potato chips company
DESCRIPTION
Pre feasibility report of Potato chips manufacturing unit.The Islamia University of Bahawalpur, Pakistan.TRANSCRIPT
“ Our Lord!Condemn us not
If we forget or fallInto error; our Lord!
Lay not on us a burdenLike that which Thou
Didst lay on those before us;Our Lord! Lay not on usA burden greater than we
Have strength to bear.Blot out our sins,
And grant us forgiveness.Have mercy on us
Thou art our Protector;Help us against those
Who stand against Faith”
We must not be arrogant, and think that because Godhas granted us His favor and mercy we have no need
to exert ourselves, or that we are ourselvessuperior to those before us. On the contrary, knowing
how much they failed, we pray that burdens shouldbe lightened, and we confess our realization that
we have all the greater need forGod’s mercy and forgiveness.
(Surah-e-Bakarah 286)
Recommended Proverb
“Forget your own happiness by trying to createA little happiness for the others.
REMEMBER… When you are good to others,You are best to yourself”
DEDICATION
To our loving, caring and great
teachers and parents, whose
prayers have been a force
behind all our inspiration, and
whose guidance, motivation and
support has made us able to be
successful in all the fields of life.
PROJECT REPORT ON POTATO CHIPS MANUFACTURING UNIT
“Potato chips manufacturing unit”
SUBMITTED TO:
Mr. JAVAID IQBAL (chairman)
SUBMITTED BY:
ZEESHAN SAEED ROLL NO.17
ADEELA AKHLAQ ROLL NO.48
MADEHA NAZZ ROLL NO.33
MSC 3rd SEMESTER AFTERNOON
THE ISLAMIA UNIVERSITY OF BAHAWALPUR PAKISTAN
PREFACE
It is stated that the students of Department of Commerce presently in MSC 3rd has given a
project on “POTATO CHIPS MANUFACTHURING UNIT”. Department of
Commerce is being aware of the importance of practical training, requires every Msc
student to make a project Assignment. We have visit a local chips manufacturing unit in
Lahore City. We have tried our best to collect the knowledge and information. It has
broadened our knowledge and vision about the market. This Report is the Explanation of
all work done by project Team.
PROJECT TEAM BACKGROUND
ZEESHAN SAEED Project Manager
ADEELA AKHLAQ Survey Monitor
MADEHA NAZ Data analysts
AKNOWLEDGEMENT
Up and above everything, we are thankful to ALMIGHTY ALLAH, the most Beneficent
and merciful, and His Holy Prophet (Peace be upon him) Who is forever a true torch of
guidance for whole humanity. We are greatly obliged to “ALLAH” by Whom grace we
have been able to complete this Project Report successfully.
We want to pay our thanks to Honorable Mr. Javaid Iqbal for providing us a chance to
work in such a Profitable Industrial Project. We also pay our thanks to loving Parents for
being supported us financially and mentally to complete our work
EXECUTIVE SUMMARY
Project Assignment:
Each student of MSC 3rd semester required to prepare a sold
Project Assignment. The Project assignment is given to Increase our knowledge about
“Project Management”.
Objectives:
SWOT analysis of chips industry
Identifying the important points of chips industry
How chips manufacturing unit works
What is production process
What is cost of unit
Approach to Project:
The Team of project will, analyze, summarize, and interpret the data which is collected
different primary and secondary sources.
Data Collection:
Both primary and secondary means of data will be used to collect the Data. Like Books,
internet, personal visits, teacher guidance etc.
Market Analysis:Introduction To Chips Industry:
Demand & supply conditions……………………… Target customers………………………………….. SWOT Analysis of snacks industry……………….. Market Entry timing……………………………… Market information about Potatoes……………… Market information about Potato Chips………… Production Process……………………………….
“Potato Chips Manufacturing Unit”
PAKISTAN AND CHIPS INDUSTRY
Third world countries are very habitual to adopt the western culture therefore; Pakistan is
also in line with those countries. Big potential do exist for investment in this industry in
Pakistan as the Demand or growth rate is very high. Annual Growth Rate of snacks
industry is estimated at the rate of 20% to 30% per annum.
Children, teenagers and young people are the target market of the product and we have
the experience that the eating habits of the target market is rapidly changing and they like
to have snacks all the time. Future Potato and corn snacks are labeled as a meal
replacement and being a light fast food is becoming popular.
Another plus point for the investment in this industry is that the life style is improving
and going to be changed and also because of satellite invasion the demand is bound to
register a considerable boost.
DEMAND & SUPPLAY:
According to the industry findings carried out the market mix in respect of the potato
chips is as follows:
Market Mix:Age Group (Years) Market Mix5 – 10 30 %11 – 20 35 %21 – 35 20 %36 – above 15 %
The demand of the present market is met by the mix of Branded and Unbranded Chips
available in the Market. There is 60% of the population which is Brand Loyal. However
remaining 40% of the Un-branded Market can be attracted through heavy Advertisement
Campaign. The analysis is as follows:
Growth in Snacks Industry:
Supplier MarketBranded 60 %Unbranded 40 %
Leading Exporting Countries of Potato Chips in the World:
Export prospects for the next decade are very promising given the sustained and
continued expansion of the Fast Food Industry abroad. Further Tariff cuts under Trade
Agreements are anticipated. Low per Capita consumption of Fries in the overseas market
is a strong indication of future demand.
United States of America is a major exporting country of the Potato Chips in the World.
Supply Quantity Analysis:
Presently, Triple Em which produces major share that is about 58.33 % and is a market
leader. Good potential exists for a new brand to compete and fetch a market share
provided that:
Having good quality of product Unique Packing A market Network Industry Understanding Financial Soundness Feed back of Information preferring the taste of the Market
Target Customers:
Children, teenagers and young people are the target market of the Potato Chips Line.
Home, rather than school, is the most popular destination for eating crisps and savory
snacks, with seven in ten children (70%) consuming them at home, against around half
(48%) who eat such snacks at school, After school, when children tend to choose their
own snacks, 70% select crisps and savory snacks compared to lunchboxes, which
mothers generally pack, where the most popular item is a savory sandwich or roll. Some
44% of consumers prefer to buy children’s snacks in multitasks while nearly half of all
consumers say they are price motivated in their snack purchasing.
SWOT Analysis:
Before making the decision, whether to invest in the Potato Chips Manufacturing or not,
one should carefully analyze the associated risk factors. A SWOT analysis can help in
analyzing these factors, which can play important role in making the decision.
Strengths:
Continuous availability of Raw Material in the form of Fresh Potatoes.
Totally automated plant and hence require the involvement of less local labor.
Availability of Cheaper Labor.
Tariff cuts under Trade Agreements are anticipated which may result in
Increase in the Export Market of the Potato Chips.
The life style of the people is improving and going to be changed and also
because of satellite invasion the demand is bound to register a considerable boost.
Attractive brand name
Depth in product range
Distribution channel is strong all over the Pakistan
Good quality product
Freshness
Direct supply to retailers
Latest automatic plant
Availability
Differentiated features (like nitrogen gas in packing)
Weaknesses:
Strict controls over the Labor efficiency need to be observed to reduce the
Waste Production at the minimum level.
Expected loss at the initial stages of the operation as a result of Sales return from
the distributors.
In -experienced Technical Staff as compared to the Units currently in Operation.
Low trade margin
Strict discount policies
No prize scheme for available for retailers and distributors
Opportunities:
Changes in the current eating habits of the People.
About 40% of the Potato Chips Market comprises un-branded chips which can be
attracted through Heavy marketing Campaign.
Attraction amongst the Younger consumers to products identified with
Western Lifestyles and Tastes and general trend towards more Snacking.
A large number of people which are not Brand Loyal can be attracted through
heavy Marketing Campaign.
Low per Capita consumption of Fries in overseas market is a strong indication of
future demand.
New horizons are opening for the company
Attractive market size
Can export their product
Diversification into related product line.
Threats:
Monopoly of Multinationals currently in the business of Potato Chips
Manufacturing.
Imbalanced Prices of Potatoes due to lack of adequate Storage Facilities as a
result of which large Production is wasted.
Quality of the Potato Chips need to be considered very closely as the people
are more directed towards Health and Safety issues.
Low saving and low holding capacity of General Public as a result of which there
is increasing level of poverty.
High Promotional activity by the Competitors and increased competition.
Chances of price cut from the existing players of the Potato Chips
Manufacturers to keep the new product out of market
Market Entry Timing:
Various Products and Services have high dependence on their commercialization timing
and delivery to the Customers but the Chips Manufacturing Unit can be started at any
time during the year due to the availability of Raw Material (Fresh Potatoes) throughout
the year.
Proposed Business Legal Status:
The said project can be a proprietorship or a partnership and even it can be registered
under the Companies Ordinance, 1984 with the Securities & Exchange Commission of
Pakistan. The selection totally depends upon the choice of the Entrepreneur. we selected
the proprietorship.
Market Information About Potato:
Pakistan is a large Potato producing Country yet it has very limited and adequate Storage
and Processing facilities. Due to the lack of adequate Storage facilities a substantial
proportion of Production is wasted. The combination of inadequate Storage facilities and
an under-developed Processing Industry leads to volatility in prices as not all excess
production can be Stored or Processed for consumption during the Off season. The
following Analysis will illustrate the current state of the Potato production in Pakistan
along with the potential that exists in both Farming and Processing of Potatoes.
Pakistan Potato Production :
Potato is grown in Pakistan on about 111,000 Hectares distributed over eight different
Agro-ecological Zones. About 70 - 80% of the production is concentrated in the Irrigated
Plains of the Central Punjab and Southeast North West Frontier Province (NWFP). There
are three seasons of Potato cultivation, Autumn, Spring and Summer.
20% of above Production Quantity is wasted against Post Harvest Loses primarily due to
improper handling and lack of proper Cold Storage facilities. Potatoes are improperly
stored at Temperatures negative 3-4 Celsius mainly for seed storage purpose. These
temperatures are maintained only to avoid sprouting since no humidity levels are
administered, which is a vital factor for proper storage of Potatoes for Table
Consumption and Processing. About 5% of Total Potato Production is being exported.
About 18% of the Production is stored for Potato Seeds.
Pakistan produces three Potato Crops per year. The major produce of the Potato Crop is
harvested in the autumn season.
Crop Seasons:
Potato Corp Season Sowing – Month Harvesting - MonthAutumn Crop October JanuarySummer Crop January May – JuneSpring Crop April – May August – September
Major Varieties And Characteristics Of Potato Grown In Pakistan:
Variety Shape Color Of Flesh Cooking Type Utilization Common Scab
Diamante Oval Light Yellow Mealy Firm + French Fries Just Resistible
Cardinal Oval Light Yellow Mealy Firm + French Fries Quite ResistibleDesiree Long Oval Light Yellow Mealy Firm + French Fries Just Resistible
Potato Whole - Sale Price Trends :
In the absence of adequate Storage facilities, at the time of harvest, there is a huge supply
of potatoes, which drives prices down. If Storage facilities are available price volatility
could be stabilized through consistent supply year around. The following Graph shows
prices begin to fall as Harvesting begins, which is January and continue to fall to the
lowest level until April after which they begin to rise again.
Market Information About Potato Chips:
Chips Manufacturing Plants Currently in Operation:
Following are the major and leading Producers of Potato Chips (Crisps) in Pakistan. The
Crisps are being produced by direct Potato Cuts/slices and also by Extrusion Process.
However, there is not a single Frozen French-Fries Producing Company / facility in
Pakistan.
COMPANY NAME BRAND NAMEStandard Foods (Pvt.) Limited Golden ChipsTripple EM (Pvt.) Limited Super CrispsKohinoor Smith (Pvt.) Limited SmithsConsolidate KolsonTrading Enterprises Krincles
Sector Characteristics:
Potato and Other Corn Products are considered a part of Snack Food Industry. Although,
the concept of snacks particularly packed Snacks Meals is not old in Pakistan. Infact
these products consumption is a result of adoption to Western Culture and eating habits.
A research made in U.K and published by DATA MONITOR is an example of the
growth in the Snack Food Industry. The figures in this survey stood at £ 816.7 million in
1996 compared to £ 481.2 Millions in 1995 with break up as follows:
Description £ (Millions)Chips 618.50Snacks 148.20Pop Corns 50.00Total 816.70
Market Research, Trend & Analysis:
Sales of crisps and snacks increased by 10.1% between 2000 and 2003 to peak at £2,386
million. A decline of 3.5% in 2004, however, took retail sales to £2,303 million. The key
factor currently impacting on the Crisps and Savory Snacks market is public
consideration towards health issues. The Crisps sector accounts for just over 56% of total
Crisps and Savory Snack Sales. Within the Crisps sector, sales of added value/premium
Crisps saw their share of sales increase from 20% in 2000 to 26% in 2004.4 In addition to
the local Market, Gulf and Central Asia are yet to be explored. It is estimated that 2,500
Tons of Chips can be exported to these countries if proper efforts are being made.
Technical AnalysisProduction Process:
PRODUCTION PROCESS:
The production process goes through the following steps:-
Washing & Shelling Machine - suitable for washing of Fresh Potatoes
Peeling Machine - suitable for peeling of Potatoes
Slicing Machine - suitable for slicing Potatoes into Chips
Chips Washing Machine - suitable for washing and rinsing of Potato Chips in hot
water for excessive starch removal before frying.
INITIAL STAGE OF PROCESS
STOREPOTATOOO
WASHER PEELER SLICING
STEAM WASHING
FRYING
FLAVORINGPACKING
PRODUCTION PLANT
FINAL STAGE BEFOR PACKING
PACKING
INDRODUCTION OF PRODUCT
MY CHOICE POTATO CHIPIS
TYPES OF PRODUCT
LUXURY
Level And Type Of Competition:
Their competition strategies are based on the competitor’s strategies. They don’t follow
the price war competitive strategy. They follow the standard of product and quality in
competition. Their competition type is oligopoly.
Competitors:
One can’t imagine about a business without competition. My choice potato chips Pvt
limited has also some competitor’s major threats to My choice potato chips are Lays,
Pringles, Kalson and Supper chips which has almost 45% of the market share. But as
quality of the product play an important role that is not up to the standard by the
competitors. So My choice is outstanding in all ways to the competitors like quality,
quality and price of the product and etc.
Competitors Product And Activates:
Following competitor’s product is being sold in the market but their product availability
is not that good. The only reason for their presence is the credit facility and margins
Lays Nirrala Smith Bunny Sadiq dry fruits Sherry Pace Golden Pak food Supper chips
Competitors:
Triple EM 45% Lays 15% Kalson 15% Golden 8% Smith 5% Others 12%
INDRODUCTION OF PRODUCT
MY CHOICE POTATO CHIPIS
TYPES OF PRODUCT
LUXURY
A-SWOT AnalysisB-Company profile
1-Name…………………………………………… 2-Mission statement………………………………. 3-Scope of company……………………………….. 4-Vision of company……………………………… 5-Head office……………………………………… 6-Branches……………………………………….. 7-Location……………………………………….. 8-Contact………………………………………… 9-Site…………………………………………….. 10-Product………………………………………. 11-Board of directors…………………………… 12-Banks………………………………………. 13- Certificates………………………………… 14-Estimated Statements……………………..
Cost and means of finance Assumptions of project Income statement Profit & loss Account Financial Analysis Balance sheet
A-SWOT ANALYSIS
Strengths:
Highly Technical Process of Production.
Company is equipped with the New Technology.
Economics of Scale.
Registered as private. Company.
Good Quality Products.
Skilled Labour
Good Management
Weaknesses:
Company never compromise on the Quality aspects.
Company has a fixed rate to sell product.
Strict controls over the Labor efficiency need to be observed to reduce the Waste Production at the minimum level.
Expected loss at the initial stages of the operation as a result of Sales return from the distributors.
Opportunities :
Changes in the current eating habits of the People.
Attraction amongst the Younger consumers to products identified withWestern Lifestyles and Tastes and general trend towards more Snacking
Low per Capita consumption of Fries in overseas market is a strong indication of future demand.
Threats:
o The political Conditions
o Monopoly of Multinationals currently in the business of Potato Chips manufacturing.
o Imbalanced Prices of Potatoes due to lack of adequate Storage Facilities as a result of which large production is wasted.
o Chances of price cut from the existing players of the Potato Chipso Manufacturers to keep the new product out of market.
B- COMPANY PROFILE
Mission Statement:
“To be the best chips manufacture in the chips industry and all over the world”
Scope of company:
“To deals in a number of flavored snacks”
Vision of company:
“Best quality producer and exporter all over the world”
Head office:
“P.O. BOX. 1245 Small-Industries Bahawalpur”
Branches:
Rahim yar khan “ P.O.Box. 845 Defense Road Rahim yar khan”
Location:
“Bahawalpur Pakistan”
Site
“Small Industries”
Products:
Salted Snacks
Sweet chilli snacks
Lemon Flavored Snacks
Chilly Flavored Snacks
Board of directors:
Zeeshan Saeed(chair person)
Adeela Akhlaq
Madeha Nazz
Banks:
HBL
MCB
Certificate:
Multan chamber of commerce Small- Industries Bahawalpur
PROMOTION AND ADVERTISMENT
My choice potato chips almost use all the Medias for advertisement and promotions of
their consumer products. The main advertising and promotional Medias used by the
packages are as under:
Television (GEO and ARY Digital) Cable (World call and NBC) Urdu newspapers (Daily jung, Nawa-e-waqat, Kabrain) English newspapers (Daily Dawn, The News)
Govt Regulation:
Different kinds of taxes are imposed by the Govt on different things. These taxes effect
the pricing of these goods and services. Supper chips being a product has to pay 15% a
Govt sales tax which is taken directly to the customers. These taxes are include in the
price of the product and different promotional offers of supper crisps. Other than this is a
deduction of 35% of net income is made as a tax deduction on income of the company
Problems:
Food industry faces problems at pre-establishment and post-production stage. Investment
climate, political changes, market, labor, documentation and guidance problems do not
attract potential investors. Sanctioning of project, fuel, water, electricity, raw material,
credit facilities, imports of machinery, low capacity utilization, export restrictions,
production cost, defective market systems, transport and Govt policies are major
problems after productions
Personal Analysis:
Requirement Of Staff:
axbx12
Factory staff(including managerial, Technical, Skilled and Un- Skilled)Type Of Staff Nos Per Month Per yearPlant Manager 1 30000 360000Supervisor 3 14000 504000Shift in charge 3 10000 360000Machine operator 3 8000 288000Security guard 2 5000 120000Driver 2 5000 120000Sweeper 1 3000 36000Total 1788000Add fringe benefit 50% 894000
Total Salary of Factory Staff 2682000
Yearly Increased by 10%1st 2nd 3rd
2682000 2950200 3245220
Administrative and General Staff: axbx12Type Of Staff Nos Per Month Per yearChief Accountant 1 25000 300000Assistant Accountant 1 10000 120000Office Boy 2 5000 120000Receptionist 2 6000 144000
Total 684000Add fringe benefits 50% 342000Total salary of admin and general staff 1026000
Yearly Increased by 10%1st 2nd 3rd
1026000 1128600 1241460
Sales Staff: axbx12Type Of Staff Nos Per Month Per yearSales representative 3 8000 288000Helper 3 5000 180000
Total 468000Add fringe benefits 50% 234000
Total sales staff 702000
Yearly Increase by 10%1st 2nd 3rd
702000 772200 849420
Financial Analysis:
Cost of the Project: Local Foreign Total Rs Rs Rs
Land and its Development 2255000 2255000Building and Civil Work 4934000 4934000Machinery and Equipment 15500000 15500000Engineering and Technical fee 50000 50000Furniture and Fixture 166000 166000Vehicles 11600000 11600000Preproduction Expense 1925000 1925000Office Equipment 61000 61000Contingencies 600000 600000Others 400000 400000
Interest During Construction 7540000 7540000Total Fixed Cost 45031000 45031000Initial Working Capital 19969000 19969000
Total Cost of the Project 65000000 65000000
Net fixed Assets 43106000
Means Of Finance TotalDebt 60% 39000000Bank Name ( Habib Bank Limited)Total Debt
Equity 40% 26000000
Total Equity and Debt 65000000
Land and its DevelopmentCost of LandSize Acre Cost per acre TotalLand 1 1500000 1500000Cost of Registration 5% 75000Cost of Transfer 3% 45000Boundary Wall and Main Gate 560000Legal Charges 70000Brokerage Fee 5000
Total 2255000
Building and Civil Works
Factory Building Area Sq ft Rate per Sq ft CostPlant Hall 3520 200 704000Packing room 1200 200 240000Store Room 500 200 100000Changing Room 1100 200 220000Office 150 200 30000Meeting Room 200 200 40000Total 1334000Air Conditioning and Electricity 3000000Furnishing and Water Supply 600000
Total 3600000
Total 4934000
Machinery and EquipmentItem Cost Total Cost
Washing & Shelling Machine 3 2500000 7500000Peeling Machine 2 500000 1000000Slicing Machine 5 1000000 5000000Chips Washing Machine 10 150000 1500000Boiler 1 500000 500000
Total 15500000
Furniture and FixtureQty Cost/Qty Total
Executive Table and chair 1 30000 30000Visitors and Employees Chair 50 2000 100000File Cabinet 3 3000 9000Steel Safe 3 5000 15000Office Table 3 4000 12000
Total 166000
Office EquipmentItem Cost/ item Total
Office Computer 3 10000 30000Office Printer 2 5000 10000Computer table and Chair 3 5000 15000Office table and Telephone 2 3000 6000
Total 61000
Estimated Initial Networking CapitalCurrent Asset: RsCash 7000000Account Receivable 4069000Locally raw material (1 month) 5000000Advances and deposits 5000000
Total 21069000Current Liabilities: RsAccount payable 600000Short term Loan 500000Total 1100000
Initial Net working Capital 19969000
Pre Production Expenses: RsProject examination fee 150000Legal documentation fee 120000
Commitment Charges 300000Traveling Expenses 5000Wapda 200000Gass 1000000Office fuel and telephone 150000
Total Pre production expenses 1925000
Vehicles Item Cost/ item TotalCar 3 500000 1500000Van 2 800000 1600000Truck 1 5000000 5000000Buss 1 3500000 3500000
Total 11600000
Assumptions Underlying Financial Statement:
Income StatementSales 336375000 399625000 428375000Cost of Goods sold:Raw Material 138739500 149681000 149781000Labour 2682000 2950200 3245220Manufacturing Expenses 1416000 1486800 1561140Depreciation 2987700 2987700 2987700Cost of Goods sold: 145825200 157105700 157575060Gross Profit 190549800 242519300 270799940Operating Expenses:General and Admin expenses 1026000 1128600 1241460Selling expenses 702000 772200 849420Total Operating expenses 1728000 1900800 2090880Operating Profit 188821800 240618500 268709060Non Operating Expenses
Financial expenses 1,675,917
5,731,267
4,372,117
Amortization of production expenses 385000 385000 385000
Workers welfare fund 2% 3776436 4812370 5,374,181
Total operating Expenses 5,837,353
10,928,637
10,131,298
Profit before Tax
182,984,447 229,689,863 258,577,762
less tax 40% 73,193,779
91,875,945
103,431,105
Net Profit after tax
109,790,668
137,813,918
155,146,657
Ratios: % % %Gross Profit Margin: 57 61 63 Net Profit Margin: 33 34 36
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Factory staff(including managerial, Technical, Skilled and Un- Skilled)
Type Of Staff NosPer Month Per year
Plant Manager 1 30000 360000Supervisor 3 14000 504000Shift in charge 3 10000 360000Machine operator 3 8000 288000Security guard 2 5000 120000Driver 2 5000 120000Sweeper 1 3000 36000Total 1788000Add fringe benefit 50% 894000
Total Salary of Factory Staff 2682000
Yearly Increased by 10%1st 2nd 3rd
2682000 2950200 3245220
Administrative and General Staff: axbx12
Type Of Staff NosPer Month Per year
Chief Accountant 1 25000 300000Assistant Accountant 1 10000 120000Office Boy 2 5000 120000
Receptionist 2 6000 144000
Total 684000Add fringe benefits 50% 342000Total salary of admin and general staff 1026000
Yearly Increased by 10%1st 2nd 3rd
1026000 1128600 1241460
Sales Staff: axbx12
Type Of Staff NosPer Month Per year
Sales representative 3 8000 288000Helper 3 5000 180000
Total 468000Add fringe benefits 50% 234000
Total sales staff 702000
Yearly Increase by 10%1st 2nd 3rd
702000 772200 849420
Depreciation Expenses:1st 2nd 3rd
Building 4934000 5% 246700 246700 246700Machinery 15500000 10% 1550000 1550000 1550000Vehicle 11600000 10% 1160000 1160000 1160000Furniture 166000 15% 24900 24900 24900Office Equipment 61000 10% 6100 6100 6100
Total 2987700 2987700 2987700
Manufacturing Expenses:65% 70% 75%
Electricity 400000 420000 441000Generator 500000 525000 551250Maintance Expenses 300000 315000 330750Carriage in 8000 96000 100800 105840Carriage out 10000 120000 126000 132300
Total 1416000 1486800 1561140
Pre Production expenses Amortization
1st 2nd 3rd
20% 385000 385000 385000
Sales:
Salted snakes 2750000Salt free Snakes 4000000
Salted snakes 65% 70% 75%Production of salted snakes 1787500 1925000 2062500Add beginning 0 178750 192500Available for sale 1787500 2103750 2255000Less ending 10% 178750 192500 206250Sales 1608750 1911250 2048750
Salt free snakes 65% 70% 75%Production of salt free snakes 2600000 2800000 3000000Add beginning 0 260000 280000Available for sale 2600000 3060000 3280000Less ending 10% 260000 280000 300000Sales 2340000 2780000 2980000
Sales Revenue:Export of salted snakes 80 128700000 152900000 163900000Export of salt free snakes 60 140400000 166800000 178800000Export rebate 25% 67275000 79925000 85675000
Total Sales 336375000 399625000 428375000
Cost OF Production:Potatoes 2438000Frying oils 1695000
65% 70% 75%Potatoes 1584700 1706600 1828500Frying oils 1101750 1186500 1271250
Total 2686450 2893100 3099750
Cost Of Raw Material:Potatoes per kg 10 15847000 17066000 18285000Frying oil per liter 110 121192500 130515000 139837500Artificial flavors 400000 500000 600000Food colors 300000 400000 500000Preserving chemicals 500000 600000 700000Packing Material 500000 600000 700000
Total 138739500 149681000 149781000
Financial Charges:Name of Bank The Bank Of Punjab
Amount of loan 39,000,000
Rate Of Interest 17% per AnnualPeriod Of Loan 5 Years 360Repayment of Interest Quarterly InstallmentRepayment of Installment Half YearlyDate of Disbursement of Loan 3/31/2010Completion of the Project 31/12/2010Date of Commercial Production 31/3/2011Date of Repayment of principle 30/6/2011 6 Installment No of Principle Amount Total OutstandingDue Dates Days Installment of Interest Installment Principle
3/31/2010 0 0 0 39,000,000
6/30/2010 9
1 0 1,675,917
1,675,917
39,000,000
9/30/2010 92 0
1,694,333
1,694,333
39,000,000
12/31/2010 92 0
1,694,333
1,694,333
39,000,000
3/31/2011 90 0
1,657,500
1,657,500
39,000,000
6/30/2011 3,900,00
91 0 1,675,917 5,575,917 35,100,000
9/30/2011 92
1,524,900
1,524,900
35,100,000
12/31/2011 92
3,900,000
1,524,900
5,424,900
31,200,000
3/31/2012 91
1,340,733
1,340,733
31,200,000
6/30/2012 91
3,900,000
1,340,733
5,240,733
27,300,000
9/30/2012 92
1,186,033
1,186,033
27,300,000
12/31/2012 92
3,900,000
1,186,033
5,086,033
23,400,000
3/31/2013 90
994,500
994,500
23,400,000
6/30/2013 91
3,900,000
1,005,550
4,905,550
19,500,000
9/30/2013 92
847,167
847,167
19,500,000
12/31/2013 92
3,900,000
847,167
4,747,167
15,600,000
3/31/2014 90
663,000
663,000
15,600,000
6/30/2014 91
3,900,000
670,367
4,570,367
11,700,000
9/30/2014 92
508,300
508,300
11,700,000
12/31/2014 92
3,900,000
508,300
4,408,300
7,800,000
3/31/2015 90
331,500
331,500
7,800,000
6/30/2015 91
3,900,000
335,183
4,235,183
3,900,000
9/30/2015 92
169,433
169,433
3,900,000
12/31/2015 92
3,900,000
169,433
4,069,433 -
Total 39000000 23,551,233
62,551,233
Interest during Construction
from 3/31/2010 to 3/31/2011 6,722,083
2011 2012 2013 2014 2015
Interest
1,675,917
5,731,267
4,372,117
3,027,700
1,683,283
Installments
3,900,000
7,800,000
7,800,000
7,800,000
7,800,000
Balance Sheet:Cons Year 1st 2nd 3rd
Owner Equity and Liability:Capital and Reserves:Capital 26000000 26000000 26000000 26000000
Retained Earning 0 43,916,267
99,041,835
161,100,497
Sub total 26000000 69,916,267
125,041,835
187,100,497
Long term Liabilities:
Habib Bank limited loan 39000000 31,200,000
23,400,000
15,600,000
Sub total 39000000 31,200,000
23,400,000
15,600,000
Current liabilities:
current maturity of l term Loan 3,900,000
3,900,000
3,900,000
Account payablesWorkers welfare fund 0Acuured expenses 0Tax payables 0 0 0 0
Sub total 0 3,900,000
3,900,000
3,900,000
Total Equity and Liability: 65000000 105,016,267
152,341,835
206,600,497
Assets:
Fixed Assets:Fixed Assets 43106000 43106000 40118300 37130600Less Accumulated Depreciation 0 2987700 2987700 2987700Net fixed assets 43106000 40118300 37130600 34142900Pre-Production expense 1925000 1925000 1540000 1155000Less Amortized 0 385000 385000 385000Net pre-production expense 1925000 1540000 1155000 770000Sub total 45031000 41658300 38285600 34912900Current Assets:Debtors 0Stores and Spares 0Advance deposits 0Short term investment 0
Cash and bank balance 19969000 63,357,967
114,056,235
171,687,597
Sub total 19969000 63,357,967
114,056,235
171,687,597
Total Assets 65000000 105,016,267
152,341,835
206,600,497
Ratios:Current Ratio: 16.2 29.2 44.0
Cash Flow:Cons Year 1st 2nd 3rd
Sources
Operating Profit 0 182,984,447
229,689,863
258,577,762
Add:Dep. & Amort. 0 3372700 3372700 3372700
Equity 26,000,000
Other Sources
Long Term Loans 39,000,000
Total 65,000,000
186,357,147
233,062,563 261950462.1
Uses
Fixed Asset 43,106,000
Pre-Production Exp. 1,925,000
Long Term Loans 0 3,900,000
7,800,000
7,800,000
Re-Payment of:.Financial Exp. 0
Tax Paid 0 73,193,779
91,875,945
103,431,105
Profit Distribute 65,874,401
82,688,351
93,087,994
Inc/(dec) in Current asset 0
Total 45,031,000
142,968,180
182,364,296
204,319,099
Net Cash Inflow/(Outflow) 19,969,000
43,388,967
50,698,267
57,631,363
Balance Opening 0 19,969,000
63,357,967
114,056,235
Balance Closing
19,969,000
63,357,967
114,056,235
171,687,597
Conclusion
Current RatioThe current ratio for chips manufacturing is 1.51 the end of the year 1st and 1.79 at the end of the 2nd year and 1.82 at the end of 3rd year. It is increasing and shows the strength of the company. Current ratio determines the short term debt paying ability of the company..
Net profit MarginThe net profit margin for chips manufacturing is 32.63% at the end of the year 1st and it was 34.48% in the 2nd year and in the 3rd year it is 36.22%. Net profit margin improves substaintly. This ratio measure of net income in rupee generated by each rupee of sales.
Gross profit It is the cost of product sold during the period. The gross profit margin for chips manufacturing is 56.64 at the end of 1st year 60.68 for 2nd year 63.22 3rd years. It improves over three year period so it is better indicator. It is also used in cost control.
Operating profit56.13 in 1st year, 60.21 in 2nd year,62.72 in 3rd year it shows significant increase during three year period. It is better for company.
Debt to equity The bebt to equity ratio is 20.73% in the 1st year it is12.97% in the 2nd year and 7.93% in the 3rd year. It shows the creditor is protected in case of insolvency.
Conclusion And Recommendation
We conclude on the basis of field work and survey of chips manufacturing unit that the demand of chips increase day by day and it is profit motive business. We can earn money by very low investment. We would like to suggest that investor invest in chips manufacturing unit that contribute in growing economy of the country.