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LIQUID SOAP

INTRODUCTION
The liquid soap is used for cleaning the utensils and other kitchen wares. The
use of cleaning material is steadily increasing everywhere. Extensive use of
cleaning liquid is necessitated due to increase in use of modern sophisticated
kitchen wares and utensils, crockery, cookers, pans etc. by the house holds.
These sophisticated kitchen wares cost a fortune, require to be cleaned
hygienically and thoroughly without any detrimental effects to the kitchen
wares. The old conventional method using materials like cow dung ash, coal
ash, wood ash etc. spoils the wares, which are costly and one cannot afford to
replace them frequently.

Nowadays people have started using costly and modern kitchen wares
increasingly because of their standard of living is increasing. Apart from
metropolitan cities, in other cities and bigger towns, the use of modern and
costly sophisticated kitchen wares have increased tremendously.

USES AND APPLICATION


The use of sophisticated modern kitchen wares necessitates the use of liquid
soap for getting a proper, thorough and hygienic cleaning of the wares. The
use of coal ash, wood ash, dung ash have been replaced by liquid soap, and
even lower middle class people have started using the same.

MARKET
In spite of a few units manufacturing liquid soap, the demand is ever
increasing. The use of this product is not limited only to house holds. Hotels
and restaurants have also started using this product to great advantage. With
the increase in education and advertisement in the mass media, the people in
every walk of life, including lower middle class are also aware of the use of
liquid soap to their advantage in every respect.

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INSTALLED CAPACITY
The installed capacity of the unit proposed is 100 litres of Liquid soap per day
on single shift of 8 hours. On this basis the annual capacity works out to
30000 litres for 300 days working

PLANT AND MACHINERY


The following items of plant and machinery are required for the project.

Qty Rs
Mixing tank with stirrer 1 4500.00
Plastic tank-200litres 2 5000.00
Weighing machine 1 2500.00
Other miscellaneous assets 3500.00
TOTAL 15500.00

MANUFACTURING PROCESS
The manufacturing process involved has the following sequence of operations

Caustic soda and acid slurry are mixed in tank


II
When the solution becomes viscous, urea and trisodium phosphate are added
and mixed thoroughly
II
Water and perfume are added as per requirement
II
The whole mix is stirred thoroughly to get a homogenous product
II
Then the resultant liquid cleaner is packed in bottles

2
RAW MATERIALS
The raw material required for the production at full capacity is given below
Qty Rate Value
Acid Slurry 6000 66 396000
Urea 2400 8.00 19200
Caustic soda 1050 24.50 25725
Trisodium Phosphate 1050 39.00 40950
Perfume 42100
Cans 4000 35.00 140000
Bottles 10000 3.00 30000
TOTAL for 30000 lires 693975
TOTAL for 30000 litres Rs. lakhs 6.94
Raw material cost per KG 23.13
Packing material cost-Included in above 0.00

LOCATION LAND AND BUILDING


The infrastructural facilities required for the project by way of land and
building are the following.
Built up area-Sq.ft 300
Rent p.m.-Rs 2400
Advance-10 months.Rs 24000

UTILITIES
The utilities required for the project are the following

Three phase- KW 0.75


Power charges Rs.lakhs p.a 0.09
Water- For process-Litres per day 30
For human consumption 100

3
MANPOWER
The manpower requirement for the project is given below

Monthly wages Total


Supervisor 1 5000.00 5000.00
Operator 1 4000.00 4000.00
Helpers 2 2500.00 5000.00
Assistant 1 3000.00 3000.00
sub total 17000.00
Add benefits 20% 3400.00
Total per month 20400.00
TOTAL PER ANNUM-Rs. lakhs 2.45

Implementation Schedule
As the equipments are available easily, if financing arrangements are made, the
project can be implemented in a months time.

Assumptions

Installed capacity 30000 litres of Liquid soap per annum


Capacity utilisation Year-1 -60%
Year -2 -70%
Year-3 onwards- 80%
Selling price Rs.45.00 per litre
Raw materials Rs.23.13 per litre
Packing materials Included in above
Power Rs.0.09 lakh per annum at 100%
Wages and salaries Rs. 2.45 lakhs with increase 5% every year.
Repairs and Maintenance Rs.0.06 lakh per annum
Depreciation Written down value method -15 % on machinery
Selling general and Rs.5000 per month
administrative expenses
Interest on Term loan 12% per annum
Interest on working capital 12 % per annum
Income tax 33.99 % on profits

4
MACHINERY SUPPLIERS
M/s Bhuvaneswari&co, No13 Old Trunk Road, Pallavaram, Chennai-400 043
M/s Navinchandra &co, No284 Linghi Chetty Street, Chennai-60 001

RAW MATERIAL SUPPLIERS


M/s Kannan &co, 117 Nainiappa Naicken Street, Chennai-600 003
M/s Pure Chemicals, Plot No 1984-A, H-Block, 15 th Main Road, Anna Nagar
Chnnai-600 040

FINANCIAL ASPECTS
1. COST OF PROJECT [Rs.lakhs
Land & Building (Advance) 0.24
Plant & Machinery 0.16
Other Misc. assets 0.05
Pre-Operative expenses 0.10
Margin for WC 0.21
Total 0.76
2. MEANS OF FINANCE
Capital 0.64
Term Loan 0.12
Total 0.76

3. COST OF PRODUCTION & PROFITABILITY STATEMENT


Years 1 2 3 4 5
Installed Capacity (Kg.) 30000 30000 30000 30000 30000
Utilisation 60% 70% 80% 80% 80%
Production/Sales (Kg.) 18000 21000 24000 24000 24000
Selling Price Rs.43.00 perLitre
Sales Value (Rs.lakhs) 7.74 9.03 10.32 10.32 10.32
Raw Materials 4.16 4.86 5.55 5.55 5.55
Power 0.05 0.06 0.07 0.07 0.07
Wages & Salaries 2.45 2.57 2.70 2.83 2.98
Repairs & Maintenance 0.06 0.07 0.08 0.09 0.10
Depreciation 0.02 0.02 0.02 0.01 0.01
Cost of Production 6.74 7.58 8.41 8.56 8.71
Selling, Admin, & General exp 0.60 0.63 0.66 0.69 0.72
Interest on Term Loan 0.01 0.01 0.01 0.00 0.00
Interest on Working Capital 0.00 0.00 0.00 0.00 0.00

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Total 7.35 8.22 9.08 9.25 9.43
Profit Before Tax 0.39 0.81 1.24 1.07 0.89
Provision for tax 0.00 0.00 0.42 0.36 0.00
Profit After Tax 0.39 0.81 0.82 0.71 0.89
Add: Depreciation 0.02 0.02 0.02 0.01 0.01
Cash Accruals 0.41 0.83 0.83 0.73 0.91
Repayment of Term Loan 0.00 0.03 0.03 0.03 0.03

4. WORKING CAPITAL:
Months Values % Margin Bank
Consumptions Amount Finance
Raw Materials 0.50 0.17 100% 0.17 0.00
Expenses 1.00 0.05 100% 0.05 0.00
0.22 0.22 0.00

6. PROFITABILITY RATIOS BASED ON 80% UTILISATION


Profit after Tax = 0.82 8%
Sales 10.32
Profit before Interest and Tax = 1.25 164%
Total Investment 0.76
Profit after Tax = 0.82 127%
Promoters Capital 0.64

7. BREAK EVEN LEVEL


Fixed Cost (FC): Rs.lakhs
Wages & Salaries 2.70
Repairs & Maintenance 0.08
Depreciation 0.02
Admin. & General expenses 0.66
Interest on TL 0.01
3.47
Profit Before Tax (P) 1.24
BEL FC x 100 = 3.47 x 80 x
= FC +P 4.70 100 100
59% of installed capacity