(AL-ALAQ)
READ! AND THY LORD IS THE MOST
BOUNTENOUS, WHO TEACHETH
BY THE PEN, TEACHETH MAN THAT
WHICH HE KNEW NOT.
ALLAH DOES NOT LOOK AT YOUR
FORMS AND POSSESSIONS
BUT HE LOOKS AT YOUR HERTS AND
DEEDS.
(MUSLIM)
SMALL INDUSTRIAL ESTATE
BAHAWALPUR
U 4 YOU Session 2008-103
OUR PARENTS
&
RESPECTED TEACHER
MR JAVED IQBAL
DEDICATED TO
PREFACE
Department of Commerce, The Islamia University Bahawalpur has
always been admirable in its efforts to equip the future executives with arms
of creativity, flexibility and adaptability to meet the challenges offered by
fast changing business environment.
To achieve the above goals the department is providing both text and
practical knowledge to its students with its available resources. Text
knowledge is very well transferred to the students within the premises of the
department; Practical knowledge requires the kind co-operation of various
business organization of the country. Faculty members are always trying
their best to ask the students to explore the market by assigning these
different field activities and to conduct the “Feasibility Report”.
This report has been made on
“UNITED FLOUR MILLS”
The key function of our work was to make Feasibility study and Feasibility
Report.
We have done our best efforts to complete this report efficiently and
effectively with all abilities. We hope this report fulfills the criteria and
expectations of Department of Commerce. We have tried our best to make it
analytical as well as informative.
ACKNOWLEDGMENT
We first thanks to Allah, The Almighty who bestowed knowledge,
health, vigor, to complete this report.
“Life is a learning experience”. We have learned the validity of this
statement time and time again. Every time we think we know something, we
look back a year later and realize how little we know and how much we
have learned. This Feasibility Report has convinced us again, not in the
learning but also in terms of the vast team of talented people that take part
in creating this report. We believe each person plays a piece of a puzzle to
make the complete picture, some pieces are bigger then others, but without
anyone piece the picture would not be completed.
We feel great pleasure and honor to express our gratitude from the
citadel of our hearts to the people whom we met, for their cooperation.
Their sympathetic behavior has an ever-lasting impression on the pages of
our memory.
We also give honor to (In charge of Project Appraisal) Mr. Javed
Iqbal who provide us an opportunity to get practical experience in fieldwork
and whose guidance remained with us during completing this report.
We are specially thankful to Ch Masood Majeed (owner of ASIA
Flour Mill located in state of small industries Bahawalpur)who provide us
necessary information and show us the working of flour mill.
We also wordless to pay our humble gratitude to our parent, who
have supported us to reach the point where we stand now and have been a
great and enormous source of inspiration for us throughout the life.
TABLE OF CONTENTS
Sr#
Name
Page No
1 PROJECT SUMMARY 1 2 ASSUMPTIONS 8 3 EXECUTIVE SUMMARY 9 4 MANAGEMENT 105 Estimated Cost of Land 11
6 Estimated Cost of Civil Works 11
7 Estimated Cost of Machinery 12 8 Estimated cost of the Project and interset during construction 13
9 Initial Net Working Capital Requirement 14
10 Estimated Income Statement 15
11 Production at 100% Capacity 16
12 Capacity Utilized 17
13 Raw Material: 18
14 Estimated Cost of Labour 18
15 Year Wise Wages of Labor: 19
16 Manufacturing Overhead Cost: 20
17 Administrative And General Expenses 21
18 Year Wise Administrative Salaries: 22
19 Year Wise Depreciation: 23
20 Pre-Production Expenses: 23
21 Cash Flow Statement 24
23 Calculation of Internal Financial Rate of Return and Loan Repayment Schedule 26
24 Financial ratios 27
25 Financial Plan 28
27 Market Analysis 29
28 Technical Analysis 30
29 Manufacturing process/flow chart/diagram 31
30 Personel Analysis 33
31 SWOT Analysis 34
32 List of Machinery 35
33 Conclusion and Recomendations
34 Special Thanks
PROJECT SUMMARY
Name of Project.
Unitied Flour Mills
Location. Small industries estate bahawalpur
Nature of Industry. Flour Mills - A new Project
Product range Flour,Maida and bran
Installed Capicity 8 body flour mill
1.M.FARHAN KHIZAR 2.Amir Fraz
3 humaira kanwal
Purpose of Loan. To meet the Capital cost of the Project. Brief Description of Ma
chinery
Machinery would be purchased from local suppliers of machinery having good reputation in market in this regard.
Estimated cost of the project Debt
60% 40,6870 00 Eqyity 40% 27,1250 00 total 67,8120 00
Names of loans Picic
Long term loan
Name of machinery supplier M younas malik Satluj industries
Small industries estate shop 5’6 Cell no: 03017711033
Introduction
Wheat is one of the most important products for all of region of the world. Without wheat human life is uncompleted. It is become more important not only by the fact of improvement international value. It’s a first food item that an important for all over the world. That business also important for a Pakistan. And last decades the flour mill are increase due increase in demand of flour.
Reasons for Motivation
1. Availability of raw material 2. Availability of utilities 3. Availability of labor 4. Technical facilities
5. Whole year producing process 6. Large demand of the people. 7. Profitable Business
Proposed Location
The most feasible location for the plant would be in or near the wheat producing regions of Punjab. This is advisable as transportation costs would be reduced and contact with growers/farmers directly can be made. It is usually the case that the farmers are willing to approach the manufacturing plant directly if it is located near to their lands. However, the availability of trained personnel in the locality has to be kept in mind as well as the availability of suitable residences because costs could rise if there was a problem in the accessibility of the location from other urban area.
Decide Location
When we make investment and open a plant than we first decide the location and study some regard about the location. The best location of any plant is important and greater effect on business. The business can run if all input is available. We decide location the small industrial area of Bahawalpur followings factor should be examined.
1. Availability of raw material
The location that we decide, in that location the raw material of our plant is available. And we also examined the input constraint. And study any short and fall of raw material and how we can avoid that.
2. Availability of utilities
After the analyses of the raw material then we examine the utilities. For example power water telecommunication road and other facilities. If the all facilities are available than open a project other wise rejects.
3. Availability of labor
Then we examine labor. The workers are available for running a project.
• Available of skilled labor.
• Available of unskilled labor.
• Wage rate.
• Training of employees.
Nature of the Business
The nature of the business is partnership. Although selection totally depends upon the choice of entrepreneur. This business is based on the partnership and registered under
Name
We decide that the name of our flour mill is Bahawal Flour Mill.
Covered Area
The total area, which we want to establish a Flour mill, is 2 acres. The cost of one acre is 5million. The area required to the machinery building is 2kenal.
Human Resource Required
Labor
There are three types of the labor are required 1. Technical Labor
2. Supervisors 3. Loaders
Technical Labor
Technical labor is a permanent employee of the factory. 15 to 20 employees are required.
1. Miller. 2. Manager. 3. Shift Incharge. 4. Rule man. 5. Washer Man. 6. Silk Man. 7. Accountant. 8. Packers. 9. Others Helper. Supervisors
These are also the permanent employee of the factory.10 to 15 employees are required.
Loaders
Loaders are the contractor employee of the company. 15to20 employees are required.
What legal aspects do I need to consider while starting my business?
While starting your business, government regulations need to be considered. These regulations may also cover special incentives offered by the government for that particular sector and other laws that may govern the business. You also must decide about the form of your organization (sole proprietorship, partnership etc). Establish Flour Mill following legal procedure is follows.
Legal Procedure
Application for license to Establish Flour Mill
Applications for licenses shall be made in Form “B” (annexed herewith as annex “A”) to the Licensing Authority of the district in which the applicant carries on or intends to carry on business involving the purchase, sale or storage for sale of food grains in wholesale quantities. To obtaining license applicant have to undertake on the application Form that he agrees to abide the conditions of license given in Form “A” (annexed herewith as annex “B”). If any applicant carries on such business or intends to carry on such business in more than one district he shall apply to the District Magistrate of the district in which he usually resides. A single application may include a request to carry on business in a number of districts.
APPLICATION FORM FOR LINCENSE
1. Applicant's name. 2. Applicant's profession. 3. Applicant's residence.
4. Situation of applicant's place(s) of business with full particulars regarding the number
of house or premises, which he wants to get this license.
5. Place (s) of storage.
6. How long has the applicant been trading in food grains mentioned in the Schedule I to
8. Food grains in respect of which license is required.
9. I have carefully read the conditions of license given in Form 'A' in Schedule II
appended to the West Pakistan Foodgrains (Licensing Control) Order, 1957 and I agree to abide to them.
Date……….. Signature of the applicant.
9. Issuance of License
On receipt of application and on payment of a license fee of Rs. 10 for one district and Rs. 2 for each subsequent district the licensing authority shall issue license.
10. Renewal of License
A license granted under this order shall, unless suspended, withdrawn or cancelled continue to be in force for one year from the date of the issue of the said license but shall be renewable annually by the licensee to the licensing authority by which the license was granted and on payment of the renewal fee of Rs. 5 for the first district and Rs. 1 for each subsequent district. Renewal of licenses shall be granted on the Renewal Endorsement Form shown in Form “C” (annexed herewith as annex “D”). If any person fails to apply and to deposit the renewal fee before the date when it is due to expire the license shall not be renewed
Unless:
-A. the licensing authority is satisfied that there were good and sufficient reasons for the
delay; and
B. the licensee pays an extra fee of Rs. 5 for the first district and Rs. 1 for each
subsequent district.
11. Duplicate License
In the case of lost or damage of the license, a duplicate license shall be issued on payment of Rs. 5 for one district and Rs. 1 for each subsequent district when it is proved to the
satisfaction of the licensing authority that the original license was lost or damage in a bona fide manner.
No Objection Certificate. (NOC)
After the issue of license the owner get the No Objection Certificate (NOC) from the following department.
1-Industry Department 2- Environment Department
After the issue of (NOC) the owner starts the business properly.
No Objection Certificate Fee. (NOC)
No Objection Certificate Fee (NOC) pay the to the Industry Department and Environment Department is Rs.25000
Food Department
Food Department gives the permission of quota of wheat on the base of urban bodies live in the district.
ASSUMPTIONS
1.
Direct labour will increase every year 20%.
2.
Administration salaries will be increase 20% per year.
3.
Selling expense are 5% of sales revenue.
4.
Depreciation will be constant over the life of assets.
5.
The economic life of the project would be 10 year.
6.
The entire capital outlay would be incurred one year prior to the
commencement of commercial operation.
7.
Motor vehicles, furniture, fixtures, and equipments would be replaced
after 10 years.
8.
Salvage value at the end of the life of the project represents recovery
of working capital original value of land, book value of land and book
value of building.
EXECUTIVE SUMMARY
We are the fresh graduates of MSc A/c & Finance double specialization.
We are going to start a new business. We have made a research and seek
different type of investment opportunities in Bahawalpur region. As
Bahawalpur is an agricultural area having two major crops wheat and
cotton. We have decided to invest the flour mill because there is much
potential in this business and raw material is easily available.
As population is increasing day by day so the demand of flour is increasing
day by day so it is a very profitable project and it will contribute in the
industrial sector of Bahawalpur region.
United Flour Mill is a registered firm established with the objective of
providing flour and to fulfill the increasing demand of Bahawalpur region.
The two buy products are Maida and Bran. The mill is intending to starts it
operations initially with one plant in Chak 12BC Yazman road Bahawalpur.
It plans to expand its network latter in others Tehsils of Bahawalpur.
Initially United Flour Mill operates at 75% of the capacity. United Flour
MANAGEMENT
1. Mr. Amir Fraz
CEO
2. Mr. Farhan Khizar
GM
3. Miss. Humaira kanwal
MD
Annexure - I UNITED FLOUR MILL
Estimated Cost of Land
Sr.
No. Description Area in Unit Cost Rs ("000") Marlas Total Cost
1 Land 120 68,000 8,160 2
Registratioin & Legal Requirements 1% of cost of
Land 120 680 82
3 Stamp Duty 2% of Cost of Land 120 1,360 163
4 District Council Fee 1% of Cost of Land 120 680 82
Total Cost of Land 8,48 6 Annexure - II UNITED FLOUR MILL Estimated Cost of Civil Works Sr. No. Description Type of Unit of Covered Rate Per Rs ("000") Building Construction area Unit Total Cost 1 Machinery Hall(4 floor) RCC Square feet 10,880 700 7,616 2 Ware House(single story) RCC Square feet 5,440 400 2,176 3 office RCC Square feet 2,720 550 1,496 4 garage RCC Square feet 2,720 350 952
5 mchinery store RCC Square feet 2,720 350 952
6 work shop RCC Square feet 2,720 350 952
boundry wall 1 130000 130
main gate 1 30000 30
UNITED FLOUR MILL Estimated Cost of Machinery
Rupees ("000") Sr.No. Description Qty Unit Cost Total Cost
Grinding Section
1 Ruler bodies(USSR type)(1000mm Ruler size with ruler) 8 700,000 5,600 2 Plant Shifter(4 Section each) 4 470,000 1,880 3 Bran Finisher 1 255,000 255 4 High Pressure Suction Fan 1 300,000 300 5 Battery Cyclone 1 300,000 300 6 Air lock with Cyclone with Dividing Walls 20 155,000 3,100 7 Main Pipe(size 24inch,lenth 50feet) 2,300 8 Purification Machine 1 450,000 450 9 Low Pressure Suction Fan 1 200,000 200 10 Cyclone with Pipe(size 4*8) 1 200 11 Flour,Maida,sujji,Chollar Packing Bin(Steel) 8 155,000 1,240 12 Conveyor Werm 9" Size(feet) 2000 1,000 2,000 13 Lift Pipe(4 inch with band,8 gage) 1500 1,000 1,500 14 Ruler Body Receiver with Happer 20 5,000 100 15 Production Pipe(5 inch, 16 gage) 1500 500 750
Cleaning Section
1 Washing Machine Full Size USSR type Steel 1 550,000 550 2 Elevators with belt with bucket 56 feet length 5 312,000 1,560 3 Seperater Polland Type 4 300,000 1,200 4 Scorer 2 270,000 540 5 Suction Fan with Cyclone with Suction Pipe 4 325,000 1,300 6 Cocle Salender Polland type 2 550,000 1,100
Others
Nut Bolt,Angle,Steel Sheet,Belt,Steel Jalli,Resham Jalli,etc 100
Total Cost of Machinery 26,525
Annexure - III UNITED FLOUR MILL
Estimated cost of the Project
Sr.No. Description LCY FCY Total cost ("000")
1 Land 8,486 - 8,486 2 Building 9,792 - 9,792 3 Machinery 26,525 - 26,525 4 Installation & Erection of Machinery 5,305 5,305 5 Insurance 10% of Cost of Machinery 2,653 2,653 6 Transportaion 10% of Machinery 2,653 2,653 7 Vehicles 1,400 1,400 8 Furniture and Fixture 900 900 9 Office Equipment 3,320 3,320 10 Pre-operating expenses 2,580 2,580 11 Interest during construction 1,846
Estimated fixed cost - 65,459
Add: Net Initial Net Working Capital 2,352
Total Estimated Cost of Project 67,812
interest during construction "000"
total cost of project 67812 interest loan loan 40687 60% 1845.964
equity 27125 40%
UNITED FLOUR MILL Initial Net Working Capital Requirement
Rs. "000"
A. Current Assets:
1 Inventories:
a) Raw Material 5 Days Requirement:
I)Wheat 134 b) Finished Goods 2,721
Total Cost of Inventory 2,855 2 Advances and Deposits, & Prepayments 4
3 Accounts Receivables (2% of Sales) 1,613
4 Cash 1% of Amount withdrawn from Bank for Inventory 21 Total Current Assets 4,494
B. Possible Current Liabilities:
Less: Bank Borrowing 75% of Inventories 2,141
Initial Net Working Capital 2,352
Annexure-VI
UNITED FLOUR MILL Estimated Income Statement
Years ending September 30 : 2009 2010 2011
Sales 80,669 95,010 100,985 COST OF SALES Raw Material 16,536 17,633 18,742 Labor 15,439 18,527 22,232 Manufacturing Overheads 22,450 23,356 24,263 Depreciation 2,576 2,576 2,576
Total Cost of Goods Manufactured 57,001 62,093 67,814
Inventory Adjustment - Less 5,700 509 6,272
Cost of Sales 51,301 61,583 61,541 Gross Profit 29,368 33,426 39,444 OPERATING EXPENSES: Administrative Expenses 3,780 4,536 5,443 General Expenses 1,750 2,100 2,520 Seling Expenses 4,033 4,750 5,049 Total Operating Expenses 9,563 # 11,386 # 13,012 Operating Profit 19,804 22,040 26,431 OTHER EXPENSES:
Financial Charges on:
Long Term Loan 6,103 5,493 4,882 Amortization of Pre-Production Expenses 860 860 860
Total Other Expenses 6,963 6,353 5,742 Profit Before Tax and Worker's Fund 12,841 15,687 20,689
Profit/(Loss) Before Tax 12,841 15,687 20,689
Tax Provisions @ 40% 5,136 # 6,275 # 8,276 Net Profit 7,705 9,412 12,413 Ratios: 1 Gross Profit/Sales 36.41 35.18 39.06 2 OperatingProfit/Sales 24.55 23.20 26.17 3 Pre-Tax Profit/Sales 15.92 16.51 20.49 4 Net Profit/Sales 9.55 9.91 12.29 5 Net Profit/Equity 22 21 22 Annexure-VI-A Production at 100% Capacity
Crushing Of Wheat:
6400kg Kg of Wheat/day/machine No. of Machines % Output Quantity (000)
Flour 1 80 256 Maida 1 10 32 Bran 1 10 32 Total 100 320 Annexure-VI-A U 4 YOU Session 2008-1016
Year ending 30th September:
Capacity Utilized 2009 2010 2011
75% 80% 85%
Quantity ("000") Production of Flour:
a) Number of Units Manufactured 192 205 218 Add: Opening Inventory - 19 21 Total Units available for Sales 192 224 238 Less: Closing Inventory 10% of Production 19 21 22
Units Sold 173 204 217
Production of Maida:
b) Number of Units Manufactured 24 26 27 Add: Opening inventory - 2 3 Total Units available for Sales 24 28 30 Less: Closig Inventory 10% of Production 2 3 3
Quantity Sold 22 25 27
c) Production of Bran:
Number of Units Manufactured 24 26 27 Add: Opening Inventory - 2 3 Total Production available for Sales 24 28 30 Less: Closing Inventory 10% of Production 2 3 3
Quantity Sold 22 25 27
Sales Revenue:
Description Unit Price Rupees
75% 80% 85%
a Flour 420 72,667 85,585 90,968
b Maida 250 5,407 6,368 6,768
c Bran 120 2,595 3,057 3,249
Total Sales (a+b+c) 80,669 95,010 100,985
Annexure-VI-A
Consumption of Raw Material:
Description Quanity ("000")
Wheat 6400kg/day/Machines 240 256 272
Cost of Raw material:
Description Rs. ("000")
Wheat @ 40/kg 9,612 10,253 10,894 Packing material 6,924 7,380 7,848
Total Cost 16,536 17,633 18,742
Annexure-VI-A UNITED FLOUR MILL
Estimated Cost of Labour Labour Cost:
a) Direct Labor:
No. of Salary/Month Annual Sr. No. Milling Staff Employees /Worker Salary ("000")
1 Miller 1 35,000 420 2 Shift Incharge (Asst. miller) 1 25,000 300 3 Ruleman 2 20,000 480 4 Washing man 1 25,000 300 5 Silk man 1 22,000 264 6 Helper 8 24,000 2,304 7 Unskilled labour 12 25,000 3,600 Total 26 176,000 7,668 Add: Fringe Benefits (40% of Basic Salary) 3,067
Total Cost of Milling Staff 10,735
No. of Salary/Month Annual Sr. No. Office Staff & Production Staff Employees /Worker Salary ("000")
1 Manager 1 35,000 420 2 Accountants 2 25,000 600 3 Cashier 1 20,000 240 4 Production Clerk 2 23,000 552 5 Wheat Clerk 2 22,000 528 6 Field Supervisor 1 26,000 312 7 Gunman/Chowkidar 3 15,000 540 8 Peon 1 14,000 168 U 4 YOU Session 2008-1018
Total 13 180,000 3,360 Add: Fringe Benefits (40% of Basic Salary) 1,344
Total Cost of Office Staff & Production Staff 4,704 Assumptions:
1 Direct labor will increase every year @ 20%.
Year Wise Wages of Labor:
Sr. No. Description Years
2009 2010 2011 Rs ("000")
1 Milling Staff 10,735 12,882 15,459
2 Office Staff & Production Staff 4,704 5,645 6,774
Total Cost of Labor 15,439 18,527 22,232
Annexure-VI-A
Manufacturing Overhead Cost:
Description Rs ("000") a) Fixed Cost:
Maintenance and Depreciation:
Overhauling Expenses @ 40000 Per machine 40 Maintenance of Building @ 10% of Cost of Building 979 Maintenance of Vehicles 10% of Cost of Vehicles 140
Total Fixed Cost 8,847
b) Variable Manufacturing Expenses:
Power: @ 7.71/unit of 400/KW/Month 85% of which will be utilized 18,119 Machinery Re. 3.00 Per 40/Kg on Crusing of wheat 18
Total Variable Cost 18,137
Year ending Manufacturing Overheads as per Different Capacities:
Description Years 2009 2010 2011 Rupees ("000") 75% 80% 85% Fixed Cost 8,847 8,847 8,847 Variable Cost 13,603 14,510 15,417
Total Cost of Manufacturing Overheads 22,450 23,356 24,263
‘
Annexure-VI-A
Administrative And General Expenses
Rupees ("000") Sr. No. Designation No. of Salary/ Annual
Employees Month Salary
1 Manager 1 40,000 480 2 Accountants 2 30,000 720 3 Production Clerk 2 20,000 480 4 Cashier 1 25,000 300 5 Chowkidar/Gunman 3 15,000 540 U 4 YOU Session 2008-1020
6 Peon/Sweeper 1 15,000 180
Total 9 145,000 2,700 Add: Fringe Benefits @ 40% 58,000 1,080
Total Cost of Administrative Staff 203,000 3,780
General Expenses:
Sr. No. Description Year Exp. ("000")
1 Travelling Expenses 300 2 Printing & Stationary 200 3 Telephone, Telex, Postage 250 4 Rents, Rates and Taxes 300 5 Entertainment 200 6 Legal & Audit 250 7 Miscellaneous 250
Total 1,750
Year Wise Administrative Salaries:
No. of Rupees ("000")
Sr. No. Designation Employees 2009 2010 2011
1 Manager 1 480 576 691 2 Accountants 2 720 864 1,037 3 Production Clerk 2 480 576 691 4 Cashier 1 300 360 432 5 Chowkidar/Gunman 3 540 648 778 6 Peon/Sweeper 1 180 216 259 Total 10 2,700 3,240 3,888 Add: Fringe Benefits @ 40% 1,080 1,296 1,555
General Expenses:
Sr. No. Description Rupees ("000")
1 Travelling Expenses 300 360 432 2 Printing & Stationary 200 240 288 3 Telephone, Telex, Postage 250 300 360 4 Rents, Rates and Taxes 300 360 432 5 Entertainment 200 240 288 6 Legal & Audit 250 300 360 7 Miscellaneous 250 300 360
Total 1,750 2,100 2,520
Selling Expenses:
Selling Expenses are assumed to be 5% of Sales Revenue
Sr. No. Description Rupees ("000")
1 Selling Expenses 5% of Sales Revenue 4,033 4,750 5,049
Annexure-VI-A
Depreciation Schedule of Fixed Assets:
Total Cost
(Rs.) Rs. ("000") Sr. No. Description
1 Plant & Machinery 37,135 1,857 2 Building 9,792 490 3 Vehicles 1,400 140 4 Furniture & Fixture 900 90 -
Total 49,227 2,576
Note:- Depreciation will be constant over the life of assets.
Year Wise Depreciation: Description Years 2009 2010 2011 Rupees ("000") Depreciation 2,576 2,576 2,576 Pre-Production Expenses: Sr. No. Description Rs. ("000") 1 Registration Charges 400 2 Sales Tax Registration Charges 300 3 Consultancy & Report Preparation Charges 350 4 Printing & Stationary 250 5 Conveyance Charges 280 6 Telephone & Postage 300 6 Salaries and Wages during Construction 700
Total Preproduction Expenses 2,580
Annexure-VII
UNITED FLOUR MILL Cash Flow Statement
End of Operating Years
years ending 30th September:
Construction
2008 2009 2010 2011 SOURCES OF FUNDS:
Operating Profits - 19,804 22,040 26,431 Add: Depreciation - 2,576 2,576 2,576
Total Funds from Operation - 22,381 24,616 29,008
Other Sources:
Total Sources of Funds 67,812 22,381 24,616 29,008
APPLICATION OF FUNDS:
Investment in Fixed Assets 57,713 - - - Financial Charges during Construction 1,846 - - - Pre-Production Expenses 2,580 - - -
Repayment of:
Long Term Loan - - 4,069 4,069 Bank Borrowings - - -
Financial Charges On:
Long Term Loan - 6,103 5,493 4,882 Bank Borrowings - -
PAYMENT OF:
Taxes - 5,136 6,275 Dividends - - - -
- - - short term investment 3,000 - 5,000 10,000 Increase in Current Assets (Other than Cash) 138 4,811 573 438
Total Application of Funds 65,277 10,914 20,271 25,664
Cash Surplus/(Deficit) 2,535 11,467 4,345 3,344 Cash at the Beginning of the Year - 2,535 14,002 18,347
Cash at the end of the year 2,535 14,002 18,347 21,691
Annexure-VIII
UNITED FLOUR MILL Balance Sheet
End of
Operating Years Year ending 30th September: Construction
2008 2009 2010 2011 ASSETS: Rupees ("000")
CURRENT ASSETS:
Cash and Bank Balance 2,535 14,002 18,347 21,691 Short Term Investment 3,000 3,000 8,000 18,000 Accounts Receivable - 1,613 1,900 2,020
Inventories:
Wheat 134 481 513 545 Finished Goods - 2,850 3,105 3,391 Advances, Deposits and Prepayments 4 4 4 4
Total Current Assets 5,672 21,950 31,868 45,650
FIXED ASSETS:
Fixed Assets at Cost 59,559 59,559 59,559 59,559 Accumulated Depreciation on Fixed Assets - 2,576 5,153 7,729
Fixed Assets Net 59,559 56,983 54,407 51,830
Intangibles 2,580 1,720 860 -
Total Assets 67,812 80,653 87,135 97,480
LIABILITIES AND EQUITY: CURRENT LIABILITIES:
Taxes Payable - 5,136 6,275 8,276 Dividend Payable - -
Worker's Fund Payable - - - - Current Maturity of Log Term Debt - 4,069 4,069 4,069
Total Current Liabilities - 9,205 10,344 12,344
LONG TERM DEBTS:
Long Term Debt 40,687 36,618 32,550 28,481
Total long Term Debt 40,687 36,618 32,550 28,481 EQUITY:
Paid-Up-capital 27,125 27,125 27,125 27,125 Retained Earnings - 7,705 17,117 29,530
Total Equity 27,125 34,829 44,242 56,655 Total Liabilities and Equity 67,812 80,653 87,135 97,480
Annexure - XII
UNITED FLOUR MILL Loan Repayment Schedule
Years Opening Interest Principle Closing Balance Balance 1 40,687 6,103 4,069 36,618 2 36,618 5,493 4,069 32,550 3 32,550 4,882 4,069 28,481 4 28,481 4,272 4,069 24,412 5 24,412 3,662 4,069 20,344 6 20,344 3,052 4,069 16,275 7 16,275 2,441 4,069 12,206 8 12,206 1,831 4,069 8,137 9 8,137 1,221 4,069 4,069 10 4,069 610 4,069 -
UNITED FLOUR MILL
Calculation of Internal Financial Rate of Return
Years Capital Operating Depreciation Worker's Taxes Net Cash Net Cash Inflow Outlay Profit Fund Return (Outflow)
- 60,431 - - - - - (60,431) 1 4,811 19,804 2,576 22,381 17,570 2 573 22,040 2,576 - 5,136 19,480 18,906 3 438 26,431 2,576 - 6,275 22,733 22,295 4 - 26,431 2,576 - 8,276 20,732 20,732 5 - 26,431 2,576 - 8,276 20,732 20,732 6 2,300 26,431 2,576 - 8,276 20,732 18,432 7 - 26,431 2,576 - 8,276 20,732 20,732 8 - 26,431 2,576 - 8,276 20,732 20,732 9 - 26,431 2,576 - 8,276 20,732 20,732 10 - 26,431 2,576 - 8,276 20,732 20,732 IFRR 30%
RATIOS
Netprofit margin rationet profit net sale
year 2010 2011 2012
net profit 7704.727 9412.266 12413.34 sale 80668.71 95009.81 100985.3
net profit margin ratio 9.551073 9.906625 12.29223
Current ratio
current asst current liability year 2010 2011 2012 current asst 21950.04 31868.3 45650 current liability 9205.197 10343.56 12344.27 Current ratio 2.384526 3.080981 3.69807 U 4 YOU Session 2008-1026Debt/equity ratio
total debt totalequity year 2010 2011 2012 total debt 45823.61 42893.26 40825.26 totalequity 34829.48 44241.74 56655.09 Debt/equity ratio 1.315656 0.96952 0.720593Sponsors stake
27124.75 Amir fraz 10849.9 40% Farhan khizar 10849.9 40% Humaira kanwal 5424.95 20% 27124.75Annexure - XIII UNITED FLOUR MILL
Financial Plan
Rupees ("000")
Description LCY FCY Total cost
Total Fixed cost of the project 65,459 - 65,459 Initial Permanent working capital 2,352 - 2,352 Total cost of the project 67,812 67,812
Long Term Debt 40,687 - 40,687 Equity Participation 27,125 - 27,125 Total Capital Required 67,812 67,812
Debt/Equity Ratio
Debt-to-Equity Ratio: 60 : 40
Market Analysis
Brief description of market:Like every other industry, milling is subject to increased market pressures. Customers demand consistent quality and product variety while production efficiency must be maintained if not improved. A FOSS solution can prove an important ally in walking such a tightrope.
Pakistan has a rich and vast natural resource base, covering various ecological and climatic zones; hence the country has great potential for producing all types of food commodities. Agriculture has an important direct and indirect role in generating economic growth. The importance of agriculture to the economy is seen in three ways: first, it provides food to consumers and fibres for domestic industry; second, it is a source of scarce foreign exchange earnings; and third, it provides a market for industrial goods
Production in Pakistan for the last 5 years (000 tons):
2004-05
2005-06
2006-07
2007-08
2008-09
21612
21277
23295
20959
23421
Present demand:
P
resent demand of flour is about 25525000 tons in this current year.Demand supply gap:
The supply of flour is about 23225000 tons and demand is about 25525000 tons.
Ex-factory price(price which u will sell to whole sellers)
The ex-factory price of 20kg bag of floure is 540 The ex-factory price of 20kg bag of maida is 740 The ex-factory price of 20kg bag of bran is 220
Retail price
The retail price of 20kg bag of floure is 560 The retail price of 20kg bag of maida is 760
Distribution channel:
First of all our salse man collect the orders from whole sale dealers than from whole sale dealer the shop keeper collect the flour than ultimate consumers purchase from retail store
Strategic Recommendations
Initially, the product would be launched in the local market. The preferred mode of distribution is going directly to the wholesalers. There is an option of having no involvement of any distributor between the manufacturer and the wholesaler in the city where manufacturing is being done. By giving healthier profit margins to the wholesalers, the wholesalers will hence promote the product. This strategy is important to introduce such a product and to create an extensive distribution and sales channel. The company will later expand into other cities through a distributor network.
Technical analysis
Brief description of technical aspects:
There are five roll systems in a flour mill: break, sizing, midds (for middlings), low grade, and residue.
In the break system, the kernel is opened, the bran flattened and the endosperm broken into large chunks. Al-though some flour is produced here, the goal in the break system is not to produce a lot of flour but to maximize separation of bran from endosperm. Because the break rolls are at the beginning of the milling process, the quality of the work done here effects each subsequent step, thus determining both the yield of flour and the quality of that flour. If the rolls are too aggressive, portions of the bran may be torn or ground into dust that will be impossible to separate from the endosperm in later steps.
In the sizing system, rolls are used to further flatten and separate bran and germ from the endosperm. Sizing rolls are either finely corrugated or smooth. Coarse and fine sizings are produced on these rolls.
Most of the high quality flour is produced in the midds reduction system. Here the rolls are either very finely corrugated or smooth.
Each time stock passes between a pair of rolls, the resulting milled stock is run through a purifier, primarily gyratory bolters with stacks of sieves with different screen and cloth meshes. Vibration and air flow contribute to stratification and separation of the material. The material which will pass through ("thrus") the finest (bottom) sieve cloth in the purifier is flour. Each set of rolls thus has its own flour "stream," identified by the roll the stock came from before arriving at the purifier: 1st Break, 2nd Break, 1st Midds, Sizings, etc.
The "overs" of each sieve (particles not fine enough to pass through) are directed to another set of rolls for further reduction, or to one of the residue streams: bran, germ, shorts, or red dog. None of these end up in the flour. Indeed, any part of the wheat that does not enter one of the flour streams will be one of these four "by-products." These materials, unless there is a specialty market for them, are generally sold as feedstock.
The separation by size, grade, etc. at each stage of the milling process creates many dozens of "streams" which wind their way through the mill.
In the end, the various streams are blended and mixed to make various grades of flour, then treated with the addition of malted barley, bleaching agents,
enrichments, etc. before packaging. If all the flour streams are combined and blended, the resulting flour is "Straight Grade." 'Patent" is the flour from those streams containing the least bran and germ particles, thereby the whitest and lowest in ash. "Clear" flour, on the other hand, is from the "dirtier" flour streams. While straight and clear flours will have more protein than the patent flour from the same wheat on the same mill run, this additional protein is from the aleurone and germ, not gluten from the endosperm.
Area we will cover:
Our flour mill established in bahawalpur. We can supply of flour in bahawalpur division. There are three district in this region in which we will supply our products.
Manufacturing process/flow chart/diagram:
U 4 YOU Session 2008-10
Wheat received in the Factory
Wheat is weighted on the Plate Form
Elevator 1 Elevator 2 Elevator 3 Elevator 4
Wheat goes to Separators for Clearing Separator 1 Separator 2 Separator 3
Wheat goes to Bin to send it for
Washing
Washing Machine
Wheat goes to Bin to send it for Grinding Roller Body Sifter Packing Output is send to Market 32
3)Personnel analysis:
Factory staff:
S.NO
Type of
Staff
Number
required
Basic salary
per Person,
per month
Total
salaries per
year
1
skilled14
30000 40680002
Un-skilled12
25000
3600000ADMINISTRATION AND GENERAL STAFF
No. of Salary/Month Annual Sr. No. Office Staff & Production Staff Employees /Worker Salary ("000")
1 Manager 1 35,000 420 2 Accountants 2 25,000 600 3 Cashier 1 20,000 240 4 Production Clerk 2 23,000 552 5 Wheat Clerk 2 22,000 528 6 Field Supervisor 1 26,000 312 7 Gunman/Chowkidar 3 15,000 540 8 Peon 1 14,000 168 Total 13 180,000 3,360 Add: Fringe Benefits (40% of Basic Salary) 1,344
Total Cost of Office Staff & Production Staff 4,704 Assumptions:
SWOT Analysis
The labor to manufacture flour is easily available we can reach easily to low cost labor. Moreover the location for our project is very attractive. We can avail maximum
advantage from this market.
Weaknesses:
Our weakness is that we are not producing flour up to the present demand of the consumer. Because we have dependend on govt for wheat and electricity problem is also our weakness.
Opportunities:
Pakistan is an agricultureal country, the production of wheat is very high.flour is neccessry for all kind of people so, demand of wheat is repedly increases.also there is no enough flour mills to fullfill the demand so, there is great opportunity to establish flour mill.
Threats:
Competitive Structure of the market
The market of the flour mills is highly competitive; therefore if the entrepreneur is
not well responsive and fulfilling the demand of the consumer he/she may not be able to capitalize the opportunity properly.and the qotta system is used the supply of wheat not provided to flour mills according to their demands.
.
List of machinery
Now we will discuss the process of converting Wheat into Flour
There are two section of working area in the Hafiz flour mill 1. Washing section.
2. Grinding section.
Now we will discuss these sections and what is happening in these sections in detail.
WASHING SECTION
There are few machineries are used for the processing of flour. We will discuss these machineries in detail one by one. Following are the machineries. 1. SEPRATOR.
2. ELEVATOR.
3. SCOLDER MACHINE. 4. LOW PRESSURE FAN. 5. WASHING MACHINE. 6. STORAGE BIN.
7. MAGNETIC MACHINE.
1. Seprator
separator is the first machine which is used in the washing section and the person who operate this machine is roll man.
First when the wheat pool, there are lot of dust and mummnies in the wheat. This machine’s main function is that to separate the dust and mummnies from the wheat.
2. ELEVATOR
Elevator is the machine which is help full for lifting the wheat at each section. it is just like the lift and performing the same function of lift. There are two types of elevator are used in the mill. First is traditional elevator and other is new
technological elevator. Traditional way is that the wheat is lift through the simple belt.
Scolder Machine.
With the help of elevator the wheat is shift to the scorer machine.The scorer machine is one of the most important machines. The main function which is performed by this machine is to put out the outer layer of the wheat. This is necessary to understand that this machine put out the outer layer of dry wheat. It is necessary that the wheat is dry at least twelve hours and then put into the scorer machine.
LOW PRESSURE FAN
Low pressure fan is the fan that pressurized the wheat for the purpose of
cleaning. This means that after outing the scorer machine some dust include and this fan clean such dust. This fan is not too much power full as the high pressure fan.
Low pressure Fan
WASHING MACHINE
Washing machine acutely performs three types of functions. 1. Wash with water.
2. Further put out the outer layer 3. To put out the stones.
Wash with water.
This machine firstly washed the wheat through the water after passing the water the wheat will be too much clean and then transfer for further process.
Further putout the outer layer of wheat
After wash with the water wheat is transferred for again thrashing. In during the trashing again put out the outer layer of wheat.
Put out the Stones
Washing machine also performs the function to put out the stones from the wheat.
Magnetic Machine
Magnetic machine is used to catch the iron particles included in the wheat. In this machine magnets are installed which help to catch the iron particles.
Ruler Body
Ruler body is the machine through which grinding of wheat takes place. This is the first step of grinding. Wheat comes after the washing section firstly put into the ruler body for the grinding purpose.
Shifter
The other machine which is used in the grinding section is the shifter. This machine main function is that it shifts the flour into different categories. Categories means that special type of flour is separate from the bran and suji. There are separate boxes for each item.
PURIFIER
Purifier machine is used to make the suji.It is independent from the shifter.purifier has different boxes and each box has show different effect which means that from one box wastage material is stored and other boxes are for the preparation of suji.
Air lock is used to cease the air because if the air is include in the production then all the production may be destroy. So that’s why air lock is used to cease the air.
High pressure Fan
High pressure fan has a same function as the low pressure fan but the main difference is that the high pressure fan has a high voltage power full machine.
Battery cyclones is also help full for the cleaning and it take the pressure from the low pressure fan and the high pressure fan.
Production worm
Production worm is the line through which the final product is being passed at the packing room.
The above all the machinery is used to convert the
wheat into flour. The above is all the process of
production of flour.
We conclude that on the basis of field work and surveu of flour
mills that the flour is neccessry product so its demand increse
day by day. There is no chance to decrease the demand of
flour. Pakista is an agricultural country and wheat is the one of
the major crop. Availability of raw material is very easy. So,
conclusion is that the flour mill is a profit motive business
because no chance of decrease of demand.
Our recommendation to new investors is that they must invest
in flour mill because from the last year there is the shortage of
flour in pakistan. So, they step forward to minimize this
shortage, and also contribute in the economic as well as social
groth of Pakistan.
Special Thanks
We bow our head, before ALLAH Almighty, who blessed us with potential and stamina to complete our fesibility report on flour mill.
First of all would like to pay our special regards to Respected “Sir Mr. JAVED IQBAL” who provides us guidance at each and every step, in completion of all this fesibility report. We are especially thankful to those personalities who help us in collecting data during the fieldwork and also in our practical work.
In this regard our thanks goes to:
Mr:Arsalan rabbani, Mr: Jawad-ul-hasan, Mr: Hunain khan, Mr: hasan qureshi, Mr: Farzan rafi, mr: Shakeel ahmed, Mr: Mohsin shazad, Mr: Adnan ch and all of our class fellows.
