.78 25.24
Secured Loan
Term loan 8.91 8.91 7.13 5.35 3.56 1.78 0.00
CC limit from Banks 2.86 3.28 3.70 3.70 3.70 3.70
Sub Total 8.91 11.77 10.41 9.05 7.27 5.48 3.70
Unsecured Loan
Current Liabilities
Total of Liabilities 14.85 17.72 18.41 21.21 23.69 26.27 28.94
ASSETS
Gross Fixed Block 12.03 12.03 12.03 12.03 12.03 12.03 12.03
Sub Total (a) 12.03 12.03 12.03 12.03 12.03 12.03 12.03
Depreciation
Cum. Depreciation 0.70 1.40 2.10 2.79 3.49 4.19
Sub Total (b) 0.00 0.70 1.40 2.10 2.79 3.49 4.19
Net Fixed Asset Block (a-b) 12.03 11.33 10.64 9.94 9.24 8.54 7.84
Current Asset Block
W.I.P.(Inventories)
Cash & Bank balance 0.95 0.89 1.91 5.03 8.40 11.86 15.41
Other Current Assets 3.82 4.38 4.94 4.94 4.94 4.94
Sub-Total 0.95 4.71 6.28 9.97 13.33 16.79 20.35
Preliminary expenses not written off 1.87 1.68 1.49 1.31 1.12 0.93 0.75
Total of Assets 14.85 17.72 18.41 21.21 23.69 26.27 28.94
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Report on Potato Chips & Snacks
ANNEXURE-F
(Rs. in lacs)
SOURCES OF FUND
USES OF FUND
Preliminary expenses 1.87
Capital expenditure 12.03
Increase in WIP
Repayment of Term Loan 0.00 1.78 1.78 1.78 1.78 1.78
Decrease in unsecured loan
Interest payment
Term Loan 0.71 0.65 0.51 0.36 0.22 0.08
Other bank(W.C) 0.34 0.39 0.44 0.44 0.44 0.44
Increase in Working capital 3.82 0.56 0.56
Decrease in Other current liabilities
Sub Total 13.90 4.87 3.38 3.29 2.59 2.45 2.30
Opening cash/bank balance 0.00 0.95 0.89 1.91 5.03 8.40 11.86
Surplus/Deficit 0.95 -0.06 1.01 3.13 3.36 3.46 3.56
Closing cash/bank balance 0.95 0.89 1.91 5.03 8.40 11.86 15.41
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Report on Potato Chips & Snacks
ANNEXURE-G
(Rs. in lacs)
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Report on Potato Chips & Snacks
ANNEXURE-H
BREAK-EVEN ANALAYSIS
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Report on Potato Chips & Snacks
ANNEXURE-I
(Rs. in lacs)
IRR = 23%
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Report on Potato Chips & Snacks
ANNEXURE-J
TERM LOAN REPAYMENT SCHEDULE
(Rs in lacs)
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Report on Potato Chips & Snacks
APPENDIX-A1
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Report on Potato Chips & Snacks
APPENDIX-A2
Sub total
Add: Taxes, transportation and installation etc @ 10%
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Report on Potato Chips & Snacks
APPENDIX-A3
Sub total
Add: Taxes, transportation and installation etc @ 10%
2.09
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APPENDIX-A4
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Report on Potato Chips & Snacks
APPENDIX-C1
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Report on Potato Chips & Snacks
APPENDIX-C2
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Report on Potato Chips & Snacks
APPENDIX-D1
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Report on Potato Chips & Snacks
APPENDIX-D2
ESTIMATES OF INCOME
Price per
Unit Amount
Particulars Qty (Rs.) (Rs.)
5800000
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Report on Potato Chips & Snacks
APPENDIX-D3
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Report on Potato Chips & Snacks
APPENDIX-D4
DEPRECIATION SCHEDULE
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