project appraisal report

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“And He gives you of all that you ask Him, and if you count Allah’s

favor’sYou will not be able to number

them.”

Nadeem Meraj Submitted To: MAM Tabinda Kiran

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EXECUTIVE SUMMARY

1. Project: Milky bites ice cream Factory is

manufacturing plan proposed to set up

Ferozpur Road near Masjid Ibrahim Lahore

Our project lies in food and beverages

industry and we will produce 12 different

products of Ice cream. We will produce

Khulfa 2 liter pack khulfa 1 liter

pack. ,Khulfa ½ liter pack, Khulfa Cup

Mango 2 liter pack, Mango Mango 1 liter

pack, Mango ½ lite pack, Mango cup,

Vanila stick, Chocbar stick, Orange Lolly,

Pineapple lolly.As our project name suggest

our all product will be made of three main

ingredient Milk, Butter and Suger.

2. Location: - The proposed project will be located in

Lahore on Ferozpur Road near Ibrahim

Masjid. The edge of the location is that it is

situated in the industrial area. The proposed

project site enjoys the benefits of easy

availability of communication system, free

from poisoned effluents and it is in the main

city area of Lahore.

3. Sponsors:- The project is sponsored by four business

personnel’s they are highly qualified and

have proper knowledge of business

management in industrial fields, named

Nadeem Meraj of 22 year old form

Bahawalnagar and his qualification is BBA

(Hons) Finance, Shagufta Ramzan of 22

year old from Chak Madrassa and her


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qualification is BBA (Hons) Finance, Affifa

Dastgir of 22 year old from Haroon Abad

and her qualification is BBA (Hons)

Finance, and Tahir Munir of 22 year old

from Bahawalnagar his qualification is

BBA (Hons) Finance that are providing

finance for this proposed project. All the

members are equally contributing and are

equal partners and the management and

overall control of factory will be managed

by them.

4. Market & Plant Capacity: - Our proposed project site is located in

Lahore so we firstly target market of our

project is PUNJAB province of Pakistan.

We are going to serve in the different cities

of Punjab mainly Lahore, Faisalabad,

Gujranwala, Okara etc and then we will

move toward other cities of Pakistan

inshalla. Our product demand is highly exist

in market especially in summer season. The

100% capacity of plant is 30912000 liters

annually. At initial stage the plant will

operate at 80% capacity and 85% for next

two subsequent years and will be dependent

on demand level for next coming years.

5. Material & Inputs: - The basic raw materials that are required for

producing Ice-Cream and Milk, Butter, and

Sugar that we will take from Lahore and

Bhai Pheru. Other inputs are solid milk,

flavors, alomond pista, choclate, Mango

pulp etc.

6. Project Engineering: - Local and Imported both Machinery are


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used in our project. The locally purchased

machinery will be Heat exchanger,

Homogenizer, colling pipes and chiller. The

imported machinery will be GMF (Cup

filler) Technoice (Continuous Freezer)

Sedam, Gram equipment and 3M-Matic.

7. Man Power: -

Sr.No Admin Staff Skilled Labor Semi Skilled Labor

1 17 14 13

8. Implementation Schedule: - The total time period for construction of our

project is 11 months which will start from

December 2010 and will end on November

2011.We will start operations of our project

from December, 2011. The slack time of

our project can be 3 months in case of any

delay.


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9. Cost of Project: -

(Rs. In “000”)

SR #. DESCRIPTION TOTAL COST

1 Fixed Cost340351

2

Net Initial Working Capital50628

3 Total Cost390979

10. Financial Plan: -

Rs. In “000”

Sr #. Description RatioLocal Currency

LoanTotal

1 Debt 60 234587 234587

2 Equity 40 156392 156392

11. Operating Results: -

(Rs. In “000”)Description 2012 2013 2014

Sales 1381500 1540541 1545096

Cost of Sale 785418 866978 875700

Gross Profit 596082 673563 669396

Operating Expenses 31506 35074 35592

Operating Profit 564576 638489 633804

Tax 0 0 0

Net Profit 500374 572263 569752


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12. Financial Position of the Company: -Rs. In “000”

Description 2012 2013 2014

Total current Assets585985 1122144 1626853

Total Fixed Assets331703 323055 314407

Total assets917688 1445199 1941260

Total liabilities 260922 241192 200344

Total Owner equity656766 1204006 1740916

Total Liabilities and

Equity917688 1445199 1941260

13. Financial Indicators: -

Cash Break even 13.01%

Commercial Break even 24.15%

Weighted Average Cost of Capital 12.64%

IFRR 154.44%

14. Terms and Conditions: - Rate of interest on NBP loan from the

date of disbursement is 16%, securities

that will collateral for this loan will be

our machinery and in case of loss level

land will also be kept as collateral.

Technoice machine will be pledged with

the National Bank of Pakistan as


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security.

For providing loan the Sponsors or we

should have to do.

Acquire goods and valid title of land

Incorporate after the approval of NBP.

Dividend would not be declared up to 5

years.

Final contract with material, machinery,

suppliers and civil work need to be

disclosed to the Loan Sanctioning Bank

The loan will be paid necessarily in 10

equal annual installments. The bank will

charge penalty on delay of installment or

interest amount.

For further financial assistance approval

from National Bank of Pakistan is

essential.


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INTRODUCTION

There are many firms operating in food and beverages industry and developing many

food products. We choose food and beverages industry to impose project and we made

Ice-Cream factory named Milky Bites Ice-Cream factory at Faruz Pur Road near Masjid

Ibrahim Lahore. We select this site because many establishing firms are operating here

and this site is best for availability of raw materials, labor, near to market utilities,

availability of communication system and it is free from poisoned effluents. By selecting

this site due to these properties of site we will purchases a land of 500 marlas because we

take a survey of companies that are working in this sector. So this land will be enough for

our project. After approving map of project, construction and then of installation of

machinery, building on site will start and completed in 11 months. After that our projects

operation will started. We will made 12 products named as Khulfa 2 liter pack khulfa 1

liter pack. ,Khulfa ½ liter pack, Khulfa Cup Mango 2 liter pack, Mango Mango 1 liter

pack, Mango ½ lite pack, Mango cup, Vanila stick, Chocbar stick, Orange Lolly,

Pineapple lolly

There will be three main ingredients of our products Milk, Butter and suger. Firstly we

will supply our products in Lahore, Okara, Fasilabad, Gujranwala, Sheikpura, Baseer Pur

and with the passage of time we will increase our target area.

We will finance our project through 40% equity and 60% loan.

MANAGEMENT

The overall management and control of the firm will be actively managed by its active

partners who will actively participate in management decisions and control the affairs of

the firm.

Partners Name Designation

1. Nadeem Meraj Managing Director

2. Affifa Dastghir Managing Director

3. Shagufta Ramzan Managing Director

4. Tahir Munir Managing DirectorNadeem Meraj Submitted To: MAM Tabinda Kiran

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The partners will contribute equally in the equity of the project and will equally

participate in the profit and loss of the firm's business.

SPONSORS

The sponsors of the project are professionally qualified and have valuable and extensive

experience of business management in industrial fields. They have got good trading

contacts and market reputation in the industry. Moreover, they are professionally

qualified in the field of business Management from the Islamia University of Bahawalpur

under BBA Program. The sponsors experience would assist the firm in its smooth and

profitable operations.

The sponsors are financially sound and capable to contribute their part of equity in the

proposed project.

The Sponsors detail is as under:-

1. Name : Mr. Nadeem Meraj

Age : 22 years

Address : Mohallah Islam Nagar BWN.

Qualification : BBA (Finance)

2. Name : Miss. Affifa Dastghir

Age : 22 Years

Address : Tehsil Haroonabad District Bahawalnagar


3. Name : Miss.Shagufta Ramzan

Age : 22 Years

Address : Chak Madrasa District Bahawalnagar.


4. Name : Mr. Tahir Munir

Age : 22 Years

Adress : Fasil Colony Bahawalnagar


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MARKET AND DEMAND ANALYSIS

Introduction

In Pakistan there are lots of ice cream manufacturing companies working. Most well

known products of industry are kulfa, choc bars, vanilla flavors, strawberry tutti-frutti

that make large portion of sales of industry. Major raw materials are milk, butter and

sugar. e.g. 11% solid milk, 10% butter and 15% sugar.

Historically Walls is the oldest and largest company which started its working firstly in

Pakistan. Then it had a number of followers like yummy, Hecco, Rocco and in new firms

are Omore and gourmet that are now providing valuable products in noticeable volumes

in market and competing with market giants. Most of the units are working with latest

technology machinery like yummy is totally using latest technology in the whole industry

that is automated plant.

But the firms which are operating locally are not using automated plants they are using

local machineries. So when talk about whole ice cream industry the market share is

shared by both large and small firms as well because a larger portion of our population is

not brand conscious.

Present Capacity:

At present there are 3 giant companies Walls having back of gigantic parent organization

unilever, Yummy and the new born Omore the subsidiary of a big name Engro Pakistan

ltd. Other major companies of the industry are Hecco, Pearl, Panda, Rocco and gourmet.

These all are mainly located in Punjab. Most of the units are equipped with advance

technologies and are continuously striving to get most advance and latest technology.

According to an estimate totally 80130000 liter ice cream is delivered by these major

companies in the market.

Following are the ice cream units which are operating at their different levels of

percentage like Walls is operating at 85% and other units, their locations and current

capacities are as following:


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NAME OF FIRM/COMPANY LOCATIONCURRENT

CAPACITY

Walls Lahore 21000000

Yummy Lahore 16800000

Omore Sahiwal 16500000

Hecco Lahore 6300000

Gourmet Lahore 12600000

Pearl Lahore 2100000

Rocco Lahore 4200000

Panda Lahore 630000

Demand Forecast:

We are forecasting our demand of ice cream on the basis of expected growth in our target

population. The consumption of ice cream increases as population increases that will

definitely increase overall demand.

Yearly increase in population and future demand is given below.

Year Population

Expected

Growth

chances

Annual

consumption per

person(liter)

Total Demand

2010-11 172144947 1.95 1 172144947

2011-12 174985338 1.65 1.25 218731672

2012-13 177872596 1.65 1.5 266808894

2013-14 180807493 1.65 1.5 271211239

2014-15 183790816 1.65 1.5 275686224

2015-16 186823364 1.65 1.5 280235046


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Gap between Demand and Supply:

Here we try to find out the gap that exists between supply and demand of ice cream.

We will find it by taking total production and total demand of one year. When we subtract total

production from total demand the gap comes. This gap shows the potential for new entrants to

enter the market or not. Yearly increase in gap is shown in the table below:

Year Total Demand Supply Gap

2010-11 172144947 80130000 92014947

2011-12 218731672 81452145 137279527

2012-13 266808894 82796105 184012788

2013-14 271211239 84162240 187048998

2014-15 275686224 85550916 190135307

2015-16 280235046 86962506 193272539


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Price of Products:-

Table Showing the Prices of Products:

Sr No. products Prices (Rs.)

1 Kulfa (2 liter) 250

2 Kulfa (1 liter) 130

3 Kulfa (½ liter) 70

4 Kulfa Crown cup 20

5 Mango(2 liter) 250

6 Mango (1 liter) 130

7 Mango (½ liter) 70

8 Mango Cup 20

9 Vanilla bar 7

10 Choc Bar 12

11 Orange Lolly 5

12 pineapple Lolly 5


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TECHNICAL ANALYSIS

MANUFACTURING PROCESS: -

It is step by step process and it includes following steps.

Pasteurization:-

At this step milk is heated at 85° C in till milk boils properly and become pure

from germs.

Homogenization:-

At this step all milk is homogenized mean milk , its cream and butter and suger is

broken into small molecules’ and mix in all milk. In this Homogenizer mixing is done at

2000 pressure.

Cooling:-

At this step all milk is cooled and it passes through cooling pipes and when it

reaches in next in chiller flavor according to product added in this chiller. The

temperature of these cooling pipes is 4°C.

AGING:-

In this chiller all the materials stay for 4 to 6 hours and stay here until it thick and

thin.

FREEZING:-

At this step all the processed material comes in continuous freezer and freeze.

FILLING:-

After freezing of material it come in GMF machine it start filling into cups or liter

peals and packed.

COLD ROOM:-

After filling of material packing then all finished products go to cold room where

the temperature is - 25°C.


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MANUFACTURING PROCESS

CHOICE TECHNOLOGY:-

We have chosen our technology on the basis of the machinery that is using in its sector

firms.

MATERIAL INPUT AVAILABILITY:-

Our raw material lies in 3rd type of raw material which is from livestock. We get

milk and butter from it which is main ingredients and basis inputs for our products.

LOCATION AND SITE SELECTION:-

Following factors taken into account while selecting the location for project.

Availability of Raw Material:-

We select this location because here raw material will be easily available because

it is main area of Lahore and raw material can easily come here from other areas of

Lahore and from its surrounding area.

Availability of Labor:-

Adjacent with the area is rural areas that provide that will provide cheaper and

hardworking manpower for production.


PASTEURIZATION HOMOGENIZATION COOLING AGING FREEZING

FILLING

COLD ROOM

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Transportation Cost:-

The proposed location is Farooz Pur Road near Masjid Ibrahim Lahore. The

project will be there where transportation can be easily possible and cost of transportation

means for delivery of products and coming of raw material to factory will be less costly.

Utilities:-

Utilities are easily available there because as we already explained there are so

many firms operating in this area so electricity, water and communication media’s are

easily available.

Labor Situations:-

Labor situations are positive and favorable for our project. We need 27 semi

skilled and 17 for labor and admin staff are requires for admin staff we checked the labor

is productive and hardworking and there is no any unionization labor exist.

Govt. Policies:-

The project that we are going to impose follows the Govt. policies and we will

work by residing within the Govt. policies for private limited firms.

Climate Condition:-

The site that we have selected for our proposed project climate are favorable here

because ice cream is mainly a summer season operating firm and for reserving it from hot

climate we will always put it into cold stores.

Living Condition:-

The site of our project is suitable for living conditions also because here many

firms are operating already and living facility is easily available.

Environmental pollution:-

Our proposed project site is not harmful for environment it will create sound

pollution but not more than enough so it is situated at industry area where the residential

area is not so much near to it.

Machinery and Plant:-

We will purchase our machinery not from only one supplier because our few

machinery will be locally and remaining we will import from Italy.


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Annexure-I

MILKY BITES ICE CREAM FACTORY (PROPOSED) FAROOZ PUR

ROAD LAHORE

ESTIMATED COST OF LAND

RS in (000)

Sr. No. Description Area In Marlas Unit Cost Total 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


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Annexure-II


ROAD LAHORE

ESTIMATED COST OF CIVIL WORK

(RS in “000”)

Sr.

No. Description

Type of

Building

Area

Covered

(Marla’s)

Unit of

ConstructionUnit Cost Total Cost

1 Office Building RCC 170 Sft 119.83 20371

2Production

BuildingRCC 170 Sft 119.83 20371

3Store for Raw

materialRCC 8 Sft 119.83 959

4Store for Finished

goodsRCC 120 Sft 119.83 14380

5 Cafeteria RCC 5 Sft 100 500

6 Boundary wallsBrick

work19.64 Sft 57.26 1125

7Security

Room/Hut

Brick

work1 Sft 93.15 93.15

Total Cost of

Civil Work 57798


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Annexure-III

MILKY BITES ICE CREAM FACTORY (PROPOSED) FAROOZ PUR ROAD

LAHORE

ESTIMATED COST OF MACHINERY (LOCAL )

(RS in “000”)

Sr. No. Description Quantity Unit Cost Total Cost

1 Heat exchanger 1 150 150

2 Homogenizer 1 150 150

3 Cooling pipes 1 100 100

3 Chiller 1 170 170

Total Cost of Local Machinery 570


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Annexure-III B


ROAD LAHORE

ESTIMATED COST OF MACHINERY (IMPORTED)

(Rs In “000”)

Sr.No DescriptionUnit

CostCurrency Quantity

Exchange

RateTotal Cost

1GMF (cup filler, Role

20)374770 Euro 1 106.732 40000

2 Techno ice 140539 Euro 1 106.732 15000

3 Sedum 1874 Euro 1 106.732 200

4 Gram equipment 468 Euro 1 106.732 50

5 3M-Matic 2342 Euro 1 106.732 250

Total Cost of Imported

Machinery 55500


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Annexure-IV


ROAD LAHORE

ESTIMATED COST OF PROJECT

Sr. No. Description Total Cost

1 Land 175235

2 Building 57798

3 Machinery Local 570

4 Machinery Imported 55500

5 Inland Charges 20

6 Eraction and Installation Charges 200

7 Contingencies 5000

8 Furniture & Fixture 5000

9 Vehicles 5 No. 12500

10 Preproduction Expenses 1000

11 Interest During Construction 27528

Total Fixed Cost 340351

Initial Working Capital 50628

Total Cost of Project 390979


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Annexure-V


LAHORE

INITIAL WORKING CAPITAL (Rs in

“000”)

Current Assets Amounts

Inventories

Raw Material (30 Days) 47025

Finished Goods 40922

Store & Spares 200

Total Cost of Inventory 88147

Advances & Deposits 300

Accounts Receivable(.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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Annexure-VI


ROAD LAHORE

ESTIMATED INCOME STATEMENT

(Rs in 000”)

Year ending October 31 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

Excise Duty 0 0 0

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 EXPENSIS

General & Administrative Expenses 3876 4264 4690

Selling Expenses 27630 30811 30902


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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

Expenses333 333 334

Total Other Expenses 37867 36107 34065

Profit before tax and workers fund 526709 602383 599739

Workers Fund 26335 30119 29987

Profit / loss before Tax 500374 572263 569752

Tax Provision 0 0 0

Net Profit 500374 572263 569752

Ratios: (%)

Gross Profit / Sales 43% 56% |57%

Operating Profit / Sales 41% 41% 41%

Pre-tax Profits / Sales 36% 37% 37%

Net Profit / Sales 36% 37% 37%

Net Profit / Equity 320% 366% 364%


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Annexure-VI-A


LAHORE

ASSUMPTION UNDERLYING THE EARNINGS FORECAST

The proposed ice cream unit would be equipped with 5 products lines which are capable of

producing different levels of production. GIF and Techno ice can produce 600 liters per hour, Sedum

can produce 300 liters per hour, GMF produce 6000 cups per hour, and Rollo 20 can produce 600

pieces per hour. Following is the detailed specification of products.

Products Specification

a) Kulfa 2 Liter

Milk 600 gm

Butters 180 gm

Solid Milk 200gm

Suger 200gm

Flavour 2 ml

Almond 150 gm

Pista 25 gm

b) Kulfa 1 Liter

Milk 300gm

Butters 90gm

Solid Milk 100gm

Suger 100gm

Flavour 1ml

Almond 25gm

Pista 12gm

c) Kulfa 1/2 Liter

Milk 150gm

Butters 45gm

Solid Milk 50gm


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Suger 50gm

Flavour 0.5ml

Almond 12gm

Pista 08gm

d) Kulfa Cup 1 liter

Milk 300gm

Butters 90gm

Solid Milk 100gm

Suger 100gm

Flavour 1ml

Almond 25gm

Pista 12gm

e) Mango 2 liter

Milk 600gm

Butters 90gm

Solid Milk 100gm

Suger 200gm

Flavour 2ml

Mango pulp 150gm

f) Mango 1 liter

Milk 300gm

Butters 45gm

Solid Milk 50gm

Suger 100gm

Flavour 1ml

Mango pulp 75gm

g) Mango 1/2 Liter


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Milk 150gm

Butters 22gm

Solid Milk 25gm

Suger 50gm

Flavour 1/2ml

Mango pulp 36gm

h) Mango CupsI Liter

(12 Cups)

Milk 300gm

Butters 45gm

Solid Milk 50gm

Suger 100gm

Flavour 1ml

Mango pulp 75gm

I) vanila StickI Liter

(12 Sticks)

Milk 300gm

Crème 50gm

Suger 100gm

Cremey powder 10gm

Flavour 1ml

J) Choc BarI Liter

(12 Sticks)

Milk 300gm

Crème 50gm

Suger 100gm

Cremey powder 10gm

Flavour 1ml

Choclate 2000gm


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K) Ice Lolly Orange I Liter

(20 Sticks)

sugar 200gm

colour 1 1/2 spoon

tatary 100gm

Galucose 100gm

Orange Flavour 2ml

L) Pineapple Ice LollyI Liter

(20 Sticks)

sugar 200gm

colour 1 1/2 spoon

tatary 100gm

Galucose 100gm

Pineaple Flavour 2ml


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Annual Production

Annual Production of Products Annual production (In Litter)

Annual production of (a) 504

Annual production of (b) 1,008

Annual production of (c) 2,016

Annual production of (d) 10,080

Annual production of (e) 504

Annual production of (f) 1,008

Annual production of (g) 2,016

Annual production of (h) 10,080

Annual production of (i) 840

Annual production of (j) 840

Annual production of (k) 1,008

Annual production of (l) 1,008

Total Production 30,912

1- The above capacity is based on 365 working days per annum at 100% capacity and project would start operation 12,2011.

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.

Based on these assumptions following are the year vice detailed of production sales and sale revenue of a proposed project.

( In Liter)

a Year ending 30 April 2012 2013 2014

Production of Kulfa 2 Liter 403200 428400 428400

add: opening inventory 0 20160 21400

Total Available for sale 403200 448560 449800

less: ending inventory (20160) (21400) (21400)

Quantity Sold 383040 427160 428400


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Local Sale 100% 383040 427160 428400

(In Liter)

b Year ending 30 April 2012 2013 2014

Production of Kulfa 1 Liter 806400 856800 856800




Sold 766100 854260 856800

c Year ending 30 April 2012 2013 2014

Production of Kulfa 1/2 Liter 1612800 1713600 1713600




Sold 1532160 1708560 1713600

d Year ending 30 April 2012 2013 2014

Production of Kulfa cups

( 1 Liter 12 Cups) 8064000 8568000 8568000




Sold 7660800 8542800 8568000

e Year ending 30 April 2012 2013 2014

Production of Mango 2 Liter 403200 428400 428400




Sold 383040 427160 428400

(In Liter)


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f Year ending 30 April 2012 2013 2014

Production of Mango 1 Liter 806400 856800 856800




Sold 766100 854260 856800

g Year ending 30 April 2012 2013 2014

Production of Mango 1/2

Liter 1612800 1713600 1713600




Sold 1532160 1708560 1713600

h Year ending 30 April 2012 2013 2014

Production of Mango cups

(1 Liter 12 Cups) 8064000 8568000 8568000




Sold 7660800 8542800 8568000

i Year ending 30 April 2012 2013 2014

Production of Vanila stick 672000 714000 714000




Sold 638400 711900 714000

[(In Liter)

j Year ending 30 April 2012 2013 2014

Production of Choc Bar 1

Liter (12 stick) 672000 714000 714000




Sold 638400 711900 714000


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K Year ending 30 April 2012 2013 2014

Production of Orange ice-lolly

1 Liter (20 stick)8064000 8568000 8568000




Sold 7660800 8542800 8568000

LProduction of Pineapple ice-

lolly 1 Liter (20 stick)8064000 8568000 8568000




Sold 7660800 8542800 8568000

(RS in “000”))

Sales Revenue

Local Sale 2012 2013 2014

1 Kulfa 2 liter @250 95760 106779 107100

2 Kulfa 1 liter @130 99593 111053 111384

3 Kulfa 1/2 liter @70 107251 119599 119952

4 Crown cup @20 153216 170856 171360

5 Mango cup @20 153216 170856 171360

6 Mango cup @20 153216 170856 171360

7 Mango cup @20 153216 170856 171360

8 Mango cup @20 153116 170856 171360

9 Ice, lolly orange @ 5 3292 3559 3570

10 Ice, lolly pineapple @ 5 3192 3559 3570

11 Vanila stick @7 153216 170856 171360

12 choc bar stick @12 153216 170856 171360

Annual Sales 1381500 1540541 1545096


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Cost of Raw Material

1- Kulfa 2 liter :173 Rs per 2 Litter

2012 2013 2014

69754 74113 74113

2- Kulfa 1 liter : 86 Rs per litter

69350 73685 73685

3- Kulfa 1/2 liter: 43 Rs per 1/2 litter

69350 73685 73685

4- Kulfa cup: 12 cup in 1 litter: 7.50 pr cup

60480 64260 64260

5- Mango 2 litter: 170 Rs per 2 litter

68544 72828 72828

6- Mango 1 litter: 85 Rs per litter

68544 72828 72828

7- Mango 1/2 litter : 43 Rs per 1/2 litter

69350 73685 73685

8- Mango Cup (I Litter 12 Cups)

56448 59976 59976

9- vanila Bar 3 Rs per unit

2016 2142 2142

10- Chocbar stick 9 Rs per unit

6048 6426 6426

11- Orange Lolly ( 1 litter 20 stick) 2 per unit

16128 17136 17136

12- Pineaple lolly (1 litter 20 stick) 2 per unit

16128 17136 17136

Total Cost of Raw Material 572140 607900 607900

Labor Cost (Rs in 000)

Category No. Salary Annual

Refgeration Incharge 1 15 180

Loader 3 6 216

Electrical Engineer 1 20 240

Production Incharge 1 25 300


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Shipping Incharge 1 10 120

Labor 20 6 1440

Total 27 82 26568

Fring Benefits 40% 10627

Total Labor Cost 37195

Year vice as under

Year ending 30th April 2012 2013 2014

Total Labor Cost 37195 40034 42872

(Rs in “000”)

Manufacturing Overhead Cost

a) Fixed Cost

Power: 1000 kw @ 23 276

Insurance 1/2 % of fixed asset cost 170176

Repair and Maintenance

Machinery @ 1/2% of installation cost 100

Building @ 1% of construction cost 578

Vehicle @4% of cost 500

Oil and lubricates 50

Miscellaneous 20

Total Fixed FOH 171700

b) Variable FOH

Power: 1000 kw x0.80*8*365*16 37376

Furnace oil 30

Total Variable Cost 37406

Year ending 30th April 2012 2013 2014

Fixed Cost 171700 171700 171700

Variable Cost 37406 41147 45261

Total Cost Of Over head. 209106 212846 216961


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Depreciation Cost

Plant and Machinery (Cost Rs. 56070) @ 7% 3925

Building (Cost of Rs.) @ 5% 2890

Furniture and Fixture (cost Rs.5000) @ 5% 250

Vehicles (Cost Rs 12500000) @ 10% 1250

Total Depreciation Cost 8315

Administration Salaries and General Expenses

Administration Salaries

Category No. Salary Annual

G.M 1 40 480

Deputy Manager 3 25 900

Cashier 1 7 84

Clerks 2 6 144

Drivers 5 8 480

Security Guards 3 6 216

Sweeper 2 1 29

Total 17 93 2333

Fringe benefit 40% 933

Total Admin salary cost 3266

General Expenses

Travelling and conveyance 100

Painting and stationary 90

Telephone 150

Haj 200

Medical Facility 50

Miscellaneous 20

Total General Expense 610

Total Admin and General Expenses 3876

Selling Expenses

2 % of Sales Revenue

Year ended 30 April 2012 2013 2014

Selling expenses 27630 30811 30902


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Annexure-VII


ROAD LAHORE

ESTIMATED CASH FLOW STATEMENT

End of

Construction

Year

Operating Years

(Rs in “000”)

Year ending October 31 2011 2012 2013 2014

SOURCES OF FUNDS

Operating Profit 0 564576 638489 633804

Add back: Depreciation 0 8315 8315 8315

Total Fund From Operation 0 572891 646804 642119

OTHER SOURCES

Loans 234587 0 0 0

Term Finance Certificates 0 0 0 0

Bank Borrowings 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

Financial Charges

Long Term Debts 0 37534 35774 33731

Bank Borrowings 0 0 0 0

PAYMENT OF

Taxes 0 0 0 0

Dividends’ 0 0 0 25023

Worker's Fund Payable 0 0 26335 30119


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Short Term Investment 0 0 0

Increase in Current Assets (other than Cash) 47525 50184 7141 499

Total Applications of Funds 387876 87718 117786 137909

Cash Surplus 3103 485173 529018 504210

Cash at beginning of Year 0 3103 488276 1017294

Cash at end of the year 3103 488276 1017294 1521504

Debt service coverage (Times) 13 7 7


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Annexure-VIII


ROAD LAHORE

ESTIMATED BALANCE SHEET

End of

Construction

Year

Operating Years

Year ending October 31 2011 2012 2013 2014

ASSETS

CURRENT ASSETS

Cash & Bank balance 3103 488276 1017294 1521504

Short term Investment 0 0 0 0

Account Receivable 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 Fix Assets 340351 331703 323055 314407

Total Assets 390979 917688 1445199 1941260


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LIABILITIES AND EQUITY

CURRENT LIABILTIES

Bank Borrowings 0 0 0 0

Tax payable 0 0 0 0

Dividend Payable 0 0 25023 32842

Worker's Fund Payable 0 26335 30119 29987

Current Maturity of Long term Debt 0 48536 48536 48536

Loans

Total Current Liabilities 0 74872 103678 111366

LONG TERM DEBTS

Long Term Loan 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 1204006 1740916

Total Liability & Equity 390979 917688 1445199 1941260

Ratios: (%)

Current Ratio 7.83:1 10.82:1 14.61:1

Debt / Equity 28.33% 11.42% 5.11%


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Annexure-IX


ROAD LAHORE

Commercial Break-Even in the First Operating Year:

(at 85% Capacity)

Rs In

"000"

Description Variable Cost Fixed Cost Total Cost

Raw Material 572140 0 572140

Labor 37195 0 37195.2

Manufacturing Overheads 37406 171700 209106

Depreciation 0 8315 8315

Administration & General Expenses 0 3876 3876


Interest / Mark up Expenses 0 37534 37534

Amortization of Preproduction Expenses 0 333 333

Total 646769 221757 868526

Sales Value of Production 1381500

Break Even Point =Fixed Cost

Sales – variable cost

=221757

x 80.00%

1381500 - 646769

= 24.15%


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Annexure-IX-A


ROAD LAHORE

Cash Break-Even in the Third Operating Year:

(at 85% Capacity)

(Rs In "000")

Description Variable Cost Fixed Cost Total Cost

Raw Material 607900 0 607900

Labor 26568 10627 37195

Manufacturing Overheads 45261 172 45433

Administration & General Expenses 0 4690 4690


Interest / Mark up Expenses 0 33731 33731

Worker's Participation Fund 0 29987 29987

Debt Payment 0 48536 48536

Tax 0 0 0

Total 710631 127744 838375

Sales Value of Production 1545096

Break Even Point =

Fixed Cost

Sales – variable cost

=

127744

x 85.00%

1545096 - 710631

= 13.01%


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Annexure-X


ROAD LAHORE

WEIGHTED AVERAGE COST OF FUNDS

(Rs In "000")

Nature of Fund AmountInterest

Rate

After Tax

Rate

Total

Interest

NBP Loan 234587 16% 10.40% 24397

Paid-Up-Capital 156392 16% 16% 25023

Total 390979 49420

Weighted Average Cost of

Fund = Weight x After Tax Rate


Fund (Debt) =60% x 10.40% 6.24%


Fund (Equity) =40% x 16% 6.40%

Total Weighted Average

Cost of Fund =12.64%


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Annexure-XII


ROAD LAHORE

MILKY BITES ICE CREAM FACTORY

(Rs in "000")

YearsCapital

OutlayO

pe

rati

ng

Pro

fit

De

pre

cia

tio

n

TaxesWorkers

Fund

Net Cash

Return

(3+4)-

(5+6)

Net Cash

Inflow

(7-2)

0 360348 0 0 0 0 0 -360348

1 50184 564576 8315 0 0 572891 522707

2 7141 638489 8315 0 28229 618575 611434

3 499 633804 8315 0 31924 610195 609695

4 0 633804 8315 0 31690 610429 610429

5 0 633804 8315 0 31690 610429 610429

6 12500 633804 8315 0 31690 610429 597929

7 0 633804 8315 210740 31690 399689 399689

8 0 633804 8315 210740 31690 399689 399689

9 0 633804 8315 210740 31690 399689 399689

10 0 633804 8315 210740 31690 399689 399689

11 12500 637729 4390 210740 31690 399689 387189

12 0 637729 4390 212114 31886 398119 398119

13 0 637729 4390 212045 31886 398188 398188

14 0 637729 4390 212045 31886 398188 398188

15 -6051138 637729 4390 424090 63773 154256 345690

IFRR = 154.44%


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Assumption:-

Calculation Of IFRR for the project has been carried out under the following

assumptions:- The economic life of the project would be 15 years;

I. The entire capital outlay would be incurred one year prior to the commencement of

commercial operations.

II. Motor Vehicles and operating equipment would be replaced after every 5 years.

III. Salvage value at the end of the life of the project represents the recovery of working

IV. Capital, book value of building, office furniture and fixture and original value of

land.


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ECONOMY ANALYSIS

What ever the project is imposed by anyone but the thing that is considering is that how

much it is contributing to development of the economy as a whole because if you are

going to impose the project that will be not for your personal benefits only you have to

see how much beneficial for our society or for our country.

The project that we will operate is not a so much big but it will provide employment to 27

persons as labor and 17 persons for admin staff. It will not only provide employment but

also made them skilled persons. We will hire them and provide them proper training

about how to work with automated machinery and how to operate it. So through this we

will convert unskilled people to skilled people.

Whenever we see our contribution in economy we can’t measure it accurately as separate

firm because seeing position in economy we will se our sector contribution to overall

economy. For increasing our contribution to overall economy firstly we will increase the

our contribution in our sector then as our contribution in sector increases then our

contribution in overall economy will also increases. So, as we will get profits through this

project it will provide employment to people and helpful for making then skilled people,

and our sector contribution increases in overall economy and our economy indicator will

lead our economy to grow.


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CONCLUSION

After making all the estimation and calculations of proposed project we conclude

that our project can work good if it is operated efficiently because we select this project

on the base of gap that exist in market in supply and demand of Ice-cream. Our target

areas are Lahore, Okara, Gujranwala etc here a portion of population is living and

eating ice-cream and for any new project starts must be on small level that’s why we

select these target areas firstly and these areas are in surroundings of our site so on time

delivery can be easily possible. The products that we will offer are prepared on specific

quality standard and with latest automated machinery so products quality would

increase demand of our products. We take estimation of land, building construction,

loan sanctioning and overall cost of project on accurate measurement so according to

our efforts conclude that this project is feasible in almost all of aspects is should have to

be implemented.

After the careful analysis of this project we are come to the opinion that the project will

be INSHALLAH successful


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RECOMMENDATIONS

After analyzing financial statements this project is viable for investment so it should

be financed.

It has high liquidity due to high current ratio so it can easily serve its short term

liabilities.

Due to its profitability it can repay its loans.


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ANNEXURES

Summary of Financial AnalysisMILKY BITES ICE CREAM FACTORY (PROPOSED) FAROOZ PUR ROAD

LAHORE

Ratios: (%) 2012 2013 2014

Gross Profit / Sales 43% 56% |57%

Operating Profit / Sales 41% 41% 41%

Pre-tax Profits / Sales 36% 37% 37%

Net Profit / Sales 36% 37% 37%

Net Profit / Equity 320% 366% 364%

Debt service coverage (Times) 13 7 7

Current Ratio 7.83:1 10.82:1 14.61:1

Debt / Equity 28.33% 11.42% 5.11%

Operating Condition (Rs. In “000”)

Description 2012 2013 2014

Net Profit 500374 572263 569752

Financial Position of Company (Rs. In “000)

Description 2011 2012 2013 2013

Total assets 390979 917688 1445199 1941260


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LAHORE

FINANCIAL PLAN

Description LCY FCY Total Cost

Total Fixed Cost of the Project 340351 - 340351

Initial permanent working capital 50628 - 50628

Total cost of the project 390979 - 390979

Long term Debt 234587 - 234587

Equity Participation 156392 - 156392

Total Capital Required 390979 - 390979

Debt/equity Ratio

Debt-to-equity Ratio: 60:40


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ROAD LAHORE

LOAN REPAYMENT SCHEDULE

Loan Amount 234587Interest Rate(t) 16%

Time (t) 10 Years

(RS In "000")

Sr. No.

Installment Period

Beginning Balance

Interest Principal TotalEnding Balance

1 2012 234587 37534 11002 48536 223585

2 2013 223585 35774 12763 48536 210822

3 2014 210822 33731 14805 48536 196017

4 2015 196017 31363 17174 48536 178843

5 2016 178843 28615 19921 48536 158922

6 2017 158922 25428 23109 48536 135813

7 2018 135813 21730 26806 48536 109007

8 2019 109007 17441 31095 48536 77912

9 2020 77912 12466 36070 48536 41842

10 2021 41842 6695 41842 48536 0


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project appraisal report

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