Financial Forecasting

SR. NO.

PARICULARS

PAGE NO.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

Executive summary Promoters profile Background Objective of study Research methodology Financial forecasting Introduction of Rice Mill Cost of project Means of finance Sources of Rice Mill Estimates of production Cost of production Assessment of working capital requirement Financial statement Projected profitability statement Assumption of profitability statement Projected depreciation schedule Repayment schedule

6 7 10 13 14 18 19 20 23 25 37 38 42 44 45 50 52 55

19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37

Projected cash flow statement Projected balance sheet Findings Conclusion Advantages Limitations Bibliography Annexure A Annexure B Annexure C Annexure D Annexure E Annexure F Annexure G Annexure H Annexure I Annexure J Annexure K Annexure L

56 58 61 62 65 66 67 68 70 71 73 75 76 78 80 81 83 85 87

Executive Summery

I have completed my summer internship at Paniya Chandwani & Co , Gondia. It is chartered accountant office , established its business in 2007.

I selected this area of work for my project since it is very much relevant in modern day business. Today, forecasting is a challenging task. Forecasting is not just about putting some numbers in place. Rather it is about having a believable story about the company, translated into numbers. These numbers should reflect the strategy of the company and its position compared to its peers and competition. I have studied about what all financial information required to carry out a project.

This project is titled as financial forecasting. To be precise it explains how the financial statements are prepared for the project. This important forecasting is performed usually by finance professionals in order to prepare financial or annual reports. These reports are usually presented to promoter and bank that will finance the project, as one of their basis in making crucial business decisions.

The finance required for the firm and its engulfing factors were studied in depth. Total cost, expenditure and the profits were forecasted for the project. As the end result of this activity, a project report containing the relevant facts and figures (projected) of the firm has been prepared for further appraisal. Details of every step taken in this regard are covered in this project report

PROMOTERS PROFILE

01 02 03

Name of the Unit Name of the Proprietor Factory Location

: : :

M/s. Trimurti Rice Mill Shri Sanjeev Tekchand Gahane Gat No. 274/3, Village - Futala Tahsil Sadak Arjuni Dist - Gondia

04

Office Address

Shri Sanjeev Tekchand Gahane Village Futala, Post Soundad Tahsil Sadak Arjuni, Dist. Gondia 441806 Dist. Gondia 441806 M.No. 9422131556

05

Constitution

Proprietor

06

S.S.I. No.

PROV. 27/011/12/00168 dated 29-06-2013 BST No. Applied CST No. - Applied

08

Sales Tax

: :

09

Product

: : :

Rice Broken Rice Rice Bran 4800 M.T. Paddy [4 M.T. X 8 X 300 Days ]

10

Installed Capacity

11

Capacity Utilisation

50%

55%

60%

65%

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Raw Materials

Paddy & Bardana

13

Utilities

345 H.P.

14

Employment

20 Persons

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Cost of the Project 1. Land 2. Mill Building 3. Mill Machinery 4. Pre-operative Expenses 5. Other Fixed Assets 6. Working Capital Margin TOTAL

: : : : ; :

(Rs. in Lacs) Freehold 31.68 95.00 1.00 0.50 37.00 165.18 (Rs. in Lacs) 50.00 60.00 23.51 31.67 165.18

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Means of Finance 1. Promoter Contribution 2. Term Loan from Bank 3. Family Deposits 4. Subsidy MOFPI TOTAL

: : : : :

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Financial Aspect Ratio 1. Debt Equity Ratio 2. Debt Service Coverage Ratio 3. Break Even Point : : : 2:1 2.00 28.47%

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Loan & Their Repayment Period 1. Term Loan

: : Rs. 60.00 Lacs in 60 monthly installment @ Rs. 105000X56 installments and 120000X1 installment.

2. Cash Credit Limit 19 Securities offered for Mortgage

: :

Rs. 40.00 lacs renewable every year Primary 1. Term Loan ( Secured against machinery ) 2. C. C. Limit (Secured against current assets) Collateral 1. Plot & Residential Construction Ground and First Floor on T. S. No. 06, Sheet No. 08, Mouja Soundad Grampanchyat area, Tah. Sadak Arjuni, Dist. Gondia. Belongs to Shri Tekchand Kusanji Gahane. Market value of the property Rs.10502822.00

The firm derives it characters, growth pattern and stability from those person whose family into its operations. The ensuing portions of this section are devoted to those group of person through whom the exploitation of this modernization program of the project will be entrusted and on whose collective judgment its future will depend. The proposed unit M/s. Trimurti Rice Mill, Futala is promoted by Shri Sanjeev

Tekchand Gahane. The promoter is experienced enthusiastic industrialist and belongs to well known GAHANE FAMILY of FUTALA a pioneer in Rice Mill, Bamboo Mats, Steel and Cement.

So, he has been promoter because of her family background and attainment and also potential capacity to contribute guidance to proposed project. The promoter and his family has a fair knowledge of local conditions and have experience of running successful ventures. So promoter have arranged most suitable site for the Rice Mill and if a chance be given to them then they will be able to prove their caliber.

Back-Ground Today, in modern age, the crust of development of a progressive society is achieved by a healthy co-operation of agrarian and industrial economies. With the basics in economics giving weightage to unending human wants, it is natural that if the output from any thing is to be achieved the inputs must be in accordance with it. If the same thing is to be pin pointed to the current business scenario today, then if business house wants optimum output then it has to give in substantial input too. For any business the output may be its sales through production or lending of services to the society, out of which profits are earned by it. The input for all kinds of business is the money poured in. As the saying goes, nothing is free in this world, every business house, be it a large multinational company or a small scale factory operating in a local market, finance is the lifeblood of all the activities. Hence every organization has to look into the matter of finance with utmost seriousness. If finance is managed well then the business is half well done. No business entity is self sufficient. It has to take help of external sources in an array of different activities that it indulges in. Similar is the case for financing of business activities. Thus businesses are financed in numerous ways. Banks require the financial viability of any project before it lends money to the applicant party. The details to be covered in such submission are organization profile, details of the project, and financial details of the project, projected profitability statement (both consolidated and yearly), projected balance sheet, and projected cash flow statement, ratio analysis, schedule for working capital and its finance.

Before we start with the actual theory base of the concepts used in this project first we will see what is project. Project, can be defined as an organized unit dedicated to the attainment of a goal i.e. successful completion of a development project on time, within budget, in conformance with predetermined programmed specification. While project differs in size, nature, objectives and complexity, they must all take part of three basic attributes. 1) Course of action 2) Specific objectives 3) Definite time The work plan must be laid down in a clear and unambiguous manner in which the predetermined project objectives are sought to be achieved, the resources which will be consumed in this process of achieving objectives. A project can also be considered as proposal involving capital investment for the purpose of the basis for classification. Project financing may be defined as the raising of funds required to finance an economically separable capital proposal in which the lenders mainly rely on established cash flow from the project to service their loan. The financing process here differs from conventional financing in the following aspect: 1. Cash flows from the project related assets alone are considered for assessing

the repaying capacity. 2. The creditors ensure proper utilization of funds and creation of assets as

envisaged in the project proposal. Funds are also released in stages as and when assets are created.

3.

The financers are keen to watch the performance of the enterprise and suggest/

take remedial measures as and when required to ensure that project repays the debt out of its cash generation. As the element of risk increase, it becomes more and more important to precisely define the scope and nature of the project objectives and to select the best possible approach so as to minimize both resources consumption and risks and to optimize the return or gains. The starting point of a project analysis is the establishment of objectives to be attained. The next stage is the pre selection stage, the advisability of having an in depth study. The analysis stage consist mainly three factors market, technical and financial analysis. Financial analysis is important here from the financing point of view. In this the emphasis is on preparation of financial statement, so that the project may be evaluated in terms of different measures of commercial profitability followed by the magnitude of financing which requires the assembly of the market and also technical cost estimated in various proforma statements. Fixing the cost of the project should be done with great care. It is the single most exercise on the basis of which the subsequent exercise of Means of financing is done. The calculation of the promoters contribution is also done on the basis of this particular exercise. Each and every item which can be conceived should be included at this stage. Another factor which is important is the fixation of the time schedule or the implementation period of the project. The help of the Bar chart is recommended which does not require any specialized knowledge like PERT or CPM.

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OBJECTIVES There are several objectives for this study, first of which is to study the steps involved in project formulation and preparation of financial statements. The second objective of study is to provide information about the financial position, performance and changes in financial position of an enterprise that is useful to a wide range of promoter in making economic decisions. Financial Statements are prepared for this purpose to meet the common needs of most users. To study all related aspects regarding the financing of the project through cash credit and term loan facility. To know, how to manage the cash for day to day requirement with the study of working Capital Management and cash flow management. To maintain a proper balance between the amount of current assets & the current liabilities in such a way that a firm is always able to meet its financial obligations whenever due. This will ensure smooth working of the unit without any production held ups due to paucity of funds. To find out the utility of financial ratio in credit analysis & determining the financial capacity of the firm Through profitability ratios understand the profitability position of the firm. To study the steps involved in project formulation for analysis. To manage and reduce the identified risks To predict the future performance of the securities under study based on the analysis. 11

Research Methodology

Step 1:

Initially I understood and analyzed the objective of my project.

Step 2:

Detailed meeting with the Senior Financial consultant of the firm and

promoter of Company for determining and understanding the financial requirement of the various stages

Step 3:

Collection and understanding the primary data.

Step 4:

Collection of secondary data analyzing previous years financial report of

other companies in the same sector.

In preparation of this project report I have used the information provided by the promoter itself, quotations received from the suppliers, observations, as well as related information is extracted from the financial reports. Primary Data: - Observation, Discussion with the Manager. - The company profile, Annual Reports, various documents submitted by the applicant along with the loan proposal has been obtained from the Bank. Secondary Data:

Secondary data relating to the procedure of assessment of working capital finance, old sanction proposals, RBI guidelines etc. have been sourced from reference books. 12

Research Type Source of Data Sample Unit Sample Sample Technique Analysis Tool used

Analytical Primary and Secondary Industries applying for loan Case studies Allocation of Case Financial Analysis

13

SAMPLING METHODOLOGY

Sampling Technique :

Initially, a rough draft was prepared keeping in mind the objective of the research. A pilot study was done in order to know the accuracy of the Questionnaire. The final Questionnaire was arrived only after certain important changes were done. Thus my sampling came out to be judgmental and convenient . The respondents who were asked to fill out questionnaires are the sampling units. These comprise of employees of MNCs, Govt. Employees, Self Employees etc. The sample size was restricted to only 20, which comprised of mainly peoples from different regions.

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LIMITATIONS OF THE RESEARCH 1. The research is confined to a certain parts of CHENNAI (MADRAS) and does not necessarily shows a pattern applicable to all of Country. 2. Some respondents were reluctant to divulge personal information which can affect the validity of all responses.

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FINANCIAL FORECASTING As an important requirement for a variety of purposes, the financial forecasting is under new focus these days. Be it for the preparation of a project report or a business plan, a budgeting exercise, corporate valuation and sometimes just for planning for the future, the Financial Forecasting is a must. Business forecasting summarizes future expectations of the business strategy and the accounting and financial analysis. It projects future expected scenario, keeping the past in view. It is like driving a car we look at the road ahead, keeping the reflection of the road behind in our line of sight. While we do not drive keeping our eyes on the rear-view mirror alone, we do occasionally look at it while proceeding ahead. The very nature of forecasting, i.e. capturing our expectation of the uncertain future, makes the task difficult. The very process of forecasting for the firm makes one alert to the possible consequences of actions taken or not taken, decisions made or not made. We cannot afford to neglect planning for the future in a business environment. It is the very uncertainty that exists that makes forecasting a challenging task. Forecasting is not just about putting some numbers in place. Rather it is about having a believable story about the company, translated into numbers. These numbers should reflect the strategy of the company and its position compared to its peers and competition.

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Introduction Of Rice Mill

This comprehensive project report deals with the establishment of Rice Mill At Futala (Soundad), Tahsil - Sadak Arjuni, aspects. District - Gondia, its viability and financial

M/s. Trimurti Rice Mill, Futala

is to be set up by Shri Sanjeev Tekchand

Gahane under Proprietary concern to process paddy for manufacturing of Rice and its by products for own.

This unit is provisionally registered with District Industries Centre, Gondia Registration 27/011/12/00168 dated 29-06-2013.

vide

The proposed Unit has obtained feasibility certificate from M.S.E.B., M.P.C.B., Noc from Grampanchayat Futala and also all other necessary documents.

The promoters approached us for preparation of project report to study the economic viability of the project and to obtain Loan. So we have prepared the report after collecting quotations from reliable Rice Mill Suppliers, discussing with client.

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COST OF PROJECT

Total cost of the project has been estimated at Rs. 165.18 Lacs. Comprising margin for working capital of Rs. 37.00 Lacs.

COST OF PROJECT

Rs. In Lacs.

Mill Building

31.68

Plant & Machinery

95.00

Pre-operative Expenses

1.00

Other Fixed Assets

0.50

Working Capital Margin

37.00

165.18

A) LAND

The promoter has freehold land admeasuring about 1500 Sq. Mt. At Gat No. 274/3A Mouza Futala, Revenue Circle Soundad, Tah. Sadak Arjuni, Dist. Gondia.

B) FACTORY BUILDING

The

cost

estimate of Rice Mill Building has been prepared by Er. Suresh Piplewar,

Architect, Gondia. The copy of cost estimate and the actual map for factory building is enclosed herewith. The total cost of the civil work has been calculated at Rs. 3167635/-. The Building Built up area 621 Sq. Mt. include the covered area required for machines, Raw material and finished goods godown, office etc.

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C) PLANT AND MACHINERY ADDITION

The cost of plant and machinery has been taken on the basis of quotations received from reputed machine suppliers and manufacturers. The Break up of cost is as given under:

Sr.No. 1

Particulars Pre Cleaner, Cleaner, Length Graders, Grain Discharger (M/s. Alpsco Garintech Private Limited, Mohali)

AMOUNT 2157000/-

Seprator (M.s. Harman Overseas, New Delhi)

1151000/-

Color Sorter (M.s. Harman Overseas, New Delhi)

2600000/-

Sheller, Polisher, Motor, Water Pump, Magnet, Blower, Cyclone, 1008645/Bran Discharger (M/s. Milltec Machinery Pvt. Ltd., Bangalore)

Air receiver, Refrigerated Air Dryer, Filter (M/s. Leintz Pneumatics Pvt. Ltd., Bangalore)

435000/-

Bran Filter Windoews, Blower, Air lock, cyclone (M/s. National vibro Motors, Meerut)

242500/-

Rice Sifter, Husk Aspirator (M/s. Suri Engineers Private Limited, Hyderabad)

323190/-

Motor (M/s. Ninad Enterprises, Nagpur)

129627/-

9 10

Electric Installation Freight, Installation & Erection TOTAL

1212670/240368/9500000/-

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D) PREOPERATIVE EXPENSES

Total preoperative expenses required for the rice mill unit is Rs. 1.00 Lacs. The details are given as follows :

1. 2.

Interest during construction period Legal Fees & Charges TOTAL

0.75 0.25 1.00

E) OTHER FIXED ASSETS

Rs. 0.50 lacs provision for other fixed assets like office furniture, fire fighting instrument, etc.

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MEANS OF FINANCE

The total project cost arrived at Rs. 165.18 Lacs is proposed to be financed as per following as per following finance mix.

MEANS OF FINANCE Promoters Equity Term Loan from Bank MOFPI Subsidy Family Deposits TOTAL The details about means of finance is as follows given

AMOUNT 50.00 60.00 31.67 23.51 165.18

A)

PROMOTOER'S EQUITY AND FAMILY DEPOSITS

Promoter's equity is estimated to Rs. 50.00 Lacs and family deposits Rs. 23.51 lacs which comes about 45% of the Capital Project Cost. The promoter's can manage the funds from their own sources and accepting the loan and deposits from the relatives and friends in their own capacity. They can also manage the funds in terms of deposits till the reimbursement of the subsidy from state Government and Central Government Grant.

B)TERM LOAN AND CASH CREDIT LIMIT

The promoter's has also approached to Bank for term Loan for Rs. 60.00 Lacs and Cash Credit Limit Rs. 40.00 lacs. Term Loan secured against fixed Assets Capital Investment which comes about 51% of the fixed assets and Cash Credit Limit secured against Current Assets.

C) MOFPI GRANT

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The proposed modern rice unit is also eligible to get Rs. 31.67 Lacs from Ministry of food Processing, Delhi for Technical Civil Work & Rice mill machinery for installing latest technology.

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Sources of Rice Mill

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Sources of Rice Mill

A. AVAILABILITY OF RAW MATERIAL

The main raw material for any Rice Mill Unit is paddy which is grown in almost all the states of the country, but its cultivation is mostly concentrated in the states of Andhra Pradesh, Bihar, Orissa, Madhya Pradesh, Punjab, Karnataka, Maharashtra and Assam which account for more than 89 percent of the total paddy produced in the country.

Although Gondia, Bhandara,Chandrapur, and Gadchiroli. District is a very much known for paddy production. At present about 80% of paddy is processed in the District itself and balance 20% of paddy is exported for Rice Processing to Tamil Nadu and Kerala. Sufficient paddy is available through out the year particularly Parmel, Swarna, Massori Gurmukhi, HMT, Kranti and Taichun varieties of

paddy cultivated by agriculturists. The paddy is also available in near districts Chandrapur, Ramtek and adjoining districts of M.P. & C.G. like Balaghat, Rajnandgaon, Durg, Raipur which are also known as paddy growing area.

Due to increased irrigation facilities summer crop of paddy is also increased. It would be optimistic that paddy production will be double by end of this decade. So for a full utilization of paddy production in the area the proposed rice mill will be considered.

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B.

MANUFACTURING PROCESS

Rice Milling Industry is one of the largest agro based industries in the country. In the past Rice Milling is gone through from hand pounding, foot pounding, hulling and dehusking by emery disc sheller etc. and now latest modern method involving dehusking by rubber roller sheller and polishing by modern mechanical techniques.

A bucket elevator

is employed for to convey paddy to paddy cleaner. Paddy cleaner cum destoner

ensures perfect cleaning of impurities i.e. straw, dust, stone etc, existing in paddy. The clean paddy fed through elevator into husker (Modern Mill) where it is dehusked with the help of rubber roller sheller and separated from the husk. The brown rice is next fed through elevator into huller for polishing in abrasive polisher, their friction polishes, where polished rice and rice bran (Kukus) got separated and are collected separately and packing in Jute Bags and are ready for Marketing.

During paddy milling rice is generally obtained 65 to 70 percent, husk is obtained 20 to 25 percent and 5 to 10 percent rice bran. The Rice Bran contains about 15 to 23 percent oil which can be obtained through solvent extraction process.

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C.

MARKETABILITY

Rice is the staple food of more that half of India population with the passage of time and even increasing population. So requirement of rice as food for human consumption also increasing because of rice has an important places in our diet. The Government is encouraging the Nutrition Food processing Industries to expand in to the rural area with its nutritious ready to eat product also for to recruit the local people for employment.

It is expected by the promoters that finished goods i.e. Rice, Broken Rice, and Rice bran can be easily sold in open market because following reasons.

1.

The production easily will be sold in free open market through existing food grains

brokers. 2. The demand of rice is much more than that is manufacturing by this unit because white

H.M.T. Rice demand day by day increasing by consumers. 3. The By-products, Rice bran and Rice broken has much more demand than its production

due to bran Solvent plant established in nearby area.

Considering all the above factors. It is thus clear that no difficulty is envisaged in marketing the product.

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D.

ECONOMIC VIABILITY AND FEASIBILITY

The demand of rice is increasing in all over the country, hence Rice Mill Industry has dynamic future in India. Moreover Gondia & Bhandara District is most Backward District in the

Maharashtra state and this District also mainly growing paddy in the state.

1.The proposed Rice Mill is situated in the middle of the paddy cultivation area so there will be low transport cost for transporting of paddy.

2.The proposed unit will be located in rural area where there is no labor problem, as well as at lower cost than urban area.

3.Also this proposed rice mill unit is situated at Futala (Soundad) on National Highway No. 6. So the transportation facility easily and economically available.

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E.

CAPACITY OF RICE MILL

The installed capacity of the proposed units is 16 tones per shift. Since the main raw material i. e. paddy which is seasonable produces, so by taking this consideration its annual capacity based on Single shift working for 300 days in year. Installed capacity will be 300 X 16 = 4800 MT. However, the unit proposed to utilize the installed capacity at 50% in first year, 55% in second years, 60% in third year and 65% in fourth and subsequent years.

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F.

PLANT UTILITIES AND SERVICES

The following utilities and services shall also be required for smooth and successful operation of the unit.

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G.

POWER

The proposed unit requires 345 H.P. Power load for Rice Mill unit. And the said load will be sanctioned by MSEB Sadak Arjuni.

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H.

FIRE FIGHTING & FIRST AIDS

A provision has been made towards the cost of fire fighting and first aids equipments in the miscellaneous fixed assets.

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I.

TRANSPORTATION

Transportation is a basic necessity for rice milling unit as well as cost of transportation is prominent factor to any industry. The unit is well connected with other parts of the state by Road and Railway. The site situated at Futala (Soundad). which connected with Railway and national highway. So proposed unit situated in ideal site.

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J.

PERSONNEL

The overall management of unit will be controlled by the proprietor of the unit because he knows all the system and technique of the unit. However he will be assisted by a Accountant who will be look after all the administrative and accounts matter. On factory side Supervisor will be assisted by suitable numbers of skilled, semi skilled and unskilled workers.

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K.

IMPLEMENTATION AND EFFECTIVE STEPS TAKEN

The promoters have taken following effective steps for the purpose of implementation of the project:

1.

Land is already acquired at Futala Soundad,

2.

NOC from Grampanchyat to establish Rice Mill plant has been obtained.

3.

Application made for Consent of Maharashtra Pollution Control Board.

4.

M.S.E.B. Feasibility Certificate etc are obtained.

5.

Rice Mill plant, electrical motors etc. Suppliers have been identified.

The breakup of various activities is given below:

S. No. 1. 2. 3. 4. 5. 6. 7.

Activity Land Site Development Building & Civil Work Machinery Order Machinery Delivery and Installation Trial Run Commercial Production

Commencement Existing 15.09.2013 01.10.2013 01.02.2014 16.02.2014 01.04.2014 06.04.2014

Completion

30.09.2013 28.02.2014 15.02.2014 31.03.2014 05.04.2014

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ESTIMATES OF SALES AND PRODUCTION Typically the starting point for profitability projection is the forecast for sales revenue. In estimating sales revenue, the following considerations should be borne in mind: 1. It is not advisable to assume a high capacity utilisation level in the first year of operation. Even if the technology is simple and the company may not face technical problems in achieving a high rate of capacity utilisation in the first year itself, there are likely to be other constraints like raw material shortage, limited power supply etc. It is sensible to assume that capacity utilisation would be somewhat low in the first year and rise thereafter gradually to reach the maximum level in the third or fourth year of operation. A reasonable assumption with respect to capacity utilisation is as follows- 40-50% of the installed capacity in the first year, 50-80 % in the second year and 80-90% from the third year onwards. 2. It is not necessary to make adjustments for stocks of finished goods. For practical purposes, it may be assumed that production would be equal to sales. 3. The selling price considered should be the price realisable by the company net of excise duty. It shall, however, include dealers commission which is shown as item of expense (as part of sales expense). 4. Selling price used may be the present selling price- it is generally assumed that changes in selling price will be matched by proportionate changes in cost of production. If a portion of production is sellable at controlled price, take the controlled price for that portion.

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COST OF PRODUCTION Given the estimated production, the cost of sales may be worked out. The major components of cost are: Material cost Labour cost Expense Material cost: this is the cost of commodities and material used by the firm. It can be direct or indirect. Direct material indicates that material which can be identified with the individual cost centre and which becomes an integral part of finished goods. It basically consists of all raw materials, either purchased from outside or manufactured in house. Indirect material indicates that material which cannot be identified with the individual cost centre. This material assists the manufacturing process and does not become integral part of finished goods. The examples of this material may be cotton wastes, oils and lubricants, inventory material etc. Labour: this is the part of remuneration paid to the employees of the firm. It can be direct or indirect. Direct labour cost indicates that labour cost which can be identified with the individual cost centre and is incurred for those employees who are engaged in the manufacturing process. Indirect labour cost indicates that labour cost which cannot be identified with the individual cost centre and is incurred for those employees who are not engaged in the 36

manufacturing process. The examples of this cost are wages paid to the foreman/storekeeper salary of works manager accounts/personnel department salaries. Expenses: this is the cost of services provide to the firm and notional cost of assets only. It can be direct or indirect. Direct expenses are those which can be identified with the individual cost centre. the examples of this expense are hire charges of machinery/equipments required for the particular job, cost of defective work for a particular job, etc. Indirect expenses are those expenses which cannot be identified with individual cost centre. The examples of these expenses are rent, telephone expenses, insurance, lighting, etc. The above elements of cost can be shown as below.

The aggregate of direct material cost, direct labour cost, direct expenses is termed as production/prime cost. The aggregate of indirect material cost, indirect labour, indirect expenses is termed as overheads. Overheads: For the proper interpretation and presentation of cost, the term overheads may be further classified as below 37

o Factory overheads ( production/other manufacturing overhead) o Office and administration overheads o Selling and distribution overheads Factory overhead: these overheads consist of all overhead costs incurred from the stage of procurement of material till the stage of production of finished goods. They include: Indirect material such as consumable stores, cotton wastes, oil and lubricants, etc. Indirect labour cost such as wages paid to foreman/storekeeper, works manager salary, etc. Indirect expenses such as carriage inward cost, factory lighting, power expenses, rent/insurance/repairs for factory building/machinery, depreciation on factory building/machinery, etc.

Office and administration overhead: these overheads consist of all overheads costs incurred for the overall administration of the firm. They include: Indirect material such as stationery items, office supplies, etc. Indirect labour cost such as salaries paid to the accountants and administration staff, directors remuneration, etc. Indirect expenses such as postage/telephone, rent/insurance/repairs/depreciation on office building, general lighting, legal/audit charges, bank charges, etc. 38

Selling and distribution overheads: These overheads consist of all overheads costs incurred from the stage of final manufacturing of finished goods till the stage of sale of goods in the market and collection of dues from the customers. They include: Indirect material such as packing material, samples etc. Indirect labour like salaries paid to sales personnel, commission pais to sales manager etc. Indirect expenses like carriages outwards, warehouse charges, advertisement, bad debts, repairs and running of distribution van, discount offered to customers etc.

Projected format of cost of production as shown in Annexur J & L

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WORKING CAPITAL REQUIREMENT AND ITS FINANCING In estimating the working capital requirement and planning for its financing, the following points have to be borne in mind: 1. The working capital requirement consist of following: Raw materials and components (indigenous as well as imported) Stocks of goods-in-process (also referred to as work-in-process) Stocks of finished goods Debtors and Operating expenses 2. The principal sources of working capital finance are: Working capital advances provided by commercial banks Trade credit Accruals and provisions Long term sources of financing 3. There are limits to obtaining working capital advances from commercial banks. They are in two forms : The aggregate permissible bank finance is specified as per the norms of lending, prescribed by the Tandon committee.

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 Against each current asset a certain amount of margin money has to be provided by the firm. 4. The Tandon committee has suggested three methods of determining the maximum permissible the amount of bank finance for working capital. The method that is generally employed now is the second method. 5. The margin requirement varies with the type of current assets. While there is no fixed formula for determining the margin amount. Projected table of Working capital as shown in Annexure L

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FINANCIAL STATEMENTS Definition: Financial statements (or financial reports) are formal records of a business' financial activities. These statements provide an overview of a business' profitability and financial condition in both short and long term. There are three basic financial statements: Profitability projections/income statement Cash flow statement Balance sheet

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Profitability projections (or income statement):-

Income statement also called a Profit and Loss Statement (P&L), is a financial statement that reports a company's results of operations over a period of time for companies that indicates how revenue (money received from the sale of products and services before expenses are taken out) is transformed into net income (the result after all revenues and expenses have been accounted for ).The purpose of the income statement is to show managers and investors whether the company made or lost money during the period being reported. Given the estimates of sales revenues and cost of production, the next step is to prepare the profitability projections or estimates of working results (as they are referred to by term- lending financial institutions in India). The estimates of working results may be prepared along the following lines: ABCCost of production Total administrative expenses Total sales expenses

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DEFGHIJKLMNO-

Royalty and know-how payable Total cost of sale (A+B+C+D) Expected sales Gross profit before interest Total financial expenses Depreciation Operating profit (G-H-I) Other income Preliminary expenses written-off Profit/loss before taxation (J+K-l) Provision for taxation Profit after tax (M-N)

LESS: dividend on preference capital and equity capital PQRetained profit Net cash accrual (P+I+L)

Cost of production: This represents cost of materials, labour, utilities, and factory overheads. Total administrative expenses:

44

This consist of administrative salaries, remuneration to directors, professional fees, light, postage, telegrams, and telephones, and office supplies (stationary, printing, etc.), insurance and taxes on office property, and miscellaneous items. Total sales expense: The expense included under this head are ; commission payable to dealers, packing and forwarding charges, salary of sales staff (which may be increased at 5% per annum), sales promotion and advertising, and other miscellaneous expenses. The selling expenses depend mainly on the nature of industry and a kind of competitive conditions that prevail. Typically, selling expenses vary between 5-10% of sales. The experience of similar firms in the industry may be used as a basic guideline. Royalty and know-how payable: Royalty and know-how payable annually may be shown here. The royalty rate is usually 2-5% of sales. Further, royalties is payable often for a limited no. Of years, say 5-10 years.

Total cost of sales: This is simply sum of Cost of production, Total sales expense, total sales expenses, Royalty and know-how payable. Expected sales: The figure of expected sales is drawn from the estimates of sales and production prepared earlier in the financial analysis and projection exercise. Gross profit before interest: This represents the difference between expected sales and cost of production. Other income:

45

This represents income arising from transactions not part of the normal operations of the firm. Examples of such transactions are sale of machinery, disposal of scraps, etc. Except disposal of scrap, which can be reasonably anticipated and estimated, the effects of other non operating transactions can hardly be estimated. Of course, when non operating transaction result in deficit, others income would be negative- put differently, there will be non operating loss. Write-off of preliminary expenses: Preliminary expenses up to 2.5% cost of the project or capital employed, whichever is higher, can be amortised in five equal instalments. Profit/ Loss before taxation: This is equal to: operating profit + other income write-off of preliminary expenses. Provision for taxation: To figure out the tax burden, a sound understanding of the income Tax act- a complicated legislation- and relevant case laws is required. While calculating the Taxable income, a variety of incentives and concession have to be taken into account. Once the taxable income, as per the income act, is calculated, the tax burden can be figured out fairly easily by applying the appropriate tax rates. Details pertaining to tax calculation are discussed in an appendix at the end of the book. Profit after Taxation: This is simply profit/loss before taxation minus provision for taxation. A part of profit after tax is usually paid out as dividend-dividend on preference capital and dividend on equity capital. Retained profit: The difference between profit after tax and dividend payment is referred to as retained profit. It is also called ploughed back earnings.

46

Net cash accrual: The net cash accrual from operations is equal to: retained profit + depreciation + write-off of preliminary expenses + other non cash charges. Projected Cash Flow Statement as shown in Annexure A

47

ASSUMPTION OF PROFITABILITY ESTIMATES

The cost of production and profitability of the project its first 5th year is calculated and is presented in Annexure 'A'. The various assumptions made for the calculation of cost of production and profitability are given below :

1.

The unit will work for 300 days in year on Single shift basis.

2.

The installed capacity of the plant is 4800 MT paddy per annum.

3.

The capacity utilisation has been assumed at 50% in the first year 55% in the second

year, 60% in third year and 65% in the fourth year and onwards.

4.

The promoter will utilized 100% capacity for own manufacturing.

5.

The sales prices are considered at ex-factory basis based on prevailing market prices.

6.

The cost of raw materials i.e. paddy has been assumed at F.O.R. Mill basis.

7.

The details of man power requirement has been shown in Annexure 'J' and the

employees benefit have been @ 25% of salary & wages.

8.

Every year an increase of 10% on total salary and wages of previous year has been

assumed.

9.

Provisions for repairs and maintenance has been taken at 5% on total cost of Plant &

Machinery. In every year an increase of 10% on previous year has been assumed.

48

10.

The interest on Bank Term Loan & Cash Credit Limit have been taken 13.00% p.a. due

to the unit is registered S.S. I. Unit.

11.

Details of administrative expenses have been given in Annexure 'K' & every year 10%

increase in administrative Expenses.

12.

Depreciation has been calculated on W. D. V. method.

49

Projected Depreciation:

Fixed assets are primarily held to carry on the business and as such no intention to resale it. As a result of actual use of assets, there is fall in the value of asset; since most of the assets have limited number of years of useful life. Depreciation is that portion of fixed assets which is expired in earning revenue. According to carter Depreciation is the gradual and permanent decrease in the value of an asset from any cause Causes of depreciation: Physical deterioration Expiration of time Obsolescence Exhaustion

Methods of charging depreciation: 50

There are mainly two methods of charging depreciation. 1. Straight line method or fixed instalment method 2. Written down value method or reducing balance method Straight line method: A fixed percentage of the original cost of the asset is charged as depreciation each year during the life of the asset. This reduces the original cost of the asset to zero or to its scrap value at the end of its useful life. Written down value; In this case, rate of depreciation is fixed. Amount of depreciation is calculated by applying fixed rate to the reduced balance (written down value) of the fixed asset except in the year of purchase of fixed asset. It is calculated by using following formula: WDV = original cost total depreciation charged up to the date This is an important item, particularly for capital intensive projects. In figuring out the depreciation charge, the following points should be borne in mind: 1. Contingency margin and pre-operative expenses providing in estimating the cost of project should be added to fixed assets proportionately to ascertain the value of fixed assets for determining the depreciation charge. 2. Preliminary expenses in excess of 2.5% of the project cost (excluding working capital margin) should be added to fixed assets proportionately to ascertain the value of fixed assets for determining the depreciation charge. 3. The income tax act specifies that the written down value method should be used for tax purposes. It further specifies the rate of depreciation applicable to different kind of assets. 51

The key depreciation rates under the companies act are already shown in the basis and presumption table. Projected Depriciation as shown in Annexure F

52

Repayment Schedule It consist of interest on term loans, interest on bank borrowings, commitment charges on term loans, and commission on bank guarantees. The principal finance expenses, of course, are interest on term loans and interest on bank borrowings. In estimating the interest on term loans, two points should be borne in mind; o Interest on term loan is based on the present rate of interest charged by the term lending financial institutions and commercial banks. o Interest amount would decrease according to the repayment schedule of term loan. The interest on bank borrowings may be estimated as follows; o Determine the total requirement of the working capital. o Find out the quantum of bank borrowing that would be available against the total working capital requirement Calculate the interest charges on the basis of the prevailing interest rates.

53

Projected cash flow statement:-

Cash Flow statement is a statement, which measures inflows and outflows of cash on account of any type of business activity. The cash flow statement also explain reasons for such inflows and outflows of cash so it is a report on a company's cash flow activities, particularly its operating, investing and financing activities. The cash flow statement shows the movement of cash into and out of the firm and its net impact on the cash balance with the firm. The format for preparing the cash flow statement, which is really a cash flow budget, as prescribed by the all-India Financial Institutions is shown in the table. While this format calls for preparing the cash flow statement on a half yearly basis for the construction period and annual basis for the operating period (for 10 years) for the managerial purposes, it may be helpful to prepare it on quarterly basis for the construction period and half yearly basis for the first 2 to 3 operating years for the managerial purposes. This would facilitate better financial planning, project evaluation and fund control. The way in which cash flow Statement can be prepared, takes the following form. Opening Cash Balance Add: Sources of cash

54

Less: Applications of cash Closing Cash Balance. Projected Cash Flow Statement as shown in Annexure B

55

Projected Balance sheet:-

Balance sheet: also referred to as statement of financial position, it is a statement of the book value of all of the assets and liabilities (including equity) of a business at a particular date. A balance sheet is often described as a "snapshot" of the company's financial condition on a given date. The balance sheet, showing the balances in various assets and liability accounts, inflates the financial condition of the firm at given point of time. The format of balance sheet prescribed by the companies act is given below; Format of Balance prescribed by the companies act Liabilities Share capital Reserves and surplus Secured loan Unsecured loans Current liabilities and provision Assets Fixed Assets Investments Current assets, loans and advances Miscellaneous expenditures and losses

The liabilities side of balances sheet shows the sources of finance employed by the business. A word about its component shown on the left side of the table is in order. Share capital consists of paid up equity and preference capital. Reserve and surplus represents mainly the accumulated retained earnings. They are shown in different accounts like the capital reserves, the investment allowance reserve, and general reserve. A secured loan represents the borrowings of the firm against which security has been provided. The important component secured loans are

56

debentures, term loans from financial institutions, and loans from commercial banks. An unsecured loan represents borrowings against which no specific security has been provided. Important constituent are: fixed deposits from public and unsecured loans form promoters. Current liabilities are obligations which mature in near future, usually a year. This obligation arises mainly from items which operating cycle: payable from acquiring materials and supplies used in production, and accrual of wages, salaries, and rentals. Provision include mainly tax provision, provision for provident fund, provision for pension and gratuity, and provision for dividends. The assets side of balance sheet shows how funds have been used in the business. The major asset components may be described briefly. Fixed assets are tangible long-lived resources ordinarily used for producing goods and services. They are shown at original costs less depreciation. Investment represents financial security owned by the firm. Current asset, loans and advances consists of cash, debtors, inventories of different kinds and loans and advances made by the firm. Miscellaneous expenditure and losses represents outlays not covered by the previously described asset account and accumulated losses, if any. For preparing projected balance sheet at the end of year n+1, we need information about the following: The balance sheet at the end of year n The projected income statement and distribution of the earnings for the year n+1 The sources of external financing proposed to be tapped in the year n+1 The proposed repayment of debt capital( long term, intermediate term, and short term) during the year n+1

57

 The outlays and disposal of fixed asset during year n+1 The changes in the level of current assets during year n+1 The changes in other assets and certain outlays like preoperative and preliminary expenses which are capitalised during year n+1 The cash balance at end of year n+1 Projected Balance sheet as shown in Annexure C

58

FINDINGS After completion of this project in consideration one can easily understand the process of project formulation, projection of profits. It is evident that the process that involves a detailed study of the nature of the business and its other financial aspects. Other aspects such as good rapport with banker, credibility with bank make this process faster and smoother. This study has been taken up with main intention of preparing financial report/forecasting and financial details of the company there after. The projected financial details of five years represent the financial position, and profitability of the company. The brief description of the study is given below: A) Projected Profitability of company: In the first financial year 2008-09 shows projected loss of Rs57000, because of high expenses in the first year. After the first year projected increase in profitability of the company will gradually rise up to Rs70 lacs at the end of fifth year, which is achieved by maintaining fixed cost and increasing sales continuously. B) Financial position: As the cash credit facility and term loan gives the flexibility in the operations which will smoothen the growth of the business. But in the fifth year, there is an opportunity for expansion of the business as the total term loan liability becomes zero (which gives tax exemption benefits).

59

CONCLUSION The financial forecasting is one of the useful tools which are used for any new start-up. It is utilised for the preparation of a project report or a business plan, a budgeting exercise, corporate valuation and sometimes just for planning for the future; the Financial Forecasting is a must. The financial forecasting portraits the realistic picture of business enabling the entrepreneur for future of business. Business forecasting summarizes future expectations of the business strategy and the accounting and financial analysis. It projects future expected scenario, keeping the past in view. This financial forecasting gives all the financial details about project which further assist the production department to make the production schedule plans. There are lots of old techniques used in C.A Office which is time consuming and

people working by those techniques take more time to do their work so It is time consuming as well as there maintenance is more and there is also wastage of money e.g., typewriter is used instead of computer. On the survey it is clear that the various internal resources and human resources of the company decrease year after year and the main important resources which is man power resources also decreases. The organization has lots of paper work which take lots of extra time and there is chance of misuse of important papers, documents etc, so there should be reduction in work. paper

60

SUGGESTION

Time consuming : every activity follow long procedure, and it take more time

so it is important to avoid such types of long procedure and adopt the short cut method.

Money wastage :

office and administration

require lots

of

paper and

administrative things, by which the money were waste so it is necessary to adopt new types of methods and technologies.

Technology : It is important that out dated technology

are not used for

administrative purpose.

Jobs have limitation

some times employees take more time to do small and

same type of work therefore the employees are also bored to do the same activities all the time and their also efficiency decreases, and the worker who is efficient in their

work do not work up to the mark. So in this types of situation such types of conditions are made by which employee enjoy their work and not to be bore.

On comparing the last 7 year financial reports the loss is more as compare to

profit, so organization take some action on this. The success of organization depend upon their internal and man power resourses

and these resourses decrease year after year so the organization take some action on this also.

61

Before delegated the authority to the worker it is important to give some training

and instruction to the worker by which he complete the work in effective manner. And in case of accounts & cost sheet their should be a advisor or a guide who guide the new or ineffective worker to whom work is delegated.

62

ADVANTAGES

*. It helped me to increase my knowledge in management field while working within the organisation.

*. I got the practical knowledge by doing project in the company.

*. The working pattern of the organization is understood.

*. The behavior of colleagues , workers and managers is understood.

*. It helped me to analysis the different departments of the organisation.

63

LIMITATION OF THE PROJECT

1)

Raw material cost has been taken considering the last two years trend of

the market. They are expected to vary according to the market conditions. 2) Term repayment schedule has been considered as one year moratorium

and four and years repayment. 3) Interest rates have been considered at 13% for term loan and 15% for

working capital. As the unit is a new unit coming up in Aurangabad, it is eligible to get subsidy on loan taken from financial institutions. The unit can avail this benefit under the state interest subsidy scheme of Government of Maharashtra.

64

Bibliography Project report Financial Forecasting- MBA 2007-2009 VIM, Pune. Financial Management, N.M. Vechalekar. Financial Management, Ravi M. Kishore. Projects planning, analysis, selection, implementation and review, by Prasanna

Chandra, TATA McGraw hill. Management Accounting, by Satish Inamdar, Everest publishing house. Direct Taxes, by Girish Ahuja and Ravi Gupta, Bharat law house,

65

Annexure A

PROFITABILITY STATEMENT
ANNEXURE 'A' Rs. in Lacs

PARTICULARS

2015 Year

2016 Year

2017 Year

2018 Year

2019 Year

Capacity Utilisation

50%

55%

60%

65%

65%

65%

A. SALES (Rice, Rice Bran & Rice Broken) TOTAL A 424.32 424.32 511.84 511.84 568.99 568.99 628.92 628.92 628.92 628.92 628.92 628.92

B. COST OF PRODUCTION Raw Material Consumed Power Wages including benefits Repairs & Maintanance Depreciation 384.00 17.37 4.50 4.75 17.62 428.24 435.60 19.11 5.00 5.25 15.14 480.10 489.60 20.85 5.50 5.75 13.01 534.71 546.00 22.59 6.00 6.25 11.19 592.03 546.00 22.59 6.50 6.75 9.63 591.47 546.00 22.59 7.00 11.00 9.21 595.80

Add : Opening Stock of Finished Goods Less : Closing Stock of Finished Goods TOTAL B

0.00 39.00 389.24

39.00 45.00 474.10

45.00 51.00 528.71

51.00 57.00 586.03

57.00 63.00 585.47

110.00 115.00 590.80

C. Administrative Expenses D. Selling Expenses 1% of Sales E. Interest - Term Loan

3.00 4.24 7.39

3.30 5.12 5.82

3.60 5.69 4.18

3.90 6.29 2.54

4.20 6.29 0.91

4.50 6.29 0.00

66

Cash Credit Limit Family Deposit TOTAL ( C + D + E) F. Grand Total (B + C + D + E) G. Profit Before Tax (A - F) H. Taxation I. Profit After Tax (G - H)

4.00 4.00 22.63 411.87 12.45 2.00 10.45

4.00 4.00 22.24 496.34 15.50 2.94 12.56

4.00 4.00 21.47 550.18 18.81 3.96 14.85

4.00 4.00 20.73 606.76 22.16 5.00 17.16

4.00 4.00 19.40 604.87 24.05 5.58 18.47

4.00 4.00 18.79 609.59 19.33 7.14 12.19

67

Annexure B CASH FLOW STATEMENT

ANNEXURE 'B' Rs. in Lacs

PARTICULARS

GESTATION PERIOD

2015 Year

2016 Year

2017 Year

2018 Year

2019 Year

A) SOURCE OF FUND 1. Net Profit after tax but added back depreciation 2. Increase in Capital 3. Increase in Term Loan 4. Cash Credit Limit Bank 5. Increase in Subsidy 6. Increase in Family Loan 7. Increase in Current Liabilities TOTAL 'A' 0.00 50.00 60.00 0.00 0.00 20.00 0.00 130.00 28.07 0.00 0.00 40.00 0.00 20.00 3.00 91.07 27.70 0.00 0.00 0.00 31.67 0.00 0.50 59.87 27.86 0.00 0.00 0.00 0.00 0.00 0.50 28.36 28.35 0.00 0.00 0.00 0.00 0.00 0.00 28.35 28.10 0.00 0.00 0.00 0.00 0.00 0.00 28.10 21.40 0.00 0.00 0.00 0.00 0.00 0.00 21.40

B) DISPOSAL OF FUNDS 1. Increase in Fixed Assets 2. Increase in Investment 3. Increase in Debtors 4. Increase in Inventory 5. Repayment of Term Loan 6. Withdrawals TOTAL 'B' 128.18 0.00 0.00 0.00 0.00 0.00 128.18 0.00 1.00 9.00 71.00 9.45 1.00 91.45 0.00 32.67 2.00 11.00 12.60 1.00 59.27 0.00 1.00 2.00 11.00 12.60 1.00 27.60 0.00 1.00 2.00 11.00 12.60 1.00 27.60 0.00 1.00 2.00 11.00 12.75 1.00 27.75 0.00 1.00 5.00 10.00 0.00 1.00 17.00

9. Opening Balance 10. Surplus ( A - B) Closing Balance

Nil 1.82 1.82

1.82 -0.38 1.44

1.44 0.60 2.03

2.03 0.76 2.79

2.79 0.75 3.54

3.54 0.35 3.89

3.89 4.40 8.29

68

Annexure C
PROJECTED BALANCE SHEET

ANNEXURE 'C' Rs. in Lacs

PARTICULARS

2015 Year

2016 Year

2017 Year

2018 Year

2019 Year

CAPITAL AND LIABILITIES Promoter Capital Add: Net Profit 50.00 10.45 60.45 Less: Withdrawals 1.00 59.45 Term Loan from Bank Cash Credit Limit Family Deposits Sundry Creditors TOTAL 50.55 40.00 40.00 3.00 193.00 59.45 12.56 72.00 1.00 71.00 37.95 40.00 40.00 3.50 192.45 71.00 14.85 85.85 1.00 84.85 25.35 40.00 40.00 4.00 194.20 84.85 17.16 102.01 1.00 101.01 12.75 40.00 40.00 4.00 197.76 101.01 18.47 119.48 1.00 118.48 0.00 40.00 40.00 4.00 202.48 118.48 12.19 130.67 1.00 129.67 0.00 40.00 40.00 4.00 213.67

PROPERTIES AND ASSETS

Fixed Assets Less: Subsidy Depreciation

128.18 0.00 17.62 110.56

110.56 31.67 15.14 63.75 33.67 82.00 11.00

63.75 0.00 13.01 50.74 34.67 93.00 13.00

50.74 0.00 11.19 39.55 35.67 104.00 15.00

39.55 0.00 9.63 29.92 36.67 115.00 17.00

29.92 0.00 9.21 20.71 37.67 125.00 22.00

Investment Current Assets: Stock Debtors

1.00 71.00 9.00

69

Cash & Bank Balance TOTAL

1.44 193.00

2.03 192.45

2.79 194.20

3.54 197.76

3.89 202.48

8.29 213.67

70

Annexure D

CALCULATION OF BREAK EVEN OF POINT ANNEXURE 'D' Rs. in Lacs

PARTICULARS Capacity Utilisation A. SALES B. VARIABLE COST : Raw Material Consumed Wages Including Benefit Repairs & Maintanance Power Selling Expenses Administrative Expenses 50% Interest on Cash Credit Limit Contribution (B) C. Contribution (A - B) D. FIXED COST Depreciation Power Administrative Expenses 50% Interest on Term Loan TOTAL

2015 Year 50% 463.32

2016 Year 55% 517.84

2017 Year 60% 574.99

2018 Year 65% 634.92

2019 Year 65% 634.92 65% 633.92

384.00 4.5 4.75 15.37 4.24 1.50 8.00 422.36

435.60 5.00 5.25 17.11 5.12 1.65 8.00 477.73

489.6 5.5 5.75 18.85 5.69 1.80 8.00 535.19

546 6.00 6.25 20.59 6.29 1.95 8.00 595.08

546 4.10 6.75 20.59 6.29 2.10 8.00 593.83

546 4.10 11.00 20.59 6.29 2.25 8.00 598.23

40.96

40.11

39.80

39.84

41.09

35.69

17.62 2.00 1.50 7.39 28.51

15.14 2.00 1.65 5.82 24.61

13.01 2.00 1.80 4.18 20.99

11.19 2.00 1.95 2.54 17.68

9.63 2.00 2.10 0.91 14.64 71

9.21 2.00 2.25 0.00 13.46

'C' D. BREAK EVEN VALUE OF SALES E. BREAK EVEN % OF SALE OF PRODUCTION Fixed Cost X 100 Contribution Average B. E. P. 30.44 % 34.81% 33.75% 31.65% 28.85% 23.15% 24.51% 322.53 317.76 303.27 281.83 226.16 239.07

72

Annexure E

CALCULATION OF D. S. C. R.
ANNEXURE 'E'

PARTICULARS

2015 Year

2016 Year

2017 Year

2018 Year

2019 Year

Net Profit after tax and Depreciation Depreciation Interest on Term Loan TOTAL 'A' Repayment of Term Loan Interest on Term Loan TOTAL 'B' D. S. C. R. (A/B)

10.45 17.62 7.39 35.46

12.56 15.14 5.82 33.52

14.85 13.01 4.18 32.04

17.16 11.19 2.54 30.89

18.47 9.63 0.91 29.01

12.19 9.21 0.00 21.40

9.45 7.39 16.84

12.60 5.82 18.42

12.60 4.18 16.78

12.60 2.54 15.14

12.75 0.91 13.66

0.00 0.00 0.00

2.11

1.82

1.91

2.04

2.12

Average D. S. C. R.

2.00

73

Annexure F

DEPRECIATION SCHEDULE WRITTEN DOWN VALUE

ANNEXURE 'F' Rs. in Lacs

PARTICULARS

RATE OF DEP.

COST

2015 Year

2016 Year

2017 Year

2018 Year

2019 Year

Land (Freehold)

Nil

0.00

0.00

0.00

0.00

0.00

0.00 0.00

Rice Mill Building

10%

31.68

3.17

2.85

2.57

2.31

2.08 2.79

15% Rice Mill Plant with Electric Installation and Pre-Operative Expenses

96.00

14.40

12.24

10.40

8.84

7.52 6.39

Other Fixed Assets

10%

0.50

0.05

0.05

0.04

0.04

0.03 0.03

TOTAL

128.18

17.62

15.14

13.01

11.19

9.63 9.21

74

Annexure G

REPAYMENT OF TERM LOAN AND INTEREST

ANNEXURE 'G' Loan Interest Rate First Installment YEAR & MONTHS YEAR 2014-15 Aril May June July August September October November December January February March YEAR 2015-16 Aril May June July August September October November December January February March YEAR 2016-17 Aril May June O/S. : Rs. 60.00 Lacs No. of Installment : 13.00% Moratorium Period : End of 4th monInstallment Amount th of 1st Year REPAYMENT INTT. : 57 months : 3 Months : Rs. 105000 * 56 : Rs. 120000*1 REPAYMENT & INTEREST

60.00 60.00 60.00 60.00 58.95 57.90 56.85 55.80 54.75 53.70 52.65 51.60 TOTAL 50.55 49.50 48.45 47.40 46.35 45.30 44.25 43.20 42.15 41.10 40.05 39.00 TOTAL 37.95 36.90 35.85

0.00 0.00 0.00 1.05 1.05 1.05 1.05 1.05 1.05 1.05 1.05 1.05 9.45 1.05 1.05 1.05 1.05 1.05 1.05 1.05 1.05 1.05 1.05 1.05 1.05 12.60 1.05 1.05 1.05

0.65 0.65 0.65 0.65 0.64 0.63 0.62 0.60 0.59 0.58 0.57 0.56 7.39 0.55 0.54 0.52 0.51 0.50 0.49 0.48 0.47 0.46 0.45 0.43 0.42 5.82 0.41 0.40 0.39

16.84

18.42

75

July August September October November December January February March

34.80 33.75 32.70 31.65 30.60 29.55 28.50 27.45 26.40 TOTAL

1.05 1.05 1.05 1.05 1.05 1.05 1.05 1.05 1.05 12.60

0.38 0.37 0.35 0.34 0.33 0.32 0.31 0.30 0.29 4.18

16.78

YEAR & MONTHS YEAR 2017-18 Aril May June July August September October November December January February March YEAR 2018-19 Aril May June July August September October November December January February March YEAR 2019-20 Aril May

O/S.

REPAYMENT INTT.

REPAYMENT & INTEREST 0.27 0.26 0.25 0.24 0.23 0.22 0.21 0.20 0.18 0.17 0.16 0.15 2.54 0.14 0.13 0.12 0.10 0.09 0.08 0.07 0.06 0.05 0.04 0.02 0.01 0.91 0.00 0.00

25.35 24.30 23.25 22.20 21.15 20.10 19.05 18.00 16.95 15.90 14.85 13.80 TOTAL 12.75 11.70 10.65 9.60 8.55 7.50 6.45 5.40 4.35 3.30 2.25 1.20 TOTAL 0.00 0.00

1.05 1.05 1.05 1.05 1.05 1.05 1.05 1.05 1.05 1.05 1.05 1.05 12.60 1.05 1.05 1.05 1.05 1.05 1.05 1.05 1.05 1.05 1.05 1.05 1.20 12.75 0.00 0.00

15.14

13.66

76

June July August September October November December January February March

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 TOTAL

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

0.00

77

Annexure H CALCULATION OF TERM LOAN FROM BANK

ANNEXURE 'H'
PARTICULARS TOTAL COST RATE MARGIN AMOUNT RATE BANK LOAN AMOUNT

Rice Mill Building

31.68

53%

21.68

32%

10.00

Rice Mill Machinery

95.00

47%

45.00

53%

50.00

Pre-Operative Expenses

1.00

100%

1.00

----

----

Other Fixed Assets

0.50

100%

0.50

----

----

TOTAL

128.18

68.18

60.00

78

Annexure I DETAILS OF CONSUMPTION OF PADDY AND SALE OF RICE, RICE BROKEN AND RICE BRAN
ANNEXURE ' I ' (Quality in M. T. / Rs. in Lacs PARTICULARS 2015 Year 2016 Year 2017 Year 2018 Year 2019 Year

Installed Capacity Capacity Utilisation Paddy Consumed Rate of Paddy/Ton Value of Paddy Consumed A) Rice Production (50% of Paddy) Rate / Ton Sales Value (a) B) Rice Broken Produced (17% of Paddy) Rate/Ton Sales Value (b) C) Rice Bran Produced (8% of Paddy) Rate / Ton Sales Value (c) D) Husk Produced (25% of Paddy) Rate / Ton Sales Value (d) Total Sales Value (A+B+C+D)

4800 50% 2400 16000 384.00

4800 55% 2640 16500 435.60

4800 60% 2880 17000 489.60

4800 65% 3120 17500 546.00

4800 65% 3120 17500 546.00

1200 32000 384.00

1320 32700 431.64

1440 33400 480.96

1560 34000 530.40

1560 34000 530.40

408 14000 57.12

449 14500 65.08

490 14500 70.99

530 15000 79.56

530 15000 79.56

192 10000 19.20

211 10000 21.12

230 10000 23.04

250 10000 24.96

250 10000 24.96

600 500 3.00 463.32

660 500 3.30 517.84

720 500 3.60 574.99

780 500 3.90 634.92

780 500 3.90 634.92

79

CALCULATION OF NET SALES Gross value of Finished Goods Add : Opening Stock of Finished Goods Less : Closing Stock of Finished Goods 463.32 0.00 39.00 424.32 517.84 39.00 45.00 511.84 574.99 45.00 51.00 568.99 634.92 51.00 57.00 628.92 634.92 57.00 63.00 628.92

80

Annexure J

MAN POWER REQUIREMENT AND ESTIMATES OF ANNUAL SALARY AND WAGES BILL
ANNEXURE ' J '

CATEGORY

NO.

SALARY/MONTH

SALARY

ADMINISTRATIVE STAFF Accountant 1 6000.00 72000.00

Watchman

4000.00

48000.00 120000.00

Add: 25% Perks & Social benefits

30000.00 150000.00

PRODUCTION STAFF Production Manager Machine Operator Unskilled Workers Add: 25% Perks & Social benefits 1 9000.00 108000.00

6000.00

72000.00

5 7

3000.00

180000.00 360000.00 90000.00

81

450000.00

(Rs.

0.50 Lacs increase every year in wages)

Say

4.50 Lacs

82

Annexure K

ESTIMATE OF ADMINISTRATIVE EXPENSES

ANNEXURE ' K ' Rs. in Lacs

PARTICULARS

Salary Rate & Taxes Telephone, Telegram and Postage Insurance Printing & Stationery Travelling & Conveyance Bank Commission Audit Fees and Legal Charges Miscellaneous Administrative Expenses

1.50 0.10 0.10 0.30 0.05 0.15 0.50 0.15 0.15 3.00

ESTIMATE OF POWER BILL

The unit require 345 H. P. power load for Rice Mill Unit, The M. S. E. B. Feasibility Certificate obtained.

Total Connected Load Power required per day (1 HP = 0.746) KWH

345 H.P. 345 X .746 X 6 1544

83

Annual Power Requirement (Unit)

1544 x 300 days 463200

Power Tariff Annual Power Bill At 100% Capacity At 50% Capacity At 55% Capacity At 60% Capacity At 65% Capacity

Rs. Rs. Rs. Rs. Rs. Rs. Rs.

7.50 3474000 34.74 Lacs 17.37 Lacs 19.11 Lacs 20.85 Lacs 22.59 Lacs

84

Annexure L

CALCULATION OF WORKING CAPITAL

ANNEXURE ' L ' (Rs. in Lacs

PARTICULARS

DAYS

2015 Year

2016 Year

2017 Year

2018 Year

2019 Year

Raw Material Finished Goods Debtors TOTAL ' A ' Creditors Net Working Capital ( A - B ) Less: Bank Borrowing Working Capital Margin B'

30 30 7

32.00 39.00 9.00 80.00

37.00 45.00 11.00 93.00 3.50 89.50

42.00 51.00 13.00 106.00 4.00 102.00

47.00 57.00 15.00 119.00 4.50 114.50

52.00 63.00 17.00 132.00 5.00 127.00

3.00 77.00

40.00 37.00

40.00 49.50

40.00 62.00

40.00 74.50

40.00 87.00

85