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PROTEIN RICH BISCUITS

1.0 INTRODUCTION
Bakery products are being made since long, with bread and biscuits being the main
constituents. India is one of the largest biscuit producers in the world and last few years
have witnessed substantial increase in the consumption of bakery products including biscuits.
This industry has major share from the unorganised sector with hundreds and thousands of
small bakers across the country. Biscuits of different varieties are popular in all age groups
as they are cheap compared to many other ready-to-eat food items, enjoy longer shelf life and
can provide nutrients.

2.0 PRODUCT
2.1 Applications
Majority of the biscuits are manufactured from wheat flour. Addition of soya flour would
increase the protein contents substantially. Protein rich biscuits can thus serve the purpose
of providing additional nutrition at a reasonable price. The project has to be located in
industrially developed states like Maharashtra, Gujarat, TN, Andhra Pradesh etc.

2.2 Availability of technology, compliances and quality standards


DFRL, Mysore, has successfully developed the process know-how. Certification under the PFA
Act is compulsory. Quality standard is specified in IS 7487:1986

3.0 MARKET POTENTIAL


3.1 Demand and Supply
Bakery is an age-old industry manufacturing bread and biscuits. With changes in the
lifestyles of people and tendency to spend more, many products have become very popular

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since last few years. Spending on fast food items or ready-to-eat snacks have gone up
substantially during last few years and the rural and semi-urban areas are not an exception.

3.2 Marketing Strategy


Biscuits are consumed regularly by all age or income groups. With addition of soya flour, the
consumers can get additional nutrients as soya is high in protein but low in fat and
carbohydrates. Soya products like milk, nuggets, paneer, flour, biscuits etc. are becoming
popular and the industry is growing at more than 15% every year. Appropriate marketing
network backed up with adequate publicity are critical aspects.

4.0 MANUFACTURING PROCESS


The process of manufacture is very well standardised and easy. Various ingredients like
wheat flour/maida, soyabean flour, starch, soda, salt, preservatives, sugar, ghee etc. are
thoroughly mixed with the help of water and properly kneaded dough is set on biscuit moulds
and then baked in an oven. On completion of baking, biscuits are cooled, weighed and packed.

5.0 CAPITAL INPUTS


5.1 Land and Building
A plot of land of about 500 sq.mtrs. with built-up area of 300 sq.mtrs. shall be required for
main production area, storage and packing, laboratory, office etc. Land may cost Rs.1.50 lacs
whereas construction cost would be Rs.7.50 lacs:

5.2 Machinery
Annual rated production capacity of 80 tonnes with 2 shift working and 300 working days
would need following machines.

Item Qty. Price (Rs.)


Roller cutting machine with oven complete with reduction
gear box, electric motor and other accessories- Size 48 inches 1 5,00,000
Automatic screw type flour sifter with electric motor and starter 1 50,000
Grinder- 30 Kgs Capacity 1 20,000
Roller Sheeter complete with electric motor,
starters and gear box- Size 24inches 1 1,75,000
Double action horizontal mixing machine of
250 kgs. per batch capacity with electric motor and starters 1 80,000
Cooling conveyor of 18" size with electric motor and starter 1 2,00,000
Oil Spraying Machine 1 55,000
Turn-table with electric motor and starters 1 1,00,000
Syrup machine with electric motor 1 80,000
Biscuit grinder with electric motor 1 25,000
Working tables, aluminium trays and vessels,
weighing scales, packing machine etc. -- 1,00,000
Total 13,85,000

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5.3 Miscellaneous Assets
Some other assets like furniture & fixtures, laboratory instruments, exhaust fans, office
equipments etc. would cost Rs. 75,000/-.

5.4 Utilities
Power requirement shall be 70 HP whereas per day water requirement shall be about 2500
ltrs.

5.5 Raw and Packing Materials


Wheat flour would be the basic raw material followed by soya flour. Others like starch, salt,
sugar, ghee, baking soda, colours, flavours etc. shall be required in small quantity. Packing
material like printed wrappers, plastic bags, cartons, box strapping etc. shall be required.

6.0 MANPOWER REQUIREMENTS


Particulars Nos. Monthly Total Monthly
Salary (Rs.) Salary (Rs.)
Supervisor 1 3,500 3,500
Skilled Workers 2 2,500 5,000
Semi-skilled Workers 2 1,750 3,500
Helpers 4 1,250 5,000
Clerk 1 2,000 2,000
Salesman 1 2,500 2,500
Total 21,500

7.0 TENTATIVE IMPLEMENTATION SCHEDULE


Activity Period (in months)
Application and sanction of loan 2
Site selection and commencement of civil work 1
Completion of civil work and placement of
orders for machinery 4
Erection, installation and trial runs 1

8.0 DETAILS OF THE PROPOSED PROJECT


8.1 Land and Building

Particulars Area (Sq.Mtrs) Cost (Rs.)


Land 500 1,50,000
Building 300 7,50,000
Total 9,00,000

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8.2 Machinery
An estimated expenditure of Rs.13.85 lacs shall have to be incurred on machinery as
discussed earlier.

8.3 Miscellaneous Assets


A provision of Rs.75, 000/- would take care of other assets as stated before.

8.4 Preliminary & Pre-operative Expenses


There will be many pre-production expenses like establishment, registration, administrative
and travelling expenses, interest during implementation, trial runs etc. for which an amount
of Rs 1.00 lac is earmarked.

8.5 Working Capital Requirements


At 60% capacity utilisation in the first year, the working capital needs will be as under:
(Rs. in lacs)
Particulars Period Margin Total Bank Promoters
Stock of Raw and ½ Month 30% 0.80 0.55 0.25
Packing Materials
Stock of Finished Goods ½ Month 25% 1.00 0.75 0.25
Receivables ½ Month 25% 1.80 1.35 0.45
Working Expenses 1 Month 100% 0.40 -- 0.40
Total 4.00 2.65 1.35

8.6 Cost of the Project & Means of Financing (Rs. in lacs)


Item Amount
Land and Building 9.00
Machinery 13.85
Miscellaneous Assets 0.75
P&P Expenses 1.00
Contingencies @ 10% on Land and
Building & Plant & Machinery 2.30
Working Capital Margin 1.35
Total 28.25
Means of Finance
Promoters' Contribution 8.50
Term Loan from Bank/FI 19.75
Total 28.25
Debt Equity Ratio 2.32 : 1
Promoters' Contribution 30%

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Financial assistance in the form of grant is available from the Ministry of Food Processing
Industries, Govt. of India, towards expenditure on technical civil works and plant and
machinery for eligible projects subject to certain terms and conditions.

9.0 PROFITABILITY CALCULATIONS


9.1 Production Capacity & Build-up
As against the rated capacity of 80 tonnes annually, the actual utilisation in the first year is
taken as 60% and thereafter it is limited to 75%.

9.2 Sales Revenue at 100%


(Rs. in lacs)
Product Qty. (Tonnes) Price/Ton (Rs.) Value
Assorted Biscuits 80 85,000 68.00

9.3 Raw and Packing Materials Required at 100%


(Rs. in lacs)
Product Qty. Price/Ton Value
(Tonnes) (Rs.)
Wheat Flour 65 15,000 9.75
Soyabean Flour 10 25,000 2.50
Starch, ghee, salt, baking soda, colours, flavours etc. -- -- 1.50
Sugar 30 18,000 5.40
Packing Material @ Rs.15000/- per ton -- -- 12.00
Total 31.15

9.4 Utilities
Total expenditure on utilities at 100% activity level would be Rs. 1.50 lacs.

9.5 Selling Expenses


A provision of 22.5% of sales income is made every year under this head towards expenditure
on selling commission, advertisement, transportation, free sampling etc.

9.6 Interest
Interest on term loan of Rs. 19.75 lacs is calculated @ 12% per annum assuming repayment
in 5 years including a moratorium period of 1 year whereas on working capital from bank it
is computed @ 14% per annum.

9.7 Depreciation
It is calculated @ 10% on building and 15% on machinery and miscellaneous assets on WDV
basis.

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10.0 PROJECTED PROFITABILITY
(Rs. in lacs)
No. Particulars 1st Year 2nd Year
A Installed Capacity --- 80 Tonnes ---
Capacity Utilisation 60% 75%
Sales Realisation 40.80 51.00
B Cost of Production
Raw and Packing Materials 18.69 23.36
Utilities 0.90 1.12
Salaries 2.58 3.00
Stores and Spares 0.30 0.42
Repairs & Maintenance 0.36 0.48
Selling Expenses @ 22.5% 9.18 11.48
Administrative Expenses 0.60 0.80
Total 32.61 40.66
C Profit before Interest & Depreciation 8.19 10.34
Interest on Term Loan 2.10 1.70
Interest on Working Capital 0.37 0.47
Depreciation 2.94 2.54
Profit before Tax 2.78 5.63
Income-tax @ 20% 0.55 1.13
Profit after Tax 2.23 4.50
Cash Accruals 5.17 7.04
Repayment of Term Loan -- 4.35

11.0 BREAK-EVEN ANALYSIS (Rs. in lacs)


No Particulars Amount
[A] Sales 51.00
[B] Variable Costs
Raw and Packing Materials 23.36
Utilities (70%) 0.78
Salaries (70%) 2.10
Stores & Spares 0.42
Selling Expenses (70%) 8.03
Admn. Expenses (50%) 0.40
Interest on WC 0.47 34.56
[C] Contribution [A] - [B] 16.44
[D] Fixed Cost 9.81
[E] Break-Even Point [D] ÷ [C] 59%

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12.0 [A] LEVERAGES
Financial Leverage
= EBIT/EBT
= 5.25 ÷ 2.78
= 1.89

Operating Leverage
= Contribution/EBT
= 12.28 ÷ 2.78
= 4.42

Degree of Total Leverage


= FL/OL
= 1.89 ÷ 4.42
= 0.43

[B] Debt Service Coverage Ratio (DSCR)


(Rs. in lacs)
Particulars 1st Yr 2nd Yr 3rd Yr 4th Yr 5th Yr
Cash Accruals 5.17 7.04 8.15 9.17 10.12
Interest on TL 2.10 1.70 1.18 0.67 0.38
Total [A] 7.27 8.74 9.33 9.84 10.50
Interest on TL 2.10 1.70 1.18 0.67 0.38
Repayment of TL -- 4.95 4.95 4.95 4.90
Total [B] 2.10 6.65 6.13 5.62 5.28
DSCR [A] ÷ [B] 3.46 1.31 1.52 1.75 1.99
Average DSCR -------------------------------- 2.00 -------------------------------------

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[C] Internal Rate of Return (IRR)
Cost of the project is Rs. 28.25 lacs.
(Rs. in lacs)
Year Cash 16% 18% 20%
Accruals
1 5.17 4.46 4.38 4.31
2 7.04 5.23 5.05 4.89
3 8.15 5.22 4.96 4.72
4 9.17 5.06 4.73 4.42
5 10.12 4.82 4.42 4.07
6 10.89 4.46 4.03 3.65
50.54 29.25 27.57 26.06

The IRR is around 17%.

Some of the machinery suppliers are


1. Baker & Co Pvt Ltd, Crawford Market, Mumbai 400 008
2. Baker Enterprise, Near Peeragarhi, New Delhi 110 041
3. Raylon Metal Works, PO Box no. 17426, Andheri (E), Mumbai 400 059
4. Delight Engineering Works, Lane No. 8 Asalatpura, Moradabad 244001.
Tel. No. 2498398/2491687, Fax: 2194378
5. Foodmac Engineers Pvt. Ltd., 37038, Sector 2, Parwanoo 173220 (HP)
Tel. No. 233294/5, Fax: 233296

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