Project Appraisal for a Hypothetical Textile Manufacturer

EMINENT TEXTILES

Modipuram MeerutUtter Pradesh.

PROJECT REPORTSubmitted by Mustafa Khan (2002362)

EMINENT TEXTILES , MEERUT

PROJECT REPORT

I N D E X

CHAPTER PARTICULARS PAGE NUMBER

I - INTRODUCTION

A- BACKGROUND - 1 -B- LOCATION - 1 -C- NATURE OF INDUSTRY - 1-

II- BIO DATA OF THE PARTNERS - 2 to 3 -

III- ESTABLISHMENT

A- LAND - 4 -B- BUILDING - 4 -C- PLANT AND MACHINERY - 4 to 5 - D- POWER - 5 - E- WATER - 5 -

IV - OPERTIONAL ASPECTS

A- RAW MATERIALS - 5 -B- MANUFACTURING PROCESS - 5-C- MARKETING - 6 -D- MAN – POWER - 6 -E- EFFLUENTS - 6-

CHAPTER PARTICULARS PAGE NUMBER

V- PROJECT AT A GLANCE - 7 -

VI- PRESUMPTIONS - 8 -

VII- DETAILS OF CAPACIATY - 9 -

VIII- PROJECTIONS OF PERFORMANCE - 10 & 11 - PROFITABILITY

IX- IMPORTANT RATIOS - 12 -

X- PROJECTED BALANCE SHEET - 13 -

XI- CASH FLOW STATEMENT - 14 -

XII- BREAK EVEN POINT - 15 -

XIII- DETAILED WORKING - 16 TO 20

XIV- STATEMENT OF WORKING CAPITAL - 21-

EMINENT TEXTILES, MEERUT

PROJECT REPORT

CHAPTER – I – INTRODUCTION

A- BACKGROUND

Having been encouraged and inspired by the Utter Pradesh Agro Advantage campaign launched by the Utter Pradesh Govt. we have decided to start a Industrial Unit. We have given serious consideration to all the factors more particularly in the area of upholstery fabric looking to their own experience, financial capacity, administrative convenience, etc. and have concluded that Job Work of upholstery fabric is the most suitable and lucrative proposition. Finally we have decided to set up a small scale unit for upholstery fabric, especially drapes production.

B : LOCATION

The Project Holders after realizing the factors of availability of the raw materials, transportation has selected a site on National Highway No. 58, situated at Modipuram which is hardly 4 Kms away from Meerut. As Modipuram is a small village, it will be beneficiary to the Industry as the entrepreneur will get labor, etc at cheaper rate. It is a matter of fact that Meerut Division has gained the recognition of been one of the key producer of yarn through Dewan Textile Mill, at Meerut.

The final product i.e., Drapes has nationwide demand from the customers itself as it is a Consumable item.

B- NATURE OF INDUSTRY

The proposed unit will be classified as a SSI unit and therefore shall be entitled to all concessions, incentives available from the State and Central Govt. The Project has

been got Provisional registered with the District Industries Centre, Garh. There is a subsidy at 35% with a ceiling of Rs. 25lacs to the maximum along with a power subsidy for SSI units at Rs. 3.5 per unit.

CHAPTER III – ESTABLISHMENT

A – LAND

The unit has proposed to acquire a plot ad-measuring 20000 square feet on lease for 40 years. The Plot is situated on the National Highway No. 58 at Modipuram and is well connected to the road. The Job Work is available in near by areas and easily be brought up to the location through out the year. The plot is specious enough to house the factory shade along with the shades for storing the raw materials & finished goods.

B- BUILDING

Factory Building Construction Cost is expected to arrive at Rs. 16.70 lacs .A detailed building map along with estimated cost is enclosed herewith. (5000sqft, 300rs/sqft)

C- PLANT AND MACHINERY

We have planned to install a Rapier Loom Plant with an available advanced technology being used in the Upholstery Industry. The following machinery is required for Fabric Industry.

SR. NO.

PARTICULARS QTY. RATE RS. (000)

AMOUNT RS. (000)

1 Rapier Looms 3 514.80 1544.40

2 Jacquards 3 1580.00 4740.00

3 Motors various 170.00

4 Over Head Traveller 1 125.00 125.00

5 Erection charges 271.00

6 Electrification Charges 250.00

7 Contingencies, Transportation, Loading and Unloading Charges

159.20

GRAND TOTAL RS. (000) 6230.00

D- POWER

The maximum power required will be about 100H.P. covering the installation of motors, Water Pump, Domestic Electric requirement. The application for supply of power to the unit has been already applied to U.P.S.E.B. and the same is principally agreed to give the required load.

E- WATER

The total water requirement per day will be about 500 liters only. The same will be supplied by existing tube well. Humidification, blowers in summer,

CHAPTER IV – OPERATIONAL ASPECTS

A- RAW MATERIAL

The main raw material for this unit is 10,00 end warper’s beam and different yarns which will be supplied by M/s Dewan Textile Mill, Meerut for their job work and the rest would be purchased from the market. So as such there is no problem of basis raw material required by the unit.

B-MANUFACTURING PROCESS

Manufacturing process requires the development of design and feeding the design to the jacquard. Depending upon the requirement, yarns and process parameters will be selected and warper’s beam installed. Technical settings are done for the production process and the fabric will be rolled onto a take up roller.

C – MARKETING

We have ready market for drapes and upholstery purchases. We will have arrangements with bulk purchasers like Garha Bhandar. So we will have work during the whole year and we have not to trace any new job work since. We are going to supply material to wholesale dealers and specially

D - MAN POWER

The Total Man Power requirement is as under:

1- Master - 1 Nos 2- Helper - 3 Nos 3- Supervisor - 3 Nos 4- Labour - 7 Nos

Man power for such work is locally available for which no additional requirement is to be full filled by the unit.

E - EFFLUENTS

In fact there are no effluents which are hazardous to the environment. However the unit has applied for Consent to Operate Certificate from Utter Pradesh Pollution Control Board, Meerut.

EMINENT TEXTILES, MEERUT

CHAPTER - V - PROJECT AT A GLANCE

CAPACITY :

295 KG PER DAY PER SHIFT OF 8 HOURS

UTILISED : CAPACITY

98%

TURNOVER ( 3R YEAR RS.(000) :

12081.31

NORMAL YEAR : OF WORKING

THIRD YEAR

PROJECT COST

Amount

(Rs. 000)

1) Land ( Lease Hold ) 0.00

2) Factory Building & Site Development 1670.00

3) Plant & Machinery 6230.00

4) Preoperative Expenses 100.00

5) Margin Money for working capital 358.99

Total 8358.99

PROPOSED FINANCES

Amount

(Rs. 000)

Partner's Capital 2158.99

1) Term Loan 5000.00

2) Unsecured Loans 1200.00

3)

Total 8358.99 CHAPTER VI - PRESUMPTIONS

1) Capacity : 295.00 Kgs. Per Shift Per Working day

2) No of Shifts per day 3

3) Capacity Utilisation

Single Yarn

I) 1st Year : 94% 831.9 Kgs. Per day.

ii) 2nd Year : 96% 849.6 Kgs. Per day.

iii) 3rd Year : 98% 867.3 Kgs. Per day.

4) No. of working days p.a. : 360 days .

No. of shifts per day. : 3 shift.

5) Working Hours Per day. : 8 Hours

6) Raw Materials :

I) Availability

(a) 360 days : Single Yarn

I) Rate : Per Kgs. 89.00

Single Yarn

7) Sales Doubled Yarn

I) Rate : Per Kgs. :

Doubled yarn 106.25

8) Job Work Rates

I) Rate : Per Kgs. :

Doubled Yarn Job Work : 17.25 Per Kgs.

ii ) Delivery . : Ex Factory - Meerut

iii) Realization : 1 Month

9) Stocks The Unit follows 31st March as its year end.

Days of Stock Held

Basic of Valuation.

i) Single Yarn 30 days at cost

ii) Stores Stock : 30 days at cost

10) Depreciation Method :

a) Building : 10%

b) Plant & Machinery : 15%

11) Rate of Interest :

I) On Term Loan : 13.00%

ii) On Working Capital Loan : 13.00%iii) Bridge Unsecured Loan & Deposits from friends and relatives. : 12.00%

12) Subsidy : The release of subsidy is expected in five equall instalments from second year onwards as per new Industrial Policy of Utter Pradesh Govt.

13) Normal Working Year : 3rd year

CHAPTER VII - DETAILS OF CAPACITY

Unit 1st year 2nd year 3rd year 4th year 5th year

1)Installed Capacity Per day Per Shift Kgs. 295.00 295.00 295.00 295.00 295.00

2) No. of Working days

for Double Yarn No' s 360 360 360 360 360

3) No. of Shift No' s 3 3 3 3 3

4) No. of employees

Factory Staff

( Including Workers ) No' s 11 11 11 11 11

General Staff No' s 3 3 3 3 3

5) Estimated Production Per day

i) Double Yarn Kgs. 885.00 885.00 885.00 885.00 885.00

ii) Sub - Total (i) 885.00 885.00 885.00 885.00 885.00

6) Estimated Annual Production

i) Double Yarn Kgs. 318600.00 318600.00 318600.00 318600.00 318600.00

ii) Sub - Total (i) 318600.00 318600.00 318600.00 318600.00 318600.007) Estimated output as percentage of

plant Capacity in % 94% 96% 98% 98% 98%

8) Total Quantity

i) Double Yarn Kgs. 299484.00 305856.00 312228.00 312228.00 312228.00

ii) Sub - Total (i) Kgs. 299484.00 305856.00 312228.00 312228.00 312228.00

9) Sales Quantity

i) Double Yarn 25% Kgs. 74871.00 76464.00 78057.00 78057.00 78057.00

ii) Sub - Total (i) Kgs. 74871.00 76464.00 78057.00 78057.00 78057.00

10) Job Work Quantity

i) Double Yarn 75% Kgs. 224613.00 229392.00 234171.00 234171.00 234171.00

ii) Sub - Total (i) Kgs. 224613.00 229392.00 234171.00 234171.00 234171.00

11) Sales ( Amount ) ( Rs . 000 )

i) Double Yarn

0.10625 Rs.(000) 7955.04 8124.30 8293.56 8293.56 8293.56

ii) Sub - Total (i) Rs.(000) 7955.04 8124.30 8293.56 8293.56 8293.56

12) Job Work ( Amount ) ( Rs . 000 )

i) Double Yarn

0.01725 Rs.(000) 3874.57 3957.01 4039.45 4039.45 4039.45

ii) Sub - Total (i) Rs.(000) 3874.57 3957.01 4039.45 4039.45 4039.45

13) Total Sales ( Amount ) ( Rs. 000) Rs.(000) 11829.62 12081.31 12333.01 12333.01 12333.01

CHAPTER VIII -PROJECTIONS OF PERFORMANCE, PROFITABILITY AND REPAYMENT

(Rs.000)

Year 1st 2nd 3rd 4th

Percentage Utilisation of installed capacity 94% 96% 98% 98%

A. Sales

1) Sales and Job Work 11829.62 12081.31 12333.01 12333.01

2) Less : Excise Duty 0.00 0.00 0.00 0.00

3) Net Sales 11829.62 12081.31 12333.01 12333.01

B. Cost of Production

4) Single Yarn 7326.44 6819.40 6961.18 6947.07

5) Stores 99.83 101.95 104.08 104.08

6) Power & Fuel 2120.55 2165.67 2210.79 2210.79

7) Direct Labour & Wages 315.96 363.35 363.35 363.35

8) Repairs & Maintenance 30.00 40.00 50.00 60.00

9) Depreciation 1115.44 956.58 820.71 704.45

Total Cost of Production 11008.22 10446.96 10510.10 10389.74

`

9)Add : Opening stock in progress and finished goods 0.00 662.92 677.03 691.13

11008.22 11109.88 11187.12 11080.8710)

Deduct : Closing stock in progress and finished goods 662.92 677.03 691.13 691.13

C. Cost of Sales 10345.30 10432.85 10495.99 10389.74

D. Gross Profit ( A - C ) 1484.32 1648.46 1837.01 1943.27

E. Interest

i) On Term Loans 643.75 562.50 462.50 362.50

ii) Relatives and Friends 144.00 144.00 115.20 86.40

iii) On Working Capital 140.01 143.99 146.69 146.48

927.76 850.49 724.39 595.38

F. Selling & Administrative Exp. 236.59 241.63 246.66 246.66

G. Profit Before Tax (D-(E+F) 319.97 556.34 865.97 1101.23

H. Provision for Taxes 0.00 0.00 231.88 355.95

I Net Profit (G-H) 319.97 556.34 634.09 745.28

J. i) Depreciation added back 1115.44 956.58 820.71 704.45

ii)Interest on Term Loan added back 643.75 562.50 462.50 362.50

K. Total of I & J 2079.16 2075.42 1917.29 1812.22

L. Repayment Obligations

i) Towards proposed term loan 384.62 769.23 769.23 769.23

ii) Interest on Term Loans 643.75 562.50 462.50 362.50

1028.37 1331.73 1231.73 1131.73

M. Debts Service Coverage Ratio K ; L 2.02 1.56 1.56 1.60

N.Average Debts Service Coverage Radio 1.75

O Earning per rupee 0.15 0.26 0.29 0.35

P Average Earning per rupee 0.37

Q Internal rate of return 2079.16 2075.42 1917.29 1812.22

R Average Internal rate of return 1814.65

CHAPTER VIII -PROJECTIONS OF PERFORMANCE, PROFITABILITY AND REPAYMENT (years 5-8)

Year 5th 6th 7th 8th

Percentage Utilization of installed capacity 0% 0% 0% 0%

A. Sales

1) Sales and Job Work 11829.62 11829.62 11829.62 11829.62

2) Less : Excise Duty 0.00 0.00 0.00 0.00

3) Net Sales 11829.62 11829.62 11829.62 11829.62

B. Cost of Production

4) Single Yarn 7326.44 7326.44 7326.44 7326.44

5) Stores 99.83 99.83 99.83 99.83

6) Power & Fuel 2120.55 2120.55 2120.55 2120.55

7) Direct Labour & Wages 315.96 315.96 315.96 315.96

8) Repairs & Maintenance 10.00 20.00 30.00 40.00

9) Depreciation 998.60 898.74 808.87 727.98

Total Cost of Production 10871.38 10781.52 10701.64 10630.76

`

9)Add : Opening stock in progress and finished goods 0.00 662.92 662.92 662.92

10871.38 11444.44 11364.56 11293.6810)

Deduct : Closing stock in progress and finished goods 662.92 662.92 662.92 662.92

C. Cost of Sales 10208.46 10781.52 10701.64 10630.76

D. Gross Profit ( A - C ) 1621.16 1048.10 1127.97 1198.86

E. Interest

i) On Term Loans 4th 4th 4th 0.00

ii) Relatives and Friends 262.50 162.50 0.00 0.00

iii) On Working Capital 140.01 143.99 146.69 146.48

402.51 306.49 146.69 146.48

F. Selling & Administrative Exp. 236.59 236.59 236.59 236.59

G. Profit Before Tax (D-(E+F) 982.06 505.02 744.70 815.79

H. Provision for Taxes 0.00 0.00 231.88 355.95

I Net Profit (G-H) 982.06 505.02 512.82 459.84

J. i) Depreciation added back 998.60 898.74 808.87 727.98

ii)Interest on Term Loan added back 4th 4th 4th 0.00

K. Total of I & J 1980.66 1403.76 1321.69 1187.82

L. Repayment Obligations

i) Towards proposed term loan #REF! #REF! #REF! 0.00

ii) Interest on Term Loans 4th 4th 4th 0.00

#REF! #REF! #REF! 0.00

M. Debts Service Coverage Ratio K ; L #REF! #REF! #REF! 0.00

N. Average Debts Service Coverage Radio

O Earning per rupee 0.45 0.23 0.24 0.21

P Average Earning per rupee

Q Internal rate of return 1980.66 1403.76 1321.69 1187.82

R Average Internal rate of return

CHAPTER IX - IMPORTANT RATIOS (year 1- 4)

1st Year 2nd Year

3rd Year 4th Year

Debts Service Coverage Ratio (DSCR)

2.02 1.56 1.56 1.60

Average DSCR 1.75

Earning per rupee 0.15 0.26 0.29 0.35

Internal Rate of Return

2079.16 2075.42 1917.29 1812.22

Debt Equity Ratio 1.37 1.23 1.07 0.87

Current Ratio 1.93 2.58 3.16 3.77

Asset Cover 1.49 1.54 1.66 1.91

Contribution to Exchequer by way of

Direct Tax ( Rs. 000)

0.00 0.00 231.88 355.95

Indirect Tax ( Rs. 000)

0.00 0.00 0.00 0.00

Addition to Gross Domestic Products (Rs.000)

11829.62 12081.31 12333.01 12333.01

B.E.P. (Commercial) 88.47% 80.30% 69.87% 61.56%

% of installed capacity

83.16% 77.09% 68.48% 60.33%

B.E.P. (CASH) 48.29% 46.43% 41.32% 36.97%


45.39% 44.58% 40.49% 36.23%

CHAPTER IX - IMPORTANT RATIOS (year 5-8)

5th Year 6th Year 7th Year 8th Year

Debts Service Coverage Ratio (DSCR)

1.67 1.90 1.92 0.00

Average DSCR

Earning per rupee 0.40 0.50 0.50 0.54

Internal Rate of Return

1727.04 1766.30 1597.89 1541.90

Debt Equity Ratio 0.64 0.36 0.00 0.00

Current Ratio 4.39 5.10 5.60 6.60

Asset Cover 2.47 4.26

Contribution to Exchequer by way of

Direct Tax ( Rs. 000)

460.14 439.85 627.21 673.33

Indirect Tax ( Rs. 000)

0.00 0.00 0.00 0.00

Addition to Gross Domestic Products (Rs.000)

12333.01 12333.01 12333.01 12333.01

B.E.P. (Commercial) 53.77% 46.44% 39.48% 35.19%


52.70% 45.51% 38.69% 34.49%

B.E.P. (CASH) 32.58% 28.17% 23.72% 21.59%


31.93% 27.60% 23.25% 21.16%

CHAPTER X- PROJECTED BALANCE SHEET (year 1-4)

(RS. 000)

PARTICULARS 1st

Year 2nd Year

3rd Year 4th Year

A. Liabilities

Partner's Capital 2158.99 2158.99 2158.99 2158.99

Profit & Loss (Surplus)

319.97 876.31 1510.40 2255.68

Subsidy Reserve 500.00 1000.00 1500.00

Term Loans 4615.38 3846.15 3076.92 2307.69

Bank Borrowings for working capital

1076.97 1107.62 1128.36 1126.78

Unsecured Loans 1200.00 960.00 720.00 480.00

Current Liabilities & Provisions

432.93 415.91 424.61 424.30

Total 9804.24 9864.99 10019.28 10253.44

B. Assets

Gross Block 8000.00 8000.00 8000.00 8000.00

Depreciation 1115.44 2072.03 2892.73 3597.18

Net block 6884.56 5927.97 5107.27 4402.82

Current Assets 1868.89 1892.74 1929.08 1926.67

Cash and Bank Balance

1050.80 2044.27 2982.93 3923.94

Total : 9804.24 9864.99 10019.28 10253.44

CHAPTER X- PROJECTED BALANCE SHEET (year 5-8)

(RS. 000)

PARTICULARS 5th Year 6th Year 7th Year 8th Year

A. Liabilities

Partner's Capital 2158.99 2158.99 2158.99 2158.99

Profit & Loss (Surplus)

3115.27 4199.32 5287.93 6445.57

Subsidy Reserve 2000.00 2500.00 2500.00 2500.00

Term Loans 1538.46 769.23 0.00 0.00

Bank Borrowings for working capital

1125.23 1123.90 1122.74 1121.75

Unsecured Loans 240.00 0.00 0.00 0.00

Current Liabilities & Provisions

424.57 424.85 425.13 425.41

Total 10602.53 11176.29 11494.79 12651.71

B. Assets

Gross Block 8000.00 8000.00 8000.00 8000.00

Depreciation 4202.12 4721.88 5168.66 5552.92

Net block 3797.88 3278.12 2831.34 2447.08

Current Assets 1924.88 1923.38 1922.12 1921.07

Cash and Bank Balance

4879.77 5974.78 6741.33 8283.56

Total : 10602.53 11176.29 11494.79 12651.71

CHAPTER XI -CASH FLOW STATEMENT

(Rs. 000)

PARTICULARS 1st Year 2nd Year

3rd Year

4th Year

A. Sources of Funds

Cash accruals (viz. Net Profit before taxation and interest but after depreciation

1247.73 1406.83 1590.35 1696.61

Induction of Partner's Capital

2158.99

Depreciation 1115.44 956.58 820.71 704.45

Induction of Long Term Loans

5000.00

Induction of Unsecured Loans

1200.00

Increase in Sundry Creditors

305.27 -21.13 5.91 (0.59)

Subsidy from State Govt. 500.00 500.00 500.00

Increase in Bank Borrowings for working capital

1076.97 30.66 20.73 (1.57)

Increase in Current Liabilities

127.66 4.11 2.79 0.28

Total 12232.06 2877.05 2940.49 2899.17

B. Disposition of Funds

Increase in Capital Expenditure

8000.00

Increase in Current Assets

Inventories 662.92 14.10 14.10 0.00

Receivables 985.80 20.97 20.97 0.00

Others 220.16 (11.23) 1.26 (2.41)

Decrease in Long Term Loans

384.62 769.23 769.23 769.23

Decrease in Unsecsured Loans

240.00 240.00 240.00

Interest 927.76 850.49 724.39 595.38

Taxation 0.00 0.00 231.88 355.95

Distribution of Profit

Total 11181.26 1883.58 2001.84 1958.16

C. Opening Balance 1050.80 2044.27 2982.93

D. Net Surplus 1050.80 993.48 938.65 941.02

E. Closing Balance 1050.80 2044.27 2982.93 3923.94

CHAPTER XI -CASH FLOW STATEMENT

(Rs. 000)

PARTICULARS 5th

Year 6th

Year 7th

Year 8th

Year

A. Sources of Funds

Cash accruals (viz. Net Profit before taxation and interest but after depreciation

1786.11 1861.31 1924.28 1976.80

Induction of Partner's Capital

Depreciation 604.95 519.75 446.78 384.26

Induction of Long Term Loans Induction of Unsecured Loans Increase in Sundry Creditors

0.00 0.00 0.00 0.00

Subsidy from State Govt. 500.00 500.00

Increase in Bank Borrowings for working capital

(1.55) (1.34) (1.15) (1.00)

Increase in Current Liabilities

0.28 0.28 0.28 0.28

Total 2889.78 2880.00 2370.18 2360.34

B. Disposition of Funds

Increase in Capital Expenditure

Increase in Current Assets

Inventories 0.00 0.00 0.00 0.00

Receivables 0.00 0.00 0.00 0.00

Others (1.79) (1.50) (1.26) (1.05)

Decrease in Long Term Loans

769.23 769.23 769.23 0.00

Decrease in Unsecsured Loans

240.00 240.00

Interest 466.38 337.41 208.46 145.83

Taxation 460.14 439.85 627.21 673.33

Distribution of Profit

Total 1933.96 1784.99 1603.63 818.11

C. Opening Balance 3923.94 4879.77 5974.78 6741.33

D. Net Surplus 955.82 1095.01 766.55 1542.23

E. Closing Balance 4879.77 5974.78 6741.33 8283.56

CHAPTER XII - BREAK EVEN ANALYSIS

Rs. (000)

1st Year 2nd Year

3rd Year 4th Year

AVERAGE CAPACITY UTILIZATION

94% 96% 98% 98%

1) SALES 11829.62 12081.31 12333.01 12333.01

2) VARIABLE COST

i Raw Material 6663.52 6805.30 6947.07 6947.07

ii Stores 99.83 101.95 104.08 104.08

iii Power & Fuel 2120.55 2165.67 2210.79 2210.79

iv Repairs & Maintenance 30.00 40.00 50.00 60.00

v On Working Capital 140.01 143.99 146.69 146.48

9053.90 9256.91 9458.62 9468.42

3) CONTRIBUTION ( 1 - 2 ) 2775.72 2824.41 2874.38 2864.59

4) FIXED COST

i Direct Labour & Wages 315.96 363.35 363.35 363.35

ii On Term Loans 787.75 706.50 577.70 448.90

iiiSelling & Administrative Exp.

236.59 241.63 246.66 246.66

iv Depreciation 1115.44 956.58 820.71 704.45

2455.75 2268.06 2008.42 1763.36

5) B.E.P. (Commercial) 88.47% 80.30% 69.87% 61.56%

% of installed capacity 83.16% 77.09% 68.48% 60.33%

6) B.E.P. (CASH) 48.29% 46.43% 41.32% 36.97%


CHAPTER XII - BREAK EVEN ANALYSIS

Rs. (000)

5th Year 6th Year 7th Year 8th Year

AVERAGE CAPACITY UTILIZATION

98% 98% 98% 98%

1) SALES 12333.01 12333.01 12333.01 12333.01

2) VARIABLE COST

i Raw Material 6947.07 6947.07 6947.07 6947.07

ii Stores 104.08 104.08 104.08 104.08

iii Power & Fuel 2210.79 2210.79 2210.79 2210.79

iv Repairs & Maintenance 70.00 80.00 90.00 100.00

v On Working Capital 146.28 146.11 145.96 145.83

9478.22 9488.04 9497.89 9507.76

3) CONTRIBUTION ( 1 - 2 ) 2854.79 2844.96 2835.11 2825.24

4) FIXED COST

i Direct Labour & Wages 363.35 363.35 363.35 363.35

ii On Term Loans 320.10 191.30 62.50 0.00

iiiSelling & Administrative Exp.

246.66 246.66 246.66 246.66

iv Depreciation 604.95 519.75 446.78 384.26

1535.06 1321.07 1119.30 994.27

5) B.E.P. (Commercial) 53.77% 46.44% 39.48% 35.19%


6) B.E.P. (CASH) 32.58% 28.17% 23.72% 21.59%


CHAPTER XIII - DETAILED WORKING

Unit 1st year 2nd year 3rd year 4th year 5th year

A) POWER AND FUEL

( Including Consumption )

1) Units consumed per day at 100% No's

Capacity Utilisation

2) Capacity Utilisation % 94% 96% 98% 98% 98%

3) Units Consumed Per day. No's 1682.98 1718.78 1754.59 1754.59 1754.59

4) Annual Unit Consuption No's (000) 605.87 618.76 631.65 631.65 631.65

5) Rate per unit Rs. 3.50 3.50 3.50 3.50 3.50

6) Cost of Power Rs. (000) 2120.55 2165.67 2210.79 2210.79 2210.79

B) DIRECT LABOUR AND WAGES

1) Staff on Monthly Basis

Master - i.e..1 x 4000 Rs. 48000 48000 48000 48000 48000

Supervisor 3 x 2000 Rs. 72000 72000 72000 72000 72000

Helper i.e. 3 x 1500 Rs. 54000 54000 54000 54000 54000

2) Labours on Daily Basis

7 x 26 x 65 (11830) Rs. 141960 141960 141960 141960 141960

Rs. 315960 315960 315960 315960 315960

Rs. (000) 315.96 315.96 315.96 315.96 315.96

3) 15% Benefits from 2nd year Rs. (000) 0.00 47.394 47.394 47.394 47.394

onwards. Rs. (000) 315.96 363.35 363.35 363.35 363.35

C- DEPRECIATION ON W.D.V. BASIS :

YEAR LAND BUILDING

COST / WDV/ OPENING

DEPRECIATION WDV CLOSING

COST / WDV/ OPENING


10%

1st. 0.00 0.00 0.00 1691.14 169.11 1522.03

2nd. 0.00 0.00 0.00 1522.03 152.20 1369.82

3rd. 0.00 0.00 0.00 1369.82 136.98 1232.84

4th. 0.00 0.00 0.00 1232.84 123.28 1109.56

5th. 0.00 0.00 0.00 1109.56 110.96 998.60

6th. 0.00 0.00 0.00 998.60 99.86 898.74

7th. 0.00 0.00 0.00 898.74 89.87 808.87

8th. 0.00 0.00 0.00 808.87 80.89 727.98

PLANT & MACHINERY TOTAL DEPRECIATION

COST / WDV/ OPENING


15%

6308.86 946.33 5362.53 1115.44

5362.53 804.38 4558.15 956.58

4558.15 683.72 3874.43 820.71

3874.43 581.16 3293.26 704.45

3293.26 493.99 2799.28 604.95

2799.28 419.89 2379.38 519.75

2379.38 356.91 2022.48 446.78

2022.48 303.37 1719.10 384.26

D- DEPRECIATION ON W.D.V. BASIS :

FOR INCOME TAX CALCULATIONS

YEAR BUILDING PLANT & MACHINERY TOTAL DEPRECIATION

COST / WDV/ OPENING


COST / WDV/ OPENING


10% 25%

1st. 1691.14 169.11 1522.03 6308.86 1577.22 4731.65 1746.33

2nd. 1522.03 152.20 1369.82 4731.65 1182.91 3548.73 1335.11

3rd. 1369.82 136.98 1232.84 3548.73 887.18 2661.55 1024.17

4th. 1232.84 123.28 1109.56 2661.55 665.39 1996.16 788.67

5th. 1109.56 110.96 998.60 1996.16 499.04 1497.12 610.00

6th. 998.60 99.86 898.74 1497.12 374.28 1122.84 474.14

7th. 898.74 89.87 808.87 1122.84 280.71 842.13 370.58

8th. 808.87 80.89 727.98 842.13 210.53 631.60 291.42

E: INTEREST AND REPAYMENT OF LOANS :

Term loan Rs.

(Rs.000) 5000.00

Repayment in Quarterly instalments

Interest on quarterly basis

@

13.00%

YEAR Quarter BALANCE LOAN RS. (000)

INSTALLMENT OF REPAYMENT RS. (000)

INTEREST RS. (000)

YEARLY INTEREST

1st 1st 5000.00 0 162.50

2nd 5000.00 0 162.50

3rd 5000.00 192.31 162.50

4th 4807.69 192.31 156.25 643.75

2nd 1st 4615.38 192.31 150.00

2nd 4423.08 192.31 143.75

3rd 4230.77 192.31 137.50

4th 4038.46 192.31 131.25 562.50

3rd 1st 3846.15 192.31 125.00

2nd 3653.85 192.31 118.75

3rd 3461.54 192.31 112.50

4th 3269.23 192.31 106.25 462.50

4th 1st 3076.92 192.31 100.00

2nd 2884.62 192.31 93.75

3rd 2692.31 192.31 87.50

4th 2500.00 192.31 81.25 362.50

5th 1st 2307.69 192.31 75.00

2nd 2115.38 192.31 68.75

3rd 1923.08 192.31 62.50

4th 1730.77 192.31 56.25 262.50

6th 1st 1538.46 192.31 50.00

2nd 1346.15 192.31 43.75

3rd 1153.85 192.31 37.50

4th 961.54 192.31 31.25 162.50

7th 1st 769.23 192.31 25.00

2nd 576.92 192.31 18.75

3rd 384.62 192.31 12.50

4th 192.31 192.31 6.25 62.50

8th 1st

2nd

3rd

4th

Long Term Unsecured Deposit Working Capital Loan of

(Rs.000) 1200.00 (Rs.000) 1076.97 1st year Bridge Loan for capital

12.00% @ 13.00%

subsidy and others from friends and relatives @BALANCE LOAN RS. (000)


INTEREST RS. (000)

YEARLY INTEREST

BALANCE LOAN RS. (000)


INTEREST RS. (000)

YEARLY INTEREST

1200.00 36.00 1076.97 35.0014

1200.00 36.00 1076.97 35.0014

1200.00 36.00 1076.97 35.0014

1200.00 36.00 144.00 1076.97 35.0014 140.01

1200.00 36.00 1107.62 35.9977

1200.00 36.00 1107.62 35.9977

1200.00 36.00 1107.62 35.9977

1200.00 240.00 36.00 144.00 1107.62 35.9977 143.99

960.00 28.80 1128.36 36.6716

960.00 28.80 1128.36 36.6716

960.00 28.80 1128.36 36.6716

960.00 240.00 28.80 115.20 1128.36 36.6716 146.69

720.00 21.60 1126.78 36.6205

720.00 21.60 1126.78 36.6205

720.00 21.60 1126.78 36.6205

720.00 240.00 21.60 86.40 1126.78 36.6205 146.48

480.00 14.40 1123.90 36.5266

480.00 14.40 1123.90 36.5266

480.00 14.40 1123.90 36.5266

480.00 240.00 14.40 57.60 1123.90 36.5266 146.11

240.00 7.20 1123.90 36.5266

240.00 7.20 1123.90 36.5266

240.00 7.20 1123.90 36.5266

240.00 240.00 7.20 28.80 1123.90 36.5266 146.11

1122.74 36.4892

1122.74 36.4892

1122.74 36.4892

1122.74 36.4892 145.96

1121.75 36.4568

1121.75 36.4568

1121.75 36.4568

1121.75 36.4568 145.83

F -CALCULATION OF PROVISION FOR INCOME TAX

Sr. No.

PARTICULARS 1st Year 2nd Year

3rd Year

4th Year

5th Year

6th Year

7th Year

8th Year

1PROFIT AS PER PROFITABILITY STATEMENT

319.97 556.34 865.97 1101.23 1319.73 1523.90 1715.82 1830.97

2

ADD : DEPRECIATION AS PER PROTITABILITY STATEMENT

1115.44 956.58 820.71 704.45 604.95 519.75 446.78 384.26

3

LESS : DEPRECIATION AS PER INCOME TAX ACT

1746.33 1335.11 1024.17 788.67 610.00 474.14 370.58 291.42

ADJUSTED PROFITS OR LOSS()

(310.92) 177.81 662.50 1017.00 1314.68 1569.51 1792.02 1923.81

4ADD: CARRIED FORWARD LOSSES

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

5PROFIT - LOSSES BROUGHT FORWARD

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

6GROSS TOTAL INCOME TAX

0.00 0.00 231.88 355.95 460.14 439.85 627.21 673.33

CHAPTER XIV -ASSESSMENT OF WORKING CAPITAL REQUIREMENTS

1st Year

2nd Year

3rd Year

4th Year

5th Year

6th Year

7th Year

8th Year

1) CURRENT ASSETS

Raw materials (including stores and other items used in the process of manufacture

a) Indigenous 662.92 677.03 691.13 691.13 691.13 691.13 691.13 691.13

Other consumable spares ( excluding those included under item (I) above )

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Stock in Progress 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Finished Goods 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Receivables from parties 985.80 1006.78 1027.75 1027.75 1027.75 1027.75 1027.75 1027.75

Other current assets 220.16 208.94 210.20 207.79 206.00 204.50 203.24 202.19

Total Current Assets (1) 1868.89 1892.74 1929.08 1926.67 1924.88 1923.38 1922.12 1921.07

2) CURRENT LIABILITIES

(Other than bank borrowings for working capital)

Creditors for purchase of raw materials and stores and consumable spares.

305.27 284.14 290.05 289.46 289.46 289.46 289.46 289.46

Advances from Customers 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Accrued Expenses 68.51 71.36 72.89 73.17 73.45 73.73 74.00 74.28

Other Current Liabilities 59.15 60.41 61.67 61.67 61.67 61.67 61.67 61.67

Total Current Liabilities (II) 432.93 415.91 424.61 424.30 424.57 424.85 425.13 425.41

3) Working Capital Gap 1435.96 1476.83 1504.48 1502.38 1500.31 1498.53 1496.99 1495.66

4) Margin on Working Capital 358.99 369.21 376.12 375.59 375.08 374.63 374.25 373.92

5) Bank Finance (III-IV) 1076.97 1107.62 1128.36 1126.78 1125.23 1123.90 1122.74 1121.75

6) Interest of Bank 140.01 143.99 146.69 146.48 146.28 146.11 145.96 145.83

13.00%

Project Appraisal for a Hypothetical Textile Manufacturer

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