feasibility report on peanut processing

Pea-hut Private Limited

S.K.SCHOOL OF BUSINESS MANAGEMENT, PATAN

A

FEASIBILITY REPORT

ON

NEW BUSINESS DEVELOPMENT OF PEANUT PROCESSING

AT GOGAPURA IN BHILADI

SUBMITTED TO:

Mr. Shakti Dodiya

S.K.School of Business Management,

Hemchandracharya North Gujarat University, Patan

In Partial Fulfillment of Entrepreneurship and Innovation Management under Subject for

Requirement of Degree of

MASTER OF BUSINESS ADMINISTRATION

Submitted By:

Bhalabhai V. Bukoliya

(Roll No. 02)

MBA-IV

Academic Year 2014-15



PREFACE

Management education seeks to accomplish several objectives simultaneously. One is to develop

a set of concepts so that students can understand the framework in which business decisions are

made. The second is to operational those concept with specific tool of analysis.

In my opinion management education may be divided in to two broad categories, Theory and

practical. The more emphasis should be on practical portion of management. Management theory

is same everywhere, but not practice, what makes organizations different from each other course,

the way of practicing management concepts.

For the successful completion of the MBA programme, the students are required to complete the

Project. In the 4th semester of the programme, under the subject entrepreneurship and innovation

management one project carried for knowledge of practical implication of all the theory we have

study in the classroom. Under the project of new business development, it gives lot of idea for

establish new enterprise and how money pump-in and how all activity handled.

I got golden chance at shri s.k. school of business management under subject of entrepreneurship

and innovation management in my MBA programme. I have gone through new business

development for new peanut processing plant. It gives me lot of knowledge for applied a all

aspects of business like marketing analysis, technical analysis, financial analysis so on. I have

tried to best of my level for completing this project.



ACKNOWLEDGEMENT

I would like to sincere thanks to the S.K.School of Business Management, Patan, affiliated to the

HNGU University for giving us the opportunity to increase our practical knowledge in our

interest of management area.

I also would like to grateful thanks to Prof. Shakti Dodiya for motivated us to undertake this

project. He spent valuable time for suggesting and helped in modification during the project

work. I am thankful for her aspiring guidance, invaluably constructive criticism and friendly

advice during the project work.

I express my warm thanks to ms. Jyoti ghanci for her support and guidance at a time of project

report.

I would also like to thanks to Mr. Pravinbhai for providing lab facility whenever required.

Finally, I thanks to all people who helped me in the project.

Bhalabhai Bukoliya (02)

MBA-IV



EXECUTE SUMMARY

We have made a new business plan of new peanut processing. We find out great opportunity in

Gogapura area near Bhiladi (Deesa). Bhiladi is the centre of peanut which is produced by the

farmer of Deesa, Bhiladi and Lakhani district and also there is national highway of 14 no. is

passed through Bhiladi so there is huge chance of transportation. During end of summer there is

huge peanut come in the market and our plant producing mainly three item: Chikkis, Peanut

Butter and roasted peanut nut. The one important thing that we provide to people by peanut

processing is healthy peanut. That helps to people reducing a heart problem.

We decided name of our processing plant is ‘Pea-hut Pvt. Ltd.’ We have conducted marketing

analysis, financial analysis, technical analysis and other competitor analysis for our business. For

analysis of market we find out great opportunity for peanut butter and great chance of success in

the north Gujarat. How many is important for running business, we find out by the financial

analysis and the fluctuation in the cash flow, income statement, balance sheet and so on. Which

machinery we used in our plant we find out by technical analysis and total production capacity of

the machine is find out by the technical analysis and what would be total annually demand of the

raw material all thing like that we find out by the technical analysis. Besides that we made a

market plan and most of the profit spends behind promotion activity and for sales expenses. By

the competitors analysis we find out our strengths, weakness, opportunity and threats for our

business plan.

We have also seen our best qualitative suppliers and financial plan and we have seen all

information regarding use of capital and how can raised capital and how much amount should be

required for carrying out day to day activity by working capital analysis.



CHAPTER-1

GENERAL

INFORMATION

1.1 COMPANY PROFILE

Name : Pea-hut Private Limited.



Year of Establishment : 2015

Owner : Mr. Bhalabhai Bukoliya

Address : Pea-hut Private Limited

Nr. Gogapura Patiya,

Deesa Highway,

Bhiladi(Gujarat) -385344

Post Box No : 51,

Ph. +91-02742-268774/5,

Fax : +91-02742-265974

Business Type : food industry

Web Site : www.Pea-hut.com

Email : [email protected]

Quality standard : ISO 9001:2008

Slogan : ‘Testy he fir bhee healthy hee’

1.2 VISION & MISSION OF COMPANY

Our Way - Our Mission

Guided by the Our Way principles, our goal at Pea-hut is to cultivate a workplace that nurtures

and expects innovative solutions from all employees. The mission of Our Way is simple: As a

http://www.hormelfoods.com/Careers/MissionCulture/~/link.aspx?_id=54E667C5C74441418DFE8CAE139293A4&_z=z



leading branded peanut processing company with a focus on profitable growth, and inspired by

our founder's charge to "originate, don't imitate," we market a balanced portfolio of highly

differentiated quality products. We engage our employees by creating an environment where

careers are fostered, people make a difference and integrity is absolute.

Our Vision

"Pea-hut responsibility is to continually improve all aspects of the peanut production in

which we operate – environment, social, economic - creating a better tomorrow than today."

Our vision is put into action through programs and a focus on environmental stewardship,

activities to benefit society, and a commitment to build shareholder value by making Pea-hut

a truly sustainable company.

1.3 HISTORY

Peanut is a mass consumption item and is used for extraction of oil, for making butter, chikki and

chocolates, as an ingredient in making several food and snack preparations, for munching and so

on. India is one of the largest producers along with the USA; China and Argentina. Gujarat,

Andhra Pradesh, Tamilnadu and Maharashtra are the main cultivating states. Peanuts from the



Saurashtra region of Gujarat are famous all over the world on account of their big size, nutty

flavor and crunchy taste. This note basically deals with processing for munching purpose for

which there is a vast demand all over the state. The market is primarily controlled by the small

and unorganized sector.

Peanuts have considerable nutrients and are consumed in different forms all over the world since

long. Peanut butter is one such product consumed in large quantities especially in western

countries since many years. It is not very popular in India and the domestic market is dominated

by milk butter. Hence, the promoters must target growing export market and should be

financially sound. The technology is available indigenously and it is advisable to engage a

technical consultant to ensure quality.

Peanuts are rich in unsaturated fats and other nutrient that may improve Glucose and insulin

homeostasis. It also helps in reducing diabetes. It can serve as substitute for red or processed

meats. It is very much popular in western countries. Americans eat almost 7 pounds of peanuts

and peanut butter per capita.

From the last three years (2011-14) many of the Banaskantha farmers have been cultivating a

peanut in huge volume. And here no any branded peanut processing plant. Some have, but in the

saurashtra. As earlier said saurashtra region is highest peanut manufacturing in Gujarat.

However, some region of north Gujarat like Deesa, Bhildi, West area of Diodar etc. are main

cultivating states in north Gujarat region.

I want to establish three main plants like:

1. Salted peanut,

2. Peanut Butter,

3. Assorted Chikki.

1.4 PRODUCT

Groundnut is an agriculture produce with 2 crops, with the winter crop contributing more than

the summer crop. Groundnuts in shell (pods) are de-stoned and then de-shelled to obtain peanuts.

After grading them as per different sizes (known as counts) they are sold in the market. The

product taken here is roasted and salted peanuts for direct consumption, Peanut Butter for snack

and Assorted Chikkis for teenagers. .



1.4.1 Roasted Salted Blanched Peanuts

We would be offer best roasted salted blanched peanuts. These peanuts are processed from raw

peanuts and are thoroughly tested for quality. Whole process is carried out in a hygienic

environment to retain quality and freshness. Moreover, offered product is available in various

customized packaging sizes.

Features:

Rich in taste

High nutritional value

High nutrition value

Customized packaging Available Packaging Sizes:

100 gm, 200 gm, 500 gm

1.4.2 Assorted Chikkis:

Chikki is a traditional ready-to-eat Indian sweet generally made from groundnuts and jaggery.

There are several different varieties of chikki in addition to the most common groundnut chikki.

Each chikki is named depending upon the ingredients used. Usually, ingredients such as puffed

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

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

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



or roasted Bengal gram, sesame, puffed rice, beaten rice, and Khobara (desiccated coconut) are

used.

Chikkis is very popular from the long time, people eat Chikki for the best and qualitative taste.

Most of the market of Chikki is children because they like sweet and dessert.

Ingredients:

Peanut, sugar/ jaggery/brawn sugar, cardamom powder

It is a very popular sweet item in both rural and urban South Asia (spanning India, Pakistan,

Bangladesh, Nepal and Sri Lanka). Some also add glucose to the chikkis, which are usual there.

It just started from a single flavor of jaggery and peanuts. But today there are many different

exotic flavors available in the market. In our plant we would use only peanut nut for chikkis.

1.4.3Peanut Butter:

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

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

http://en.wikipedia.org/wiki/File:Chikki_assortment.jpg



Basic Nutritional Information

A 2-tablespoon serving of peanut butter contains 188 calories, or 9 percent of the daily intake in

a standard 2,000-calorie diet. These calories come from a mix of carbohydrates, proteins and

fats. Each serving of peanut butter provides us with 7.7 grams of protein, which helps keep our

tissues strong and promotes immune function, as well as 16 grams of fat, a concentrated source

of energy. Peanut butter also offers 6.9 grams of carbohydrates per serving. Some of these carbs

break down into sugar and fuel our brain, liver and muscle tissue, while 2.6 grams comes from

heart-healthy dietary fiber. A serving of peanut butter contributes 10 percent toward the

recommended daily fiber intake for women and 7 percent for men.

Vitamin Content



Peanut butter serves as a rich source of vitamin E and niacin, or vitamin B-3. Vitamin E controls

inflammation in our body, aids in healthy cell-to-cell communication and helps prevent tissue

damage through its role as an antioxidant. Consuming 2 tablespoons of peanut butter boosts our

vitamin E intake by 2 milligrams, or 13 percent of the recommended daily intake. The niacin in

peanut butter helps our cells perform chemical reactions, including those needed for energy

production, and plays a role in cell development. A serving of peanut butter offers 4.4 milligrams

of niacin -- 28 and 31 percent of the recommended daily niacin intakes for men and women,

respectively.

Beneficial Minerals:

Reach for peanut butter as a source of beneficial minerals, especially magnesium and copper.

Our body relies on both minerals to help activate enzymes, the family of proteins that help drive

chemical reactions in our cells. Magnesium- and copper-dependent proteins support energy

production. Magnesium also contributes to healthy cell membranes, while copper controls gene

activity. A 2-tablespoon portion of peanut butter contains 51 milligrams of magnesium -- 12 and

16 percent of the recommended daily intakes for men and women, respectively -- as well as 185

micrograms of copper, or 21 percent of the recommended daily intake.

Ingradient:



CHAPTER – 2

MARKET ANALYSIS

2 MARKET ANALYSIS



2.1 Demand and Supply

Large quantity of roasted and salted peanuts is sold throughout Gujarat round the year. The

peanut butter is new for the north Gujarat region some of the manufacture of ahmedabad

producing a butter peanut. The market is completely scattered and controlled by tiny or cottage

units with few local established brands. In most of the cases, processing as well as handling is

unhygienic and volumes are very small. Pricing is very crucial as the average price is around

Rs.80/- per kg for the salted peanut. Assorted Chikki is famous in the Gujarat for teenagers.

Before the toffee and chocolate came, Chikki have good market. However in many semi-unban

and rural area have a good market for the assorted Chikki.

2.2 Marketing Strategy:

There are some locally famous brands at centers like Ahmedabad, Rajkot, Surendranagar etc for

salted peanute. Hence, while selecting location, care has to be taken to ensure smooth supply of

raw peanuts and lack of competition from regional established brands. Taluka place in Saurashtra

may satisfy these aspects. There is competition from unorganised sector units and reasonable

price, attractive packing, lucrative commission to retailers and consistent supply is the critical

factors. Fast turnover is very important.

Competitors Analysis:

Charbhuja Industries Pvt.Ltd.

C.Hema Agro

Macmoon Traders

Gormetious Foods Pvt. Ltd.

Das Foodtech Private Limited

Elite Green Pvt. Ltd.

2.3 Location strategy:

Therefore I have chosen Bhiladi for peanut processing plant because there is easily availability of

the raw material and the center of the plant in all cultivation of the north Gujarat region. The

other main benefit is most of the peanut cultivate in Deesa and Bhiladi and for the transportation

there is national highway 27 passing through so that is beneficial to the plant and also there basic

amenities are available.

There are some tiny manufactures in the Deesa but no one in the area of north Banaskantha like

Tharad, Diodar, Bhiladi, Lakhni, Vav, Suigam etc. so there is a huge chance of success.

2.4 MANUFACTURING PROCESS



Saurashtra region of Gujarat produces around 10-12 lac tones of groundnuts (in shell) every year.

Considering average recovery of peanuts at about 70%, more than 8 lac tones of peanuts are

available every year. Peanuts of medium size would be bought from market yards and then

roasted in electrically operated roaster. The roasting time will be around 90 minutes. These

roasted peanuts will be cooled and then salt will be mixed with it before packing them. The

process loss is about 2-3%.

2.4.1 Process for Salted Peanut

Peanuts of medium size would be come from size shaker machine and then roasted in electrically

operated roaster. The roasting time will be around 30 minutes. These roasted peanuts will be

cooled and then salt will be mixed with it before packing them. The process loss is about 2-3%.

2.4.2 Process for Peanut Better

1• Scatter a pod by processing

2• Roast in electrical roaster machine

3

• Roasted peanuts will out of peanut roaster machine and cool for 30 minute

4• Mixed with salt by mixer machine

5• Packaging



Shelling and processing

After harvesting, the peanuts are cleaned, shelled, and graded for size. Next, they are dry

roasted in large ovens, and then they are transferred to cooling machines, where suction

fans draw cooling air over the peanuts.

Unshelled peanuts is adjusted to avoid excessive brittleness of the shells and kernels and

to reduce the amount of dust in the plant. The size-graded peanuts are passed between a

series of rollers adjusted to the variety, size, and condition of the peanuts, where the

peanuts are cracked. The cracked peanuts then repeatedly pass over screens, sleeves,

blowers, magnets, and destoners, where they are shaken, gently tumbled, and air blown,

until all the shells and other foreign material (rocks, mud balls, metal, shrivels) are

removed.

The shelled peanuts are graded for size in a size grader. The peanuts are lifted and then

oriented on the perforations of the size grader. The larger peanuts (the "overs") are sent to

one trough, while the "troughs" are guided towards another trough. The peanuts are then

graded for color, defects, spots, and broken skins.

The peanuts are shipped in large bulk containers or sacks to peanut butter manufacturers.

(Inedible peanuts are diverted as oil stock in semibulk form.) To ensure proper size and

grading, the truckloads transporting peanuts to peanut manufacturers are sampled

mechanically. The sampler, testing two truckloads simultaneously, can quickly and

accurately assess size and grading by examining 10 samples per truckload.

After the peanuts are roasted and cooled, they undergo blanching—removal of the skins

by heat or water. The heat method has the advantage of removing the bitter heart of the



peanut. Next, the blanched peanuts are pulverized and ground with salt, dextrose, and

hydrogenated oil stabilizer in a grinding machine. After cooling, the peanut butter is

ready to be packaged.

2.4.3 Process for Assorted Chikki:

The process is very simple. Groundnut kernels are roasted to remove the outer red skin and they

are split in the splitting machine. In case of sesame seeds or dry coconut they are roasted and

small pieces of coconut are made manually. Simultaneously, jaggery is boiled in water till thick

syrup is formed and then filtered to remove unwanted particles. This hot syrup is mixed with

groundnut splits or roasted sesame seeds or pieces of roasted coconut and then this mixture is

poured in trays for drying. After about couple of hours, small square sized pieces are cut and

individual piece is packed in plastic wrappers. The Process Flow Chart is as follows:

2.5 CAPITAL INPUTS



Land and Building Pricing is very critical as explained earlier. A plot of land of about 500 sq.mtrs. with built up area

of 300 sq.mtrs. is adequate. The production area would have two major sections. One would

have processing and the second one would accommodate for packaging and storing. A producing

room of about 150 sq.mtrs. and raw materials storage of 75 sq.mtrs. is sufficient. Finished goods

godown can be accommodated in 40-45 sq.mtrs. Land we taken as on lease. Price of land would

suppose to taken at Rs. 250000/- for ten year. Whereas average construction cost is considered @

Rs.2500/- per sq.mtr.

Plant Layout:

Process for Chikki: size grader – colour sorting – medium gridding – mixer – cooling – packaging

Process for butter: size grader – cooling – small gridding – mixer – packaging

1.Dry

roaster

2.

3.

Shelli

ng &

proce

ssing

Size

grader

Colour

sorting

Cooling P

Medium

Mixer Cooling

P Colour

sorting

Mixer Cooling

P

Finish

ed-

Stora

ge

Ra

w-

stor

age

Main office Employe

e’s room Entry

room Gate

Scrap

material

small

Rest

room



CHAPTER - 3

TECHNICAL ANALYSIS

3 TECHNICAL ANALYSIS



3.1 Machinery

For a new entrant, initial producing capacity has to be moderate. Daily producing capacity of

roasted peanut will be 300 kg. Considering 8-10 hours working may be planned. With 300

working days, the annual capacity would be 90 tonnes. Chikki producing daily would be 20000

chikki from 200 kg peanut. And annual capacity would be 6000000 chikki producing from 60

tonnes. Peanut butter daily producing capacity would be 100 bottles of 500 grams from 50 kg

and annual consumption of peanut would be 15 tones peanut. This would need following

machines:

Item Qty. Price (Rs.)

Shelling machine 1 75000

Electrically-operated roaster 3 120000

Size shaker 1 25000

Colour sorting machine 2 80000

Gridding machine 2 80000

Mixer machine 2 40000

Packaging machine 3 60000

Other miscellaneous equipments -- 35000

Total -- 515000

(Table: 3.1 Machinery)

3.1.1 Peanut Sheller



Peanut Sheller machine is very useful to shell a nuts and kernels and clean a peanut. Unshelled

peanuts is adjusted to avoid excessive brittleness of the shells and kernels and to reduce the

amount of dust in the plant. The size-graded peanuts are passed between a series of rollers

adjusted to the variety, size, and condition of the peanuts, where the peanuts are cracked. The

cracked peanuts then repeatedly pass over screens, sleeves, blowers, magnets, and destoners,

where they are shaken, gently tumbled, and air blown, until all the shells and other foreign

material (rocks, mudballs, metal, shrivels) are removed.

Features:

Economical

User-friendly

Superior performance

Specifications:

Capacity 150 to 200 kg/h

Voltage 380 v

Power 24 kw

3.1.2 Peanut Butter Machine



Peanut Butter maker machine is directly gridding peanut. This machine is user-friendly, resistant

to wear & tear and offers effective performance. This machine ensures operations under hygienic

parameters and is used for making peanut butter in food industry.

Features:

Maintains hygiene

Resistant to wear and tear

Effective performance

Specifications:

Model: Gms130 peanut butter machine

Capacity: 250 to 500 kg/h

Power: 11kw/380v/50hz/3-phases/2900rpm

Size: 1000x440x1050 mm

Net weight: 420 kg

3.1.3 Peanut Roasting Machine

Pea-hut food corporation


This machine is very helpful to roast peanut and maintaining the main form of peanut nut and its

colour. We choose this machine because we never compromise with our quality and we ensure

that the quality of roasted peanut would be as per consultant requirement with the low cost.

Features:

Longer service life

Superior performance

User-friendly

3.1.4 Color Sorter Machine for Peanuts

Color sorter machine is used for the color to the peanut and its nut we used this color sorting

machine in plant for only roasted peanut nut and for assorted Chikki.

3.1.5 Sizing shaker machine:



Sizing shaker machine is helpful to separate a peanut by the nut size and remove a small and

scrap peanut. This machine helpful to separate small, medium and large size peanut. This

machine is required in our plant for separate peanut like large for roasted, small for peanut butter

so on.

Other machine:

1. Main other machine is like mixer machine that mixer the salt, sugar or jaggery with the

peanut nut for assorted Chikki and other mixer machine is for mixing small grader peanut

with the sugar, salt for peanut butter.

2. There would be main three packaging machine for roasted peanut nut, assorted Chikki

and for peanut butter respectively.

3.2 Miscellaneous Assets

Some other assets like furniture and fixtures, packing tables, SS utensils etc. shall be required for

which a provision of Rs. 45,000/- is made.

3.3 Utilities

Power requirement shall be 350 kw whereas water of around 1000 ltrs. shall be required for

potable and sanitation. The cost of utilities suppose to be 300000/- Rs.



CHAPTER – 4

FINANCIAL ANALYSIS

4 FINANCIAL ANALYSIS



4.1 Raw Materials

The most important raw material shall be good quality peanuts. Availability would not be a

problem as monthly requirement even at 100% utilisation would be just 14 tonnes. But care has

to be taken to select peanuts with uniform size and minimum moisture. Requirement may not

warrant direct procurement from the groundnut processor (due to low quantity) and hence the

trader has to be selected carefully as high moisture content reduces shelf life of the peanut and

may result in high level of aflatoxin which is harmful to human beings in the long run. Standard

packing of 100 gms and 200 gms. May be introduced for which printed polythene bags shall be

required for the roasted peanut and for Chikki and bottles producing within the plant, would be

initially 500 grams bottle for peanut butter.

4.2 Manpower Requirements

Particulars Nos. Monthly Salary (Rs.) Total Monthly Salary (Rs.)

Supervisor 2 9000 18000

Skilled Worker 3 10000 30000

Helpers 3 4500 13500

Salesman 3 9000 27000

Storekeeper 1 6000 6000

Gatekeeper 1 4000 4000

Total 98500

(Table:4.1 Manpower Requirements)

Other than that, one consultant required for the maintaining quality. So we keep 30000 for

manpower provision or for other fees.

4.3 Tentative Implementation Schedule



Activity Period (In Months)

Application and sanction of loan 2

Commencement of civil work 1

Completion of civil work and placement of orders for machinery 3

Erection, installation and trial runs 1

(Table:4.2 Tentative Implementation Schedule)

4.4 Tentative Implementation Schedule

Building

A land and building would cost Rs.10.00 lacs as stated earlier.

Machinery

For installed production capacity of 165 tonnes per year, investment in machinery will be

Rs.5.15 lac as explained earlier.

Miscellaneous Assets

A provision of Rs. 45,000/- is sufficient under this head as described earlier.

Preliminary & Pre-operative Expenses

Pre-production expenses like registration, establishment and administrative charges, interest

during implementation, trial runs etc. may cost Rs. 50,000/-.

Working Capital Requirements



Capacity utilisation in the first year is assumed to be 100% for which following working capital

shall be required:

(Rs. in lacs)

Particulars Period Margin Total Bank Promoters

Stock of raw and packing

materials

½ Months 30% 5.25 3.67 1.58

Receivables ½ Months 25% 3.00 2.1 .9

Working expenses 1 months 100% 1.14 -- 1.14

Total 9.39 5.77 3.62

(Table:4.3 Working Capital Requirements)

4.5 Cost of the Project & Means of Financing (Rs. in lacs)

Item Amount

Land and building 10.00

Machinery 5.15

Miscellaneous assets 0.45

Preliminary and Pre-operative Expenses 0.50

Contingencies @ 10% on land and building & plant and machinery 1.52

Working capital margin 3.62

Total 21.24

Means of Finance

Promoters contribution 6.372

Term loan from bank/ FI 14.868

Total 21.24

Debt equity ratio 2.33:1

Promoters’ contribution 30%

(Table:4.4 cost of project and means of financing)

Financial assistance in the form of grant is available from the Ministry of Food Processing

Industries, Govt. of India, towards expenditure on technical civil works and plant and machinery

for eligible projects subject to certain terms and conditions.

4.6 PROFITABILITY CALCULATIONS



Production Capacity & Build-up

As against the rated annual capacity of 165 tonnes, actual utilisation is expected to be 100% in

the 1st year.

Sales Revenue at 100%

Revenue from roasted peanut:

Assuming selling price of Rs. 80/- per kg and the total annual production would be 90 tonnes as

per 100% capacity, the annual income would be Rs. 72.00 lacs.

Revenue from Assorted Chikki:

Assuming selling price of a Chikki Rs.1and the total annual production would be 6000000 chikki

for a year with 100% capacity and the annual income would be Rs. 60.00- lacs.

Revenues from peanut butter:

Assuming selling price of 500 grams per bottles of peanut butter would be Rs.180, annual

production of peanut butter would be 18000 bottles. And the annual income would be Rs.32.40

Total sales of all items would be Rs. 164.2 lacs.s

Raw and Packing Materials Required at 100%

(Rs. in lacs)

Product Qty. (Tonnes) Price/Ton (Rs.) Value

Medium-sized peanuts 165 30000 49.50

Salt 10 15000 1.50

Jaggery 12 20000 2.40

Packing Materials -- -- 4.00

Total 57.4

(Table:4.5 raw and packing materials )

Utilities



Yearly cost of utilities at 100% will be Rs. 300000/-.

Selling Expenses

A provision of 22.5% of sales revenue every year is made which would take care of margins of

stockists and retailers, transportation costs and some publicity at retail counters.

Interest

Interest on term loan of Rs. 14.868 lacs is computed @ 12% per annum assuming repayment in 3

year. Interest on working capital of Rs.5.77 lacs from bank is calculated @ 14% per annum.

Depreciation

It is calculated on WDV basis @ 10% on building and 20% on machinery and miscellaneous

assets.

Years

Depreciation

Land and Building @10% Machinery and Misc.Assets@20%

1,000,000 560,000

1 (100,000) (112,000)

900,000 448,000

2 (90,000) (89,600)

810,000 358,400

3 (81,000) (71,680)

729,000 286,720

4 (72,900) (57,344)

656,100 229,376

5 (65,610) (45,875)

590,490 183,500

(Table:4.6 calculation of depreciation)

4.7 PROJECTED PROFITABILITY



(Rs. in lacs)

No. Particulars Year

1 2 3 4 5

A Installed capacity --165 tonnes--

Capacity Utilisation 60% 75% 85% 95% 100%

Sales realisation 98.520 123.150 139.570 155.990 164.200

B Cost of production

Raw and packing Materials 34.440 43.050 48.790 54.530 57.400

Utilities 1.800 2.250 2.550 2.850 3.000

Salaries 0.771 0.964 1.092 1.221 1.285

Repairs & Maintance 0.480 0.600 0.680 0.760 0.800

Selling expenses @ 22.5% 22.167 27.709 31.403 35.098 36.945

Administrative expenses 0.300 0.375 0.425 0.475 0.500

Total 59.958 74.948 84.941 94.934 99.930

C Profit before Interest &

Depreciation 38.562 48.202 54.630 61.057 64.270

Interest on Term Loan 1.780 14.868 0.000 0.000 0.000

Interest on working capital 0.790 0.990 0.687 0.767 0.810

Depreciation on land and builing 1.000 0.900 0.810 0.729 0.657

Depreciation on machinery 1.120 0.896 0.717 0.573 0.459

Profit before tax 33.872 30.548 52.416 58.987 62.344

Income-tax @ 25% 8.468 7.637 13.104 14.747 15.586

Profit after tax 25.404 22.911 39.312 44.240 46.758

(Table:4.7 projected profitability)

4.8 LEVERAGES



Financial Leverage

= EBIT/EBT (Rs. in lacs)

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

EBIT 38.562 48.202 54.63 61.057 64.27

EBT 33.872 30.548 52.416 58.987 62.344

Financial Leverage 1.14 1.58 1.04 1.04 1.03

(Table:4.8 financial leverage)

Operating Leverage

= Contribution/EBT (Rs. in lacs)


Sales 98.52 123.15 139.57 155.99 164.2

Less: Variable Cost

Salary 0.771 0.964 1.092 1.221 1.285

Raw And Packing

Materials 34.44 43.05 48.79 54.53 57.4

Repairs & Maintance 0.48 0.6 0.68 0.76 0.8

Selling Expenses @ 22.5% 22.167 27.709 31.403 35.098 36.945

Administrative Expenses 0.3 0.375 0.425 0.475 0.5

Total Variable Cost 58.158 72.698 82.39 92.084 96.93

Contribution 40.362 50.452 57.18 63.906 67.27

EBT 33.872 30.548 52.416 58.987 62.344

Operating Leverage 1.19 1.65 1.09 1.08 1.08

(Table:4.9 operating leverage)

Degree of Total Leverage



= FL/OL (Rs. in lacs)


Financial Leverage 1.14 1.58 1.04 1.04 1.03

Operating Leverage 1.19 1.65 1.09 1.08 1.08

Total Leverage 0.96 0.96 0.95 0.96 0.95

(Table:4.10 degree of total leverage)

4.9 Cash Flow Statement



Projected statement of cash flow

For the year ended March. 31, 2015

(Rs. in lacs)

Particulars 2014-15

Cash inflows

Cash

Promoter contribution 6.372

Sales 164.2

Total cash inflows 170.572

Less: cash outflows

Purchased of fixed assets 15.6

Purchase of raw and packaging materials 57.4

Salaries and wages 1.285

Utilities 3.00

Repair and maintain 0.80

Promotional expenses 36.945

Interest on term loan 1.78

Interest on wc 0.81

Income tax 14.89

Total Operating Expenses 132.51

Cash balance 38.062

(Table:4.11 calculation of cash flow statement)

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



4.10 BALANCESHEET


Balancesheet for the first five year

(Table:4.12 calculation of balance sheet)

Fixed Assets

Land & Building 10.000 9.000 8.100 7.290 6.561

Less: Depreciation 1.000 0.900 0.810 0.729 0.656

9.000 8.100 7.290 6.561 5.905

Machinery 5.600 4.480 3.584 2.867 2.290

Less: Depreciation 1.120 0.896 0.717 0.573 0.459

4.480 3.584 2.867 2.290 1.835

Total Fixed Assets 13.480 11.684 10.157 8.851 7.740

Current Assets

Cash 2.603 2.740 3.820 4.866 5.571

Inventory 34.440 43.050 48.790 54.530 57.400

Investment 5.500 1.900 5.100 3.100 2.500

Account Receivable 15.540 8.200 14.200 15.800 14.200

Total Current Assets 58.083 55.890 71.910 78.296 79.671

Total Assets 71.563 67.574 82.067 87.147 87.411

Liabilities

Owner Equity 6.372 6.372 6.372 6.372 6.372

Retaining Earning 25.404 22.911 39.312 44.240 46.758

Bank Loan 14.868 13.400 9.300 7.000 5.400

Current Liabilities

Interest 1.780 0.990 0.687 0.767 0.810

Tax 8.468 7.637 13.104 14.747 15.586

Salary 0.771 0.964 1.092 1.221 1.285

Account Payable 13.900 15.300 12.200 12.800 11.200

Total Current Liabilities 24.919 24.891 27.083 29.535 28.881

Total Liabilities 71.563 67.574 82.067 87.147 87.411



BIBLIOGRAPHY

Books.

B.S.Shah Prakashan “Financial Management”, Seventh Edition:2009-2010.

‘Working Capital Management’ From 72 page no.

Prasanna Chandra. “Financial Management”, Sixth Edition. By Tata McGraw-Hill

Publishing Company Limited New Delhi.

Part VIII 26.Working Capital Policy,

Web Site :

http://www.livestrong.com/article/265211-peanut-butter-nutrition/ in project 1.4.3 peanut butter-

basic nutritional information

http://www.whfoods.com/genpage.php?tname=foodspice&dbid=101

http://trainer-kim.com/the-ugly-truth-about-peanut-butter-3-reasons-you-shouldnt-eat-it/ page 8 -

photo peanut butter ingredient

http://newelephant.en.made-in-china.com/product/SeoJsNbEfBYz/China-Jm-130s-Multifunctional-

Peanuts-Butter-Machine.html - page 18 - gridding machine

http://www.indiamart.com/nilkanthexport/search.html?ss=peanut

http://juicebaraustin.com/product/peanut-butter-solution/

: http://www.madehow.com/Volume-1/Peanut-Butter.html#ixzz3TtBopDBr http://www.madehow.com/Volume-1/Peanut-Butter.html page 12 - peanut butter process

http://en.wikipedia.org/wiki/Chikki 1.4.2 – Chikkis

http://dir.indiamart.com/impcat/peanutbutter.html

http://www.apsindustries.net/peanut-machines.html

http://www.alibaba.com/product-detail/Automatic-Peanut-Packaging-Machine-DXDK-

350W_703317251.html

http://www.livestrong.com/article/265211-peanut-butter-nutrition/

http://www.whfoods.com/genpage.php?tname=foodspice&dbid=101

http://trainer-kim.com/the-ugly-truth-about-peanut-butter-3-reasons-you-shouldnt-eat-it/

http://newelephant.en.made-in-china.com/product/SeoJsNbEfBYz/China-Jm-130s-Multifunctional-Peanuts-Butter-Machine.html%20-%20%20gridding%20machine%20page13

http://newelephant.en.made-in-china.com/product/SeoJsNbEfBYz/China-Jm-130s-Multifunctional-Peanuts-Butter-Machine.html%20-%20%20gridding%20machine%20page13

http://www.indiamart.com/nilkanthexport/search.html?ss=peanut

http://juicebaraustin.com/product/peanut-butter-solution/

http://www.madehow.com/Volume-1/Peanut-Butter.html#ixzz3TtBopDBr

http://www.madehow.com/Volume-1/Peanut-Butter.html

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

http://dir.indiamart.com/impcat/peanutbutter.html

http://www.apsindustries.net/peanut-machines.html