PREPARES PROJECT REPORTS/ MARKET RESEARCH & FEASIBILITY STUDIES SUITED TO THE INDUSTRIAL/ ENTREPRENEURIAL NEEDSPROJECT ON RUBBER BAND PRODUCTION

PROJECT REPORT1.0 Introduction:

                      This proposal evaluates the technical feasibility and financial

viability in setting up of a small-scale enterprise to do the activity on manufacturing and

sale of Rubber bands at Vazhoor   in  Kottayam district and all over India. Unit has been

filed memorandum Part-1 with the district Industries center, Kottayam and also applied

for permission from Local body for the construction of building and for the installation of

plant and machinery.

2.0 Promoter and Management:                                                 The ownership of the unit is as a propetoership

concern by Sri.Pravin Nair, Prasant House, Arppukkara east, Kottayam-686504 .he has been associated with this business and trade related activities for the past 5 years.  The experience and the market contact that he received will help him in establishing the proposed activity of manufacturing and marketing of hollow bricks in a successful manner.

3.0 Scope and Market Potential:

                        Rubber bands are one of the most convenient products of the

twentieth century used by numerous individuals and industries for a wide variety of

purposes. The largest consumer of the rubber bands in the world is USA. The news

paper industry also uses massive quantities of rubber bands to keep the individual

newspapers rolled or folded together before home delivery. This unit intends to make

rubber bands to cater the industry needs in outside states and also got good expertise

to produce and sell all products without delay.

   4.0 Manufacturing process:                     Manufacturing process is described below.

1.      Processing the natural latex2.      Purification and making into slabs3.      Squeezing the slabs to required size4.      Mixing and milling5.      Heating and squeezing6.      Extrusion after heating7.      Curing in mandrels8.      Slicing to form rubber bands

5.0 Location, Land and Building:

                     The unit is proposed to be located at Vazhoor Panchayath in

Changanasserry Taluk. . Building required for establishing the unit has been

constructed. The amount invested for civil work on construction of building for office,

common amenity, well etc.  are invested by the promoter himself. Building number

assigned to the unit is 2/634

 6.0 Machinery & equipment:                          Details are shown in the annexure. The plant and machinery

proposed to be installed in the unit are Indigenous.  .  Total cost of machinery and equipment to be purchased is evaluated as Rs 300000/-

7.0 Installed capacity of production

                                   The unit is proposed to be operated in 300 days per annum ( 25

days in a month of single shift operation of 8 hours duration in a day). As per the

capacity of machinery to be installed and by considering production wastage the

monthly production is worked out in the following table.

It is proposed to utilize 70% of the installed capacity in the first year of operation

and 75%, 80%, 85%, 90% in the consecutive years of operation. The sales realization

for first month of operation is shown below.

Sl No items

production per

month in Tonnage amount /Tonnage

Total amount

/production per month

1 RUBBER BANDS 1.5 2,00,000 3,00,000

8.0 Raw material Requirement:                        All the raw materials required by the unit are available

throughout the year. The raw material can also be procured from the nearby districts. The stock and procurement period proposed in this scheme is for a period of 22 days. The details of requirement for 70 % capacity utilisation in the unit are tabulated as below. The raw material required by the unit is proposed to be arranged through local distributors. The requirements of the unit for the targeted production are as below.

Sl No itemsRate /kg /tonnes Rate /Tonnage

Tonnage  required /month

Total amount required per month

1 LATEX 200 650 1.5 1950002 WHITENER 7 350 1.5 36753 CHALK POWDER 5 50 1.5 3754 TITANIUM 215 250 1 537505 RUBBER CHEMICALS 155 100 2 310006 PACKING MATERIALS 70 20 1.5 2100

raw materials required per month (100 % Capacity utilization) 285900

For 70% capacity utilization 200000

9.0 Man power requirement and other expenses:Total manpower of the unit including the Workers is 5 numbers and the details of

manpower requirement, salary and other expenses per month are as follows.

Sl.No.

Designation / Category No

Monthly

salaryAmount Rs

1

Skilled workers(women) 1 8000 8000

2un skilled worker 3 6000 18000

3 supervisor 1 10000 10000

Total 5 36000OTHER EXPENSES PER

MONTHSl.No. Item

Amount

1Power 3 HP

1500

2Postage & Telephone 1000

3Printing & Stationery 3000

4Travelling expenses 4000

5Miscellaneous 3000

Total 1250010.0 Working capital requirement:Total requirement of working capital for the first Month (phase) of operation is 2.0 lakhs .

Sl.N

o. Particulars

Peri

od in

Days 1 year 2 year 3 year 4 year 5 year

Capacity

utilisation(%) 300 70 75 80 85 90

Sales 300

36000

00

38571

43

41142

86

43714

29

46285

71

Cost of raw materials 300

24000

00

25714

29

27428

57

29142

86

30857

14

Cost of production 300

29100

00

31105

71

33129

43

35145

84

37179

69

A Current Assets

1

Stock of raw

materials                     

( day's consumption) 22

17600

0

18857

1

20114

3

21371

4

22628

6

2

Stock in

process                        

          ( day's cost of

production) 1 9700 10369 11043 11715 12393

3

Stock of finished

goods                           

     ( day's cost of

production) 1 9700 10369 11043 11715 12393

4

Receivables( day's

cost of sales) 1 12000 12857 13714 14571 15429

Total(A)

20740

0

22216

6

23694

3

25171

6

26650

1

11.0 Total Cost of the Project:

Sl.No. Particulars Amount Proposed Total Loan Margin@10% subsidy/margin

RS

required

@70% money @20%

1

Land and Building

( own) own Completed own 0 0

2 room furnishing own Completed own 0 0

3

Machinery &

Equipment(proposed) 300000 300000 300000 210000 30000

4

 Working Capital as

OD 200000 200000 200000 140000 20000

Total 500000 500000 500000 350000 50000

12. Means of finance:

Sl.No. Particulars

Amount

RS

1

Term loan for machinery &

equipment, 210000

2

Margin money loan proposed to

be obtained from DIC @20% of

project cost 100000

3

Working capital Loan as over

draft 140000

4 Own Capital (including the 50000

amount already invested in

acquiring the fixed assets of the

unit) @ 10% of P.C

Total 500000

13.0 Profitability analysis:

Detailed statement is given in annexure. Assumptions made for the calculation are

as follows:(a)    Unit will function for 200 days per annum in single shift basis of 5 hours per day.(b)   Proposed to utilise 70% of the installed capacity in the first year of operation ,75%, 80%

,85% and 90% are in the consecutive years of operation.(c)    Interest on term loan and working capital loan is assumed @ 12 % and repairing and

maintenance as 5% of cost of fixed assets.(d)   Depreciation @ 5% of cost of building and 10% of the cost of machinery.(e)    Selling expense is considered as 5 % of total sales turn over. This includes the

advertisement and publicity charges(f)    Insurance expenses of building and machinery is calculated @ 1% of cost(g)   The cost of raw material and finished product is based on the present market rate.

Depreciation: Depreciation on Building, Machinery and Equipment are evaluated on

WDV basis and is tabulated as below

1 Machinery and equipment 300000 270000 243000 218700 196830

Depreciation(B) 30000 27000 24300 21870 19683

WDV on Machinery and

equipment 270000 243000 218700 196830 177147

Total depreciation(A+B) 30000 27000 24300 21870 19683

SHEDULE OF IMPLIMENTATION

Construction of Building Completed 

Installation of plant and Machinery COMPLETED after availing the loan

Trial run COMPLETED after availing the loan

Commercial Production  September 2011

14.0 Conclusion:The net profits after taxation in the first year of operation is estimated

as                      RS 450000 /. The break-even point is 41 % of installed capacity. . The cost of production and profitability statement for the first 5 years, break-even analysis, repayment schedule for term loan, cash flow statement and the projected balance sheet are given in Annexure. Based on the analysis made above it is found that the scheme is technically feasible and economically viabl

Submitted by:                                        

PRAVIN NAIRPRASANT HOUSEARPPUKKARA EASTKOTTAYAMPIN-686008

ANNEXURE 1

Sl.No. Item NosRate in Rs Amount

Rs1

CUTTING MACHINE .5 HP 2 3750075000

2STIRROR 1 15000

15000

3 GRINDER 1 15000 150004 MOULDS 350 200 700005 DIP- IN TANKS 20000

200006 VULCANISING TANK, BUCKET,

CUP ETC.. 2500025000

7 DRYING STAND 30000 300008 BIOGAS PLANT (as directed by

Kerala Pollution Control Board) 5000050000

TOTAL 300000

ANNEXURE 2                                                                           Profitability statement for 5 years of operation

       

Particulars 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR

No. of working days 300 300 300 300 300

No. of shifts 1 1 1 1 1

Installed capacity 5142857 5142857 5142857 5142857 5142857

Capacity utilisation 70 75 80 85 90

Production 3600000 3857143 4114286 4371429 4628571

A Sales 3600000 3857143 4114286 4371429 4628571

B Cost of Production

Raw materials 2400000 2571429 2742857 2914286 3085714

Wages 432000 462857 493714 524571 555429

Power,  and Fuel

charges 18000 19286 20571 21857 23143

Repair &

maintenance 20000 22000 25000 27000 30000

Insurance 10000 8000 6500 5000 4000

Depreciation 30000 27000 24300 21870 19683

Total 2910000 3110571 3312943 3514584 3717969

C

Gross operating

profit 690000 746571 801343 856844 910603

D

Admn. & Selling

expenses

1. Administrative

expenses 132000 141429 150857 160286 169714

2. Selling expenses 36000 38571 41143 43714 46286

E Financial expenses

1. Interest on term

loan 31080 24360 17640 10920 65205

2. Interest on WC

loan 22400 24640 26880 29120 33600

3. Interest on MM

loan 0 0 0 0 0

F Total of D&E 221480 229000 236520 244040 314805

G Net operating profit 468520 517571 564823 612804 595798

H Income tax 48258 53310 58177 63119 61367

I Net profit 420262 464262 506646 549685 534431

J Withdrawls

K Depreciation 30000 27000 24300 21870 19683

L Cash surplus 450262 491262 530946 571555 554114

                                         

                                                   ANNEXURE-3              

                                       BREAK EVEN ANALYSIS

Particulars 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR

FIXED COST

Salaries 432000 462857 493714 524571 555429

Repair & Maintenance 20000 22000 25000 27000 30000

Insurance 10000 8000 6500 5000 4000

Administrative expenses 132000 141429 150857 160286 169714

Depreciation 30000 27000 24300 21870 19683

Interest on MM loan 0 0 0 0 0

Interest on Term loan 31080 24360 17640 10920 65205

Total 655080 685646 718011 749647 844031

VARIABLE

COST

Raw Materials 2400000 2571429 2742857 2914286 3085714

Power Charges 18000 19286 20571 21857 23143

Selling expenses 36000 38571 41143 43714 46286

Interest on WC loan 22400 24640 26880 29120 33600

Total 2476400 2653926 2831451 3008977 3188743

BEP in % of installed

capacity 40.81 42.74 44.78 46.77 52.76

BEP in % of capacity

utilization 58.30 56.98 55.97 55.02 58.62

Return on Investment 84.05 92.85 101.33 109.94 106.89

ANNEXURE-4                        

DEBT SERVICE COVERAGE RATIO (DSCR)

Debt Service Coverage

Ratio ( DSCR)

Particulars 1 Year 2 Year 3 Year 4 Year 5 Year

A Cash generated

1 Net Profit 468520 517571 564823 612804 595798

2 depreciation 30000 27000 24300 21870 19683

3 Interest on term loan 31080 24360 17640 10920 65205

4 Interest on mm loan 0 0 0 0 0

5 Interest on wc loan 22400 24640 26880 29120 33600

Total (A) 552000 593571 633643 674714 714286

B Debt Service Requirement

1 Repayment of term loan 42000 42000 42000 42000 42000

2

Repayment of interest on term

loan 31080 24360 17640 10920 65205

3

Repayment of interest on mm

loan 0 0 0 0 0

Repayment of interest on wc

loan 22400 24640 26880 29120 33600

Total (B) 95480 91000 86520 82040 140805

C Debt service coverage ratio 5.78 6.52 7.32 8.22 5.07

Average DSCR 7.93

    

ANNEXURE-5

REPAYMENT OF TERM LOAN

Year

Instalment 

Number Principal

Inst.

Amt

Interest

@14% Balance

1 1 210000 10500 8400 199500

2 199500 10500 7980 189000

3 189000 10500 7560 178500

4 178500 10500 7140 168000

42000 31080

2 5 168000 10500 6720 157500

6 157500 10500 6300 147000

7 147000 10500 5880 136500

8 136500 10500 5460 126000

42000 24360

3 9 126000 10500 5040 115500

10 115500 10500 4620 105000

11 105000 10500 4200 94500

12 94500 10500 3780 84000

42000 17640

4 13 84000 10500 3360 73500

14 73500 10500 2940 63000

15 63000 10500 2520 52500

16 52500 10500 2100 42000

42000 10920

5 17 42000 10500 63000 31500

18 31500 10500 1103 21000

19 21000 10500 735 10500

20 10500 10500 368 0

REPAYMENT OF WORKING CAPITAL LOAN AS O.D

1 Year 2 Year 3 Year 4 Year 5 Year

Total Working

capital 200000 220000 240000 260000 300000

Loan Amount 140000 154000 168000 182000 210000

Interest@14% 22400 24640 26880 29120 33600

                                           

ANNEXURE- 6

CASH FLOW STATEMENT

A Source of Funds

Construction

period 1 year 2 year 3 year 4 year 5 year

1

Cash accruals(profit before

int&tax) 0 522000 566571 609343 652844 694603

2 Increase in capital equity 50000 0

3 Depreciation 30000 27000 24300 21870 19683

4 Investment allowance

5 Increase in long term loan 210000 0

6 Increase in MM loan 100000 0

7

Increase in unsecured 

loans

8 Increase in WC loan 0 140000 14000 14000 14000 28000

9

Sales of fixed

assets/invests 0 0 0 0 0

10

Others( investment

subsidy) 0 0 0 0 0

Total 360000 692000 607571 647643 688714 742286

B Disposition of Funds

Prelim & Pre-op expenses 0 0 0 0 0

Increase in capital

expenditure 300000 0 0 0 0

Increase in current assets 200000 20000 20000 20000 40000

Decrease in long term

loans 42000 42000 42000 42000 42000

Decrease in unsecured

loans

Decrease in MM loan 0 0 0 0

Decrease in WC loan 0 0 0 0

Interest on term loan to

bank 31080 24360 17640 10920 65205

Interest on WC loan 22400 24640 26880 29120 33600

Interest on MM loan 0 0 0 0

Taxation 48258 53310 58177 63119 61367

Divident  on equity 0 0 0

Other expenses

Total 300000 343738 164310 164697 165159 242172

C Opening balance 0 60000 408262 851524 1334470 1858026

D Net surplus 60000 348262 443262 482946 523555 500114

E Closing balance 60000 408262 851524 1334470 1858026 2358139

ANNEXURE-7

PROJECTED BALANCE SHEET

A Liabilities

Construction

period 1 year 2 year 3 year 4 year 5 year

Equity share capital 50000 50000 50000 50000 50000 50000

Reserve & Surplus 0 420262 884524 1391170 1940856 2475286

Term loan 210000 168000 126000 84000 42000

Margin Money loan 100000 100000 100000 100000 100000 100000

Working capital loan 140000 154000 168000 182000 210000

Other liabilities(towards

subsidy) 0 0 0 0 0

Total Liabilities 360000 878262 1314524 1793170 2314856 2835286

B Assets

Construction

period 1 year 2 year 3 year 4 year 5 year

Gross block 300000 300000 270000 243000 218700 196830

Depreciation 0 30000 27000 24300 21870 19683

Net block 300000 270000 243000 218700 196830 177147

InvestmenT(Prilim.

Expences) 0 0 0 0 0

Current assets 200000 220000 240000 260000 300000

 Reserved Stock

accumulated to be added

to current assets 

Cash and bank balance 60000 408262 851524 1334470 1858026 2358139

Total Assets 360000 878262 1314524 1793170 2314856 2835286