Rubberband Manufacturing Project Reports 406i5n

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

1.0 Introduction: This proposal evaluates the technical feasibility and financial viability in setting up of a small-scale enterprise to do the activity on manufacturing and sale of Rubber bands at Vazhoor in Kottayam district and all over India. Unit has been filed memorandum Part-1 with the district Industries center, Kottayam and also applied for permission from Local body for the construction of building and for the installation of plant and machinery.

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

3.0 Scope and Market Potential: Rubber bands are one of the most convenient products of the twentieth century used by numerous individuals and industries for a wide variety of purposes. The largest consumer of the rubber bands in the world is USA. The news

paper industry also uses massive quantities of rubber bands to keep the individual newspapers rolled or folded together before home delivery. This unit intends to make rubber bands to cater the industry needs in outside states and also got good expertise to produce and sell all products without delay.

4.0 Manufacturing process: 1. 2. 3. 4. 5. 6. 7. 8.

Manufacturing process is described below. Processing the natural latex Purification and making into slabs Squeezing the slabs to required size Mixing and milling Heating and squeezing Extrusion after heating Curing in mandrels Slicing to form rubber bands

5.0 Location, Land and Building: The unit is proposed to be located at Vazhoor Panchayath in Changanasserry Taluk. . Building required for establishing the unit has been constructed. The amount invested for civil work on construction of building for office, common amenity, well etc. are invested by the promoter himself. Building number assigned to the unit is 2/634

6.0 Machinery & equipment: Details are shown in the annexure. The plant and machinery proposed to be installed in the unit are Indigenous. . Total cost of machinery and equipment to be purchased is evaluated as Rs 300000/-

7.0 Installed capacity of production The unit is proposed to be operated in 300 days per annum ( 25 days in a month of single shift operation of 8 hours duration in a day). As per the

capacity of machinery to be installed and by considering production wastage the monthly production is worked out in the following table. It is proposed to utilize 70% of the installed capacity in the first year of operation and 75%, 80%, 85%, 90% in the consecutive years of operation. The sales realization for first month of operation is shown below.

production per Sl No 1

items

month in Tonnage

RUBBER BANDS

1.5

Total amount amount /Tonnage

/production per month

2,00,000

3,00,000

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

Sl No 1 2 3 4 5 6

items LATEX WHITENER CHALK POWDER TITANIUM RUBBER CHEMICALS PACKING MATERIALS raw materials required per month (100 % Capacity utilization) For 70% capacity utilization

Rate /kg /tonnes 200 7 5 215 155 70

Rate /Tonnage 650 350 50 250 100 20

Tonnage required /month 1.5 1.5 1.5 1 2 1.5

Total amount requ per month 195000 3675 375 53750 31000 2100 285900 200000

9.0 Man power requirement and other expenses: Total manpower of the unit including the Workers is 5 numbers and the details of manpower requirement, salary and other expenses per month are as follows . Sl.N o. 1 2 3

Designation / Category Skilled workers(wome n) un skilled worker supervisor

No

Month ly salary

Amou nt Rs

1

8000

8000

3 1

6000 10000

18000 10000

Total 5 OTHER EXPENSES PER MONTH Sl.N Amou o. Item nt Power 3 HP 1 1500 Postage & 2 Telephone 1000 Printing & 3 Stationery 3000 Travelling 4 expenses 4000 Miscellaneo 5 us 3000 Total

36000

12500

10.0 Working capital requirement: Total requirement of working capital for the first Month (phase) of operation is 2.0 lakhs . Peri Sl.N o.

od in Particulars Capacity

Days 1 year 300

70

2 year

3 year

4 year

5 year

75

80

85

90

utilisation(%)

Sales

38571

41142

43714

46285

00

43

86

29

71

24000

25714

27428

29142

30857

00

29

57

86

14

29100

31105

33129

35145

37179

00

71

43

84

69

17600

18857

20114

21371

22628

22

0

1

3

4

6

1

9700

10369

11043

11715

12393

1

9700

10369

11043

11715

12393

1

12000

12857

13714

14571

15429

20740

22216

23694

25171

26650

0

6

3

6

1

300

Cost of raw materials

Cost of production A

36000

300

300

Current Assets Stock of raw materials ( day's

1

consumption) Stock in process ( day's cost of

2

production) Stock of finished goods ( day's cost of

3

production) Receivables( day's

4

cost of sales)

Total(A)

11.0 Total Cost of the Project:

Loan Amount Sl.No. Particulars

required

RS

Proposed

Total

@70%

subs

Margin@10% mon

Land and Building 1

( own)

own

Completed

own

0

0

2

room furnishing

own

Completed

own

0

0

300000

300000

300000

210000

30000

OD

200000

200000

200000

140000

20000

Total

500000

500000

500000

350000

50000

Machinery & 3

Equipment(proposed) Working Capital as

4

12. Means of finance: Amount Sl.No.

Particulars

RS

Term loan for machinery & 1

equipment,

210000

Margin money loan proposed to be obtained from DIC @20% of 2

project cost

100000

Working capital Loan as over 3

draft

140000

Own Capital (including the amount already invested in acquiring the fixed assets of the 4

unit) @ 10% of P.C

50000

Total

500000

13.0 Profitability analysis: Detailed statement is given in annexure. Assumptions made for the calculation are as follows: (a) Unit will function for 200 days per annum in single shift basis of 5 hours per day. (b) Proposed to utilise 70% of the installed capacity in the first year of operation ,75%, 80% ,85% and 90% are in the consecutive years of operation. (c) Interest on term loan and working capital loan is assumed @ 12 % and repairing and maintenance as 5% of cost of fixed assets. (d) Depreciation @ 5% of cost of building and 10% of the cost of machinery. (e) Selling expense is considered as 5 % of total sales turn over. This includes the ment and publicity charges (f) Insurance expenses of building and machinery is calculated @ 1% of cost (g) The cost of raw material and finished product is based on the present market rate.

Depreciation: Depreciation on Building, Machinery and Equipment are evaluated on WDV basis and is tabulated as below 1

Machinery and equipment Depreciation(B)

300000

270000

243000

218700

196830

30000

27000

24300

21870

19683

270000

243000

218700

196830

177147

30000

27000

24300

21870

19683

WDV on Machinery and equipment Total depreciation(A+B)

SHEDULE OF IMPLIMENTATION Construction of Building

Completed

Installation of plant and Machinery

COMPLETED after availing the loan

Trial run

COMPLETED after availing the loan

Commercial Production

September 2011

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

Submitted by:

PRAVIN NAIR PRASANT HOUSE ARPPUKKARA EAST KOTTAYAM PIN-686008

ANNEXURE 1

Sl.No. 1 2 3 4 5 6 7 8

Item

Nos

Rate in Rs

75000

CUTTING MACHINE .5 HP

2

37500

STIRROR GRINDER

1 1

15000 15000

MOULDS

350

DIP- IN TANKS VULCANISING TANK, BUCKET, CUP ETC.. DRYING STAND BIOGAS PLANT (as directed by Kerala Pollution Control Board) TOTAL

Amount Rs

200 20000

15000 15000 70000 20000 25000

25000 30000

30000 50000

50000 300000

ANNEXURE 2 Profitability statement for 5 years of operation

Particulars No. of working days No. of shifts Installed capacity Capacity utilisation

A

1 YEAR

2 YEAR

3 YEAR

4 YEAR

5 YEAR

300

300

300

300

300

1

1

1

1

1

5142857 5142857 5142857 5142857 5142857 70

75

80

85

90

Production

3600000 3857143

4114286 4371429 4628571

Sales

3600000 3857143

4114286 4371429 4628571

B

Cost of Production Raw materials Wages

2400000 2571429 2742857 2914286 3085714 432000

462857

493714

524571

555429

18000

19286

20571

21857

23143

maintenance

20000

22000

25000

27000

30000

Insurance

10000

8000

6500

5000

4000

Depreciation

30000

27000

24300

21870

19683

Power, and Fuel charges Repair &

Total

2910000

3110571 3312943 3514584 3717969

Gross operating C

profit

690000

746571

801343

856844

910603

132000

141429

150857

160286

169714

36000

38571

41143

43714

46286

31080

24360

17640

10920

65205

22400

24640

26880

29120

33600

0

0

0

0

0

n. & Selling D

expenses 1. istrative expenses 2. Selling expenses

E

Financial expenses 1. Interest on term loan 2. Interest on WC loan 3. Interest on MM loan

F

Total of D&E

221480

229000

236520

244040

314805

G

Net operating profit

468520

517571

564823

612804

595798

H

Income tax

48258

53310

58177

63119

61367

I

Net profit

420262

464262

506646

549685

534431

J

Withdrawls

K

Depreciation

30000

27000

24300

21870

19683

L

Cash surplus

450262

491262

530946

571555

554114

ANNEXURE-3 BREAK EVEN ANALYSIS Particulars

1 YEAR

2 YEAR

3 YEAR

4 YEAR

5 YEAR

FIXED COST Salaries

432000

462857

493714

524571

555429

Repair & Maintenance

20000

22000

25000

27000

30000

Insurance

10000

8000

6500

5000

4000

istrative expenses

132000

141429

150857

160286

169714

30000

27000

24300

21870

19683

0

0

0

0

0

31080

24360

17640

10920

65205

655080

685646

718011

749647

844031

2400000

2571429

2742857

2914286

3085714

Power Charges

18000

19286

20571

21857

23143

Selling expenses

36000

38571

41143

43714

46286

Interest on WC loan

22400

24640

26880

29120

33600

2476400

2653926

2831451

3008977

3188743

40.81

42.74

44.78

46.77

52.76

utilization

58.30

56.98

55.97

55.02

58.62

Return on Investment

84.05

92.85

101.33

109.94

106.89

Depreciation Interest on MM loan Interest on Term loan Total

VARIABLE COST Raw Materials

Total

BEP in % of installed capacity BEP in % of capacity

ANNEXURE-4 DEBT SERVICE COVERAGE RATIO (DSCR) Debt Service Coverage Ratio ( DSCR)

Particulars A

2 Year

3 Year

4 Year

5 Year

Cash generated 1 Net Profit

468520

517571

564823

612804

595798

2 depreciation

30000

27000

24300

21870

19683

3 Interest on term loan

31080

24360

17640

10920

65205

0

0

0

0

0

22400

24640

26880

29120

33600

552000

593571

633643

674714

714286

42000

42000

42000

42000

42000

31080

24360

17640

10920

65205

0

0

0

0

0

loan

22400

24640

26880

29120

33600

Total (B)

95480

91000

86520

82040

140805

Debt service coverage ratio

5.78

6.52

7.32

8.22

5.07

Average DSCR

7.93

4 Interest on mm loan 5 Interest on wc loan Total (A) B

1 Year

Debt Service Requirement 1 Repayment of term loan Repayment of interest on term 2 loan Repayment of interest on mm 3 loan Repayment of interest on wc

C

ANNEXURE-5 REPAYMENT OF TERM LOAN

Instalment Year Number 1

2

3

4

5

Principal

Inst.

Interest

Amt

@14%

Balance

1

210000 10500

8400

199500

2

199500 10500

7980

189000

3

189000 10500

7560

178500

4

178500 10500

7140

168000

42000

31080

5

168000 10500

6720

157500

6

157500 10500

6300

147000

7

147000 10500

5880

136500

8

136500 10500

5460

126000

42000

24360

9

126000 10500

5040

115500

10

115500 10500

4620

105000

11

105000 10500

4200

94500

12

94500 10500

3780

84000

42000

17640

13

84000 10500

3360

73500

14

73500 10500

2940

63000

15

63000 10500

2520

52500

16

52500 10500

2100

42000

42000

10920

17

42000 10500

63000

31500

18

31500 10500

1103

21000

19

21000 10500

735

10500

20

10500 10500

368

0

REPAYMENT OF WORKING CAPITAL LOAN AS O.D

1 Year

2 Year

3 Year

4 Year

5 Year

Total Working capital

200000

220000

240000

260000

300000

Loan Amount

140000

154000

168000

182000

210000

Interest@14%

22400

24640

26880

29120

33600

ANNEXURE- 6 CASH FLOW STATEMENT Construction A

Source of Funds

period

1 year

2 year

3 year

4 year

5 yea

Cash accruals(profit before 1

int&tax)

0 522000 566571

2

Increase in capital equity

3

Depreciation

4

Investment allowance

5

Increase in long term loan

210000

0

6

Increase in MM loan

100000

0

50000

609343

652844

6946

27000

24300

21870

196

14000

14000

14000

280

0 30000

Increase in unsecured 7

loans

8

Increase in WC loan

0 140000

Sales of fixed 9

assets/invests

0

0

0

0

0

0

0

0

0

0

360000 692000 607571

647643

688714

Others( investment 10

subsidy) Total

B

Disposition of Funds Prelim & Pre-op expenses

0

0

0

0

0

300000

0

0

0

0

Increase in capital expenditure

7422

Increase in current assets

200000

20000

20000

20000

400

42000

42000

42000

42000

420

Decrease in MM loan

0

0

0

0

Decrease in WC loan

0

0

0

0

bank

31080

24360

17640

10920

652

Interest on WC loan

22400

24640

26880

29120

336

Interest on MM loan

0

0

0

0

48258

53310

58177

63119

0

0

0

300000 343738 164310

164697

165159

Decrease in long term loans Decrease in unsecured loans

Interest on term loan to

Taxation Divident on equity

613

Other expenses Total

0

60000 408262

2421

C

Opening balance

851524 1334470 18580

D

Net surplus

60000 348262 443262

E

Closing balance

60000 408262 851524 1334470 1858026 23581

482946

523555

5001

ANNEXURE-7 PROJECTED BALANCE SHEET

Construction A

Liabilities

period

Equity share capital

1 year 50000

2 year

3 year

4 year

50000

50000

0 420262

884524

Term loan

210000 168000

126000

84000

42000

Margin Money loan

100000 100000

100000

100000

100000

1000

140000

154000

168000

182000

2100

0

0

0

0

Reserve & Surplus

Working capital loan

50000

5 yea

50000

500

1391170 1940856 24752

Other liabilities(towards subsidy) Total Liabilities

0

360000 878262 1314524 1793170 2314856 28352

Construction B

Assets Gross block Depreciation Net block

period

1 year

300000 300000

2 year

3 year

4 year

5 yea

270000

243000

218700

1968

30000

27000

24300

21870

196

300000 270000

243000

218700

196830

1771

0

0

0

0

200000

220000

240000

260000

0

InvestmenT(Prilim. Expences) Current assets

0

3000

Reserved Stock accumulated to be added to current assets Cash and bank balance Total Assets

60000 408262

851524 1334470 1858026 23581

360000 878262 1314524 1793170 2314856 28352