b plan bpsm

A PROJECT REPORT ON

SUBMITTED BYGROUP 2

(Roll No. 10016-10030 & 10062)

MBA- BT- II

IN PARTIAL FULFILLMENT OF THE

REQUIREMENTS FOR THE AWARD OF DEGREE

OF MASTERS OF BUSINESS ADMINISTRATION-BT

DEPARTMENT OF MANAGEMENT SCIENCES

UNIVERSITY OF PUNE (PUMBA)

CERTIFICATEDepartment of Management Sciences, PUMBA 1

This is to certify that the project report on

A BUSINESS PLAN ON VERMICOMPOST FARMING

The Agrovermi Fertilisers

has been submitted by

Group 2

(Roll No. 10016-10030 & 10062)

MBA BT II (2010-12)

In partial fulfilment of the requirement for the Degree of

Master in Business Administration –Biotechnology (MBA-BT) from the

Department of Management Sciences, University of Pune.

Examiner’s Sign

Department of Management Sciences, PUMBA 2

OVERVIEW OF BUSINESS:


Name of the Company: The Agrovermi Fertilisers

Type of Company: Partnership Company

Product: Vermicompost

By-Product: Earth-worms

Type of Industry: Organic Fertilizers

Owners of the Company: Group 2 (Roll No. 10016-10030 & 10062)

Location: Baramati, Maharashtra

Vision:

“To establish the company as a strong producer of organic fertilizer in the market”.

Mission:

“To produce good quality organic fertilizer product and make it available at a profitable and affordable price in the market”.

Objectives:

To produce organic fertilizers that is environmental friendly. To produce products that satisfies the farmers by helping them achieve the expected

and required yield of crops. To maintain reputation of the company and its products by consistent performance. To carry out business in tandem with the current market dynamics. To sustain in the market by formulating competitive strategies. To ensure that proper steps are taken against the threats to the business.

Index of the Report


Topic Page No.

1.Introduction to the Product Introduction to Vermicompost Importance of Vermicompost

6

2. Market Scenario Market Study Demand Analysis for Product: Scope Competitive Market analysis

10

3. Industry Scenario The Organic Fertiliser Industry The Vermicomposting Industry

15

4. Environmental Analysis Environmental appraisal SWOT Analysis

17

5. Operations Plan Manufacturing Process for Vermicomposting Operating details about the plant

27

6. Marketing Plan Plan for executing marketing and distribution of the product

31

7. Human Resource Plan Organization Structure, Employee structure, Payment Structure, Corporate Social Responsibility

33

8. Financial Plan

34

9. Bibliography 42

1. INTRODUCTION TO THE PRODUCTDepartment of Management Sciences, PUMBA 5

1.1 Introduction to Vermicompost:

Vermicomposting is a simple biotechnological process of composting, in which certain species

of earthworms are used to enhance the process of waste conversion and produce a better end

product. Vermicomposting differs from composting in several ways It is a mesophilic process,

utilizing microorganisms and earthworms that are active at 10–32°C (not ambient temperature

but temperature within the pile of moist organic material). The process is faster than

composting; because the material passes through the earthworm gut, a significant but not yet

fully understood transformation takes place, whereby the resulting earthworm castings (worm

manure) are rich in microbial activity and plant growth regulators, and fortified with pest

repellence attributes as well! In short, earthworms, through a type of biological alchemy, are

capable of transforming garbage.

1.2 Importance of vermicompost

a) Source of plant nutrients

Earthworms consume various organic wastes and reduce the volume by 40–60%. Each

earthworm weighs about 0.5 to 0.6 g, eats waste equivalent to its body weight and produces

cast equivalent to about 50% of the waste it consumes in a day. These worm castings have been

analyzed for chemical and biological properties. The moisture content of castings ranges

between 32 and 66% and the pH is around 7.0. The worm castings contain higher

percentage (nearly twofold) of both macro and micronutrients than the garden compost.

From earlier studies also it is evident that vermicompost provides all nutrients in readily

available form and also enhances uptake of nutrients by plants. Sreenivas et al. (2000) studied

the integrated effect of application of fertilizer and vermicompost on soil available nitrozen (N)

and uptake of ridge gourd (Luffa acutangula) at Rajendranagar, Andhra Pradesh, India. Soil

available N increased significantly with increasing levels of vermicompost and highest N uptake

was obtained at 50% of the recommended fertilizer rate plus 10 t ha-1 vermicompost. Similarly,

the uptake of N, phosphorus (P), potassium (K) and magnesium (Mg) by rice (Oryza sativa) plant

was highest when fertilizer was applied in combination with vermicompost

Nutrient Composition of Vermicompost and Garden compost


Nutrient element Vermicompost (%) Garden Compost (%)

Organic Carbon 9.8–13.4 12.2

Nitrogen 0.51–1.61 0.8

Phosphorus 0.19–1.02 0.35

Potassium 0.15–0.73 0.48

Calcium 1.18–7.61 2.27

Magnesium 0.093–0.568 0.57

Sodium 0.058–0.158 <0.01

Zinc 0.0042–0.110 0.0012

Copper 0.0026–0.0048 0.0017

Iron 0.2050–1.3313 1.1690

Manganese 0.0105–0.2038 0.0414

b) Improved crop growth and yield

Vermicompost plays a major role in improving growth and yield of different field crops,

vegetables, flower and fruit crops. The application of vermicompost gave higher germination

(93%) of mung bean (Vigna radiata) compared to the control (84%). Further, the growth and

yield of mung bean was also significantly higher with vermicompost application. Likewise, in

another pot experiment, the fresh and dry matter yields of cowpea (Vigna unguiculata) were

higher when soil was amended with vermicompost than with biodigested slurry (Karmegam et

al. 1999, Karmegam and Daniel 2000).

c) Reduction in soil C:N ratio

Vermicomposting converts household waste into compost within 30 days, reduces the C:N ratio

and retains more N than the traditional methods of preparing composts (Gandhi et al. 1997).

The C:N ratio of the unprocessed olive cake, vermicomposted olive cake and manure were 42,

29 and 11, respectively. Both the unprocessed olive cake and vermicomposted olive cake

immobilized soil N throughout the study duration of 91 days. Cattle manure mineralized an

appreciable amount of N during the study. The prolonged immobilization of soil N by the Department of Management Sciences, PUMBA 7

vermicomposted olive cake was attributed to the C:N ratio of 29 and to the recalcitrant nature

of its C and N composition. The results suggest that for use of vermicomposted dry olive cake as

an organic soil amendment, the management of vermicomposting process should be so

adjusted as to ensure more favorable N mineralizationimmobilization (Thompson and Nogales

1999).

d) Role in nitrogen cycle

Earthworms play an important role in the recycling of N in different agroecosystems, especially

under jhum (shifting cultivation) where the use of agrochemicals is minimal. Bhadauria and

Ramakrishnan (1996) reported that during the fallow period intervening between two crops at

the same site in 5- to 15-year jhum system, earthworms participated in N cycle through cast-

egestion, mucus production and dead tissue decomposition. Soil N losses were more

pronounced over a period of 15-year jhum system. The total soil N made available for plant

uptake was higher than the total input of N to the soil through the addition of slashed

vegetation, inorganic and organic manure, recycled crop residues and weeds.

e) Improved soil physical, chemical and biological properties

Limited studies on vermicompost indicate that it increases macropore space ranging from 50 to

500 μm, resulting in improved air-water relationship in the soil which favorably affect plant

growth (Marinari et al. 2000). The application of organic matter including vermicompost

favorably affects soil pH, microbial population and soil enzyme activities (Maheswarappa et

al.1999). It also reduces the proportion of water-soluble chemical species, which cause possible

environmental contamination (Mitchell and Edwards 1997).

Types of earthworms

Earthworms are invertebrates. There are nearly 3600 types of earthworms in the world and

they are mainly divided into two types: (1) burrowing; and (2) non-burrowing. The burrowing

types Pertima elongata and Pertima asiatica live deep in the soil. On the other hand, the non-

burrowing types Eisenia fetida and Eudrilus eugenae live in the upper layer of soil surface. The


burrowing types are pale, 20 to 30 cm long and live for 15 years. The non-burrowing types are

red or purple and 10 to 15cm long but their life span is only 28 months.The non-burrowing

earthworms eat 10% soil and 90% organic waste materials; these convert the organic waste

into vermicompost faster than the burrowing earthworms. They can tolerate temperatures

ranging from 0 to 40°C but the regeneration capacity is more at 25 to 30°C and 40–45%

moisture level in the pile. The burrowing type of earthworms come onto the soil

surface only at night. These make holes in the soil up to a depth of 3.5 m and

produce 5.6 kg casts by ingesting 90% soil and 10% organic waste.

Earthworm multiplication

Numerous organic materials have been evaluated for growth and reproduction of earthworms

as these materials directly affect the efficacy of vermicompost. Nogales et al. (1999) evaluated

the suitability of dry olive cake, municipal biosolids and cattle manure as substrates for

vermicomposting. They reported that larger weights of newly hatched earthworms were

obtained in substrate containing dry olive cake. In another study, maize straw was found to be

the most suitable feed material compared to soybean (Glycine max) straw, wheat straw,

chickpea (Cicer arientinum) straw and city refuse for the tropical epigeic earthworm, Perionyx

excavatus (Manna et al. 1997). Zajonc and Sidor (1990) evaluated and compared various non-

standard materials for the preparation of vermicompost. A mixture of cotton waste with cattle

manure in the ratio of 1:5 was found to be the best. The use of grape cake alone increased

earthworm weight slightly. Tobacco (Nicotiana tabacum) waste, used as substrate, increased

earthworm weight but the earthworms failed to reproduce. A mixture of tobacco waste with

rabbit manure in the ratio of 1:5 was found to be lethal to the earthworms.

2. MARKET SCENARIO FOR VERMICOMPOSTING

2.1 Market Potential for Vermicompost


Vermicompost is a valuable input for sustainable agriculture and wasteland development. This

also can be used widely in pot culture and in home gardens. Several farmers are successfully

using Vermicompost. Studies in Maharashtra have shown that usage of vermicompost has

improved the production and quality of grapes. There are many successful farmers’ experiences

of using vermicompost from different climatic zones of the country. There will be lot of demand

for vermicompost in future for developing cultivable land subjected to some form of

degradation. Government agencies and NGOs are popularizing organic agriculture using

vermicompost by organizing awareness campaigns and film show in rural and urban areas. In

some cities like Bangalore and Bombay, vermicompost is sold at the rate ofRs.2 per Kgs. and is

being used in pot culture and kitchen gardens.

2.2 Market Demand For Vermicompost

In 1985, Maharashtra Agricultural Bioteks was formed and established a small plant to

manufacture vermicompost from agricultural waste. Those involved believed that a successful

commercial venture based on regenerative principles might convince others to adapt

sustainable practices. The organization currently produces 5,000 tons of vermicompost

annually. Its real achievement, however, has been in raising awareness among farmers,

researchers and policy makers in India about regenerative food production methods. The group

is directlyresponsible for 2,000 farmers and horticulturists adopting vermicomposting. These

converts have begun secondary dissemination of the principles they were taught.In 1991-92,

Maharashtra Bioteks and the India Department of Science and Technology promoted the

adoption of vermicompost technology in 13 states in India. The group has also established a

vermicompost unit with Chitrakoot Gramodaya University, Madhya Pradesh which produces

five tons of vermicompost per month.

It has been computed that India, as a whole, generates as much as 25 million tonnes of urban

solid waste of diverse composition per year. But per capita waste production in India is

minisculous compared to the per capita production of wastes in the industrialized countries.

Even so, the problem of waste disposal in India has of late attaining serious proportions posing

as it does immense health hazards and an environmental crisis of the first magnitude. Today,


many corporate units and business agencies are making a fortune by marketing vermicompost

—an excellent soil conditioner—to the farmers and gardeners. For thousands of years now, the

process of vermicomposting has been in vouge in nature due to the activities of earthworms

which excrete droppings called vermicastings. It has been estimated that about 5,000

earthworms can degrade a heap of organic wastes of the dimension 1.2x2.4mx0.6m speedily

and efficiently. BERI has established six large-scale vermicomposting projects, and motivated

nearly 5,000 farmers in 16 Indian states to use worms in their farming practices. Several

experiments have proven that vermiculture can contribute significantly to crop yields and

quality. In the Pune district, grape production increased 50 percent at a vineyard that employed

earthworms. In Maharashtra State, vermiculture helped stabilize soil pH and increase potash (a

type of potassium and key plant nutrient) content of the soil. In Auroville, Southern India,

worms are credited for doubling wheat production and quadrupling grass pasture production.

Savings on input costs such as fertilizer and water have dramatically increased profits. However,

for further increasing the efficacy of vermicomposting, care should be taken to see that worms

thrive on organic matter, breed faster, tolerate moisture and withstand climatic fluctuations.

The most beneficial feature of vermicomposting is that it eliminates foul smell of decaying

organic wastes. Japan imports 3000-million tonnes of earthworm per annum for waste

conversion. But India is still a long way behind in fully exploiting the promises of vermiculture

technology for waste disposal and manure generation. With the amount of waste produced in

India, the country could easily produce 400 million tonnes of plant nutrients and considerably

reduce the outflow of foreign exchange towards the import of fertilizers. Today, many industrial

units covering paper, pulp and tanning make use of vermiculture technology for waste

treatment. Now there is an all-round recognition that adoption and exploitation of vermiculture

biotechnology would besides arresting ecological degradation could go a long way towards

meeting the nutrient needs of the agricultural sector in a big way. On another front,

widespread use of vermicultural biotechnology could result an increased employment

opportunity and rapid development of the rural areas. It is hightime that the scientific

community of the country gave a serious attention to standardizing and popularizing

vermiculture technology on a countrywide basis.


2.3 Scope of Vermicomposting

From vermiculture, we get well decomposed worm casts, which can be used as manure for

crops, vegetables, flowers, gardens, etc. In the process, earthworms also get multiplied and the

excess worms can be converted into vermi-protein which can be utilized as feed for poultry and

fish etc. The vermiwash can also be used as spray on crops. Thus various economic uses can be

obtained from organic wastes and garbage and prevent pollution. The total annual waste

generated in India in the form of municipal solid waste is 25 million tons, agriculture waste

residues 320 million tons, cattle manure 210 million tons and poultry manure is 3.3 million tons

(Central Pollution Control Board, 2001). Traditionally the solid waste management practices

involve collection and transportation to far off low dumping sites. This leads to fowl smelling

area, disease spreading, and mosquito breeding grounds that the aesthetics of urban as well as

rural dwellings. The other option is composting which involves the dumping of waste into a pit.

The bio-conversion of waste to vermicompost by this method takes about 3- 4 months. There is

a tremendous scope to convert the bio-degradable waste into organic manure through

vermiculture biotechnology or vermicomposting.

Organic food exports from India

Organic food exports from India are increasing with more farmers shifting to organic farming.

With the domestic consumption being low, the prime market for Indian organic food industry

lies in the US and Europe. India has now become a leading supplier of organic herbs, organic

spices, organic basmati rice, etc. The exports amount to 53% of the organic food produced in

India. This is considerably high when compared to percentage of agricultural products exported.

In 2003, only 6 - 7% of the total agricultural produce in India was exported (Food Processing

Market in India, 2005).

Exports is driving organic food production in India


The increasing demand for organic food products in the developed countries and the extensive

support by the Indian government coupled with its focus on agri-exports are the drivers for the

Indian organic food industry. Organic food products in India are priced about 20 -30% higher

than non-organic food products. This is a very high premium for most of the Indian population

where the per capita income is merely USD 800. Though the salaries in India are increasing

rapidly, the domestic market is not sufficient to consume the entire organic food produced in

the country. As a result, exports oforganic food are the prime aim of organic farmers as well as

the government. The Indian government is committed towards encouraging

organic food production. It allocated Rs.100 crore or USD 22.2 million during the Tenth Five

Year Plan for

promoting sustainable agriculture in India. APEDA (Agricultural and Processed Food Export

Development Authority) coordinates the export of organic food (and other food products) in

India. The National Programme for Organic Production in India was initiated bythe ministry of

commerce. The programme provides standard for the organic food industry in the country.

Since these standards have been developed taking into consideration international organic

production standards such as CODEX and IFOAM, Indian organic food products are being

accepted in the US and Europeanmarkets. APEDA also provides a list of organic foodexporters

in India.

2.4 Competitive Market analysis

Madhya Pradesh is one of the fore runners in promotion of organic farming. The State

Government has adopted a concept called Bio farming through bio-villages for the promotion of

organic farming. Bio-farming is implemented in 1565 villages selected from 313 blocks of 48

districts in the state. It is reported that the message of growing crops through organic resources

is spreading from village to village through farmers contact programme.

The survey conducted by the Indian Institute of Soil Science (IISS-ICAR), Bhopal on organic

farming in Central Madhya Pradesh revealed that the major crops grown under organic farming

are soybean, wheat, lentil, safed musli, maize, pigeon pea, vegetables and sugarcane. The


survey also revealed that more number of large and medium farmers are involved in organic

farming as compared to small farmers. The average area under organic farming varied from

0.80 ha (with small farmer) to 5.00 ha (with large farmer)

Adoption of organic farming is reported to have a positive correlation with the number of cattle

maintained by the farmers, in the state. The large farmers have more cattle and hence more

resources for organic manure which facilitates more area under organic farming. Compost or

Farm Yard Manure (FYM) is the common source of organic manure used by the farmers,

followed by Vermicompost and Narayan Devaraj Pandey (NADEP) compost. Farmers are also

using bio-gas slurry, green manure and cow horn manure. Poultry manure, neem cake, karanjee

cake and bio-fertilizers like rhizobium, azospirillum, phosphate solubilizing bacteria etc, are the

other supplements under off-farm organic sources.The IISS survey has indicated that the

quantum of organic manure applied by the farmers do not have any scientific basis to meet the

nutrient requirements of the crops grown. The quantity applied is based on the on-farm

availability and the nature of crops grown. However, the periodicity of application is found to

be regular, either every season or crop grown under organic farming as against application once

in two or three years under conventional farming.

In Karnataka, the players involved in vermicompost production activities are the

farming sector, government organizations, private organizations, and other agencies. This

has encouraged many government and non-government agencies to promote vermicompost

production. Many enterprises by farmers and private agencies have shown keen interest in

undertaking of vermicompost production. These prospectives clearly show that vermicompost

could contribute enormously to farm production and economic conditions of rural people,

besides being an eco-friendly activity. In recent years, concerted efforts have been initiated by

the state as well as by private sector including many NGOs to create awareness among

farming community about need for application of suitable soil amendments mainly in the form

of organic matter for sustainable agricultural production. In this direction, vermicompost is an

important source of organic matter to the soil as well as soil amendment due to its

multifunctional roles and benefits. Though there is no documented information on quantities of


vermicompost produced in the state, the rough estimates indicate that Karnataka state

produces around 40,000 to 50,000 metric tons annually. An approximate breakup of the total

of 40,000 tons of vermicompost is as follows:

a. Farming sector: At around 1,000 tons per district, farmers account for nearly 25,000.

b. tons / annum.

c. Government sector accounts for nearly 5,000 tons / annum.

d. Private sector accounts for nearly 5,000 tons / annum.

e. Other accounts for nearly 5,000 tons /annum.

Vermicompost produced in the state is being utilized in agriculture, horticulture and

sericulture. The government of Karnataka procures huge quantity of vermicompost every year

for coconut crop for management of coconut mite. From utilization point of view, there is

tremendous potential in horticulture crops, agriculture crops and moriculture. Keeping in view

the advancement in organic farming in the state, a substantial increase in vermicompost

production can take place in the state in recent years.

3. THE ORGANIC AGRICULTURE INDUSTRY

Since 1980s, agricultural scientists in the world have been realizing the limitations of

chemical fertilizers used for fertility management. While on one hand research is being

initiated to improve the use efficiency of chemical fertilizers, on other hand alternative inputs

are being considered. Organic matter recycling has been in use in India for centuries. The

shift towards organic production is supported by consumers who are aware of health hazards:

demand for food grown organically is increasing by 20-25% in developed countries where

awareness is comparatively high. The organic agriculture is indeed being pursued in India;

the national programme of organic products (NPOP) was launched in 2000. Its aim is mainly

to create certification facilities; since its inauguration, 2.5 million ha (6.2 million acres) have

been certified as organic, providing 115 to 238 metric tons of produce by the end of 2004-05

(Gauri 2005). Organic agriculture, a holistic system that focuses on improvement of soil

health, use of local inputs, and relatively high-intensity use of local labor, is admirably fit for

dry lands in many ways, and the dry lands offer many benefits that would make it relatively


easy to implement. The organic agriculture is key element for development and sustainable

environment. It minimizes environmental pollution and the use of non-renewable natural

resources and conserves soil fertility and soil erosion through implementation of appropriate

conservation principles. In fact, India's national project on organic farming (NPOF), launched

in 2004, has given top priority to the dry lands (NPOF 2005). The real achievement in organic

method of farming has been in raising awareness among farmers, researchers and policy

makers in India about regenerative organic food production methods. In 1991-92, India

Department of Science and Technology promoted the adoption of vermicompost technology

in 13 states in India. From 1997-98 onwards, several government agencies and NGOs are

working individually to promote organic farming.

The awareness of organic matter and concept of sustainable agriculture is gaining

impetus among our farmers in recent years to produce good quality consumable agricultural

produce. In this context, recycling of available bio-wastes of different sources is helpful and

can reduce the environmental pollution. Vermicomposting is an important component of

organic farming without much financial involvement, which can convert rural and urban

biowastes into nutrient rich organic manures. (Sajnanath and Sushama, 2004).

Vermicomposting through organic farming is the pathway that leads us to live in harmony with

nature. Vermicomposting is the secure system for agriculture. Use of this vermicomposting with

increased efficiency by developing various methods which do not change the originality of the

process i.e. use of earthworms for sustainable and secure system should be adopted. Several

reasons have been emphasized for the need of organic agriculture including vermicomposting,

like limited land holdings, poor socio- economic conditions of farmers, and rise in input cost.

The broadest view shows two major reasons viz., population and environment, emphasized the

ultimate need for eco-friendly technologies through vermicomposting. In the past ten years

these agencies in India have prompted farmers and institutions to switch from conventional

chemicals to the organic fertilizer, vermicompost. Noted for its ability to increase organic

matter and trace minerals in soil, vermiculture has been the primary focus in India, these

agencies which have initiated both commercial and educational ventures to promote

vermiculture. In 1985 a small plant was established to manufacture vermicompost from


agricultural waste. Those involved believed that a successful commercial venture based on

regenerative principles might convince others to adapt sustainable practices. Farmers have

reduced their use of chemical fertilizers by 90% by using vermicompost as a soil amendment for

growing grapes, pomegranates and bananas. Similar work is underway on mangoes, cashews,

coconuts, oranges, limes, strawberries and various vegetable crops. These agencies have

devised methods to convert biodegradable industrial waste like pulp waste from paper mills

and filter cake and liquid effluent from sugar factories into vermicompost.

4. ENVIRONMENTAL REGULATIONS ON THE ORGANIC AGRICULTURE INDUSTRY

4.1 Impact of Govt. (Political) Environment on Organic farming industry

In response to the $26 billion global market for organic foods, the Indian Central Government

set up a National Institute of Organic Farming in October 2003 in Ghaziabad, Madhya Pradesh.

The purpose of this institute is to formulate rules, regulations and certification of organic farm

products in conformity with international standards. The major organic products sold in the

global markets include dried fruits and nuts, cocoa, spices, herbs, oil crops, and derive products.

Non-food items include cotton, cut flowers, livestock and potted plants.

Most farms in organic agriculture in India is not certified. The certifying agencies thus far named

by the Centre include the APEDA (Agricultural and Processed Food Products Export

Development Authority), the Tea Board, the Spices Board, the Coconut Development Board and

the Directorate of Cashew and Cocoa. They will be accountable for confirming that any product

sold with the new “India Organic” logo is in accordance with international criteria, and will

launch major awareness and marketing campaigns, in India and abroad.

Organic farming has been identified as a major thrust area of the 10th plan of the central

government. 1 billion rupees have been allocated to the aforementioned National Institute of

Organic Farming alone for the 10th five-year plan, Mann said. And by the end of 2004,

according to APEDA chairman K.S. Money, 15% of farm products will be organically grown &

processed. A working group has been set up by the Planning Commission, and the Department

of Commerce has established National Organic Standards.


Recognising the importance of organic farming in Indian Agriculture, Government of India has

taken various initiatives to promote and support organic production. Setting up of National

Centre of Organic Farming with Regional Centres at various places, launching of the National

Programme on Organic Production encompassing National Standards and Accreditation

Programme for Certification Agencies etc., are important steps in this direction. The importance

of organic inputs in development of organic farming is adequately emphasized with the

launching of the Capital Investment Subsidy Scheme for Commercial Production Units of

Organic Inputs by Government of India.

NABARD, as an apex institution in the field of agriculture and rural development has identified

Organic Farming as a thrust area and has taken various initiatives for its promotion. These

initiatives include building capacities of bankers, NGOs, farmers through training programmes,

exposure visits etc., technology development and its dissemination through various funds and

suggesting policy measures for financing organic farming.

Package of practices for organic farming is being developed by many Universities and Research

Institutions. These practices need to be developed into a bankable model for aiding financial

institutions in extending credit for organic farming. Preparation of model bankable schemes

based on package of practices developed by research institutions and those adopted by farmers

is an attempt in this direction. I am certain that these model schemes may act as a catalyst in

promoting organic farming amongst prospective entrepreneurs especially with the support of

institutional credit.

The recent policy measures and interventions by the Government, civil society organizations,

and financial institutions like banks and National Bank for Agriculture and Rural Development

(NABARD) are tuned to help farmers, particularly women, to access technical and financial

resources for rural enterprises. The rise of Self Help Groups (SHGs) and Farmers Clubs has

mobilized farmers and built their capacity to establish and organize enterprises and market

their produce collectively. The organic agriculture based enterprises include the production of


organic composts or other farm produce, value addition of organic produce, and improved

marketability of organic produce with better packaging and preservation.

4.2 Economic Environmental Aspects

India is bestowed with lot of potential to produce all varieties of organic products due to its

agro-climatic regions. In several parts of the country, the inherited tradition of organic farming

is an added advantage. This holds promise for the organic producers to tap the market which is

growing steadily in the domestic market related to the export market. Currently, India ranks

33rd in terms of total land under organic cultivation and 88th position for agriculture land

under organic crops to total farming area in the World. The cultivated land under certification is

around 2.8 million ha. This includes one million ha under cultivation and the rest is under forest

area (wild collection) (APEDA, 2010). India exported 86 items during 2007-08 with the total

volume of 37533 MT. The export realization was around 100.4 million US $ registering a 30 per

cent growth over the previous year (APEDA, 2010).

Organic farming has the potential to provide benefits in terms of environmental protection,

conservation of nonrenewable resources and improved food quality. Countries like Europe have

recognized and responded to these potential benefits by encouraging farmers to adopt organic

farming practices, either directly through financial incentives or indirectly through support for

research, extension and marketing initiatives. As a consequence, the organic sector throughout

Europe is expanded rapidly (24% of world’s organic land). But, in the developing countries like

India, the share is around 2 per cent only (included certified and wildlife). However, there is

considerable latent interest among farmers in conversion to organic farming in India. But, some

farmers are reluctant to convert because of the perceived high costs and risks involved. Those

who have converted earning equal incomes to their conventional counterparts, if premium

markets are exist for organic produce. Despite the attention which has been paid to organic

farming over the last few years, very little accessible information actually exists on the costs

and returns of organic farming in India. Similarly, there are only a few attempts of comparing

efficiency between organic and conventional production systems in India.


Role of Organic Farming on Indian Rural Economy

The role of Organic Farming in India Rural Economy can be leveraged to mitigate the ever-

increasing problem of food security in India. With rapid industrialization of rural states of India,

there has been a crunch for farmland. Further, with the exponential population growth of India,

the need for food sufficiency has become the need of the hour. Furthermore, the overuse of

plant growth inhibitor, pesticides and fertilizers for faster growth of agricultural produce is

detrimental to human health and the environment as a whole. The proposition of Organic

Farming in India Rural Economy holds good, as an alternative to arrest this problem. The

introduction of the process of Organic Farming in India Rural Economy is a very new concept.

The huge furor over the overuse of harmful pesticides and fertilizers to increase agricultural

out put has in fact catalyzed the entry of Organic Farming in India Rural Economy. The process

of organic farming involves using of naturally occurring and decomposable matter for growth

and disease resistance of different crops. The concept of organic farming in India dates back to

10,000 years and it finds its reference in many Indian historical books.

The main advantages of Organic Farming in India Rural Economy are as follows -

Organic fertilizers are completely safe and does not produces harmful chemical compounds

The consumption of chemical fertilizers in comparison to organic fertilizers is always more, especially in unused cultivable lands.

Moreover, chemical fertilizer needs huge quantities of water to activate its molecule whereas, organic fertilizers does not need such conditions.

Further, chemical fertilizers almost always have some harmful effects either on the farm produce or on the environment.

Furthermore, it can also produce harmful chemical compound in combination with chemical pesticides, used to ward-off harmful pests.

It is estimated that there is around 2.4 million hectare of certified forest area for collection of wild herbs.

The actual available area for cultivation of organic agriculture in India is much more than that is identified and certified so far.

India has around 1,426 certified organic farms.


India produces approximately 14,000 tons of output annually. It is estimated, that around 190,000 acres of land is under organic farming in India. The total annual production of organic food in India in the last financial year was

120,000 tons.

4.3 Social Aspects of Organic Farming

The potential social benefits of going organic range from the small to the dramatic. Farmers

who transition to organic production often have a renewed interest in farming; they join

together with others who have a similar passion for farming in a new way. Perhaps they

collaborate on renovating an abandoned grain mill for handling organic grains, or a processing

facility for organic poultry. Young, new farmers, drawn to farming because of the organic

appeal, add more vitality to their rural communities. And because organic farming is often

about building relationships and connections, consumers can support these farmers in a variety

of ways. A network develops and flourishes.

Social Benefits

Organic farming practices can be adopted in small farms and benefits for marginal farmers.

It could reduce dependency on external inputs and costly technologies thus reducing the competitiveness and disparity among the farmers in a community.

It will also lead to food security at the family level and national level. Organic farming is revival of a culture and brings back the indigenous

knowledge, beliefs and value system that are almost on extinction now. It also contributes to employment generation at the community level.

4.4 Technological Aspects of Organic Farming in India (Vermicomposting)

In India, the integration of crops and livestock and use of manure as fertilizer were traditionally

the basis of farming systems. But development of chemical fertilizer industry during the green

revolution period created opportunities for low-cost supply of plant nutrients in inorganic forms

which lead to rapid displacement of organic manures derived from livestock excreta. The

deterioration of soil fertility through loss of nutrients and organic matter, erosion and salinity,

and pollution of environment are the negative consequences of modern agricultural practices.


In India, millions of tons of livestock excreta are produced annually. Odour and pollution

problems are of concern. Currently the fertilizer values of animal dung are not being fully

utilized resulting in loss of potential nutrients returning to agricultural systems. The potential

benefits of vermicomposting of livestock excreta include control of pollution and production of

a value added product. Vermicomposting of different livestock excreta including cattle dung;

horse waste; pig waste; goat waste; sheep waste; turkey waste and poultry droppings has been

reported. Organic wastes can be ingested by earthworms and egested as a peat-like material

termed “vermicompost”. Recycling of wastes through vermicomposting reduces the problem of

non-utilization of livestock excreta. During vermicomposting, the important plant nutrients such

as N, P, K, and Ca, present in the organic waste are released and converted into forms that are

more soluble and available to plants. Vermicompost also contains biologically active substances

such as plant growth regulators. Moreover, the worms themselves provide a protein source for

animal feed. Considering the tropical climate of India, vermiculture technology seems to be one

of the most appropriate technologies for Indian farmer.

4.5 Ecological Appraisal of Vermicomposting

Organic agriculture, through its systemic approach and avoidance of agro-chemicals, prevents

natural resource degradation and the loss of land and productive potential. In organic

agriculture, nature is both instrument and aim. As organic farmers cannot use synthetic

substances (e.g. fertilizers, pesticides, pharmaceuticals) they need to restore the natural

ecological balance because ecosystem functions are their main productive "input". For

example:

Many unspecific pests like aphids, thrips, whiteflies or spider mites, economically damaging in many crops, can be kept below the economic threshold with naturally occurring or purposely released predators and parasitoids. The former are direct goods and services of hedges, botanically diverse field margins, intercropping or weedy undergrowth, and the latter do better when released in botanically and ecologically enriched habitats.

The only way to suppress soil-borne pests and diseases in organic agriculture are wide crop rotations with several components of botanically different crops. Adhering to such rotations is crucial to providing agro-ecosystem diversity.


Diverse crop rotations, or agro-forestry systems, guarantee a better uptake of nutrient elements from the soil and very efficient use of water and light, thanks to varying spatial and temporal root growth and leaf dispersion.

Soils with a high functional diversity of micro-organisms, which occur very often after decades of organic agriculture practice, develop disease suppressive properties and can help to induce resistance in plants.

By restricting farm inputs farmers have to use preventive techniques appropriately. The ban on herbicides, for instance, makes it impossible to ignore good crop rotation principles and disastrous in terms of yields and long-term problems with weeds. The ban on soluble and purchased fertilizers makes nutrient-conserving crop rotations and the sparing use of organic fertilizers to reduce losses, economically worthwhile.

4.6 Legal aspects of Organic Farming

S.O. 908(E).- Whereas the draft of the Municipal Solid Wastes (Management and Handling)

Rules, 1999 were published under the notification of the Government of India in the Ministry of

Environment and Forests number S.O. 783(E), dated, the 27th September, 1999 in the Gazette of

India, Part II, Section 3, Sub-section (ii) of the same date inviting objections and suggestions

from the persons likely to be affected thereby, before the expiry of the period of sixty days

from the date on which the copies of the Gazette containing the said notification are made

available to the public.

And whereas copies of the said Gazette were made available to the public on the 5th October,

1999; And whereas the objections and suggestions received from the public in respect of the

said draft rules have been duly considered by the Central Government

4.7 Risk Factors Associated with Solid waste composting (Vermicomposting)

Political risk factors


Considering the nature of the projects, political factors may not be perceived to be major risk

posers, however they have a very strong potential to affect sustainability of MSW treatment

plant related projects. For instance in case of Trivendrum compost plant the different political

set up at the ULB and state level and changes after the general elections created a new set of

constraints for the city planners and the operator. The assurances given by the city

government/previous government were not honoured by the state/new government. Likewise

the assurances on fiscal incentives and preferential treatment given by the urban development

department could not be honoured by the agriculture department. The plant operator is unable

to address evolving situation and faces several unmanageable risks.

Administrative risk factors

Change of a Mayor or a municipal Chief Executive Officer/Commissioner can create a set of risk

factors which perhaps are not envisaged and factored in the agreement at the outset of the

project. For instance operations at the compost plant at Mysore (location not part of the study)

came to a stand still after one such change and the operator’s inability to meet the emerging

exigencies.

A major risk factor which the Manual on Municipal Solid Waste Management has also

attempted to address pertains to the countrywide practice of entrusting the responsibility of

MSW management to public health professionals who by training are clinical professionals.

They are expected to manage the curative facilities and measure indicators of public health

rather than get involved in logistics of collection, transport, treatment and disposal of solid

waste, management of fleet of dumper, loaders and earth moving machinery etc. The latter set

of tasks typically require engineering knowledge and skill which are best left for the engineering

departments. Because of this mismatch, it is no wonder that the solid waste operations are in a

rather poor shape across the country. In this context, it is encouraging to note the decision of

the Andhra Pradesh High Court which disallowed petition of the health professionals to prevent

transfer the responsibility to the engineering staff at the Municipal Corporation of Hyderabad.

As a consequence of this positive change the improvements in the city of Hyderabad in terms of


manpower and fleet planning, contractual arrangements, work allocation, demarcation of

responsibilities etc. are highly commendable.

Promoter background and contractual agreement

Some of the projects which came up in early stages of evolution of the sector witnessed entry

of inexperienced players with limited technical, financial and organisational strengths. Their

commitment was not towards long term sustainability rather in availing short benefits which

made them pursue the ‘waste to wealth’ paradigm. Integrated solid waste management

requires technical and logistical capabilities akin to mining operations with commensurate

financial resources. Lack of such capabilities has been demonstrated in many projects across

the country to have emerged as a major risk for short and medium term sustainability. It is

understandable that with the above kind of players and lack of appreciation on the part of the

urban local bodies on required expertise/resources, the contractual agreements were slanted

by the promoters towards availing capital subsidy and compensation in the event of deficit in

delivery of assured quantity of waste or closure of the plant. The fundamental premise of

converting ‘waste to wealth’ and expectation of royalty on the part of the ULBs entailed

operators to adopt short cuts to achieve operating profits. The contracts typically did not define

the responsibility of collection, transport and safe disposal of rejects, which highlights the

misplaced priority on the paradigm of ‘waste to wealth’ rather than on the paradigm of

‘safeguarding the environment and public health’.

Location of the plant

Nobody wants a waste treatment and disposal facility in his/her back yard. As a result, there is

severe protest by the affected community to any such proposals of the urban local bodies

across the country. Proximity to a habitation necessitates conducting due diligence (irrespective

of the size of capital investment), identification of impacts and incorporation of remedial

measures in terms of higher order technology and effective and robust pollution control

measures e.g., odour/emission control system, effluent treatment plant etc. On the social side,

unlike a typical large scale industrial project, a MSW treatment plant does not involve


considerably high capital investment and thus there is not enough budget for compensation,

resettlement and rehabilitation of the project affected people. However, there is an utmost

need to address real fear of the community of being ostracised, loss of property values and

potential health impacts. Provision for host community fee and/or augmenting basic

infrastructure/services could help in reducing the risks, however these features are still not in

vogue.

FEEDSTOCK RELATED RISK FACTORS

Municipal solid waste to be treated and thereby receive value addition needs to be considered

not just as waste but as ‘feedstock’ from the point of view of the plant operator. As in case of

an industrial plant, feedstock/raw material delivery, quality and quantity become crucial from

operational efficiency point of view. Any shortfall on these counts can undermine plant

operations.

Delivery system In this regard lack of a seamless integration between treatment plant and the collection and

transport system emerges as a significant risk factor. Under the existing system the plant

operator has no control over the municipal personnel and fleet drivers who are entrusted with

the responsibility of delivery of the feedstock to its plant. The latter groups are well known for

their low efficiency and lack of accountability and the operator can be held at ransom or could

be a helpless observer when it comes to timely delivery of required quantity and quality of

feedstock. Secondly, in the evolving system of contracting out transport of waste, while there is

significant revenue for transport contractors, the plant operator does not get ‘gate fee’ in

proportion to the quantity of waste delivered at its premises. Integration of transport and

treatment systems/services will reduce such risk factors and offer higher motivation for a

private operator to make a competitive and realistic bidding.

4.8 SWOT Analysis


5. Operations Plan

Plant and Production Facilities:

Land Area of the Plant : 2 acres which includes half acres for future expansion

Main product : Vermicompost

By-product : Earthworms

Production Capacity : 20000 kgs of vermicompost per batch

Capacity Untilisation : 100%

Price/bag of 50 kg : Rs.150

Annual Sales : Rs. 30,00000 from Vermicompost & Rs. 48,0000 from earthworms

Number of vermicomposting beds : 2000 beds

Dimensions of a single bed : 10x5x3

Capacity of vermicomposting per bed : 500 kgs of vermicompost

Number of batches produced per year : 3 batches i.e 100 metric tones


g

STRENGTH

Good Quality and near to the market Good quality products Healthy and eco-friendly fertilizers No Bio magnification unlike chemical

fertilizers Basic raw materials free of cost

WEAKNESS

New In this Area Farmers are not habituated to

using organic fertilizers No brand image and brand equity

in the market

OPPORTUNITY

Less competitive market Easy availability of raw materials New Market Futuristic Market Health conscious Government subsidies

THREATS

Environmental effect is very high No skilled workers available Farmers demand for quick results

on the contrary to the fact that organic fertilizers take a longer time to give reults

Water supply Facility : Bore well water system

Means of Transportation : Tractor for farm use as well as for collection of garbage and

cow-dung

For every bed ½ kg of earthworms are required which amounts to 200 kgs for one batch.

From initial batch reproduction of earthworms leads to 600 kgs after the first batch.

Out of these 200 kgs will be retained for the culture of second batch and 400 kgs will be

sold in the market.

Next batches will not require any further purchase of earthworms.

In every batch henceforth there will be 400 kgs of earthworms as by-product that

amounts to 1200 kgs from three batches to be sold as a by-product.

Raw Materials used:

Garbage from different sources like industrial as well as household wastes, Various

Municipal Solid waste

Living organisms used: Earthworm weighing half kgs per bed of vermicomposting

Chemical used as a catalyst for vermicomposting: Agroculture 1 kg per 3 beds of

vermicomposting

Production type: Batch Production

Time required for one batch production: 4 months

Note: Time for first batch of yearly vermiculture start: June-July

Yearly Batch production: 3 batches

Plan for labourers

For maintenance of the farm 4 labourers will be on the field

Apart from these, 3 labourers will be used extra for 10 days during the initial spreading

of the garbage and preparation of the beds for vermiculture

Henceforth for 3 batches 90 days of extra working days of labourers will be required

Garbage and cowdung will be collected from the surrounding localities around the farm

in Baramati


Plant Lay

Plant layout for vermicomposting plant

Vermicomposting process

It is an aerobic, bio-oxidation, non-thermophilic process of organic waste decomposition

that depends upon earthworms to fragment, mix and promote microbial activity. The

basic requirements during the process of vermicomposting are

• Suitable bedding

• Food source

• Adequate moisture

• Adequate aeration

• Suitable temperature

• Suitable pH

Climate and Temperature requirement


g

Warehouse Packaging Vermicomposting plant

Storage plant

Industrial garbage Filtering PlantOffices

The most common worms used in composting systems, red worms (Eisenia foetida, Eisenia

andrei, and Lumbricus rubellus) feed most rapidly at temperatures of 15–25 °C (59-77 °F). They

can survive at 10 °C (50 °F). Temperatures above 30 °C (86 °F) may harm them. This

temperature range means that indoor vermicomposting with red worms is suitable in all but

tropical climates. (Other worms like Perionyx excavatus are suitable for warmer climates.) If a

worm bin is kept outside, it should be placed in a sheltered position away from direct sunlight

and insulated against frost in winter.

Fig: Flowchart for vermicomposting process

6. MARKETING PLAN


6.1 Marketing Strategy

Pre-executing Marketing Strategy

Post-executing Marketing Strategy

Pre-executing Marketing Strategy:

Identification of the Area:

Area should be near to the market so that it is easy to communicate with the farmers.

Area should also be near to the suppliers of raw materials. Moreover it should be such

that water is easily available. Area should be isolated from human dwelling so that there

is no issues regarding the bad odour of the garbage compost of the farm

Mass Campaigning:

The farmers who are the end customers will be made aware of the vermicompost

product, its features and its advantages, its availability through mass campaigning. This

is very necessary since the farmers are used to using the conventional chemical

fertilizers. Through mass campaigning they will also be made aware about the harmful

effects of the chemical fertilizers on their land as well as on their health and the dangers

associated with their small children as well.

Village meeting:

The farmers can also be made aware of the product and its competitive advantages

through village meeting. Also we can seek the help of the village authorities like the

Panchayat , or the farmers welfare unit since they have a high influence on the farmers.

They can help in convincing the farmers about the product as well as the govt subsidies

available for this product and its cheaper rates.

Meeting with the target farmers

Meeting with the target farmers is very important to convince them and demonstrate

them about the product. Moreover it will be easy to understand their expectations and

their min set about the product. It is also necessary to remove the confusions and wrong

notions of the farmers about the product. It will also help in making them aware about

the financial assistance available for this product.

Post-Execution Marketing Strategy


Mass campaigning

Publicity:

Product publicity can be made through various ways like wall posters, banners, free

samples etc. Colourful posters usually attract the village folk and make them curious

So it will be easy to attract the attention of the farmers. Various tools that can be used

for publicity are as follows:

1. Literature Distribution

2. Wall Painting

3. Shop Painting

4. Farming Equipment Painting

5. Press news Coverage

6. Print Media

7. Local Radio

Mega Farmer Meeting

Product Display: The product will be physically displayed to the farmers to give them a

clear idea about the features of the product and its usability

Demonstration: This is very important since most farmers are used to the chemical

fertilizers and are not aware of hoe to use the organic fertilizers. Demonstration of the

product will help them in using the product in their fields.

1. Result Demonstration

2. Crop Specific Demonstration

3. Result group demonstration

7. HUMAN RESOURCES PLAN


Organization and Employee Structure

1. Finance Department : Financial Manger, Head Accountant, Assistant Accountant2. Marketing Department : Marketing Manager,

Sales, Promotion and distribution team of 8 members Two drivers for driving the carrier van

3. Operations Department : Two supervisors for the Vermicomposting plant One supervisor for the packaging plant Eight field and packaging labour

4. Human Resources Department : One recruiting officer

Human resource Policies

Employee Motivation: Bonus for outstanding performance

Organisation Culture: Transparency within organization, Unity of Command

Health and Safety: Health check up, Medical Facility

Employee retention policy: Promotion policy, Career development policy

Corporate Social Responsibility

Health Conciousness

Ecofriendly System

Free soil testing and water testing for friends

8. FINANCIAL PLAN Department of Management Sciences, PUMBA 33

GENERAL MANAGER(Administrative Head)

FINANCIAL MANAGER

MARKETING MANAGER

OPERATIONS MANAGER

HUMAN RESOURCE MANAGER

1. Cost of Project (in Rupees)

Investment in Fixed assets Amount (Rs)

Land and Building 800000

Machinery 3000

IT equipment 19000

Earthworm 80,000

Miscellaneous assets 20000

Contingency (10%) 20,300

Investment in Working Capital 2,49,627

Investment in Preliminary expenses 50000

TOTAl Expenses 12,41,927

2. Means of Finance

Particulars Amount(Rs)

Loan

Long Term Loan 7,40,000

Equity Capital 11,10,000

Total 18,50,000

3. Financial Cost

S.No. Particulars 1st Year 2nd Year 3rd Year

1 Interst on Term Loan 0 55500 44400

TOTAL 99900

Note: Loan is taken from NABARD @ the rate of 7.5% for Organic farming

4. Loan Repayment Schedule:

Year Amount Interest@ Installment Paid Balance


7.5% p.a.1st year OPENING 740,000 0 740,000

CLOSING 740000

2nd Year OPENING 740,000 55500 148,000 592,000

CLOSING 592000

3rd Year OPENING 592000 44400 148,000 444,000

CLOSING 444,000

5. Cost of Capital

Particulars Amount

Interst Rate of Debt 7.5%

Interst rate of Equity dividend 16%

Income tax rate 30%

Amount of Debt 7,40,000

Amount of Euity 111,0000

Cost of Capital 11.7%

6. Projected Sales Revenue

Products sold: A. Vermicompost B. By-product: Live earthworms

10%

% Increase in S.P 10%wt. /bag 50 Kg

Selling Price Vermicomppost

113 Rs./bag

Earthworms 400 Rs/kg

1st year 2nd 3rd

Rs./Unit(kg)

Units Rs. Rs./Unit

Units Rs. Rs./Unit

Units Rs.

Sales Projection

(Units)

Vermicompost

3 1000000

3000000

3.3 1100000 3630000

3.63 1210000

4392300

Earthworms 400 1200 480000 440 1200 528000 484 1201 581284

7. Cost of Raw Material


1st Batch: 6667 bags of vermicompost of 50 kgs each

2nd batch: Purchase Earthwrorms is not required from the start of the second batch as

there will be around 600 kgs of freshly reporoduced earthworms. This will lead to cut

down of the costs as follows:

1st batch cost of raw materials/bag of 50 kg= Rs.51.5

From second batch onwards the cost of raw materials will decrease since purchase of

earthworms will no more be required

Therefore only in the first batch purchase of earthworms are require

% increase= average rate of inflation in food industry= 10%

Therefore growth in prices = 10%

1st Batch 6667 bags 1000000 Kgs1st year 2nd year 3rd year

Qty / Batch Qty / Packet

Rs./Kg. Rs./Packet

Cow Dung 40000 kg 10 1 10.00Garbage 160000 kg 40 0 0.00

Agroculture 10000 kg 0.5 75 37.50Earthworms 200 kg 0.01 400 4.00

Total 51.50 2976816 2370000 2607000

7. Working Capital Requirement Statement

1ST Year 2nd Year 3rd Yea

1) WORKING CAPITAL REQUIREMENT

Amount (Rs)

Holding

Period (Days)

Total Cost

Amount (Rs)

Holding Period (Days)

Total Cost

Amount (Rs)

Holding Period (Days)

Total Cost

(i) RM 9923 10 99227 7596 120 911538 8356 10 83558

(ii) WIP 0 0 0 0 0 0 0 0

(iii) FG 0 0 0 0 0 0 0 0

(iv) Less: Creditors 9923 15 148841 7596 15 113942 8356 15 125337

(iv) Debtor 11438 30 343142 9567 30 287006 10524 30 315707

(V) Working Capital Requirement

293528 1084602 273928

8. Depreciation on Fixed Assets (WDV Method)

1st 2nd 3rd


Fixed assets

Depreciation Rate

Gross Block

Depreciation

Net Block (WDV)

Gross Block

Depreciation

Net Block (WDV)

Gross Block

Depreciation

Net Block (WDV)

Land and Building

10% 500000

50000 450000

450000

45000 405000

405000

40500 364500

Plant& Machinery

10% 3000 300 2700 2700 270 2430 2430 243 2187

Tractor 10% 250000

25000 225000

225000

22500 202500

202500

20250 182250

Computer 10% 16500 1650 14850 14850 1485 13365 13365 1337 12029

Furniture 10% 8000 800 7200 7200 720 6480 6480 648 5832

Laser Printer

10% 2500 250 2250 2250 225 2025 2025 203 1823

TOTAL 780000

78000 702000

702000

70200 631800

631800

63180 568620

10. Operating Expenses (SG & A)

% Sales % Growth

1st Year 2nd Year 3rd Year 4th Year 5th Year

Salary 960000 1056000 1161600 1277760 1405536

Electricity expenses 10% 36000 39600 43560 47916 52707.6

Telephone expenses 10% 7200 7920 8712 9583.2 10541.52

Printing and stationery 0.25% 8700 10395 12433.96 14886.57 17838.23

Fuel 10% 15000 16500 18150 19965 21961.5

TOTAL 1026900 1130415 1244456 1370111 1508585

11. Salary Statements

Persons

% Growth

1st Year 2nd Year 3rd Year

Salary/Month

Yearly Salary

Salary/Month

Yearly Salary

Salary/Month

Yearly Salary

MANAGERS 3 10% 20000 720000 22000 792000 24200 871200

ACCOUNTANT

1 10% 10000 120000 11000 132000 12100 145200

OFFICE BOY 1 10% 5000 60000 5500 66000 6050 72600

SALES PERSON

1 10% 5000 60000 5500 66000 6050 72600

Total 960000 1056000 1161600

Cost Sheet

Particulars Inner Outer


Raw Materials 2976816

Wages 250000

Prime cost 3226816

Factory Overheads

1)Water Supply charges 0

2)Electricity charges 15000

3)Packaging charges 69600

4) Factory Rent

Depreciation on Machinery 3000

Factory Costs 3314416

Add:

Addministrative Overhead

Salary 900000

Electricity expenses

Telephone esxpenses 7200

Printing and stationery 8700

Cost of Production 4230316

Add:

Selling and Distribution Overheads

1) Salesman 60000

2) Travelling 30000

90000

TOTAL COST 4320316

Profit 432032

TOTAL SALES 3480000

11. Projected Profitability Statement

Year 1 Year2 Year3


Sales 3480000 4158000 4973584

Raw Materials 2976816 2370000 2607000

1)Water Supply charges 0 0 0

2)Electricity charges 15000 16500 18150

3)Packaging charges 69600 76560 84216

4) Factory Rent 0 0 0

5) Labour charges 250000 275000 302500

8) Operator, Supervisor and Incharge 120000 132000 145200

Cost of production 3431416 2870060 3157066

Operating Profit 48585 1287940 1816518

Insurance

SG&A 1026900 1130415 1244456

Rent

Depreciation 78000 70200 63180

Cost of Sales 1104900 1200615 1307636

EBIT -1056316 87325 508882

Less Interest 0 0 55500

-1056316 87325 453382

Less Taxes 0 26198 136015

Net Profit -1056316 61128 317367

12. Capital Budgetting

a) Cash Flow Statement

Particulars Year 1 YEAR 2 Year 3

Net Profit (1056316) 61128 317367


ADD Non Cash Charges

Depreciation 78000 70200 63180

ADD Non Operating expenses

Interest Charges 0 0 55500

Changes in Working Capital (293528) (791074) 810674

Cash Flow from Operations (1271843) (659747) 1246722

Investment Activiites

Plant Property & Equipment (780000)

Vehicles 0

Cash Flow from Investment (780000) 0 0

Financing Activities

Debts Raised 740000 0 0

Interest charges 0 0 (55500)

Debt Repayement 0 0 (148000)

Share Holders Equity 1110000 0 0

Cash Flow From Financing Activities 1850000 0 (203500)

Total Cash flow for This year (201843) (659747) 1043222

Cash From Previous Year (201843) (861590)

Year end Cash Flow (201843) (861590) 181632

b) Net present Value and Pay-back period

NPV and PAY Back period

Cost of Capital 12%

Year 0 Year1 Year 2 Year 3 Year 4 Year 5


Cash inflows -1111327 -451500 131328 380547 759607 1353542

Discounting Factor 1 0.8928571 0.79719388 0.7117802 0.6355181 0.567426856

Present Value -1111326.667 -403125 104693.479 270866.14 482743.98 768036.336

13. Balance Sheet

Sources of Funds

Year 1 Year 2 Year 3Shareholders Funds Shareholders Equity 1110000 1110000 1110000 Resrves and Surplus 0 -995188 -677821 1110000 114812 432179Loan Funds Secured Loans 740000 740000 740000 Repayment of Loans 0 0 148000 Balance 740000 740000 592000TOTAL 1850000 854812 1024179 Application of Funds Fixed Assets Net Block 702000 631800 568620 702000 631800 568620Current Assets Cash -201843 -861590 181632 Trade Recievables 343142 287006 315707 Inventory 99227 911538 83558 240525 336954 580896Less Current Liablities Trade Payables 148841 113942 125337 148841 113942 125337Net Current Assets 91685 223012 455559 Profit & Loss Account 1056316 0 0TOTAL 1850000 854812 1024179

9. BIBLIOGRAPHY

Economics and Efficiency of Organic Farming vis-à-vis Conventional Farming in India

By D.Kumara Charyulu and Subho Biswas1

American-Eurasian Journal of Agricultural & Environmental Sciences

Special Issue on‘VERMICULTURE & SUSTAINABLE AGRICULTURE’

By Ravi Sinha


Production and marketing ofproduction and marketing of

vermicompost in karnataka: a case of dharwad district: Thesis submitted to theUniversity

of Agricultural Sciences, Dharwad

http://www.composting101.com/worms-cut-waste-article.html

http://www.compostsantacruzcounty.org/Home_Composting/Worm_Composting/

worm_feeding.htm

http://www.iobbnet.org/drupal/node/view/609

Wikipedia : http://en.wikipedia.org/wiki/Earthworm

http://ejournal.icrisat.org/agroecosystem/v2i1/v2i1vermi.pdf


http://en.wikipedia.org/wiki/Earthworm

http://www.composting101.com/worms-cut-waste-article.html

b plan bpsm

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