Index

Sr. No. Particulars Page No.

1. Snack food & Biscuit Industries

2. Project at a Glance

3. Partners Profile

4. Time schedule of implementation

5. Location

6. Processing of Food Products

7. The Quality Commitment

8. Financial Analysis

9. Break Even Analysis

10. Ratio Analysis

11. Marketing Feasibility & Development

12. The Customer Confidence

13. Risk Factors

14. Future Prospectus and Conclusion

15. Bibliography
Snack Food & Biscuit
Industries

The snack food mkt. is affected by many different forces

e.g. Sociological (fewer children mean less demand for certain
products). Govt. regulations, international trade conditions, science and
technology, Weather & Other conditions affecting largest conditions
economic cycle and competitive conditions.

In India families are estimated to spend 51% of their

incomes on food, in large percentage because of low average incomes.

Snacks account for a growing proportion of consumers

diets. This presents both an opportunity and a responsibility to snack
manufacturer to provide healthy snacks for all ages. The healthy snack
concept remains strong, with low-fat products & those with an overall
lower salt content making a strong showing in the market.

Such snack food products often involve the general

marketing approaches and techniques applied the mktg. of other kinds of
products & services. In snack food marketing topics such as test
marketing segmentation, Positioning, branding, targeting, consume
research and market entry strategy. For example, one highly relevant. In
addition snack food marketing involve other kinds of challenges such as
dealing with a perishable product whose quality and availability varies as
a function of current harvest Conditions.
Project at a Glance
(1) Name of the Concern:
K.K. Biscuit Industry

(2) Status:
Small Scale Industry

(3) Constitution:
Partnership Firm

(4) Date of Establishment:

21st November, 2005.

(5) Factory Location:

Survey No. 332; Plot no. 4-3, Veraval
(Shaper) Rajkot.

(6) Registered Office:

2/7, Gondal Road,
Near Gurukul Temple,
Rajkot- 360 002.
Ph. No.:5590445/5590446

(7) Promoters Name:

(i) Rakesh M. Dholariya
(ii) Joshi Mohit J.
(iii) Kalpesh H. Pandya
(iv) Brijesh H. Shah

(8) Product:
Salty & Sweet Biscuits Products
(9) Proposed Installed Capacity:

96,000 Boxes (per annum)

(10) Proposed Capacity Utilization:

57,600 Boxes (at 60%

Capacity)

(11) Total Project Cost:

58, 42,553

(12) Capital Composition:

Term Loan:

Secured 10, 00,000

Unsecured 7, 76,000

Promoters Capacity: 40, 00,000

(13) Working Capital Requirement

3, 66,553

(14) Debt/ Equity Ratio: 0.35:1

(15) Break Even Level: 40157 Boxes

 Partners Profile
(1) Name: Rakesh M. Dholariya

(2) Age: 24 years

(3) Address:
Amin Marg,
Near Kalawad Road,
Rajkot.

(4) Education qualification: M.B.A. (Mktg.)

(5) Responsibility:
With a good communication ability and a little but
effective experience in the field of marketing. Mr. Rakesh
will handle the marketing department of the unit.

(6) Experience:

Mr. Rakesh is having a 1 years of experience

in the marketing field of one of the F.M.C.G.
Product. He is having the good communication
ability and also having a deep study on consumer
behavior.

(7) Financial Contribution: 10,00,000

(8) Profit Share: 25%

(1) Name: Joshi Mohit J.

(2) Age: 25 years

(3) Address:
New Meghani Nagar,
Near Kamal Park,
Rajkot.

(4) Education qualification: M.Com.

(5) Responsibility:

He will handle all financial transactions in this

unit. He is much matured person and understands
the importance of finance in any firm. Therefore, he
will be at his best effort in this firm.

(6) Experience & Background:

Mr. Mohit is an M.com student and posses a

1 year of experience in the field of account. He was
working as an accounting assistance in one firm.

(7) Financial Contribution:

10, 00,000

(8) Profit Share:

25%
(1) Name: Kalpesh H. Pandya

(2) Age: 20 years

(3) Address:
3- Valkeshwar Society,
Near Srinagar,
Rajkot.

(4) Education qualification: Graduate (B.B.A.)

(5) Responsibility:

As we all know H.R. is one of the precious

assets of any firm, Mr. Kalpesh will be handling all
H.R. related activities and with keeping the view of
integrated management and look over all objects of
Co. and its fulfillment.

(6) Experience & Background:

Though Mr. Kalpesh is having no experience

at all but having a good knowledge of the potential
market of this (food industry) field. So, this
knowledge will help him to make this unit run
successfully.

(7) Financial Contribution: 10, 00,000

(8) Profit Share: 25%

(1) Name: Brijesh H. Shah

(2) Age: 27 years

(3) Address:
3- Kamal Park,
Near Anand Garden,
Rajkot.

(4) Education qualification: M.B.A. (Operation Mgt.)

(5) Responsibility:

Mr. Brijesh has an ability to identify the

market situation and found to be enthusiastic at
work. He will be handling production department of
the unit as well as quality control department.

(6) Experience & Background:

Mr. Brijesh is having a good experience in the

field of production unit. He has two years of
experience with Rahul Food Product industry.

(7) Financial Contribution:

10, 00,000

(8) Profit Share:

25%
Time Schedule for
Implementation

Sr. Particulars Starti Period

No. ng of
Time Comple
tion
1. Collection of data about 0 to 2 months
concern industry its current
demand consumer
preference Survery
2. Identify & fulfill the required 2 to 3months
primary finance
3. Land & Site Selection 3 to 4months
4. Construction of Building 4 to 6months
5. Power and fuel 6 to 7months
Arrangement
6. Installation of Plant & 7 to 8months
Machinery
7. Selection of Raw Material 8 to 9months
Sources & Suppliers
8. Laboratory installation 9 to 11months
9. Starting of Production 12months
Location factors
(1) Tax Benefit:-

One reason why the location on has been

selected over there was of the Tax Benefit. Because
it is an industrial area. Tax Benefit is given to
motivate entrepreneurs for expanding the business.

(2) EASY LABOUR SUPPLY:-

As the selected location is situated in rural

area [shaper-Veraval] and the rate of lower class
People are very high. There is an easy availability of
labour at low wages, that ultimate reduce total cost
of the product. So, the need of unskilled worker can
fulfill easily.

(3) SOCIAL RESPONSIBILITY:-

It is again consider as a part of social

responsibility. The location selected is far distance
from the living area of people and we are providing
employment to rural area.
(4) EASY AVAILABILITY OF RAW MATERIALS:-

Raw material like Ghee, Maida flour etc. at

the same time water, diesel, power, fuel is also
available easily.

(5) LARGE LAND AVAILABILITY:-

Large plots of the land are available at area

selected which makes factory to build separate area
for store room, office, gate security office etc.

(6) POWER:-
As we know it is the foremost thing requires
for production process. Here powers in terms of
electrical diesel etc. are available, because factory
is situated in an industrial area. There will be a
sufficient power supply and the uniformity in getting
supply can be maintained.

(7) GOVT. SUBSIDIES & FACILITIES:-

As the location selected is in the industrial

area, govt. help by making capital, land, Water and
power available at subsidies rates. The govt. may
give such facilities as tax exemption, banking,
insurance and postal facilities at low rates.
Processing of Food Products
Why do we process food?

To convert to edible products

To preserve
To extend availability and provide accessibility
To provide variety & choice
To provide convenience
To add value

Unit Operations

The processed involved in manufacturing food products

are known as unit operations. These include:

Storage e.g. keeping raw materials in good conditions.

Cleaning e.g. removing foreign matter.
Sorting / grading e.g. assessing the quality
Size reduction e.g. firming, slicing, trashing
Mixing looming.
Heat transfer e.g. cooking & cooling.
 Typical food process
Most food which is manufactured goes through a number
of common steps. The specific details of each may differ but the basic
principles are the same.

Source ingredients

Delivery of ingredients

Storage of ingredients e.g. in hoppers etc.

Weigh and mix ingredients formulation

Mixture shaped or formed e.g. cutting, rolling etc.

Fillings added

Finish applied

Cooked

Cooled

Packaged and labeled

Stored usually on pallets

Dispatched for transportation
The Quality Commitment
K.K. Biscuit industry is located at Strategic location for
convenience and constant output and easy distribution. Industry has the
latest machinery with automatic packing facilities.

All products are manufactured under the most hygienic

conditions. Great care is exercised in the selection and quality control of
Raw Materials, Packing Materials and rigid quality Standards are
ensured at every stage of the manufacturing process. Each batch of
biscuits is thoroughly checked by expert staff, using the most modern
equipment.

THE CUSTOMER CONFIDENCE:

The consumer is the focus of all activities at K.K. Biscuit industry

Maximizing value to consumers and forging enduring customer
relationships are the core endeavors at K.K. Biscuit industry.

Our efforts are driven towards maximizing customer satisfaction

and this is in synergy with our quality pledge.

K.K. Biscuit industry will strive to provide consistently nutritious &

quality food products to meet consumers satisfaction by using quality
materials and by adopting appropriate processes. To facilitate the above
will strive to continuously train our employees and to provide them an
open & participative environment.
Financial Analysis
Land & Building:

The total land required for industry will be 3000 sq. feet and the
rate per Sq. feet is Rs. 167 (166.67).

Particulars Amount (Rs.)

Rate Per Sq. Feet 166
Total value of Land ( Rs. 167x 3000 5,00,000
Sq. Feet)
Stamp Duty Registration Fee and 10,000
Documentation Charge
Estimated Land Development 40,000
Expenses
Total 5,50,000

Build up area = 3000 Sq. feet x 80% = 2400 Sq. feet

Sr. Particulars Sq. feet Rate Per Total amt.

No. used Sq. feet
1. Project & Shed 960 150 1,44,000
(40%)
2. R. & D. Dept. 240 120 28,800
(10%)
3. Office Area 480 110 52,800
(20%)
4. Store Room 480 130 62,400
(20%)
5. Cooling Room 240 200 48,000
(10%)
Total 3,26,000
 Plant & Machineries:-

Sr. Name of Amt. Qty. Total

No. Machine
1. Cooling 25,00,000 1 25,00,000
Conveyor
With
Stacking
2. Cream 90,000 1 90,000
Mixer
3. Roller 70,000 1 70,000
Cutting
Machine
4. Oil Spray 90,000 1 90,000
Machine
5. Dough 1,00,000 1 1,00,000
Mixer
6. Biscuit 38,000 1 38,000
Luminator
7. Biscuit 8,000 1 8,000
Grinder
8. Sugar 1,00,000 1 1,00,000
Grinder
9. Rotery 5,00,000 1 5,00,000
Moulding
Machine
10. Extra 1,00,000 1 1,00,000
Cutting Die-
Roller
Total 36,00,000
 Other Miscellaneous Fixed Assets:

Sr. No. Particulars Amt.

1. Furniture & Office 1,50,000
Equipments
2. Laboratory / Testing 2,00,000
Equipments
3. Fire Fighting Equipments 70,000
4. Others 30,000
Total Cost of 4,50,000
Miscellaneous Fixed
Assets

Preliminary & Pre- Operative Expenses:

Total preliminary expenses will be of Rs. 2, 00,000 which

includes legal expenses. Commission & other miscellaneous
expenses.

Raw Material cost:

Sr. Particulars Rate per Req. per Total Amt.

No. k.g. / ltr. k.g. / ltr.
Annum
1. Maida flour 6 Rs. 1,00,000 6,00,000
2. Ghee 30 Rs. 30,000 9,00,000
3. Soda bi 3 Rs. 8,700 26,100
Carbonate
4. Sugar 12 Rs. 75,000 90,000
5. Salt 3 Rs. 1,500 4,500
6. Oil 20 Rs. 10,000 2,00,000
Total 72,20,600

At 60% Capacity = 72, 20,600 x 60 %

= Rs. 43, 32,360
 Consumable & Spares:

Sr. No. Description At 100%

1. Lubricant 10,000
2. Diesel 60,000
3. Water 5,000
Total 75,000

At 60% Capacity = 75,000 x 60%

= Rs. 45,000

Man Power Requirement:

Sr. Description Numbers Monthly (Annual)

No. Require income Total
Per Head Amt.
1. R. & D. 2 10,000 2,40,000
Department
2. Skilled Persons 5 5,000 1,20,000
3. Unskilled 20 3,000 7,20,000
Persons
4. Accountant 1 5,000 60,000
Total 11,40,000

Skilled Persons includes store keeper, clerk cum computer

operator, sales purchase officer.
 Administrative Expense:

Sr. No. Description Total Amt.

1. Traveling Expense 1,20,000
2. Stationary Expense 5,000
3. Telephone Expense 60,000
4. Sundry Expense 60,000
Total 2,45,000

Selling Expenses:

Sr. No. Description Total Amt.

1. Packing Materials 60,000
2. Freight 1,50,000
3. Sales Promotional 50,000
Expense
Total 2,60,000

Power Cost:

Electricity and total cost at 100% capacity will be

Rs. 5, 00,000 and at 60% capacity Rs.3, 00,000.

Plant & Maintenance cost:

Plant & Maintenance cost will be Rs. 3,000 per month. So

the annual total amt. will be Rs. 36,000.
 Electricity Cost:

It will be Rs. 3, 00,000 provided to the firm.

Depreciation:

Sr. Particulars Actual Rate Amt.

No. cost
1. Building 3,26,000 10% 32,600
2. Plant & 36,00,000 25% 90,000
Machinery

3. Tools & 50,000 25% 12,500

Machinery

4. Electrification 3,00,000 25% 75,000

5. Office Furniture 1,50,000 15% 22,500
Total 2,32,600

Tools & Equipments:

The total tools & equipments cost will be Rs. 50,000

annually.

Packing Expenses:

Packing Expenses = Rs. 60,000

 Capacity Utilization:

Total daily production

1000 K.g. x 16 hours 16000 kg.

Total annual Production

8000 x 300 days 48, 00,000kg.

60,000 packets of 200 gms.

Will be produce.96,000 Boxes
of 10 packets of 200 g.m. per
Annum at 100% capacity.

Now,

At 60% capacity,
96,000 x 60 57,600 Boxes
100

Total annual production at 60% capacity

will be 28,80,000 k.g. (57,600 boxes)
Statement of Profitability
 Installed Capacity ( No. of Boxes) 96,000
Capacity Utilization 60%
Production per annum ( no. of Boxes) 57,600
Sales Per annum 57,000
Total Sales Revenue ( 57000 x 150) 85,50,000
Less:- Cost of production
Raw material Cost 43,32,360
Consumables 45,000
Tools & Equipments 50,000
Power 4,00,000
Salary & Wages 11,40,000
Preliminary Expense 40,000
Repair & Maintenance 36,000
Depreciation 2,32,600
62,75,960
Cost of Production 22,74,040
Opening Stock of Finished Goods
O/P. of F.G. = 22,74,040
57,600

= Rs. 40 x 600 24,000

Closing Stock of Finished Goods -

Gross Profit 2,25,0040

Less: Administration Expense 2,45,000
Selling Expense 2,60,000 5,05,000

Net Profit before int. & tax 17,45,040

Less: int. on securities
Secured 1,40,000
Unsecured 1,17,957 2,57,957

Net Profit Before Tax 14,87,083

Less: Tax @ 25% 3,71,770

Net Profit After Tax 11,15,312

 Computation of W.C. Requirement:

Sr. Particulars Amount Rs.

No.
Current Assets
1 Raw Material
3,64,780
2 Tools & Pack 1 month 9,166
3 Finished Goods (Closing Stock) 24,000

4 Debtors 7,12,500

Total Current Assets 11,10,446

Sr. Particulars Amount Rs.

No.
Current Liabilities

Creditors 7,43,893

Total Working Caital Requirement 3,66,553

 Projected Balance Sheet

Particulars Amt.
Source of Funds:

Partners Capital 40,00,000

P&L A/c. 11,15,312

Secured Loan 10,00,000

Unsecured Loan 7,76,000

Current Liabilities 7,43,893

Total 76,35,205

Application of Funds:

Fixed Assets:

Gross Block 52,76,000

Less: Depreciation 2,32,600
50,43,400

Current Assets:
Stock 24,000
Debtors 7,12,500
Loan & Advance -
Cash 17,61,716 24,98,216

Preliminary Expense 93,589

Total 76,35,205
 Cost of Project & Means of Finance

Particulars Amt.
Land & Site Development 5,50,000
Building 3,26,000
Plant & Machine 36,00,000
Tools & Equipments 50,000
Electrification 3,00,000
Other Misc. Assets 4,50,000
Preliminary & Pre Operating 2,00,000
Expenses
Margin of Working Capital 66,513
Total 58,42,553

Means of Finance

Particulars Amt.
Partners Capital 40,00,000
Secured Loan (14%) 10,00,000
Unsecured Loan (14%) 8,42,553
Total 58,42,553
 Break Even Analysis

Break Even Analysis is a specific way of presenting and studying

the inter-relation between costs, volume, and profits. It provides information to
management in a most precise manner. It is an effective and efficient financial
reporting system.
The Break Even Analysis establishes relationship between
revenue and costs with respect to volume. It indicates the level of sales at
which costs and revenues are in equilibrium. The equilibrium point is commonly
known as the Break Even Point. The Break Even Point is that point of sales
volume at which total revenue is equal to total costs. It is a no-profit, no loss
situation.
Break Even Point = Fixed cost X 100
Contribution (Sales- Variable Cost)

= 27, 73,327
39, 36,640 (85, 50,000 46, 13,360)

= 70.45%

Sales Value of B.E.P. = B.E.P. x Sales

100

= 70.45 x 57,000
100

Sales Value of B.E.P. = 40,157 Boxes

Ratio-Analysis
Debt/Equity Ratio:-
The relationship between borrowed funds and owners capital is a
popular measure of the long-term financial solvency of a firm. This relationship
is shown by the debt-equity ratio.
The relationship between outsiders claims and owners capital
can be shown in different ways and accordingly, there are many variants of the
debt-equity (D/E Ratio).
The D/E ratio is an important tool of financial analysis to appraise
the financial structure of a firm. It has important implications from the view point
of the creditors, owners and the firm itself. The ratio reflects the relative
contribution of creditors and owners of business in its financing. A high ratio
shows a large share of financing by the creditors of the firm, a low ratio implies
a smaller claim of creditors.
Debt Equity Ratio = Debit
Equity
= 17, 76,000
51, 15,312- 93,589
= 17, 76,000
50, 21,723
= 035: 1
Where,
Debt includes Equity includes
# Secured loan
Partners capital
Unsecured loan Surplus
Preliminary expenses
Return on investment:-
The profitability ratios can also be computed by relating the profits
of a firm to its investments. Such ratios are popularly termed as return on
investments. Here, the profits are related to the total capital employed.
The term capital employed refers to long-term funds supplied by
the creditors and owners of the firm.
A comparison of this ratio with similar firms, with the industry
average and over time would provide sufficient insight into how efficiently
the long-term funds of owners and creditors are being used. The higher
the ratio, the more efficient is the use of capital employed.

Return on Investment = Net Profit after Tax x 100

Capital Employed
= 11, 15,312 x 100
67, 97,723
= 16.41
Where,
Capital Employed includes
Secured Loan
Unsecured Loan
Partners Capital
Surplus
Preliminary Expenses
 Distribution: Food
Whole selling &
Retailing

At large part the food products value Chain is

distribution:

Efficiently getting the product.

In good condition to where.
It is convenient for the consumer to but it.
In a setting that is consistent with the brands image.

Manufacturers of snack food products have different

interests with respect to the availability of their products. For
convenience products such as biscuits it is essential that your product be
available widely, chances are that if a store does not have a consumers
preferred brand of biscuits, the consumer will settle for another brand
rather than taking the trouble to go to another store.

Occasionally, however manufacturers will prefer selective

distribution since they prefer to have their products available only in
upscale stores.

Mfg. Wholesaler Retailer Consumer.

 Market Development

Mkt. development involves creating or expanding a mkt. to

new or existing products and/or increasing the value of these products.
The strategy of the product will depend on the current stage in the
product life cycle. Once more people know, a significant challenge is
going to get more people to actually try the product. This is due to vast
choices of other products that consumers can consume.

The strategic planning process in order to make good

investment decision with respect to how much to spend on mktg. & how
to allocate this spending among opportunities available e.g. advertising
& price promotions. It is useful to go through a strategic planning
process.

As this is a new product in the mkt. so, one has to see that
there should be cost reduction by improving the quality. So the maximum
use of available resources can work at this stage but again here, the
specialized product i.e. only cream & salty biscuits will be produce.
There will be a considerable beginning power because of large
quantities purchased. Firm can adopt new technology and can develop
research & develop department efficiently that allow superior quality &
performance.
 RISK FACTORS
Quality Consciousness:

To provide real quality of the food products is very

much important. Because snack food item direct
affects to the health of the consumer. So, to provide
nutritious food is first & for most things to be
considered. Any mistake in such thing can lead firm
to destroy its reputation.

Natural condition:
The management of store-keeping should be
flexible. It means it should be protected by natural
conditions like monsoon, winter or summer.

Because the main material use to make

biscuit is wheat, a firm has to be dependent on the
monsoon and the crop of wheat and ultimately price.
Because as the production of wheat decrease the
demand get increase or remain constant but due to
less supply of wheat, price gets up and lastly affect
to snack food market.

Finished Goods Preservation:-

The preservation of food finished products is
also very challengeable task for any production unit.
Because the time of storage between the finished
goods and transport it to the concerned retailer is
very risky task.

Test and Preferences:-

As we know that today the expectations of
customers are growing day to day. So, to identify
their test preference and put in front of them and
again take feed back of it whether will it work or not
is also very complex task.
Future Prospectus and
conclusion
(1) All the Players- Old & New, Big and Small are consciously
building their brands. The biscuit market, in both urban &
rural India, is extremely brand sensitive.

(2) We will start on new & emerging segments like sugar

Free cream cakes and diet biscuits to fuel its growth.

(3) Analyst expects the mkt. to show exponentially in the years

to come per capital consumption in India is only 2 k.g.
compared to 16 to 17 k.g. in the developed markets.

(4) All the national and regional players are looking forward to
fast growth over the next few years. And one thing seems
certain at least for the foreseeable future. The days of
single company monopoly are over. Indias cookie market
will continue to be ruled by many kings.

(5) The Salty- Snack market is also changing due to of the

introduction of the fat substitute olestra while the success
 of the product is still being determined. There is a lot of
potential for future uses.

Bibliography

Magazines:

0 Business Today (Oct. 9, 2005)

0 Competition Success Review (Dec., 2005)

Web Sites:

0 www.parleproducts.com
0 www.thehindubusinessline.com

Books:

0 Production & Operation Management

-Chunawalla Patel

0 Financial Management
- By Khan & Jain

0 Financial Management
- By I.M. Pandey