Oxford Luggage Industries Dpr

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North India Operational Research

& Management Consultancy Organization

OXFORD LUGGAGE INDUSTRIES

Detailed Project Report

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Chapter No. Chapter Index Page Nos

I Introduction 6

II Industry Profile 6 to 11

III Manufacturing Process 12

IV Cost of Project and Working Capital

Requirements

13 to 14

V Financial Viability 15 to 16


List of Annexure

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List of Annexure

ANNEXURE

NO.

PARTICULARS PAGE NO.

I Cost of project and means of Finance (Annexure I) 17II Details and Cost of Land (Annexure II) 18

III Details and Cost of site development and civil works (Annexure III) 19

IV Details and Cost of Plant and Machinery (Annexure IV) 20

V Computation of Miscellaneous Fixed Assets (Annexure V) 21

VI Computation of Preliminary and Preoperative Expenses(Annexure VI) 22

VII Computation of Installed Capacity and Capacity UtilizationProgramme (Annexure VII)

23

VIII Computation of Sales Realization (Annexure

VIII)

24

IX Computation of Raw Materials (Annexure

IX)

25

X Computation of Work Overheads (Annexure X) 26

XI Computation of Power (Annexure XI) 27

XII Computation of Indirect Expenses (Annexure XII) 28

XIII Computation of Depreciation (Annexure XIII) 29

XIV Computation of Working Capital (Annexure XIV) 30

XV Computation of Financial Expenses (Annexure XV) 31

XVI Computation of Profitability (Annexure XVI) 32 to 33

XVII Computation of Debt Service Equity Ratio (Annexure XVII) 34

XVIII Computation of Internal Rate of Return (Annexure XVIII) 35

XIX Computation of Return of Investments (Annexure XIX) 36

XX Computation of Break Even Point (Annexure XX) 37

XI Computation of Pay Back Period (Annexure XXI) 38XII Computation of Cash Flow Statement (Annexure XXII) 39

XIII Computation of Projected Balance Sheet (Annexure XXIII) 40

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PROJECT HIGHLIGHTS

1. Name & address of the unit : M/s Oxford Luggage Industries

2. Proposed Location of the unit : Village Biaspur, R.S Pura

Jammu.

3. Product : Manufacturing of Travelling

Bags.

4. Annual Cost of Production at

Optimum Level of Cap. Utilization

(1st Year at 50%) : Rs.102.67 (in lacs)

5. Turnover at optimum level of

production : Rs.136.25 (in lacs)

6. Cost of Project (In Rs. Lacs)

a. Land 0.20

b. Building & Civil Works 12.40

c. Plant and Machinery 1.68

d. Misc. Fixed Assets 1.52

e. Pre-operative Expanses 0.35

f. Working Capital

- Representing Bank Finance 25.00

- Representing Promoter Equity 11.00

Total 52.15

7. Means of Finance

a. Promoters Equity

- Fixed Asset Creation 4.22

- Working Capital Margin 11.00

b. Interest Free Long Term Deposits 0.93

c. Financial Facilities from Bank

- Term Loan 11.00

- Cash Credit Limit 25.00

Total 52.15

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8. Working Capital Limit {1st year} Rs.25.00 (in lacs)

9. Average debt service coverage Ratio {DSCR} 3.51

10. Repayment Period 7 years including 6

months moratorium

period.

11. Break even Point 30.71%

12. Pay back Period 3years & 4 months

13. Internal Rate of Return {IRR} 27%

14. Connected power load 2 KW

15. Working Result {RS. Lacs}

1st Yr 2nd Yr 3rd Yr 4th Yr 5th Yr 6th Yr 7th Yr

Capacity Utilization 50% 60% 70% 70% 70% 70% 70%

Sales Realization 136.25 163.50 190.75 190.75 190.75 190.75 190.75

Profit before tax 14.42 20.11 25.78 24.90 25.31 25.70 26.06

Profit after tax 10.09 14.08 18.05 17.43 17.72 17.99 18.24

Total Cash Accruals 11.97 15.71 19.45 18.65 18.79 18.93 19.07

16. Promoters Particulars: - Sh. Sham Lal S/o Sh Bishan Dass

R/o Village Biaspur, R.S Pura Jammu

- Smt. Pooja Sharma W/o Sh. Sham Lal

R/o Village Biaspur, R.S Pura Jammu

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DETAILED PROJECT REPORT

INTRODUCTION

M/S Oxford Luggage Industries has been promoted by Sh.Sham Lal s/o

Sh.Bishan Dass r/o Biaspur Teh R.S.Pura Distt Jammu along with his

wife as a partner to setup a Small Scale Industrial unit in

manufacturing travel bags, school bags and other kind of hand bags

and accessories under MSME segment. The unit is proposed to be

located at Vill. Biaspur at khasra no. 438 min/466 min, 268 min, 365

min, 369 min and khewat no. 33.

The promoters have entered into a partnership in the name and style

of M/S Oxford Luggage Industries. The unit is proposed to be covered

under priority sector advances scheme of Government of India and it

shall be registered with DIC Jammu and all other operating agencies

for various approvals sanction and permissions.

INDUSTRY PROFILE

In recent years demand for luggage and leather goods industry has

grown, so as competition in the market. It has become one of thefashion statements for women; they prefer designer handbags, laptop

bags and traveling bags etc which has turned their focus towards high

end brands such as LVMH and other competing on the same platform

Global luggage and leather goods industry has been hit by the

recession in 2009 but from mid of 2010 onwards situation is expected

to be controlled. Also demand for travel bags depends upon the growth

of travel industry of a particular region. Bags, wallets and purses

dominate the demand, of total luggage and leather goods industry.

In India, in 2009 the market size for unorganized sector has grown at

a healthy rate. In India, the premium segment is the one which is

experiencing growth and is expected to grow at 30% during 2010

Companies are channel zing their marketing strategies in this segment

to reap the benefits from the premium segment. India is traditionally

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being considered a hard luggage market; still the segment has

witnessed a negative growth of 10%-15%. On contrary the soft luggage

segment has grown since the customers are preferring aesthetics and

variety.

The biggest country producing and exporting bags in the world is

China. Small and midsize companies constitute the luggage and travel

goods industry in China.

The luggage industry in India is currently undergoing a consolidation

phase. Competition in the sector is expected to intensify with the

entry of foreign players like Delsey of France. Companies with good

research and development facilities are expected to survive while

others may end up as contract manufacturers for the bigger players.

The luggage market comprises of three segments namely the premiumsegment with 15% of total market share the popular segment and the

standard segment. Samsonite and VIP are the dominant players in the

premium segment with a market share of 52% in the popular segment.

VIP industries and Universal dominate the low end standard segment.

The luggage market is dominated by the unorganized sector with 50%

market share. Northern and Western India are the biggest markets in

the country. VIP and Samsonite are focusing on developing their

distribution networks. Both players are also into exports. VIPs

export touched Rs.134 million in 1997-98 and is mainly targeted at

Gulf and West European Markets. Samsonite posted an export turnover

of Rs.150 million for the year ended December98. Luggage

manufacturers, particularly VIP have slashed prices following decline

in prices of raw materials. The organized sector (8%) is growing at a

lesser pace when compared to the unorganized sector (25%). The

unorganized sector will have to face the reality that players in this

sector may become organized and come out with branded products

emerging as competitors to the existing players in the organized

sector. The organized sector has to be cautious of the developing

grey market.

Over the period of past several decades, India has witnessed

tremendous increase in infrastructure whether it is rail, road

transport or airways. Further current population of India 2010 is

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around 1.50 billion people and hence the second largest country after

China in terms of population. The people of India are by enlarge

socially inclined and relationship oriented society, hence traveling

to different places on different places on different occasions with

all their bag and baggage is a general phenomenon in India.

Therefore, there is a routine demand of soft luggage and accessories

in every home Indian by origin.

Over the period of last few decades there is a general trend that in

connection with work and studies most of the families send their

members outstation within India as well as abroad. This causes direct

demand for handy and soft luggage material and accessories. On

account of increase in disposable income in the hands of the people

as well as flooding of market with variety of consumables, the goodsin hand are much more than the day to day requirement of an ordinary

person. In such kind of situations every Indian home has a store in

which few bags of seasonal and slow moving garments and accessories

are packed and piled once again this is direct demand.

Coming to economy the year 2009-10 saw story recovery in the demand

according all segments after a recession ally previous year which had

led to major set backs in the global economy. The GDP growth rate is

estimated around 6.5% for the year with the last quarter showing the

significant jump. The economist project that India as a country is

back on the growth track and in the next few years the GDP growth

will be 8.5-10%. This will significantly support the business units

in attaining much stronger all round growth. However the global

recovery is still far from being satisfactory. Interest rate in India

again showing hardening to curve the inflationary pressure. Travel

industry is also showing signs of recovery. The total luggage

industry is estimated at Rs.3100 crores and is estimated to be

growing at 15% per annum with unbranded luggage growing faster than

branded luggage. With overall economy doing better and with increased

travel, the category has shown good turn around as compared to the

last year.

Due to continued inflashionary pressure, value price segment continue

to do better in sale price segment. Further with rural economy

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relatively less impacted due to overall recession, the demand mainly

for value of rings, continued to be beyond. These factors have help

the unorganized market estimated at Rs.2150.00 crores grow at a

healthy rate, the number of Chinese imported leather has estimated

more or less the same.

The total market size for the organize sector has remained around

Rs.950.00 crores. The number of major players has remained more or

less the same in organized sector. In the organized segment both the

price segment- value segments(below Rs 3,000/-) and premium

segments(over Rs 3,000/-) have grown the value segment has grown

faster 33%. Premium segment has grown 14% of last year. The modern

organization retail has shown sign of recovery. The pace of expansion

has improved with opening of new departmental stores and hypermarket. The store level profitability has been the focus of the

players in this segment.

From the customers point of view, hyper markets and departmental

stores are becoming more and more important for luggage purchase.

There is an increased focus on hyper markets and departmental stores,

towards private labels and in store brands.

While soft luggage market show grow faster than hard luggage, there

are signs of revival in hard luggage category. This is mainly due to

successful launches in premium, light weight and stylish ranges in

polycarbonate etc, within soft luggage segment business satchels and

bag packs are the fastest growing segment driven by the increasing

penetration of laptop uses in professional office use.

During the year 2009-10 the international market growth was negative.

The international market has registered a decline in 2nd consecutive

year. This is excluding the US market where the leading Indian

company has a limited presence in US. Under these challenging

environment the leading company for India has register growth in UK

market. The middle east market and Asia Pacific market still remain

good for Indian market.

The impact of the recession was most felt on mono brand felt resource

and as the same became highly unprofitable. The Indian manufacturers

who are in retail market took a biting and as a result the retail

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expansion plan in the international market has to be re-visited

during the year. The companys like VIP close down all the retail

shops owned by Carlton Travel Goods Limited in UK and Europe (CTGL).

The UK perform well registering a growth of about 3% in very

difficult conditions for future companies are focusing on cost

control, building operational opportunities and improving the

profitability of the international business.

We believe that the economy will continue to do better in both

domestic and international matter. Such environmental condition will

offer exciting and interesting opportunities to the player in the

industry. The promoters have identified opportunities including of

launching light weight bags, soft luggage, office satchels and tag

bags at comparatively economic prices. We expect aggressivecompetition from both organized and unorganized players, as branded

players increase their advertising expenditure and unorganized player

continue to exert price pressure that limit the price increases

branded player may change in order to stay competitive.

PRODUCT PROFILE

Traveling bag is one of the convenient accessories used for carrying

the belonging and consumables such as clothes, daily use articles and

other essentials during traveling from one place to other place. Some

other types of accessories are also used for carrying important

documents and office use equipments by executives and other work

force. Although there are different kind of materials in the market

yet the demand for leather bags in the upper segment and soft

leather/fabric bags in the middle segment are well accepted due to

its superior strength aesthetic looks and gunmanship among middle and

high group people. Wide ranges of traveling bags are in use for

various purposes. The cost of these traveling bags depends upon the

type of leather, space and style of it. The project aims at

manufacturing three types of bags:-

1. Leather traveling bag with multi pockets with interlining, and

reinforcement, flap type fitted with magnetic press buttons

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2. Denim traveling bags of single large pockets wit multiple zips.

3. Artificial/Polymer fabric travel bags with multi pockets with

interlining and reinforcements, flap type fitted with magnetic

press buttons.

MANUFACTURING PROCESS

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The traveling bags proposed to be manufactured in this projects is

mainly of three types; leather, Denim and Artificial/Polymer fabric.

Further the bags are of two kinds one of is single large pocket with

a space of 3-6 ft fitted with one or two fasteners and a lounge trap

handle and the other one is of multipocket(3-5) fitted with different

types of fasteners like zips, Velcro, or press buttons. The

fabric/leather being used for manufacturing of these bags are OS to

2mm thickness.

First of all the components are cut from suitable material. The basic

raw material is the finished leather which is not uniform and is

irregular in shape and size and has variation with grain structure

and presence of defects on the surface. Hence, necessary care should

be taken in cutting the components so as to match shades andstructure. The cut components are then skived to the edges for ease

of folding or stitching. The edges are then bedded and the zips and

other fasteners are attached as per other specifications. The outer

surface (leather/fabric), the inner surface (lining) and

reinforcement materials if required so, are attached first with the

adersal and then by stitch. The lining and thread ends are trimmed

and sealed. The surface is cleaned and polished and made ready for

packing.

The quality of these products has to be maintained as per buyers

specification. However the main criteria for quality control are

selection of suitable materials(especially leather and fabric with

required thickness, shade, strength and softness), cutting

components, uniform folding, fasteners attachment regular stitching

with suitable thread with specified stitch length and finishing.

The proposed unit does not produced any effluence. However the scraps

of leather and other materials are to be collected and disposed off

at appropriate place or burnt at isolated place.

M/S OXFORD LUGGAGE INDUSTRIES

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COST OF PROJECT AND WORKING CAPITAL REQUIREMENTS:

The total cost of the project including margin money is estimated at

Rs. 52.15 Lacs. The detailed break-up of cost of project under

various heads is given below:

Cost of Project (In Rs. Lacs)

a. Land 0.20

b. Building & Civil Works 12.40

c. Plant and Machinery 1.68

d. Misc. Fixed Assets 1.52

e. Pre-operative Expanses 0.35

f. Working Capital- Representing Bank Finance 25.00

- Representing Promoter Equity 11.00

Total 52.15

Land [Rs. 0.20 lacs]

The details and dimensions are given in Annexure II.

Site Development & Technical Civil works Rs. 12.40 lacs]

The details are given in Annexure III.

Plant & Machinery [Rs. 1.68 lacs]

The cost of plant & machinery is estimated at Rs. 1.68 lacs. The

details of cost of plant & machinery required for achieving theinstalled capacity is given in Annexure IV.

Misc. Fixed Assets [Rs. 1.52 Lacs]

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The details of miscellaneous fixed Assets are given in Annexure V.

The cost of Misc fixed assets is based on competitive prices and is

considered reasonable.

Pre-liminary &Pre-Operative Expenses [Rs. 0.35 Lacs]

The above cost includes pre-incorporation expenses, report

preparation etc. The details of pre-operative expenses are given in

Annexure VI.

Margin money for Working Capital [Rs 11.00 Lacs]

The details of working capital requirement, availability of bank

finance are given in annexure XIV. The working capital requirements

of the unit have been assumed on the basis of following assumptions:

S.No Particulars Period Margin

1. Raw material 2 Months 25%

2. Stock in Process 15 Days 25%

3. Finished Stock 7 Days 25%

4. Power 1 Month 100%

5. Works Overheads 1 Month 100%

6. Indirect Expenses 1 Month 100%

4. Sundry Debtors 1 Month 25%

The total working capital requirements of the unit during the first

year of operation at 50% capacity utilization has been estimated at

Rs 36.00 lacs, out of which the unit may be able to raise bank

borrowings to the extent of Rs 11.00 lacs. The balance amount of Rs

25.00 lacs has been included in the project cost as margin money for

working capital. The additional margin money requirement during the

second & third year shall be met by the firm out of internal cash

accruals of the unit.

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FINANCIAL VIABILITY:

Cost of Production and Profitability

The estimates of cost of production and profitability for the first 7

years of operation of the unit are given at Annexure- XVI. The main

assumption made while working out these estimates are as follows:

- The unit will operate on single shift and 300 days in a year.

Capacity utilization has been assumed to increase from 50% during

the first year to 60% and 70% during the second, third/subsequent

years of operation respectively.

- The details of raw materials are given in Annexure IX. Thecost of raw material is based on the current prices and includes

miscellaneous taxes and freight charges up to the plant site. Any

increase or decrease in the cost of raw materials will be taken care

of by corresponding increase or decrease in the selling price of

finished product.

-The cost of utilities like power at installed capacity, are

calculated at Annexure-XI and has been taken in the profitability

estimates as per capacity utilization during different years of

operation.

-Annual wages/salaries bill has been estimated on the basis of

manpower requirement of the unit at maximum capacity utilization.

A detailed break-up of manpower and wages/salaries proposed to be

paid for each category has been

Shown at Annexure X.

-Depreciation has been calculated on written down value. The

details of depreciation computation are given at Annexure

XIII.

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-Interest on long term borrowings for working capital has been

considered at 15.50% per annum. The interest on bank borrowings for

working capital has been considered at 15.50% per annum. The details

of interest calculation and repayment of term loan are given at

Annexure XV.

-The details of sales realization, at installed capacity, are given

at Annexure-VIII. The sales realization has been taken in the

profitability estimates as per capacity utilization during different

years of operation.

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Cost of Project and Means of Finance

Annexure I

S.No Particulars TotalA Cost of project

1. Land 0.20

2. Site Development and Technical Civil works 12.40

3. Plant and Machinery 1.68

4. Misc Fixed Assets 1.52

5. Preliminary and Preoperative 0.35

6. Working Capital

- Representing Bank Finance 25.00

- Representing Promoters Equity 11.00

Total 52.15

B Means of Finance

1. Promoters Equity

- Fixed Asset Creation 4.22

- Working Capital Margin 11.00

2. Interest free long term deposits 0.93

3. Financial Facilities from Bank

- Term Loan 11.00

- Cash Credit Limit 25.00

Total 52.15


Details of Land

Annexure II

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The promoter has got a plot of land 4 marlas at Village Biaspur

R.S.Pura, Jammu valued Rs 20.00 lacs in total. The promoter has

agreed to lease out the land to the firm for 30 years and construct

the factory on 1st floor. The premium lead by promoter is Rs.20,000/-


Details of cost of Site Development and civil works

Annexure III

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One Production hall 1000 sq ft = Rs.8.45 lacs

One office hall 400 sq ft = Rs.3.61 lacs

Total = Rs.12.06 lacs

Note:- The engineer has estimated the cost of Site Development and

civil works as Rs. 12.06 lacs, but to remain on the safer side we

have taken the cost as Rs.12.40 lacs (As the fluctuation in the cost

can occur till the time the project is completed).

M/S OXFROD LUGGAGE INDUSTRIES

Computation of Plant and Machinery

Annexure IV

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S.No Description Qty Amount in

Rs/unit

Amount in Rs

1 Sweing Machine flat

bed single needle with

stand and motor.

8 12000.00 96000.00

2 Sweing machine model

31k with stand

8 9000.00 72000.00

Total 168000.00

Or Say (Rs. in lacs) 1.68


Computation of Miscellaneous Fixed Asset

Annexure V

S.No Description Qty Rate/unit Rate in Rs.

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1 Leather goods makers tool

kit

3 4500.00 13500.00

2 Machine maintance and

Electricians tool kit

1 4500.00 4500.00

3 Testing equipments-

thickness gauge measuring

scales etc

1 4500.00 4500.00

4 Workshop working tables

racks etc

1 40000.00 40000.00

5 Office furniture and

equipments

1 50000.00 50000.00

6 Miscellaneous fixed

assets

1 4500.00 4500.00

7 Computer and printer 1 35000.00 35000.00

Total 152000.00

Or Say (Rs. in lacs) 1.52


Computation of Preliminary and preoperative expenses

Annexure VI

S.No Particulars Amount

1 Preparation of Project report and

consultancy

5000.00

2 Administrative expenses 15000.00

3 Other formalities and expenses 15000.00

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prior to production

Total 35000.00

M/S OXFROD LUGGAGE INDUSTRIES

Installed Capacity and Capacity Utilization Programme

Annexure VII

S.No Particulars Capacity

@ 100%

CU Peak

period

@ 50% CU

Peak

period

@ 60%

CU Peak

period

@ 70%

CU Peak

period

1 Leather Traveling bags 10000 5000 6000 7000

2 Denim traveling bags 5000 2500 3000 3500

3 Artificial

leather/Polymer fabric

20000 10000 12000 14000

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travel bags


Computation of sales realization

Annexure VIII

S.No Particulars 100% Capacity utilization

Qty Rate/unit Amount in

Rs lacs

1 Leather traveling bags 1000 1600.00 160.00

2 Denim traveling bags 5000 450.00 22.50

3 Artificial leather/Polymer

fabric travel bags

20000 450.00 90.00

Total 272.50

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Ist 2nd 3rd

Capacity utilization 50% 60% 70%

Sales Realization 136.25 163.50 190.75


Computation of Raw Material

Annexure IX

S.No Particular 100% Capacity utilization

Qty Rate/unit Amount in

Rs. Lacs

1 Heavy cow or buffalo chrome

tanned bab leather (2.00

mm)

10000

sheets/sqm

900.00 90.00

2 Denim in rolls 20 rolls 79000.00 15.80

3 Soft leather/Polymer fabric

in rolls

490 rolls 12500.00 61.25

4 Lining and reinforcement 8.00

5 Magnetic press button 6.00

6 Zips, threads, adhesives,

finishing and other misc

materials

8.00

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7 Packaging materials 3.00

Total 192.05

1st 2nd 3rd

Capacity utilization 50% 60% 70%

Raw Material 96.03 115.23 134.44


Computation of Works Overheads

`Annexure X

S.No.

Particularsof ManPower

Annual works overheads

100% CU 50% CU 60% CU 70% CU

ManHours

CostperMan

Hour

Amtinlacs

ManHours

Costper Man

Hour

Amtinlacs

ManHours

Costper Man

Hour

Amtinlacs

ManHours

CostperMan

Hour

A

l

1 Skilled

Worker

12000 25.00 3.00 12000 25.00 3.00 12000 25.00 3.00 12000 25.00

2 Semi-

Skilled

Worker

14400 15.00 2.16 14400 15.00 2.16 14400 15.00 2.16 19200 15.00

3 Unskilled

Worker

4800 7.00 0.34 4800 7.00 0.34 4800 7.00 0.34 4800 7.00

TOTAL 31200 5.50 31200 5.50 31200 5.50 31200

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Computation of Power

Annexure XI

Connected Load = 2 KW

Load Factor = 0.90

No. of working days per annum = 300 Days

No. of Shifts = 1 ShiftNo. of hours Per Shift = 8Hours

No. of Units Per annum = 2 x 0.90 x 300 x 1 x 8 = 4320

Cost of Power = (2.85 x 4320) = 12312

Year 1st 2nd 3rdCapacity Utilization 50% 60% 70%Power 0.06 0.07 0.09

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Computation of Indirect Expenses

Annexure XII

S.No Particulars Basis Amount in Lacs

1. Administration overheads 1.00% of sales 2.73

2. Legal overheads 0.25% of sales 0.68

3. Sales overheads 12.00% of sales 21.80

4. Forwarding overheads 1.00% of sales 2.72

5. Repair & Maintenance 2.00% of sales 0.31TOTAL 28.24

Year 1st 2nd 3rdCapacity Utilization 50% 60% 70%

Indirect Expenses 14.12 16.94 19.77

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Computation of DepreciationAnnexure XIII

Year Sitedevelopment &technical civilworks Rs.12.40 @ 10%

Plant &Machinery Rs.

1.68 @ 20%

Misc. FixedAssets Rs.1.52 @ 20%

TotalDepreciatio

n

WDV Dep. WDV Dep. WDV Dep.

1. 11.16 1.24 9.12 2.28 1.94 0.48 4.00

2. 10.04 1.12 7.30 1.82 1.55 0.39 3.33

3. 9.04 1.00 5.84 1.46 1.24 0.31 2.77

4. 8.14 0.90 4.67 1.17 0.99 0.25 2.32

5. 7.33 0.81 3.74 0.93 0.79 0.20 1.94

6. 6.60 0.73 2.99 0.75 0.63 0.16 1.64

7. 5.94 0.66 2.39 0.60 0.50 0.13 1.39

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Computation of Working CapitalAnnexure XIV

S.No

Particulars

Margin

Basis

Ist Year 2nd Year 3rd Year

WC Margin

BF WC Margin

BF WC Margin

BF

1. RawMaterials

25% 2 M 16.00 4.00 12.00 19.20 4.80 14.40 22.40 5.60 16.80

2. Work-in-progress

25% 15Days

4.00 1.00 3.00 4.80 1.20 3.60 5.60 1.40 4.20

3. Finishedgoods

25% 7

Days

2.64 0.66 1.98 3.18 0.80 2.38 3.71 0.93 2.78

4. Power 100% 1 M 0.01 0.01 - 0.01 0.01 - 0.01 0.01 -

5. Workoverheads

100% 1M 0.46 0.46 - 0.46 0.46 - 0.46 0.46 -

6. IndirectExpenses

100% 1M 1.17 1.17 - 1.41 1.41 - 1.65 1.65 -

7. Sundry

Debtors

25% 1M 11.35 2.84 8.51 13.63 3.41 10.22 15.90 3.98 11.92

Total

35.63 10.14 25.49 42.69 12.09 30.06 49.73 14.03 35.70

or-say

36.00 11.00 25.00 42.00 12.00 30.00 49.00 14.00 35.00

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Computation of Financial Expenses

Annexure XV

Quart

er

Quart

er

Term Loan Rs. 11.00 lacs @

15.50% P.A.

Working

Capital

Rs. 25.00 @

15.50%

Annual

Interes

t

Annual

Repaymen

t

Outsta

nding

Re-

payment

Interest

1. 11.00 0.00 0.43 0.97

2. 11.00 0.00 0.43 0.97

3. 10.58 0.42 0.43 0.97

4. 10.16 0.42 0.41 0.97 5.58 0.84

5. 9.74 0.42 0.39 0.97

6. 9.32 0.42 0.38 0.97

7. 8.90 0.42 0.36 0.97

8. 8.48 0.42 0.34 0.97 5.35 1.68

9. 8.06 0.42 0.33 0.97

10. 7.64 0.42 0.31 0.97

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11. 7.22 0.42 0.30 0.97

12. 6.80 0.42 0.28 0.97 5.10 1.68

13. 6.38 0.42 0.26 0.97

14. 5.96 0.42 0.25 0.97

15. 5.54 0.42 0.23 0.97

16. 5.12 0.42 0.21 0.97 4.83 1.68

17. 4.70 0.42 0.20 0.97

18. 4.28 0.42 0.18 0.97

19. 3.86 0.42 0.17 0.97

20. 3.44 0.42 0.15 0.97 4.58 1.68

21. 3.02 0.42 0.13 0.97

22. 2.60 0.42 0.12 0.97

23. 2.18 0.42 0.10 0.97

24. 1.76 0.42 0.08 0.97 4.31 1.68

25. 1.34 0.42 0.07 0.97

26. 0.92 0.42 0.05 0.97

27. 0.50 0.42 0.04 0.97

28. 0.08 0.42 0.02 0.97 4.06 1.68

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Calculation of ProfitabilityAnnexure XVI

S.No Particulars Istyear

2nd

year3rd

year4th

year5th

year6th

year7th

year

1. Sales

realization

136.25 163.50 190.75 190.75 190.75 190.75 190.75

2. Cost ofsales

(i) Raw Material 96.03 115.23 134.44 134.44 134.44 134.44 134.44

(ii) Worksoverheads

5.50 5.50 5.50 5.50 5.50 5.50 5.50

(iii) Power 0.06 0.07 0.09 0.09 0.09 0.09 0.09

(iv) Depreciation 1.88 1.63 1.40 1.22 1.07 0.94 0.83

Sub Total (ito iv)

103.47 122.43 141.43 141.25 141.09 140.97 140.86

(v) Add: Op.stock in

process

4.00 4.80 5.60 6.40 6.40 6.40 6.40

Sub Total 107.47 127.23 147.03 147.65 147.49 147.37 147.26

(vi) Less: Cl.stock in

process

4.80 5.60 6.40 6.40 6.40 6.40 6.40

(vii) Cost ofproduction

102.67 121.63 140.63 141.25 141.09 140.97 140.86

(viii) Add: Op.stock of

fin. Goods

2.64 3.18 3.71 4.24 4.24 4.24 4.24

Sub total 105.31 124.81 144.34 145.49 145.33 145.21 145.10

(ix)

Less: Cl.

stock offin. .goods

3.18 3.71 4.24 4.24 4.24 4.24 4.24

Total costof sales

102.13 121.10 140.10 141.25 141.09 140.97 140.86

3. Selling,Gen. & Adm.

Exp.

14.12 16.94 19.77 19.77 19.77 19.77 19.77

4. Sub Total (2 116.25 138.04 159.87 161.02 160.86 160.74 160.63

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+ 3)

5. Op. Profitbefore Int.

(1 - 4)

20.00 25.46 30.88 29.73 29.89 30.01 30.12

6. Interest 5.58 5.35 5.10 4.83 4.58 4.31 4.06

7. Op. Profit

after Int.(5 - 6)

14.42 20.11 25.78 24.90 25.31 25.70 26.06

8. Tax 4.33 6.03 7.73 7.47 7.59 7.71 7.82

9. Profit aftertax

10.09 14.08 18.05 17.43 17.72 17.99 18.24

10. Cash profit 11.97 15.71 19.45 18.65 18.79 18.93 19.07


Calculation of DSCR

Annexure XVII

Year NetProfit

After Tax

Depreciation

Cash Profit Interest Repayment

DSCR = C.P +Intt.Interest+Repayment

1. 10.09 1.88 11.97 5.58 0.84 2.73

2. 14.08 1.63 15.71 5.35 1.68 2.99

3. 18.05 1.40 19.45 5.10 1.68 3.62

4. 17.43 1.22 18.65 4.83 1.68 3.61

5. 17.72 1.07 18.79 4.58 1.68 3.73

6. 17.99 0.94 18.93 4.31 1.68 3.88

7. 18.24 0.83 19.07 4.06 1.68 4.02

Average 3.51

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Calculation of Internal Rate of Return

Annexure XVIII

Year CashOutflow

CashProfit

Disc.factor@10%

NPV @ 10% Disc.Factor@30%

NPV @30%

0. 52.15

1. 11.97 0.9091 10.88 0.7692 9.21

2. 15.71 0.8264 12.98 0.5917 9.29

3. 19.45 0.7514 13.91 0.4551 8.85

4. 18.65 0.6830 12.74 0.3501 6.53

5. 18.79 0.6209 11.67 0.2693 5.06

6. 18.93 0.5644 10.68 0.2071 3.92

7. 19.07 0.5131 9.78 0.1593 3.04

82.64 45.90

NPV @ 10% = 82.64 Difference @ 20% = 36.74NPV @ 30% = 45.90 Difference @ 1% = 1.84Difference between Cash Outflow and NPV @ 10% = 30.49

IRR = 10% + 30.49/1.84= 26.57%Or Say 27%

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Calculation of Return on InvestmentsAnnexure XIX

S.No Net Profit After Tax Return On Investment

1. 10.09 19.34%

2. 14.08 26.99%

3. 18.05 34.61%

4. 17.43 33.42%

5. 17.72 33.97%

6. 17.99 34.49%

7. 18.24 34.97%

Average 31.11%

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Calculation of Break Even Point

Annexure XX

S.No. Particulars Basis Amount in Lacs

A. SalesRealization

136.25

B. Variable Cost

1.

Raw Material 100%V 96.03

2.

Work Overhead 50%V 2.75

3.

Power 75% 0.05

4.

Indirect

Expenses

25%V 3.53 102.36

C. ContributionMargin

33.89

D. Fixed cost

1.

Depreciation 100%F 1.88

2.

Financial

Expenses

100%F 5.58

3.

Works Overhead 50%F 2.75

4.

Power 25%F 0.02

5.

Indirect

Expenses

75%F 10.59 20.82

Break Even Point = 20.82 x 50% = 30.71%33.89

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Calculation of Pay Back Period

Annexure XXI

S.No. Cash Inflow Cash Required Period

1. 11.97 11.97 1Year

2. 15.71 15.71 1Year

3. 19.45 19.45 1Year

4. 18.65 5.02 4 Months

Pay Back Period = 3 Years & 4 Months

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Calculation of Cash Flow Statement

Annexure XXII

.No.

Particulars Const.

Period

1stYear

2ndYear

3rdYear

4th Year 5thYear

6thYear

7thYear

. Sources of Funds

1. Term Loan 11.00

2. Depreciation - 1.88 1.63 1.40 1.22 1.07 0.94 0.83

3. Profit beforeInterest & Tax

but after Dep.

- 20.00 25.46 30.88 29.73 29.89 30.01 30.12

4. Increase in BankFinance for

Working capital

- 25.00 5.00 5.00

5. Promoter EquityFA

4.22

Promoters Equity

WC

11.00

6. Interest freeLong term

Deposits

0.93

Total 27.15 46.88 32.09 37.28 30.95 30.96 30.95 30.95

. Application ofFunds

1. Land 0.20

2. Site Dev. & Tech

Civil works

12.40

3. Plant &Machinery

1.68

4. Misc. FixedAssets

1.52

5. Preliminary &Preoperative

0.35

6. Increase in W.C - 36.00 6.00 7.00

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7. Tax - 4.33 6.03 7.73 7.47 7.59 7.71 7.82

8. FinancialExpenses

- 5.58 5.35 5.10 4.83 4.58 4.31 4.06

9. Reduction inTerm Loan

- 0.84 1.68 1.68 1.68 1.68 1.68 1.68

Total

16.15 46.75 19.06 21.51 13.98 13.85 13.70 13.56

Opening Cash 0.00 11.00 11.13 24.16 39.93 56.90 74.01 91.26

Surplus/ Deficit 11.00 0.13 13.03 15.77 16.97 17.11 17.25 17.39

Closing cash 11.00 11.13 24.16 39.93 56.90 74.01 91.26 108.65


Projected Balance -Sheet

Annexure XXIIIS.NO PARTICULARS 1st

YEAR2nd

YEAR3rd

YEAR4th

YEAR5th

YEAR6th

YEAR7th

YEAR

A) Liabilities

1) Equity Share

Capital

15.22 15.22 15.22 15.22 15.22 15.22 15.22

2) Reserves and

Surplus

10.09 24.17 42.22 59.65 77.37 95.36 113.60

3) Term Loan 10.16 8.48 6.80 5.12 3.44 1.76 0.08

4) Interest free

Long Term

Deposits

0.93 0.93 0.93 0.93 0.93 0.93 0.93

5) Bank

Borrowings for

Working

Capital

25.00 30.00 35.00 35.00 35.00 35.00 35.00

TotalLiabilities

61.40 78.80 100.17 115.92 131.96 148.27 164.83

B) Assets

1) Gross Block 15.80 15.80 15.80 15.80 15.80 15.80 15.80

2) Depreciation 1.88 3.51 4.91 6.13 7.20 8.14 8.97

3) Net Block 13.92 12.29 10.89 9.67 8.60 7.66 6.83

4) Current Assets 36.00 42.00 49.00 49.00 49.00 49.00 49.00

5) Preliminary &Preoperative 0.35 0.35 0.35 0.35 0.35 0.35 0.35

6) Cash & Bank

Expenses

11.13 24.16 39.93 56.90 74.01 91.26 108.65

Total Assets 61.40 78.80 100.17 115.92 131.96 148.27 164.83

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