Project Report

Pradhanamantri Bharathiya Janaushadi

Kendra

For submission to Bank for Loan under Overdraft Facility

Reviewed and
Deepa P
submitted by :

November.2019

Jose DP M.Com,CIA,CISA,LIFA,CPA(Int'l)
Prepared by : GST & Finance Consultant,
V4U Business Services

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INTRODUCTION

The Jan Aushadhi Scheme (Public Medicine Scheme) is a direct market intervention scheme
launched by the Department of Pharmaceuticals, Ministry of Chemicals and Fertilizers, Govt. of
India, to make available quality generic medicines at affordable prices to all citizens through a
special outlet known as Jan Aushadhi Store opened in each district of the States. More than 250 such
outlets have been in operation as of now. Jan Aushadhi stores have been set up to provide generic
drugs, which are available at lesser prices but are equivalent in quality and efficacy as expensive
branded drugs. Jan Aushadi is also a campaign to make people aware that brand value has no
correlation with quality or efficacy of the formulations and to encourage doctors to prescribe more
of such generic medicines.

BUSINESS PROFILE

This project is for a Jan Aushadhi Store, set up in line with the governmental plan for social uplifting
along with other allied medical and sanitary products at reasonable price. This store would sell
general and controlled medicine on prescription basis and other products on customer need basis.
The store would also ensure to procure quality products with care and avoid near expiry products to
kept in the store or made available for sale.

MARKET PROFILE

The store is situated at Kudamaloor of Kottayam district and is serving the people in the locality and
nearby places. From our experience in the past 8 months, we are certain that with the competitive
price and best quality service offered to the customers is attracting increasing number of customer.

ENTREPRENUER PROFILE

The proprietor of this project, Mrs.Deepa, is qualified, experienced and possess essential skills in
running a similar business. She is energetic, enthusiastic and has proven administrative skills in
running a shop like this efficiently.
The unit has been set ready and functioning successfully since 8 months. Now that the available
financial resources is too limited and an institutional financing facility has become inevitable, she is
seeking an overdraft facility from a reputed Bank, to take this business to new heights of success.

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PROJECT AT A GLANCE
Business Name : Pradhanamantri Bharathiya Janaushadi Kendra
Entreprenuer Name : Ms.Deepa P
Legal Constitution : Propreitorship Location : Kudamaloor, Kottayam
Contact Number: 9645363630 Email :
Business Premises : Shop Ownership : Owned Area(Sq.Ft): 650
Business Type Retailer Activity : Medical Store
Business Address : Door No. VII/486, Vettikottu,Kudamaloor, Kottayam 686017
Products / Services : Medicines, Sanitaryware, Babyfood and consumables.

Cost of Project Means of Financing

Cost of Landed Property - Owned Capital 50% 3,10,000
Cost of Building Construction/Rennovation - Borrowed Capital 50% 3,10,000
Cost of Plant & Machinery - Total 100% 6,20,000
Cost of Furnishing 1,38,300 Monthly Instalment 6,895.78
Cost of Office Equipments 75,500 Gestation Period (M) 3 Months
Cost of Motor Vehicles - Borrowings
Cost of Intangible Assets - Particulars Tenure Int. Rate Amount
Pre-operative Expenses - Term Loan 60 11.50% -
Security Deposits & Prepayments 53,600 WC Loan 60 12.00% 3,10,000
Working Capital 3,49,293 Auto Loan 60 8.00% -
Total Cost of Project 6,16,693 Total Borrowed Capital 3,10,000
50,00,000 Financial Analysis (Average Values)
Profitability Chart
40,00,000
Net Profit Ratio 6.93%
Profitability Index 1.00
30,00,000
Current Ratio 7.41
20,00,000 Liquid Ratio 46.58
10,00,000 Cash Reserve Ratio 4.20
Debt to Equity Ratio 0.26
-
Y1 Y2 Y3 Y4 Y5 Debt Service Coverage Ratio 3.53
Total Revenue Operating Expenses Non-Operating Expense
Payback Period (Years) 3.75
Gross Profit Net Profit
Internal Rate of Return 10.21%
10,00,000
Net Cash / Fund Flow

Location Map

-
Y1 Y2 Y3 Y4 Y5
Net Profit Net Cashflows Net change in Working Capital

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DETAILED PROJECT COST & MEANS OF FINANCING

Cost of Furnishing Particulars Quantity Unit Rate Total Cost
Sign board 1.00 12,000 12,000
Interior Decoration and Shelving 1.00 76,800 76,800
Electrical Fixtures & Installations 1.00 27,500 27,500
Furniture 1.00 22,000 22,000
Total Cost of Furnishing 4.00 1,38,300

Cost of Office Equipment Particulars Quantity Unit Rate Total Cost

Computer & Software 1.00 28,000 28,000
Printer 1.00 10,000 10,000
Inverter 1.00 21,000 21,000
Refrigerator 1.00 16,500 16,500
Total Cost of Office Equipment 4.00 75,500

Security Deposits / Margins Particulars Quantity Unit Rate Total Cost

Deposit with Shop Owner 1.00 50,000 50,000
Electricity and other Utility Deposits 1.00 3,600 3,600
Total Security Deposits/Guarantee Margins 53,600
Total Capital Expenditure 2,67,400

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Working Capital Particulars Per Month Months Total Cost

Inventory of Assorted items 2,02,651.04 1.50 3,03,977
Sundry Debtors - Sundry Creditors 3,000 1.25 3,750
Wages and Other Direct Costs 11,700 2.00 23,400
Administrative Expenses 9,083 2.00 18,167
Total Working Capital 3,49,293
Total Project Cost 6,16,693

% Amount Terms of Borrowing

Working Capital Loan ScheduleMeans of Financing

Owned Capial 50% 3,10,000 Terms Term Loan WC Loan Auto Loan
Borrowed Capital 50% 3,10,000 Scheme Overdraft Facility
Term Loan 0% - Tenure (M) 60 60 60
WC Loan 100% 3,10,000 Interest (%) 11.50%
Auto Loan 0% - Gestation(M) 3
Total 100% 3,10,000 6,20,000 Subsidy (%) Nil

Year Op. Bal Disbursal Total Loan Interest Due Principal due Repayment Cl. Balance
Year 1 - 3,10,000 3,10,000 34,608 48,141 82,749 2,61,859
Year 2 2,61,859 - 2,61,859 28,504 54,245 82,749 2,07,613
Year 3 2,07,613 - 2,07,613 21,624 61,125 82,749 1,46,488
Year 4 1,46,488 - 1,46,488 13,873 68,876 82,749 77,612
Year 5 77,612 - 77,612 5,138 77,611 82,749 0

Particulars Year 1 Year 2 Year 3 Year 4 Year 5

Summary

Total Interest Expense 34,608 28,504 21,624 13,873 5,138

Total Principal Repaid 48,141 54,245 61,125 68,876 77,611

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PROJECTED FINANCIAL STATEMENTS

Particulars Year 1 Year 2 Year 3 Year 4 Year 5

ASSETS :
Current Assets
Cash and Equivalents 2,67,468 3,91,118 5,19,365 6,54,348 7,97,836
Trade Receivables 12,557 13,330 14,150 15,021 15,946
Inventory 2,82,623 2,96,754 3,11,592 3,27,172 3,43,530
Other Current Assets 53,600 53,600 53,600 53,600 53,600
Total Current Assets 6,16,248 7,54,802 8,98,707 10,50,141 12,10,912
Non-Current Assets
Cost of Fixed Assets 2,13,800 2,13,800 2,13,800 2,13,800 2,13,800
Less Accummulated Depreciation -53,473 -93,571 -1,23,641 -1,46,191 -1,63,100
Long Term Investments
Balance Sheet (Projection)

Total Non-Current Assets 1,60,327 1,20,229 90,159 67,609 50,700

TOTAL ASSETS 7,76,575 8,75,030 9,88,866 11,17,751 12,61,612
LIABILITIES :
Current Liabilities :
Trade Payable 10,060 10,656 11,301 11,984 12,708
Other Current Liabilities 80,049 94,912 1,09,624 1,24,507 1,39,826
Total Current Liabilities 90,109 1,05,568 1,20,925 1,36,491 1,52,534
Non-Current Liabilities
Loans from Financial Institutions 2,61,859 2,07,613 1,46,488 77,612 0
Other Long term liabilities - - - - -
Total Non-current Liabilities 2,61,859 2,07,613 1,46,488 77,612 0
TOTAL LIABILITIES 3,51,968 3,13,181 2,67,413 2,14,102 1,52,535
NET ASSETS (Assets -Liabilities) 4,24,608 5,61,849 7,21,453 9,03,649 11,09,077
EQUITY:
Share Capital / Owner's Contribution 3,10,000 3,10,000 3,10,000 3,10,000 3,10,000
Retained Earnings 1,71,056 3,19,445 4,90,064 6,83,387 9,00,258
Dividend / Profit Distribution -56,449 -67,597 -78,611 -89,738 -1,01,181
TOTAL EQUITY 4,24,608 5,61,849 7,21,453 9,03,649 11,09,077

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Particulars Year 1 Year 2 Year 3 Year 4 Year 5

Statement of Changes in Working Capital

Changes in Current Assets :

Cash and Equivalents 2,67,468 1,23,650 1,28,247 1,34,984 1,43,487
Trade Receivables 12,557 773 820 871 925
Inventory 2,82,623 14,131 14,838 15,580 16,359
Other Current Assets 53,600 - - - -
Subtotal : 6,16,248 1,38,554 1,43,905 1,51,434 1,60,771
Changes in Current Liabilities :
Trade Payables 10,060 596 644 683 724
Other Current Liabilities 80,049 14,863 14,712 14,883 15,319
Subtotal : 90,109 15,459 15,357 15,566 16,044
Net Changes in Working Capital 5,26,139 1,23,095 1,28,549 1,35,868 1,44,727

Particulars Year 1 Year 2 Year 3 Year 4 Year 5

Total Sales Revenue 30,13,659 31,99,150 33,96,057 36,05,085 38,26,978
Statement of Income and Expenditure for the year

Cost of Sales / Production :

Cost of Raw materials / Purchases 24,31,813 25,78,937 27,34,963 29,00,428 30,75,904
Direct Wages 72,000 76,356 80,976 85,875 91,070
Other Direct Costs 68,400 72,538 76,927 81,581 86,516
Operating Expenses :
Staff Salaries - - - - -
Administration Expenses 1,09,000 1,10,090 1,11,191 1,12,303 1,13,426
Earnings before Interest, Tax & Depn
3,32,447 3,61,228 3,92,001 4,24,898 4,60,061
(EBITD)
Depreciation 53,473 40,099 30,070 22,549 16,910
Interest 34,608 28,504 21,624 13,873 5,138
Net Profit (Before Taxation) 2,44,366 2,92,626 3,40,307 3,88,476 4,38,014
Income Tax 73,310 87,788 1,02,092 1,16,543 1,31,404
Net Profit (After Taxation) 1,71,056 2,04,838 2,38,215 2,71,933 3,06,610

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Particulars Year 1 Year 2 Year 3 Year 4 Year 5

A. Cashflow from Operating Activities
Net Profit after Tax 1,71,056 2,04,838 2,38,215 2,71,933 3,06,610
Add : Depreciation 53,473 40,099 30,070 22,549 16,910
Add : Interest on Loans 34,608 28,504 21,624 13,873 5,138
Less : Non Cash Incomes
Changes in Working Capital
Changes in Current Assets -3,48,780 -14,904 -15,658 -16,451 -17,283
Changes in Current Liabilities 90,109 15,459 15,357 15,566 16,044
Sub total : 466 2,73,996 2,89,607 3,07,471 3,27,418
B. Cashflow from Investing Activities
Statement of Cashflows

Purchase of Fixed Assets -2,13,800 - - - -

Investment in Fixed Deposits/Equity - - - - -
Proceeds from Sale of Fixed Assets - - - - -
Other Investment Income - - - - -
Sub total : -2,13,800 - - - -
C. Cashflow from Financing Activities
Proceeds from raising Capital 3,10,000 - - - -
Proceeds from Longterm borrowings 3,10,000
Repayment of Longterm borrowings -48,141 -54,245 -61,125 -68,876 -77,611
Interest on borrowing paid -34,608 -28,504 -21,624 -13,873 -5,138
Longterm Liabilities/Provisions paid
Owners' drawings / Dividend paid -56,449 -67,597 -78,611 -89,738 -1,01,181
Sub total : 4,80,802 -1,50,346 -1,61,360 -1,72,487 -1,83,931
D. Net Cashflows 2,67,468 1,23,650 1,28,247 1,34,984 1,43,487
E. Cash & Equivalents - Opening - 2,67,468 3,91,118 5,19,365 6,54,348
F. Cash & Equivalents - Closing 2,67,468 3,91,118 5,19,365 6,54,348 7,97,836

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Particulars Year 1 Year 2 Year 3 Year 4 Year 5

A. Net Operating Income
Net Profit After Taxes 1,71,056 2,04,838 2,38,215 2,71,933 3,06,610
Debt Service Coverage Ratio

Depreciation 53,473 40,099 30,070 22,549 16,910

Interest on Bank Loan 34,608 28,504 21,624 13,873 5,138
Total Sources of Fund Available : 2,59,137 2,73,441 2,89,909 3,08,356 3,28,657
B. Debt Services
Loan Instalment Payable (Principal) 48,141 54,245 61,125 68,876 77,611
Interest on Bank Loans 34,608 28,504 21,624 13,873 5,138
Total Debt Liability Payable : 82,749 82,749 82,749 82,749 82,749
C. Debt Service Coverage Ratio (A/B) 3.13 3.30 3.50 3.73 3.97

Particulars Average Year 1 Year 2 Year 3 Year 4 Year 5

A. Profitability
Operating Profit Ratio 11.53% 11.03% 11.29% 11.54% 11.79% 12.02%
Net Profit Ratio 6.93% 5.68% 6.40% 7.01% 7.54% 8.01%
Financial Ratios

Return on Investment 38.68% 27.74% 33.22% 38.63% 44.10% 49.72%

B. Short Term Solvency - - - - -
Current Ratio 7.41 6.84 7.15 7.43 7.69 7.94
Liquid Ratio 46.58 27.84 37.95 47.21 55.86 64.04
Cash Reserve Ratio 4.20 2.97 3.70 4.29 4.79 5.23
C. Long Term Solvency
Debt to Equity Ratio 0.26 0.62 0.37 0.20 0.09 0.00
Debt Service Coverage Ratio 3.53 3.13 3.30 3.50 3.73 3.97

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Concluding Remarks

The project has good potentials of achieving targeted revenue, due to the genuine intention of delivering quality services at fair rates
and the favorable location aspect.

Total cost of the project is INR 6.2 lakhs, out of which Ms.Deepa P has already contributed INR 3.1 lakhs, and the remaining INR
3.1 lakhs is being requested from Bank as loan under the Overdraft Facility at competitive interest rate, repayable within 5 years.

We confirm that, Ms.Deepa P has acquired sufficient experience and skills in doing similar businesses during the past years.

The project, based on the financial projections, is expected to maintain an average net profit ratio of 6.93%, average return on
investment of 100.48% and average DSCR of 3.53, which are positive signs of the project's repayment capacity and profitability.
The project is expected to Payback the initial investments within a period of 3.75 years with an internal rate of return of 10.21%..

The loan is proposed to be paid off with interest in 60 equal monthly instalments, with a gestation period of 3 months. There is
sufficient cashflow for meeting the obligation of the business regarding payment of interest, instalment of loan and all other
operational expenses.

On the basis of the above facts and observations, the proposed project (Pradhanamantri Bharathiya Janaushadi Kendra) is
considered financially feasible and the loan amount is sufficiently secured with assurance of promt repayment.

Place : Kudamaloor
Date : 14.11.2019 Prepared by Submitted by
(V4U Business Services)
(Deepa P)

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PROJECTED REVENUE (APPENDIX 1)

Particulars Unit Rate Quantity Annual Sales
Annual Sales Revenue at Full

Medicines of various types 60.00 12,045.00 7,22,700

Test kits & Medical utencils 125.00 6,022.50 7,52,813
Sanitaryware 227.00 3,613.50 8,20,265
Capacity

Babyfood and kids utencils 320.00 3,011.25 9,63,600

Other consumables 63.00 12,045.00 7,58,835
Total Sales Revenue (at Full Capacity) 795.00 36,737 40,18,212

Particulars Year 1 Year 2 Year 3 Year 4 Year 5

Expected Annual Sales 30,13,659 31,99,150 33,96,057 36,05,085 38,26,978

PROJECTED OPERATING EXPENSES

Particulars of Expenses Basis (P/M) % Sales(P) Rate pm(M) Annual Expenses

Communication Expenses M 0.00% 850 10,200.00
Printing & Stationery M 0.00% 800 9,600.00
Administration Expenses

Rent of Premises M 0.00% 5,000 60,000.00

Advertisement & Publicity M 0.00% 750 9,000.00
Other Misc. Expenses M 0.00% 1,500 18,000.00
Rates & Govt. Fees M 0.00% 100 1,200.00
Insurance and Others A - 1,000 1,000.00
Total Expenses Per Year 1,09,000.00

Particulars Year 1 Year 2 Year 3 Year 4 Year 5

Expected Annual Admin Expenses 1,09,000 1,10,090 1,11,191 1,12,303 1,13,426

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PROJECTED COST OF SALES / PRODUCTION (APPENDIX 2)

Particulars Rate / Unit Input Units Turnover Annual Amount
Initial / Annual Matrials Consumed

Medicines of various types 50.00 1,000.00 30.00 6,08,333.33

Test kits & Medical utencils 100.00 500.00 30.00 6,08,333.33
Sanitaryware 180.00 300.00 30.00 6,57,000.00
Babyfood and kids utencils 250.00 250.00 30.00 7,60,416.67
Other consumables 50.00 1,000.00 30.00 6,08,333.33
Total Purchase Cost (at full capacity) 3,050.00 150.00 32,42,416.67

Particulars Year 1 Year 2 Year 3 Year 4 Year 5

Expected Annual Purchase Cost 24,31,813 25,78,937 27,34,963 29,00,428 30,75,904

Position / Designation Nos. Start year Rate/month Annual Wages

Labour Wages

Shop assistant 1 1 8,000 96,000.00

Total Wages Per Year 1 96,000.00

Particulars Year 1 Year 2 Year 3 Year 4 Year 5

Expected Annual Labour Wages 72,000 76,356 80,976 85,875 91,070

Particulars of Overheads Basis (P/M) % Sales(P) Rate pm(M) Total Overheads

Repairs & Maintenance M 0.00% 1,000.00 12,000.00
Electricity Charges M 0.00% 2,500.00 30,000.00
Direct Overheads

Consumables M 0.00% 2,000.00 24,000.00

Other Direct Overheads M 0.00% 1,000.00 12,000.00
Transportation & Delivery M 0.00% 1,100.00 13,200.00
Total Direct Overheads 91,200.00

Particulars Year 1 Year 2 Year 3 Year 4 Year 5

Expected Annual Direct Overheads 68,400 72,538 76,927 81,581 86,516

Total Cost of Sales / Production 25,72,213 27,27,831 28,92,865 30,67,883 32,53,490

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Fixed Assets and Depreciation Schedule (APPENDIX 3)

Depr Rate : 25% Method : WDV Life (Yrs) : 8 Salvage(%): 10.00%

Furnishings

Particulars Year 1 Year 2 Year 3 Year 4 Year 5

Opening Balance 1,38,300 1,03,710 77,772 58,321 43,734
Depreciation 34,589.63 25,939 19,451 14,586 10,938
Closing Balance 1,03,710 77,772 58,321 43,734 32,796

Depr Rate : 25% Method : WDV Life (Yrs) : 8 Salvage(%): 10.00%

Office Equipment

Particulars Year 1 Year 2 Year 3 Year 4 Year 5

Opening Balance 75,500 56,617 42,457 31,838 23,875
Depreciation 18,882.99 14,160.24 10,618.68 7,962.89 5,971.32
Closing Balance 56,617 42,457 31,838 23,875 17,904

Total Cost of Fixed Assets 2,13,800 2,13,800 2,13,800 2,13,800 2,13,800

Total Depreciation Expense 53,473 40,099 30,070 22,549 16,910

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ASSUMPTIONS & WORKING NOTES (APPENDIX 4)

1 This project report has been prepared based on data and information provided by the Proprietor(s)'' or authorized representative(s).

2 Depreciation has been computed on Written Down Value method, starting from date an asset is put to operational use.

GST, as applicable, will be collected from customers and remitted to Tax Authorities on due dates. As this does not affect the
3
profitability, it is not specifically shown in this report.

4 Labour cost has been merged together to Cost of Sales as it would be outsourced on piece rate basis (Rs 40 per unit)

5 It has been assumed that 50% of the Net Profit after taxes would be distributed to partners annually.

6 Other assumptions and considerations used for calculations in this Project Report are mentioned below:

Values are displayed, rounding off to 1 Depreciation Rates

% of Operational Cost that is Variable 0 Assets Life (Yrs) Salvage %

Bank Interest Rate for Term Loan 0 Buildings 10 10.00%

Bank Interest Rate for WC Loan 0 Plant & Machinery 10 10.00%

Bank Interest Rate for Auto Loan 0 Furniture & Fittings 8 10.00%

Bank Interest Rate of Deposit 0 Motor Vehicles 8 10.00%

% of Term Loan to be requested 0 Office Equipment 8 10.00%

% of WC Loan to be requested 1 Intangible assets 8 1.00%

% of Vehicle Loan to be requested 0 Income Tax Rate 30.00%

Gestation Period for Repayment (Months) 3 Method of Depreciation WDV

Accounting Year Starts from 0 Loan Tenure (Months) 60

Credit Customers (%) 10% Capacity utilization during 1st year 75.00%

Credit Suppliers (%) 10% Capacity utilization growth rate per annum 5.00%

Debtors Collection Days 15 Revenue growth rate per annum 1.10%

Creditors Payment Days 15 Expense growth rate per annum 1.00%

Debtors/Creditors Cycle for W.C 1.25 Normal production process wastage 1.00%

Inventory Cycle (Average) for WC 1.50 By-Product Separation shoratge in Qty 1.00%

Working Capital Cycle(salary/wages,etc) 2.00 Processing Fee for Term Loan 0.00%

Annual Profit Distribution/Dividend Rate 0.33 Processing Fee for WC Loan 0.00%

0 0.00 Processing Fee for Auto Loan 0.00%

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