ICE CREAM FACTORY

ICE CREAM FACTORY

“MILKY DELIGHTS”

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GROUP MEMBERS

Sidra Ahmed 7877

Mohammad Ahsan 7710

Amit 7233

Ramzan 7131

SUBMITTED TO

Sir Mohammad Ali Sheikh

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TABLE OF CONTENTS

LETTER OF ACKNOWLEDGEMENT 5

MANAGEMENT 6

SPONSORS 6

MARKET APPRAISAL 7

OVERVIEW OF LOCAL INDUSTRY 7

MARKET SIZE 9

DEMAND FOR ICE CREAM 9

DEMAND AND SUPPLY GAP 9

MARKET SEGMENT 11

TECHNICAL APPRAISAL 12

MANUFACTURING PROCESSES 12
HARDENING 15

RAW MATERIALS USED 16

SIZE OF THE FACTORY 17

EQUIPMENTS 18

LAYOUT OF THE FACTORY 20

FINANCIAL ANALYSIS 22

ESTIMATED INCOME STATEMENT 22

ESTIMATED BALANCE SHEET 23

ESTIMATED CASH FLOW STATEMENT 24

FINANCIALS 25

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ECONOMIC ANALYSIS 26

ECONOMIC RATE OF RETURN 26

ANNEXURES 27

COST OF LAND 27

COST OF CIVIL WORK 27

COST OF MACHINERY LOCAL 28

COST OF MACHINERY IMPORTED 28

ESTIMATED COST OF PROJECT 29

INITIAL WORKING CAPITAL 29

ANNUAL PRODUCTION 30

DETAILS OF PRODUCTION SALES AND SALES REVENUE 31

BREAKEVEN 33

WACC 33

BIBLIOGRAPHY 34

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LETTER OF ACKNOWLEDGEMENT

It is a matter of great satisfaction that all our efforts ended with this thorough report based on
PROJECT APPRAISAL. Here, we would like to state that firstly, it was a blessing of The
Almighty Allah that we completed this report without any barriers and shortcomings in between.
Secondly, this report came to a successful end due to the joint efforts and cooperation of all
group members who worked hard to make it better,

Last but not the least, we would to thank Sir Mohammad Ali Sheikh whose guidance and
teaching backed us all the way while preparing this report. His teachings are something, which
we will always carry with us ahead and make the most use of it wherever possible.

Regards,

Sidra Ahmed

Mohammad Ahsan

Amit

Ramzan

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MANAGEMENT
The proposed project is being installed by mutual co-operation and the work will be managed by
hard working management team. Below mentioned are the names along with the designations
who will be responsible for managing the entire project in an appropriate and effective manner.

Partners Name Designation

i. Mohammad Ahsan General Manager

ii. Sidra Ahmed Deputy Manager
iii. Amit Deputy Manager
iv. Ramzan Deputy Manager

SPONSORS
The sponsors of the project are highly qualified and are well experienced in the business field.
Besides this, they have good business reputation in the industry.

Sponsors are capable enough to help in this project in order to make it possible and viable too.
Sponsor’s names are mentioned below:

i. Mohammad Ahsan
ii. Sidra Ahmed
iii. Amit
iv. Ramzan

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MARKET APPRAISAL

OVERVIEW OF LOCAL INDUSTRY

Looking at the local industry of ice cream that is a part of food & beverages industry, Pakistan has the
market share of ice cream of around PRs8bn.

There are lots of ice cream manufacturers in Pakistan, major raw materials for ice cream are butter, milk
and sugar, Pakistan is agricultural country so all the raw materials are easily available for it. If we deeply
look at the raw materials side, consumption of milk and sugar is now becoming a problem for Pakistan.
Pakistan is rated 4th largest milk producer country. 33bn of milk is produced annually in Pakistan. There
are around 8 million farming households in Pakistan. Thus, our proposed project will be beneficial as it is
being setup in the country that is rated among top most milk producing countries. Due to the rise in the
prices of milk and sugar, industries of Pakistan are no doubt facing a lot of problems. Punjab is one of the
major milk-producing province in Pakistan, thus we have planned to purchase milk from Punjab. Around
20 million of milk was produced in Punjab in the year 2002 and this has been increase further. Below
mentioned chart depicts that how much each region produces milk.

From the above graph, we can conclude that Punjab is one of the province that produces milk in an
abundance amount. Thus, purchasing milk from Punjab is a suitable decision for us.

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Historically POLKA is the oldest and largest company in this industry their aim was to make their
product available everywhere in the Country, Walls took over polka and continued with this
differentiation of availability. Now there are number of producers’ e.g.; Omore, Hicco, Rocco, Gourmet
and yummy, they have significant market share as well.

In local market, an ice cream generally comprises of the below mentioned items:

PRODUCT QUANTITY

Sugar 12%-15%

Milk Solids 9%-11%

Gelatin or other stabilizers 0.25%-0.5%

Solid content 30%-40%

Fat 10%

SNF 10%

The composition of milk and an isolated ice cream is given below:

INGREDIENTS MILK ICE CREAM ISOLATED ICE CREAM

Protein % 4.0 7.0

Fat % 12.0 12.0

Carbohydrate 20.0 28.0

Calories/100kg 204 208

Source: Economic Review

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MARKET SIZE
Pakistan has the market size of ice cream of around 70mn liters of the branded ice cream and if we look at
the unbranded sector then the size can be doubled. Unilever, one of the giant ice cream producers
witnessed an increase in volume growth of 15%;

DEMAND FOR ICE CREAM

Ice cream is the easily available product in the market but when we analyze its growth in the current
market, we can see the upward trend which shows that there is a place in the market for expansion of
existing companies and entrance of new companies.

Year Total demand(millions)

2010 172
2011 219
2012 267
2013 271
2014 275
2015 280

Constant factors:

This prediction is based on following assumptions;

 Population is growing at 1.6% per year (world bank report)

 Per person consumption is 1 liter per person and will be at 1.5liters per person in 2013 (according
to research report on ice cream culture in Pakistan)

DEMAND AND SUPPLY GAP

Production of ice cream usually depends on the need / demand of the particular product. In Karachi,
whether it is summer or winter, the demand rate of ice cream is constant. On the other side, the demand of
ice cream in Punjab province varies. Looking at the production side, the production of igloo ice cream is
around 2400liters/hour and the capacity utilization is around 78% on the single shift basis.

Below mentioned is the production capacity of Punjab and Sind per annum.

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PRODUCTION CAPACITY OF ICE CREAM (PER ANNUM)

MILLION LITERS

PUNJAB

Walls 10.0

YUMMY, LAHORE 1.2

MARILA, ISLAMABAD 2.4

BONNIS, LAHORE 1.8

PIXIE, LAHORE 0.7

HICO, LAHORE 0.2

HOTELS & RESTURAUNT 1.0

UNORGANIZED SECTOR 3.2

TOTAL 20.5

SINDH

Walls 13.0

IGLOO, KARACHI 4.0

KHAN FOOD INDUSTRIES, SUKKUR 4.5

HOTELS & RESTURAUNT 1.5

UNORGANIZED SECTORS IN SIND 4.0

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Current demand for ice cream is around 170 million liters while its production from documented
sector is around 60 million liters that means there is a huge market available though their need is
satisfied by small producers but with good brand awareness this market can be captured.

MARKET SEGMENT
As our population is divided into rural and urban areas so their choices are different with respect to their
areas.

RURAL AREAS:

They are the people living in villages, mostly they are farmers by occupation, and their choice for ice
cream is very different they want thick and very creamy ice creams; they mostly prefer KULFA, so to
cater that market you have to come up with these types of products. However, one problem with them is
that they are not brand conscious and mostly unbranded producers satisfy them.

URBAN AREAS:

Currently they are real market for ice cream manufacturers, they are brand conscious and they prefer
specific company’s ice cream, their choices are Choc Bar, Cons, and others.

All the classes (lower, middle and upper) are customers for ice cream as they have different range in ice
cream prices, starts from 5 rupees to 50 rupees for one person.

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TECHNICAL APPRAISAL

MANUFACTURING PROCESSES

Ice-cream is readily and easily available in a variety of forms such as chocolate-dipped bars and in
sandwiches form too. Ice cream is part of food that is loved by everyone. The manufacturing process of
ice cream comprises of ten steps that includes:

i. Raw materials delivery & storage

ii. Blending the mixture
iii. Pasteurizing
iv. Homogenizing
v. Cooling
vi. Adding flavors
vii. Continuous freezing
viii. Adding extra fruits and chunks
ix. Packaging
x. Hardening

RAW MATERIALS DELIVERY & STORAGE

The first step is to arrange for the raw materials and store them at the suitable and perfect
environment in order to protect them from any danger.

BLENDING THE MIXTURE

The milk will arrives at the ice cream factory in the refrigerated tanker trucks from the local dairy
farms. The milk will be then pumped into 5,000 gal (18,925 1) storage silos that will be kept at the
temperature of around 36°F (2°C). Pipes will be used in order to bring the milk in the pre-measured
amounts to around 1,000 gal (3,7851) stainless steel blenders. Premeasured and quantified amounts of
eggs, sugar, and other additions are then further blended with the addition of milk for around eight to
ten minutes.

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PASTEURIZING

Pasteurizing is a process which will be done in order to kill the bacteria. The mixture, which will be
blended, will be then piped to the pasteurization machine, which is made up of a thin stainless steel plates.
Hot water of around 182°F (83°C) flows on the one side of the plates. On the other side, the cold milk
mixture will be piped from the other side. The water will warm the mixture to the temperature of around
180°F (82°C), this process will thus helps in killing bacteria.

HOMOGENIZING

With the input of an intensive air pressure, sometimes as much as 2,000 pounds per square inch (141 kg
per sq cm), the hot mixture will be forced with the help of a small opening into the homogenizer. This
will eventually, breaks down the fat particles and will prevent them from separating from the rest of the
mixture. Homogenizer is one of the high-pressure piston pumps; therefore the mixture is further blended
as it is drawn into the pump cylinder on the down stroke and then forced back out on the upstroke.

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COOLING

The mixture after the process of homogenizing will be then piped back to the pasteurizer where the cold
water at approximately 34°F (1°C), will flows on one side of the plates and at the same time, the mixture
passes on the opposite side. In this manner, the mixture is thus cooled to 36°F (2° C). Then the mixture is
pumped to 5,000 gal (18,925 1) tanks in a room set at 36°F (2°C), where it sits for around four to eight
hours to allow the ingredients to blend.
ADDING FLAVORS

The ice cream is then pumped to a stainless steel vats, each stainless steel vats will be holding up to 300
gal (1,136 1) of mixture. Flavorings are then piped into the vats and will be blended thoroughly

CONTINUOUS FREEZING

Now the mixture will be frozen. It is pumped into the continuous freezers that can freeze up to 700 gal
(2,650 1) per hour. The temperature inside the freezers is kept at -40°F (-40°C), liquid ammonia will be
using as a freezing agent. While the ice cream is in the freezer, air is injected into it. When the mixture
leaves the freezer, it has the consistency of soft-serve ice cream.

Source: http://www.madehow.com/Volume-3/Ice-Cream.html

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ADDING FRUITS AND CHUNKS

If chunks of food such as strawberry or cookie pieces are to be added to the ice cream, the frozen mixture
is pumped to a fruit feeder. The chunks are loaded into a hopper at the top of the feeder. Another, smaller
hopper, fitted with a star wheel, is located on the front of the feeder. An auger on the bottom of the
machine turns the hoppers so that the chunks drop onto the star wheel in pre-measured amounts. As the
mixture passes through the feeder, the star wheel pushes the food chunks into the ice cream. The mixture
then moves to a blender where the chunks are evenly distributed.

PACKAGING

Automatic filling machines drop preprinted pint or half-gallon-sized cardboard cartons into holders. The
cartons are then filled with premeasured amounts of ice cream at the rate of 70-90 cartons per hour. The
machine then places a lid on each carton and pushes it onto a conveyer belt. The cartons move along the
conveyer belt where they pass under an ink jet that spray-paints an expiration date and production code
onto each carton. After the imprinting, the cartons move through the bundler, a heat tunnel that covers
each cup with plastic shrink wrapping.

HARDENING

9 Before storage and shipping, the ice cream must be hardened to a temperature of -10°F (-23°C). The
conveyer system moves the ice cream cartons to a tunnel set at -30°F (-34°C). Constantly turning ceiling
fans create a wind chill of -60°F (-5 1°C). The cartons move slowly back and forth through the tunnel for
two to three hours until the contents are rock solid. The cartons are then stored in refrigerated warehouses
until they are shipped to retail outlets.

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RAW MATERIALS USED

Raw materials required to manufacture ice cream varies from ice cream to ice cream, main ingredients
like milk, butter, sugar remains there but other ingredients are also mixed to make different types of ice
creams, following mentioned are some ingredients to produce ice cream;

Milk:

Milk is the main ingredient in production of ice cream and fluctuation in its price and availability directly
affects Ice cream’s price and production, Pakistan is the 4th largest milk producing country in the world,
Pakistan produces 33million liters of milk annually. Pakistan is not only exporting milk but its products
too. Pakistan has 50 million animals that is huge quantity but most of the farmers don’t want to connect
with the formal markets and this is the reason they don’t play significantly in economic growth of the
country.

Butter:

This is also related to milk, butter can be formed after processing of milk, and its consumption in ice
cream depends upon the type of ice cream if it is kulfa or some other creamy ice cream than it will be
used in large quantity.

Sugar:

Sugar is used to make ice cream sweet; it is used in all types of ice cream, nowadays its increased prices
and shortage causing trouble in ice cream production, it is 2nd most important crop in Pakistan, Pakistan
grows about 1 million hectares of sugarcane, more than all other cane producing countries except Brazil,
China, Cuba, India and Thailand.

Dry Fruits:

In some ice creams like “KULFA” dry fruits are used including almond, pista, this is also very famous in
rural areas of the country.

Flavor:

Food flavors are used in this all the flavors are easily available in the market and there is no hurdle to get
those flavors.

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Fruit Pulps:

As ice creams are in different flavors and sometimes they are in flavor of different fruits, for this they
need pulp of that fruit too. E.g. to produce mango ice cream, mango pulp is required.

Cones:

For ice cream cone there is a need of cone with the ice cream, three main dry ingredients compose all
types of cones. Wheat flour, tapioca flour and sugar are chosen for baking quality, strength and sweetness
respectively.

SIZE OF THE FACTORY

The size of the plant will be large as the size depends on the manufacturing process; therefore, a large size
unit will be more economical than a small size plant.

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EQUIPMENTS
The machineries / equipments used in manufacturing of ice cream are listed below.

 Mixing units
 Storage units
 Homogenizer
 Extrusion ice cream machines
 Moulding ice cream machines
 Filling ice cream machine
 Hardening ice cream machines
 Ice cream packaging machines
 Hardening ice cream machines
 Ice cream freezing machines
 Choko bar hardner
 Chocolate pot
 Ice cream churner
 Ice cream ageing machine
 Brine tank
 Surface cooler
 Filling and Packaging line

We will use these machines in order to manufacture ice creams. The further details of the machinery are
given below:

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MIXING UNITS

Mixing units are used in order to blend the mixtures and to soften them.

STORING UNITS

Storing units are further used to store the ice cream in order to protect it from any externalities.

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FREEZING UNITS

LAYOUT OF THE FACTORY

The plant will be constructed according to the decided Line Layout as minimum time will be taken in
order to handle the equipment, raw materials and the finished goods i.e. ice cream.

I. LAND
The Ice cream factory will be spread over land of 500 Marlas, which is situated in one of the vast milk
production region of Pakistan i.e. Punjab at Sheikhupura Road near Highway. We have selected this
region due to the milk production as milk is the major raw material that is used in manufacturing ice
cream. In order to save our transportation cost, we have selected Punjab. The Factory is near from the
highway which will help us in delivering our finished goods to the other areas.

II. RAW MATERIAL

The basic raw material i.e. milk is available in abundance in the area. Punjab is known as one of the
largest milk producing area and is top among the other provinces. However, the milk prices are increasing
day by day. The current milk price is Rs 50/lit which will further grow.

III. LABOR
Due to one of the main reason that is unemployment in the country, there are many unskilled labors that
are readily available in the region. On the other side, we will hire skilled labor too.

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IV. UTILITIES

For the manufacturing / production of ice cream, a large amount of water as well as energy is required.
Due to the shortage of electricity, some problems may arise. But negotiations and agreements are under
consideration with LESCO in order to reduce any problems in future. Further, precautionary measures
will be taken by the company as well in order not to over use the electricity.

V. TRANSPORT FACILITY
Transportation facilities will be used in order to bring the milk, sugar and other raw materials to the mill.
On the other side, in house transportation facility will also be used in order to carry the material from one
hardener machine to the store rooms.

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FINANCIAL ANALYSIS

ESTIMATED INCOME STATEMENT

Rs in
(000)

2012 2013 2014

Sales 1381500 1540541 1545096
COST OF SALES
raw material 572140 607900 607900
labor 37195 40034 42872
manufacturing overhead 209106 212846 216961
depreciation 8315 8315 8315
Total cost of manufacturing 826756 869095 876048
less: inventory adjustments 41338 2117 348
Cost of sales 785418 866978 875700
Gross profit 596082 673563 669396
OPERATING EXPENSES
general & administrative expenses 3876 4264 4690
selling expenses 27630 30811 30902
Total operating expenses 31506 35074 35592
operating profit 564576 638489 633804
OTHER EXPENSES
financial charges on loan 37534 35774 33731
bank borrowings 0 0 0
Amortization of preproduction expenses 333 333 334
total other expenses 37867 36107 34065
profit before tax 526709 602383 599739
tax provision 0 0 0
net profit 526709 602383 599739

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ESTIMATED BALANCE SHEET

2011 2012 2013 2014

ASSETS
CURRENT ASSETS
cash & bank balances 3103 488276 1017294 1521504
short term investments 0 0 0 0
accounts receivables 0 27630 30811 30902
inventories
Raw material 47025 28607 30395 30395
Finished Goods 0 40922 43039 43387
Stores & Spares 200 220 242 266
Advances Deposits & Prepayments 300 330 363 399
Total current assets 50628 585985 1122144 1626853
FIXED ASSETS
fixed assets at cost 339351 339351 339351 339351
less: accumulated depreciation 0 -8315 -16630 -24944
fixed assets net 339351 331036 322721 314407
intangibles 1000 667 334 0
total fixed assets 340351 331703 323055 314407
TOTAL ASSETS 390979 917688 1445199 1941260

LIABILITIES & EQUITY

CURRENT LIABILITY
bank borrowings 0 0 0 0
tax payable 0 0 0 0
dividend payable 0 0 25023 32842
current maturity of long term debt 0 48536 48536 48536
loans
Total current liability 0 48536 73559 81378

LONG TERM DEBTS

long term loans 234587 186051 137514 88978
Total long term debt 234587 186051 137514 88978

EQUITY
paid up capital 156392 156392 156392 156392
retained earnings 0 500374 1047615 1584524
total equity 156392 656766 1204007 1740916
total liability & equity 390979 891353 1415080 1911272

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ESTIMATED CASH FLOW STATEMENT

2011 2012 2013 2014
SOURCES OF FUNDS 0 564576 638489 633804
operating profit 0 8315 8315 8315
Add: back depreciation 0 572891 646804 642119
Total fund from operation
OTHER SOURCES 0 0 0
loans 234587 0 0 0
terms finance certificates 0 0 0 0
bank borrowings 0 0 0 0
paid up capital 156392 0 0 0
Total sources of funds 390979 572891 646804 642119
APPLICATION OF FUNDS
investment in fixed assets 311823 0 0 0
financial charges during construction 27528 0 0 0
pre-production expenses 1000 0 0 0
repayment of
NBP loans 0 0 48536 48536
term finance certificates 0 0 0 0
bank borrowings 0 0 0 0
Financial charges
long term debts 0 37534 35774 33731
bank borrowings 0 0 0 0
PAYMENT OF
taxes 0
dividends 0 0 0 25023
short term investments 0 0 0 0
increase in current assets (other than
cash) 47525 50184 7141 499
Total application of funds 387876 87718 91451 107790
cash supplies 3103 485173 529018 504210
cash at beginning of year 0 3103 488276 1017294
cash at end of the year 3103 488276 1017294 1521504

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FINANCIALS
 Total cost of project 380198.398

 DEBT financing 228119

 EQUITY 152079

 Annual production 24864 liters

 Sales 1381500

 NI 526709

 WACC 12.64%

 NPV 646044

 IRR 64%

 BREAK EVEN 24.15%

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ECONOMIC ANALYSIS

ECONOMIC RATE OF RETURN

Since our project totally based on domestic resource, ad its raw material also, we get
from domestic resources , so there is not as such different In economic and financial
rate of return, but removing tariff from imported machinery, TAXES and considering
($1=86.5) AS shadow exchange rate, EIRR( economic internal financial rate of return
comes out 57%.

ECONOMIC COST OF PROJECT -339160

YEAR CAPITAL OUTLAY CASH FLOWS

0 -339160
1 522707
2 639663

3 641620

4 642119

5 642119

6 629619

7 431379

8 431379

9 431379

10 431379

11 422804

12 433930

13 433999

14 433999

ECONOMIC RATE OF RETURN 57%

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ANNEXURES

COST OF LAND
Rs in (000)
AREAS IN UNIT TOTAL
S.NO DESCRIPTION MARLAS COST COST
1 purchase of land 500 350 175000
2 site preparation 60
3 registration fees 50
4 stamp duty 5
5 district council fees 20
6 transfer charges 100
TOTAL COST OF LAND 175235

COST OF CIVIL WORK

(Rs in
000)
TYPE OF AREAS UNIT OF UNIT TOTAL
SNO DESCRIPTION BUILDING COVERED CONSTRUCTION COST COST
1 office building RCC 170 Sft 119.83 20371
2 Production building RCC 170 Sft 119.83 20371
3 store for raw material RCC 8 Sft 119.83 959
4 store for finished goods RCC 120 Sft 119.83 14380
5 cafeteria RCC 5 Sft 100 500
6 Boundary walls Brick work 19.64 Sft 57.26 1125
7 security room / hut Brick work 1 Sft 93.15 93.15
TOTAL COST OF CIVIL WORK 57798

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COST OF MACHINERY LOCAL

Rs (000)
UNIT TOTAL
SNO DESCRIPTION QUANTITY COST COST
1 heat exchangers 1 150 150
2 Homogenizers 1 150 150
3 cooling pipes 1 100 100
4 chiller 1 170 170
TOTAL COST OF LOCAL
MACHINERY 570

COST OF MACHINERY IMPORTED

Rs (000)
UNIT EXCHANGE
SNO DESCRIPTION COST QUANTITY RATE TOTAL COST
1 GMF (cup filler, Role 20) 374770 1 86 32230.22
2 Techno ice 140539 1 86 12086.354
3 Sedum 1874 1 86 161.164
4 Gram equipment 468 1 86 40.248
5 3M-Matric 2342 1 86 201.412
TOTAL COST OF IMPORTED
MACHINERY 86 44719.398

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ESTIMATED COST OF PROJECT

(Rs in (000)
TOTAL
SNO DESCRIPTION COST
1 land 175235
2 building 57798
3 machinery local 570
4 machinery imported 44719.398
5 inland charges 20
erection & installation
6 charges 200
7 contingencies 5000
8 furniture & fixture 5000
9 vehicles 12500
10 reproduction expenses 1000
11 interest during construction 27528
TOTAL FIXED COST 329570.398
INITIAL WORKING
CAPITAL 50628
TOTAL COST OF
PROJECT 380198.398

INITIAL WORKING CAPITAL

Rs in (000)
CURRENT ASSETS AMOUNTS
Inventories
raw material 47025
finished goods 40922
store & spares 200
Total cost of inventory 88147
advances & deposits 300
accounts receivables (2% of sales) 27630
cash 661
TOTAL CURRENT ASSETS 116738

Possible current liabilities

Less: bank borrowing 75% of inventories 66110
NET INITIAL WORKING CAPITAL
REQUIREMENT 50628

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ANNUAL PRODUCTION

ANNUAL PRODUCTION OF ANNUAL PRODUCTION (IN

PRODUCTS Ltrs)
Annual production of kulfa (2 ltr) 504
Annual production of kulfa (1 ltr) 1,008
Annual production of kulfa cup (1 ltr) 10,080
Annual production of mango (2 ltr) 504
Annual production of mango (1 ltr) 1,008
Annual production of mango cup (1 ltr) 10,080
Annual production of vanila stick 840
Annual production of choc bar (1 ltr) 840

1) the above capacity is based on 365 working days per annum at 100% capacity and project would start operation on 12,2012
2) operation efficiency of project assumed that 80% in first year of the operation and 85% in 2nd year
3) year end inventory is assumed that 5% of production of that particular year
4) we assumed to sell 100% of our production in local market selling prices assumed in accordance with the prevailing rates in the market

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DETAILS OF PRODUCTION SALES AND SALES REVENUE

a) 2012 2013 2014

production of sulfa (2 ltr) 403200 428400 428400
add: opening inventory 0 20160 21400
Total available for sale 403200 4485600 449800
less ending inventory -20160 -21400 -21400
Quantity sold 383040 427160 428400

b)
2012 2013 2014
production of kulfa (1 ltr) 806400 856800 856800
add: opening inventory 0 40300 42840
Total available for sale 806400 897100 899640
less ending inventory -40300 -42840 -42840
Quantity sold 766100 854260 856800

c)
2012 2013 2014
production of kulfa cup (1 ltr) 8064000 8568000 8568000
add: opening inventory 0 403200 428400
Total available for sale 8064000 8971200 8996400
less ending inventory -403200 -428400 -428400
Quantity sold 7660800 8542800 8568000

d)
2012 2013 2014
production of mango (2 ltr) 403200 428400 428400
add: opening inventory 0 20160 21400
Total available for sale 403200 4485600 449800
less ending inventory -20160 -21400 -21400
Quantity sold 383040 427160 428400

e)
2012 2013 2014
production of mango (1 ltr) 806400 856800 856800
add: opening inventory 0 40300 42840
Total available for sale 806400 897100 899640
less ending inventory -40300 -42840 -42840
Quantity sold 766100 854260 856800

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f)
2012 2013 2014
production of mango cup (1
ltr) 8064000 8568000 8568000
add: opening inventory 0 403200 428400
Total available for sale 8064000 8971200 8996400
less ending inventory -403200 -428400 -428400
Quantity sold 7660800 8542800 8568000

g)
2012 2013 2014
production of vanilla stick 672000 714000 714000
add: opening inventory 0 33600 35700
Total available for sale 672000 747600 749700
less ending inventory -33600 -35700 -35700
Quantity sold 638400 711900 714000

h)
2012 2013 2014
production of choc bar (1 ltr) 672000 714000 714000
add: opening inventory 0 33600 35700
Total available for sale 672000 747600 749700
less ending inventory -33600 -35700 -35700
Quantity sold 638400 711900 714000

SALES REVENUE

LOCAL SALE 2012 2013 2014

1 kulfa (2 ltr) @ 250 95760 106779 107100
2 kulfa (1 ltr) @ 130 99593 111053 111384
3 kulfa cup (1 ltr ) @ 20 153216 170856 171360
4 Mango (2 ltr) @ 250 153216 170856 171360
5 Mango (1 ltr) @ 130 153216 170856 171360
6 Mango cup (1 ltr) @ 20 153216 170856 171360
7 Vanila stick @ 7 153216 170856 171360
8 Choc bar @ 12 153216 170856 171360
ANNUAL SALES 1114649 1242968 1246644

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BREAKEVEN
Rs in (000)

FIXED TOTAL
DESCRIPTION VARIABLE COST COST COST
raw material 572140 0 572140
labor 37194 0 37195.2
manufacturing overheads 37406 171700 209106
depreciation 0 8315 8315
administration & general expenses 0 3876 3876
selling expenses 28 0 28
interest 0 37534 37534
amortization of preproduction
expenses 0 333 333
TOTAL 646769 221757 868526
sales value of production 1114649
[221757 / 1114649 -
Breakeven point 646769]

0.47

WACC
Rs in (000)

INTEREST AFTER TAX TOTAL

NATURE OF FUND AMOUNT RATE RATE INTEREST
NBP loan 324587 16% 10.40% 24397
paid up capital 156392 16% 16% 25023
Total 390979
Weighted average cost of fund

WEIGHT * AFTER TAX RATE

weighted average cost of fund (debt) 60% * 10.40% 6.24%
weighted average cost of fund (equity) 40% * 16% 6.40%

TOTAL 12.64%

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BIBLIOGRAPHY

I. "Ice cream industry in Pakistan". Economic Review. FindArticles.com. 29 Nov, 2010.

http://findarticles.com/p/articles/mi_hb092/is_n1_v29/ai_n28702661/
II. http://www.companiesandmarkets.com/Market-Report/ice-cream-market-in-pakistan-
to-2014-458142.asp
III. http://www.reportlinker.com/ci02024/Food.html/coverage/Asia:Pakistan/mode/premi
um/publisher/Datamonitor
IV. http://www.highbeam.com/doc/1G1-20457473.html

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