Cha

min

da R

uwan

path

irana 

2009 

Bus

ines

s Exp

ansi

on P

lan

Requesting funds as a Revolving – Short Term Loan of LKR.20.00 Mio., under bullet repayment after 06 Months and Interest to be serviced monthly, in order to meet the forthcoming Seasonal working capital requirement i.e. to meet the very heavy demand in “Vesak – Poson” Season. The funds will be used to hold extra stocks of Candle products in two different varieties & qualities. SELAN

CANDLE INDUSTRIES

No.10/1, Vidyala Road, Kotaboda

Watta, Avissawella.

036 – 2230518

2  

Contents

Vision / Mission

Management Structure

Company Profile

Candle Making Machines

Accounts Summary

Accounts Highlights

Purpose

Breakeven Level / Leverages

Bankers

Working Capital Statement

Cash-flow Statement

Assessment of Risks

   

Page No.

03

04

05

07

08

09

11

12

13

14

15

16

3  

 

Our Vision

Our Mission

To be the number one in highest quality yet affordable Candle products provider to the nation.

 

 

 

We will be the highly market oriented and the premier provider of Candle products beyond the customer expectations, while managing and expanding the Company effectively and efficiently in a social responsible and sustainable manner. 

To be the number one in highest quality, yet affordable Candle products provider.

We will be the highly

market oriented and the premier provider of Candle products beyond the customer expectations, while managing and expanding the Company effectively and efficiently in a sustainable manner.

10O

01 - Sup

0 - MachineOperators

MAST

M

ervisor

e

ANAGETRUC

Manag

EMENTURE

ging P

15Packing

& Storing

NT E

Partneers

01 - Supe

Tran

Dis

ervisor

04 nsportation

&stribution

n

candPrese

The cons“Velof wPresediffe

M r. Anil “Selan

dles (in two ently the com

MAN

Mr. Anil Piof “Seetha I

Mr. Ruhan years, beforgood knowl

business is struction of landa Piyasa

water and abilently from t

erent qualitie

M

SMALL

sized, eacpacket 

contained

40 numbeof Candle

B

Kumara &Candle Indudifferent ve

mpany can b

NAGING

iyadasa was Industries – A

Kularatne wre the compledge of acco

M

Located at “same was fia”. Taking inlity to find athe above saes which diff

Brand 

"SEL

weight o

40

ch 

d 

er es

Retail price LK

Wholesale price 

Retail price LK

Wholesale price 

BUSINES

& Mr. Ruhanustries” (SCerities i.e. Lbe placed am

G PARTN

an Ex-SalesAvissawella

was a managany was forounting.

MACHIN

“Anhettigaminanced by “n to consideample labourid factory prfer from its w

named

LAN" 

of a packet 

00g

KR.160/‐

LKR.120/‐

LARGE

sized, each pcontaine

08 number of 

KR.160/‐

LKR.120/‐

SS PART

n KularatneCI), which iLarge and S

mong the Top

NERS - E

s Representaa” for over a

er attached trmed and ha

NES AN

ma”, in a fac“Seylan Ban

eration, it is r resources aroduces twoweight and t

E

packet ed 

Candles 

TNERS A

e were schos actively enSmall, to mp 02 of the le

EXPERI

ative (with aperiod of 05

to “D. C. Mas the neces

D THE C

ctory buildinnk PLC – Aan idyllic se

at a lower coo different vethe prices as

AND AC

oolmates andngaged in meet the custeading Cand

IENCE I

an enormous5 years, befo

Mills – Balumsary admini

CAPACI

ng, propertyAvissawella”etting for thest in the vicierities of canfollows.

SMALL

sized, eacpacket 

contained

40 numbeof Candle

TIVITIE

d are the mmanufacturintomers’ dem

dle manufact

IN THE

experience ore the comp

mmahara” fostrative skil

ITY

worth over ” branch throe business sinity area. ndles i.e. La

Brand 

"DES

weight o

36

h 

d 

er es

Retail price LK

Wholesale price 

Retail price LK

Wholesale price 

ES

managing pang and distrimand) in larturers in the

TRADE

in the trade pany was for

or over a perls together w

LKR.6.00 Mough a facilince, free av

arge and Sma

named

SHAN" 

f a packet 

60g

R.160/‐

LKR.120/‐

LARGE

sized, each pcontaine

08 number of 

KR.150/‐

LKR.110/‐

artners of ibuting of rge scale. country.

E

concern) rmed.

riod of 06 with very

Mio., and ity called vailability

all in two

E

packet ed 

Candles 

6  

The following machines have been installed in the site at present.

QUANTITY PRODUCTION CAPACITY AT ONCE MV (LKR’000)

08 Machines (03 Brand-new Machines) 300 Small candles from each 2,400

02 Machines 50 Large candles from each 350

02 Machines 100 Large candles from each 500

01 Machine (Brand-new Machine) 120 Large candles 500

Minimum output for a normal day - 15,600 Large Candles or 1,950 packets or 65 Cases - 74,400 Small Candles or 1,860 packets or 62 Cases

Permanent employees - 18

Casual Basis - 15

Note 01 : Please note that the before the newly installed machines the capacity was, Small and Large

candles both, 50 cases each for a normal day. Further, the above mentioned output per day and the casual workers which the company is introducing to the process will be TRIPLED during the Season

MARKET INQUIRIES / MARKET SHARE OF THE COMPANY According to the market inquiries the only competitor to the company in this line of industry is “Elephant Brand” (known as the present Market leader or Branded candles) yet, the “SCI” holds the largest market share at all-times.

 

“Selan Candle Industries” holds the largest market share of them all, approximately 55%. The present market leader “Elephant Brand” holds approximately 30% and the “Sun Brand” 10% and other Brands holds the rest of the market share in the country.

01 Case

(Large OR Small)

30 Packets

(Large OR Small)

Large → 240 CandlesSmall → 1,200 Candles

Selan Candle Industries

Elephant Brand

Sun Brand

Other Brands

7  

Note 02 : Please note that the all above machines are Water Coolant and the island wide distribution is carried out by the company’s own vehicles.

8  

THE COMPANY’S SUMMARY OF THE BALANCE SHEET / PROFIT & LOSS HIGHLIGHTS FOR PAST THREE YEARS.

FIXED ASSETS

Furn & Fitts 67 67 19

Machinery 1,430 1,430 1,430

Vehicles 3,631 3,631 2,030

Land & Buildings 1,690 1,690 1,690

6,818 6,818 5,169

CURRENT ASSETS

Stocks 16,269 11,416 4,520

Cash 1,268 5,354 1,329

Savings Accounts 525 18,062 225 16,995 - 5,849

24,880 23,813 11,018

EUITY

Capital 1,000 1,000 1,000

Add : Net Profit 3,645 8,364 2,151

4,645 9,364 3,151

Less : Drawings - 1,140 1,317

4,645 8,224 1,834

CURRENT LIABILITIES

Bank Overdraft 4,686 5,595 4,007

Loans 13,000 5,500 3,000

Leases 1,143 1,400 -

Invoices 1,406 20,235 3,094 15,589 2,177 9,184

24,880 23,813 11,018

Sales 49,148 43,511 27,499

Less : Cost of Sales

Stocks 11,416 4,520 3,869

Purchases 42,747 35,524 20,556

16,269 37,894 11,416 28,628 4,520 19,905

Gross Profit 11,254 14,883 7,594

Less : Expenditures

Fuel 557 415 421

Other 494 324 291

Salaries 2,600 2,175 1,892

Meals 109 101 87

Packing 1,717 1,617 1,196

VehicleMaintaine 207 282 175

Electricity 68 94 59

EPF/ETF 296 143 100 Fire Woods

214 286 139

Bank Charges

209 81 157

OD Interest

618 383 298

LoanInterest

222 618 628

LeaseInterest

186 - -

VAT 66 - -

Taxes 46 7,609 - 6,519 - 5,443

Net Profit 3,645 8,364 2,151

01/04/2007 - 31/03/2008

LKR '000

01/04/2006 - 31/03/2007

LKR '000

01/04/2005 - 31/03/2006

LKR '000

Stocks as at 31 st March for the Current Year ended

9  

SUMMARY BALANCE SHEET

2008 – 2007 (LKR. ‘000) 

2007 – 2006 (LKR. ‘000) 

2006 – 2005 (LKR. ‘000) 

Current Assets 18,062 16,995 5,849

Less : Current Liabilities 20,235 15,589 9,184

Net Current Assets (2,173) 1,406 (3,335) Fixed Assets 6,818 6,818 5,169 Other Assets - - -

Total Net Assets 4,645 8,224 1,834

Equity 4,645 8,224 1,834

Long term Debt - - -

Total 4,645 8,224 1,834

PROFIT & LOSS HIGHLIGHTS

2008 – 2007 (LKR. ‘000) 

2007 – 2006 (LKR. ‘000) 

2006 – 2005 (LKR. ‘000) 

Revenue 49,148 43,511 27,499

Cost of Sales 37,894 28,628 19,905

Gross Profit 11,254 14,883 7,594

Operating Profit 4,993 9,365 3,234

Interest 1,236 1,001 1,083

Profit Before Taxation 3,757 8,364 2,151

Tax 112 - -

Net Profit After Taxation

3,645 8,364 2,151

Ratios   2008 – 2007  2007 – 2006  2006 – 2005 

Gross Profit Margin 22.9%  34.2%  27.6% Net Profit Margin 07.4%  19.2%  07.8% 

Current Asset Ratio 0.89 : 1  1.09 : 1  0.64 : 1 

Quick Asset Ratio 0.07 : 1  0.36 : 1  0.14 : 1 

Debt / Equity 4.05 : 1  1.52 : 1  3.82 : 1 

Gearing / Debt Ratio 0.81 : 1  0.65 : 1  0.83 : 1 

Interest Cover 3.95 times  9.36 times  2.99 times 

BAL

SAL

NOT

Althoover Thus

10

15

20

25

5,0

10,0

15,0

20,0

25,0

30,0

35,0

40,0

45,0

50,0

LANCE

LES TO

TE WITHough the Fin01st January

s, the financi

‐

5,000 

0,000 

5,000 

0,000 

5,000 

31.03

‐

000 

000 

000 

000 

000 

000 

000 

000 

000 

000 

Year 2

SHEET

GROSS

CARE nancial Yeay - 30th Juneial figures ar

3.200631.03

2006 Year 

GROWT

PROFIT

ars rolling ov every year re intricate /

.200731.03.

2007 Year

TH

T TO NET

ver 01st Apriand the last confused to

2008

r 2008

T PROFI

il - 31st Marccredit collec analyse to g

ASSETS

EQUITY

LIABILITIES

Sales

Gross Profit

Net rofit

Note 03:The reasoincreasingis due to stocks forthe excesdue to thecalled “DAugust ’0of financi The reasoyear 200trend in Nyear ’08,it was LKthe Year 2

IT ANAL

Note 04:The reasoIncreasingis due to for the enintroducti“Deshan”affected to Reason, fNet Profithe decre(Wax) forinflated cwas affec‘08. FurthMay ’07,prepare aconsumerNew Yearfinancial y PurchasinAugust ’0over LKRtaken for Avissawenot reflec

ch every yeactions will bget the clear

: on for decremg Assets fromthe mere facr the end of f

ss amount of e introduction

Deshan” to th05 and it waial year ’07.

on for decreas07-2008 is dNet profit foi.e. Change i

KR.6.2 Mio., 2007-2008 by

LYSIS

on for decremg of Sales frothe fact of ho

nd of financiaion of low ” in August ’0o the end of f

for decrease it for the yea

ement in the r the end of fost of the Wacted for the her, the “Ves, which is mand lesser amrs, as soon aftr” and it was year ended 20

ng of pro06, where theR.2.20 Mio., same from t

ella for LKR.ted by the abo

ar, the compabe over by en

picture for t

ment in the cm the Year 20cts of holdingfinancial yearCash in handn of low priche market dus affected for

se the Equitydue to the de

r the end of in the year 20and was dec

y LKR.4.7 M

ment in the com the year 20olding an ext

al year ’07 anpriced, bran

05 and such pfinancial year

the Gross Par 2007-2008

change in Pfinancial-yearax during theend of finanak” was falle

much shorter pmount in cash

ter the “Sinhabadly affecte

008.

operty at e Company ha

and the facthe Seylan B6.75 Mio., wove financials

any’s Seasonnd of July eathe Season.

change in 007-2008

g an extra r ’07 and d, mainly ced brand uring the r the end

y from the ecreasing financial

006-2007 creased in io.

change in 007-2008 tra stocks d further,

nd called profit was r ’07.

rofit and is due to

Purchases r ’07 and

e year ’07 ncial year en on 01st period to with the

ala Hindu ed for the

Ukwatte as funded cility has

Bank PLC which was

s.

n rolling ach year.

PUR Presewhicdema ThusBran

Furthmeet TH

Sale

LessPurcGroLessFueSalaMeaPackFireLoaNet

RPOSE O

ently the Sech is not sufand at all, es

s, the necessnd new mach

03 Machine

01 Machine

her, “SCI” it their custom

E COMP

P

es

s : Cost of Schasesoss Profits : Expenditul

ariesalsking

e Woodsan Interestt Profit

OF THE

lan Candle Ifficient to mspecially dur

sary steps hahines with be

es → 300 S

es → 50 La

is required amer’s heavy

ANY’S PTHE C

Particulars

Sales

ures

CREDIT

Industries (Smeet their exring the seas

ave been alreetter capacity

Small candle

arge candles

and targeted demand on

PROJECTCANDLE

T FACIL

SCI) functioxpected prodson sale i.e. J

eady taken ty.

s from each

at once

d to produce the forthcom

TED PROPRODUC

De

LITY

oning with mduction of cJanuary to Ju

to enhance th

→ MV is

→ MV is

10,000 caseming season

OFIT & LCTION O

ebits

28,125

50 750

20 870 180

2,400

maximum oucandles in ouly.

he productio

approximat

approximat

es additiona.

OSS HIGOF 10,000

Cred

utput for the rder to neut

on by install

tely LKR.30

tely KR.100,

ally which is

GHLIGHT0 CASES

dits

34,500

last couple tralise the cu

ing under m

0,000/-

,000/-

s hardly suff

TS ONLY.

LKR

Total

34

6

2

of years, ustomers

mentioned

fficient to

Y FOR

R ‘000

4,500

6,375

2,105

PR

Accoprod

Vari

Fixe

Aver

Brea

Brea

NoteThemattarg

NotePleafor th

ODUCTIording to th

duction of 10

iable Cost

ed Cost (LKR

rage Whole

ak-even Lev

ak-even Lev

e 05: company

tched whegeted / exp

e 06: se note that he expected

ION CAPhe Company0,000 cases, t

R.’000)

esale Selling

vel (in Units)

vel (in LKR.

y’s (SCI)en they pected can

the above Lenhanced ca

PACITY y’s’ Managethe Breakev

=

=

g Price =

) =

) =

) No Protouched tndle prod

O

c

O T F

Tat

Leverages haandle produc

/ BREAKement Acco

ven Level can

97.48 pac

2,964

LKR.115/

169 (pack

19.435 Mi

ofit – Nothe salesuction of

OVERHE

Operating Sales Tu

“SCI” spendcompany’s o

Operating Equ

The company

FINANC

TOwner’Equity

The “SCI” ruare not in a ptheir owner’

as been estimction of 10,0

K-EVENounts and thn be as follo

ckets

/-

kets in ’000)

io.

o Loss m turnover10,000 ca

EADS &

Expensesurnover

ds; approximoperating exp

Expensesity

y’s operating e

IAL LEV

otal Debtss + Total

Debt

unning the bposition to res equity

mated as per 000 cases.

N LEVELhe projectedws.

)

margin (Brr of LKRases.

OPERAT

= 6,261

mately 13% penses.

= 6,26

expenses for q

VERAGE

s =l

s (4

business withepay all their

the Financia

L d Profit & L

reakeven R.19.435

TING LE

1 / 49,148

from their s

61 / 4,645

quity is 1.35 t

ES

20,235

,645 + 20,23

h high debt er debts in the

al Year ende

Loss for the

Level) wMio., fo

EVERAG

= 0.13 tim

sales turnove

= 1.35 ti

times.

= 1 : 035)

exposure, whe short-run f

ed March ’08

e Candle

will be r their

ES

mes

er for the

imes

.81

hich they from

8 and not

BA

Prese

The fullyMio Seyl

Prese

PerRevVelLea

Tot

Furthwelcmade

ANKINGently, the “S

1st facility wy secured nat

approximatan Bank PL

ently “SCI”

Facility

rmanent Ovevolving Shorlenda Piyasaase Facilities

tal Existing F

her, with thcoming staffe a tremendo

G & BANSCI” is exclu

was granted oture. Simulttely during tC.

enjoying un

y Type

erdraft rt Term Loana Loan s

Facilities

he proper gf and togetheous growth i

NKERS usively bank

on March 19aneously, wthe past and

nder mention

C

n

guidance aner with the in a very sho

ing with Sey

996, after whwe have manad we have in

ned facilities

Capital GrantLKR.

3,70013,000

6,7501,565

25,015

nd the expecommitment

ort period

ylan Bank PL

hich the seveaged to builnvested the

with the Se

ted

0,000- 0,000- 0,000- 5,217-

5,217-

rtise of thets, enthusias

LC at Avissa

eral facilitiesd up a deposame under

ylan Bank P

Capital OuLKR

3

6

e Selan Bansm of the bu

awella since

s were grantesit base to thlong term F

PLC at Aviss

utstanding R. 3,700,000-

00- 6,000,000-

nk PLC at usiness partn

e December

ed time to timhe value of Fixed Depo

sawella bran

Rate oInteres

27.0% p15.5 % p17.5 & p

Avissawellaners, the bus

1994.

me, under LKR.3.70 sits at the

nch.

of st

p.a. p.a. p.a.

a branch’ siness has

14  

ASSESSMENT OF WORKING CAPITAL REQUIREMENT

ASSUMPTIONS Expect production per 1 month in units 9,525 cases (approx. 6,750,000 candles in both large and

small) 1 Case includes 30 packets with small 40 / large 8 candles each. Purchasing and storing of Raw Materials is 1 month (57,150 cases per 6 months).

Processing Time is 2,820 candles for 20 Minutes, and maximum of 203,040 candles can be manufactured per day (5,076,000 per month), during the season. Storing period of finished goods (Candles) is 1month.

60% sales done on Credit and Credit allowed for 45 days Production requirement is for 6 months No. of Workers 50. Working 24 Hours round the clock (shift work) during the season and No. of

Working days per months = 25 days. Payments made for Raw Materials within 1 Month Average wholesale selling price per 1 Case is LKR.3,450/-

Raw Materials

Paraffin Wax 50 Kg. is LKR.12,500/-, estimated production is, 11.25 Kg., required for {average weight from “Selan” & “Deshan”=(12+10.5)/2=11.25}1 Case. Therefore, to 160,734,500 produce 57,150 cases “SCI” required 642,938 Kg. (value for 1Kg is LKR.250/-) Value required for 6 Months is (642,938 X 250)

Yarn 200 g., per 1 Case (1 Kg = LKR.325/-), Therefore, required Kilograms per __3,714,750 6 month 11,430 Kg. Value required for 6 Months is

Paper - estimated cost per case is LKR.40/-. Value required for 6 Months is __2,286,000

Labels - estimated cost per case is LKR.25/-. Value required for 6 Months is __1,428,750

1 Box per 1 case - estimated cost is 22/-. Value required for 6 Months is __1,257,300

Total Raw Materials 169,421,300 Salaries (Direct Labour) – Candle production of 1 case entitle for LKR.40/- per worker __3,143,250 Therefore Wages per month (9,525 X 55/- = 523,875/-). Wages for 6 Months Fuel and Transport ___ 407,000 Loan Interest __4,455,000 Factory Overheads ___ 345,000 Administration & Establishment Expenses ___ 600,000 Assessment of Working Capital Requirement for 6 months

No Months Amount (LKR.) Raw Materials 01 _28,236,883 Working Progress ½ _14,266,369 Finished Goods ⅔ _19,819,061 Debtors 1 ½ _26,755,732 Gross Working Capital _89,078,045 Less : Suppliers Credit 01 28,236,883 Revolving STL at Seylan Bank PLC– Avissawella 13,000,000 Company’s Contribution _6,500,000 Cash Sales 19,716,750 _67,453,633 Net Working Capital Requirement _21,624,412 =========

15  

PROJECTED CASH FLOW STATEMENT FOR THE REVOLVING SEASONAL PERIOD

FROM 1ST JANUARY TO 31ST JULY 2009

January 2009

February 2009

March2009

April2009

May2009

June2009

July2009

Cash Inflow

Sales Turnover 28,715,000 29,750,000 30,910,000 31,980,000 32,850,000 29,750,000 15,500,000

Sales on Cash 4,506,000 8,900,000 10,320,000 14,460,000 21,320,000 14,210,000 6,066,000

Proceeds on Credit Salesexcludingreturns (68%)

- 10,759,000 12,708,000 23,606,000 28,842,000 22,152,000 19,610,000

RSTL 13,000,000 - - - - - -

SCI's Contribution

6,500,000 - - - - - -

Total Cash Inflow

24,006,000 19,659,000 23,028,000 38,066,000 50,162,000 36,362,000 25,676,000

Cash Outflow

Salaries / Wages

524,000 524,000 524,000 524,000 524,000 524,000 280,000

Fuel / Transportation

68,000 68,000 68,000 68,000 68,000 68,000 68,000

Other Factory Over Heads

58,000 58,000 58,000 58,000 58,000 58,000 58,000

Fire wood 80,000 80,000 80,000 80,000 80,000 80,000 80,000

Bank Interest 742,500 742,500 742,500 742,500 742,500 742,500 742,500

Admin & Estb. 100,000 100,000 100,000 100,000 100,000 100,000 100,000

Raw MaterialsParapin Wax 26,789,000 26,290,000 26,785,000 26,039,000 26,540,000 25,985,000 22,514,000

Yarn 619,000 619,000 619,000 619,000 619,000 619,000 619,000

Paper/Labels 615,000 615,000 615,000 615,000 615,000 615,000 615,000

Boxes 210,000 210,000 210,000 210,000 210,000 210,000 210,000

Total Cash Outflow

29,805,500 29,306,500 29,801,500 29,055,500 29,556,500 29,001,500 25,286,500

Net Cash OutflowExcess/(Short)

-5,799,500 -9,647,500 -6,773,500 9,010,500 20,605,500 7,360,500 389,500

B/F - -5,799,500 -15,447,000 -22,220,500 -13,210,000 7,395,500 14,756,000

Total New CashflowExcess/(Short)

-5,799,500 -15,447,000 -22,220,500 -13,210,000 7,395,500 14,756,000 15,145,500

AS

Com

Indu

Econ

SESSM

mpany Risk

ustry Risk

nomy Risk

ENT OF

: Since “reputaticompan

: There acompeti(previoushare aneffectiv

: When itor the materialto the w

F RISK

SCI” has beon and stand

ny risk is ver

are no severitors. Howeusly and tillnd also were manner.

t comes to aheavy Impols especially

whole country

een in this tds among thry narrow.

re or huge ever, now thl recently, tre the Mark

a Economic ort-duty impy for Parpingy as well.

trade over dhe Top-02 le

risks or thrhe “SCI” hothe “Elephan

ket Leader).

risk there isposed by thg Wax, but i

decade of timeading Cand

reats in thisolds the larnt Brand caBut the “SC

s always therhe Governmit will be aff

me, as they dle manufact

s Industry orgest marketandles” heldCI” handles

re the Tax ament time tofected to the

gained an etures in this

other than tht share of t

d the largests the situatio

and the Goveo time for te whole Indu

excellent country,

he main them all t market on in an

ernment, the Raw ustry and