Agro Food Products

Private Ltd
Business Report

Mr. Somnath Tapare

33, 22nd main, 10 cross,
J P nagar, Bangalore,
Karnataka-560078
India.
Phone no. (080), 26631073. Mob No
08050998297
somnathtapare@agrofoodproduct.com
www.agrofoodproduct.com

10/4/2010
Table of Contents
1. Executive summary.
2. Organization background.
3. Marketing plan.
3.1 Pricing.
3.2 Selling strategy.
4. Financial plan.
4.1 Land & building.
4.2 Machinery.
4.3 Manpower requirement.
4.4 Working capital requirement.
4.5 Cost of project.
4.6 Profitability calculation.
4.7 Break even analysis.
5. Risk analysis.
5.1 Risk management plan.
6. Decision making criteria.
6.1 Breakeven analysis.
1. Executive summary:
“Agro food products private ltd” is a manufacturing company and
going to start production of jaggery from sugarcane(not traditional
method). I am Mr. Somnath Tapare the owner of company.

Sugar industry in India is a well-developed industry and one of

the largest after textiles. It provides rural employment
opportunities and plays an important role in Indian economy.

Jaggery is also manufactured from sugarcane juice and is very

widely used not only in individual households but also in many
eateries, restaurants, clubs and hostels and it has certain
industrial applications as well. Compared to this, production of
jiggery is very simple and the capital cost is also very limited.
Due to its wide applications, the
Market for jaggery is continuously growing.

We are investing Rs 12 laces in this project. In which, as a

proprietor of company I (Mr. Somnath Tapare) would investing
Rs 4 laces. i. e. 33% of total capital and remaining 67% will
take from bank i. e. 7.5 laces.
We are making more than 10 different products. Those
products we are selling in urban, rural areas. Basically few
products like chocolate are going to sale in urban area.

India has good market for chocolate and it is growing day by

day. What chocolate we are making? It will not create a
problem for teeth.

2. Organizational background:

Number of employees:

S.No Designation No of person

.
1 CEO 1
2 At factory 12
3 On field i.e. for cane cutting 10
4 Drivers 2

Annual sales figures:

Company’s crushing capacity would be 20 tons/day. Company will have

been operated 180 days in a year. From 1 ton of cane, 90 to 100 kg
jaggery will make. In one season is 325 to 350 tons.
Company’s target of sales of jaggery is 350 tons per annum

Key product lines:

Jaggery is a typical Indian product with several uses in daily

food preparations and it is also used to make many sweet food
preparations. This is a product with scattered market.

Company’s concern is not only produce jaggery, but also chikki

and so many other, jiggery related products.
Now days people don’t bother about prepare food, so company
also will make powder of it.

R & D has going on for, how to make chocolate, hot chocolate,

drinking chocolate and I am successes in it.

2.1 R & D: on products

• Chocolate Jaggery

• Dry fruit Jaggery

• Jaggery Candy

• Jaggery Cubes

• Jaggery Lad doo

• Jaggery Powder

• Jaggery Sugar

• Jaggery Syrup

• Kolhapuri Jaggery (chemical less jaggery)

• Natural Jaggery

Location of facilities:
 Project is located at near to sugarcane farm. Proprietor has 15 acre
his own land. In which, every year almost 10 acre sugarcane we are
growing. Project is in Maharashtra and Maharashtra is leading
sugarcane grower.
We are getting raw material i. e. sugarcane in only 1 km radius. Other
all facilities are available at the place i.e. water, labor etc
Company structure:
Agro Food Products private limited is sole proprietor company. We
register it with state government.
Proprietor is Mr. Somnath Tapare, MBA(Finance).

3. Marketing plan:
The demand for jaggery is steadily growing many folds in the
urban, rural and semi-urban areas. There are several
applications of jaggery and almost all Indian households use it
on day-to-day basis. Market for jaggery is round the year
whereas its production is only during the sugarcane season
and thus factory works for around 6 to 7 months every year.
Apart from individual households, it is used in large quantities
in restaurants, road-side dhabas, other eateries, hostels and
clubs and by caterers. It has shelf-life of more than couple of
months.

Its production is undertaken at several places but

Maharashtra, Uttar Pradesh, Bihar and Tamil Nadu are
the leading manufacturers. In view of constantly growing
market, it should not be difficult for a new entrant to
enter and capture the market
a. pricing:
Cost-plus pricing:
 In this method, first calculate the cost of the product, then
includes an additional amount to represent profit. This
pricing method we use only for retailer
Otherwise, at government market there is fixed price for
one season, i. e. one year.

b. selling of product:
We are going to sale at local government market. Also
we are selling in local retailer, urban big retailer

4. Financial plan:

Capital inputs:

4.1 land and building:

Where project will start, that is my own

The built up area requirement is estimated to be 500

sq.mtrs. and the rate of construction is taken at
Rs.1000/sq.mtr. Since the roofing could be of steel
sheets. The cost of construction would be Rs.5 lacs.
Land cost Rs. 100/sq.mtrs
Particulars Area in sq mtrs Cost in Rs
Land 1000 100000
 Building 500 500000
Total 600000

4.2 Machinery:
This is a seasonal activity and the plant generally
runs from October to March-April. To produce more
than 350 tons of jaggery every season, following
machines shall be required:

S.no Particulars Amt(Rs)

1 Sugarcane Crusher complete roller 120000
size 216mm x 8.5" length crushing
capacity 25 ton in 24 hours
2 Diesel engine Lister type TOPLAND 20000
 15 HP
3 Open Pan furnace- 4 no 80000
4 Foundation Frame for crusher. 1000
5 Counter shaft , pulley for crusher 500
and engine
6 Water Pump 3500
7 Misc. nut bolts. 500
8 Laboratory Equipments- 1 set 5000
9 Strong Iron Scrappers with 2000
Long handle
10 Tank 5000 lit capacity- 2 no 20000
Total 2,52,500

4.3 Manpower requirement (salary):

Particulars No Amt in Rs
Labors at factory 12 1800/day
Rs150/day/person
Labor on field Rs200/day/person 10 2000/day
3800/day
Total For 6 month 5,92,800
4.4 Working capital requirement:

Raw material is on 2 months credit, cost of it is Rs 1700/ton

This is a seasonal business and sugarcane is available on

credit. Main requirement is for post-sales for which a lump
sum provision of Rs.2 lacs is made comprising margin of
Rs. 60,000/- and bank finance of Rs. 140,000/-.
Preliminary & pre-operating expenses:

Capital requires for registration of firm, interest during

implementation of project @ 14% on amount Rs 7.5 lacs is Rs
10500.

4.5 Cost of project and means of financing:

Particulars Amt in lacs

Land & building 6
Machinery 2.52500
Preliminary & pre-operating expenses 1.2
Contingencies @ 5% building & 0.37625
 machinery(252500+500000)*.05
Working capital margin 0.6
Total 11.00125
Means of finance
Promoter’s contribution 3.50125
Loan from bank 7.5
Total 11.00125
Debt-equity ratio 2.14:1
Promoters contribution 36%

Financial assistance in the form of grant is available from the

Ministry of Food Processing Industries, Govt. of India, towards
expenditure on technical civil works and plant and machinery
for eligible projects subject to certain terms and conditions.
There is no tax on production of jiggery, because of it is
agriculture product and in India no tax on agriculture
products

4.6 Profitability calculation:

Production capacity and build up:
The installed production capacity of jaggery making would
be 350 tones during the season and capacity utilization
 of 90% is envisaged during first year and thereafter it is
restricted to 95%

Sales revenue:

Product quantity Selling price Total value

Jiggery 350 tons 28000/ ton 98 lacs

Raw material requirement:

Product Quantity Rate in Rs value in lacs

Sugarcane 3600 tons 1700 61.2
Soda ash 3
Ganny bags 300 500 1.5
Total 65.7

Depreciation:

Depreciation on building has been worked out @ 10% p.a. The

depreciation on plant and machinery as well as miscellaneous
assets is assumed @ 20% per annum. The method applied is
WDV.

Projected profitability: 2nd year, raw material price will Rs

1800/ton.
 In Rs
lacs

No Particulars 1st yr 2nd yr

A Installed Capacity 350 tons 350 tons
Capacity Utilization 90% 95%
Sales Realization 88.2 93.1
B Cost of Production
Raw and Packing 58.5 59.85
Materials
Utilities 0.90 0.95
Salaries 5.928 6
Stores and Spares 1 1.1
Repairs and Maintenance 0.5 0.55
Selling Expenses 1.3 1.4
Administrative Expenses 0.5 0.6
Total 68.628 70.45
C Profit before Interest & 19.572 22.65
Depreciation
Interest on Term 1.05 0.84
Loan@14%
Interest on Working 0.17 -
Capital(1 lac @ 17%)
Depreciation 1 0.975
Tax octroi @ 7% 6.174 6.174
Total 8.394 7.989
Net Profit 11.178 14.661
Repayment term loan - 1.5
4.7 BREAK-EVEN POINT ANALYSIS:

No Particulars Amt Amt in

lacs
A Sales 88.2
B Variable Cost
Raw and Packing Materials 58.5
Utilities (75%) 0.675
Salaries (75%) 4.446
Stores and Spares 0.01
Selling Expenses (20%) 0.26
Administrative Expenses 0.1
(20%)
Interest on working capital 0.17
Total 64.161
C Contribution 24.039
D Fixed Cost 8.5
E Break Even Point (D÷C) 35%
 5. Risk analysis:

In this project only one risk is there, i.e. shortage of sugarcane.

Because of less rain fall, crop of sugarcane will be damage.

Another risk is co-operative sugar factories. They are big

competitor.

5.1 Management of risk:

Project is located at such place, where big dam is

there, so we can get sugarcane, but we will have to
pay more transportation cost.

Second risk, we can give some more money for raw

material,

So farmer will give sugarcane to us.

6. Decision making criteria:

Breakeven point is only 35%, i. e. when we sale 35% of total
sales, we will get profit. Also it means, we will sale 122.5 tons
jageery, after this sale our profit will start.