A Product Project Report On K.K.

Biscuit Industry

Prepared by: Hirpara Anil V. Class: T.Y.B.B.A. Roll no.:__ Seat no.:__ Year: 2006-07 College
Geetanjali College of Commerce & B.B.A. - RAJKOT.

Submitted To Saurashtra University Rajkot. Guided by Prof.Nirav Joshi

Preface
Preparation of Project report is of a greater importance and while the matter comes of a Student of B.B.A. field, it becomes very industrial. As we know, today the era has totally changed. Practical knowledge is given more importance rather than that of theorical concept. In third year of B.B.A., Students have to make Project Report under the subject of Entrepreneurship and Management of Small Business. The main object behind the making of such project Report is to create and develop entrepreneurial skills of students. The SSI, sector producer more than 8000 item employing 27.13 million people. Employment growth in the sector has been 4.32% in 2004-05. Apart from this, The SSIs (Small Scale Industries) are blessed with advantages like operational Flexibility, Utilization of local H.R. (Human Resource) high propensity to adopt technology etc.

As we know that the growth of SSI, (Small Scale Industries) have been noted considerable well and fast since last three to four years

Acknowledgement
This project Report Requires many things. I am thankful to Saurashtra University that it has implemented such a nice practical work for the student of B.B.A. I have received a generous help from many persons in conducting this report. First and foremost, I am grateful to Prof. Nirav Joshi and all other staff members of Geetanjali of commerce & B.B.A. college-Rajkot. for his masterly guidance, meticulous attention, scholarly criticisms, affectionate reprimands and perceptive suggestions without which this study would not have been possible. Words can not express my gratitude to my parents and other members of my family for all the help and encouragement, I have received from them. I thank my friends from the bottom of my heart for their concern & kindness. I owe a debt of gratitude to Mr. Abbas Merchant and all staff members (K.K. Biscuits Ind.-Shapar) for his valuable suggestions & encouragement in pursuing of this work. Date: Place: Rajkot Sign: 3 Yours Faithfully,

Declaration
I undersigned HIRPARA ANIL V. A student of T.Y.B.B.A. of Geetanjali commerce & B.B.A.College- Rajkot, Declare that the project report is my own and has been carried out under the supervision of Prof. Nirav Joshi of Geetanjali commerce & B.B.A.College- Rajkot, This work has not been previously submitted to any other university for any examination.

Date: Place: Rajkot

Sign. Of Student

Index
Sr. No.
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15.

Particulars
Snack food & Biscuit Industries Project at a Glance Partners Profile Time schedule of implementation Location Processing of Food Products The Quality Commitment Financial Analysis Break Even Analysis Ratio Analysis Marketing Feasibility & Development The Customer Confidence Risk Factors Future Prospectus and Conclusion Bibliography

Page No.

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 September , 2006. (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) (ii) (iii) (iv) Jignesh B. Hirpara Bhavesh V.Kotdia Anil V.Hirpara Jignesh H.Sangani

(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 Unsecured Promoters Capacity: 10, 00,000 7, 76,000 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) (2) (3) Name: Age: Address: Amin Marg, Near Kalawad Road, Rajkot. (4) (5) Education qualification: M.B.A. (Mktg.) Responsibility: With a good communication ability and a little but effective experience in the field of marketing. Mr. Jignesh will handle the marketing department of the unit. (6) Experience: Jignesh B. Hirpara 24 years

Mr. Jignesh 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) (2) (3)

Name: Age: Address:

Bhavesh V.Kotdia 25 years New Meghani Nagar, Near Kamal Park, Rajkot.

(4) (5)

Education qualification: Responsibility:

M.Com.

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. Bhavesh 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%

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(1) (2) (3)

Name: Age: Address:

Anil V.Hirpara 20 years 3- Valkeshwar Society, Near Srinagar, Rajkot.

(4) (5)

Education qualification: Responsibility:

Graduate (B.B.A.)

As we all know H.R. is one of the precious assets of any firm, Mr. Anil 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. Anil 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) (8)

Financial Contribution: Profit Share:

10, 00,000 25%

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(1) (2) (3)

Name: Age: Address:

Jignesh H.Sangani 27 years 3- Kamal Park, Near Anand Garden, Rajkot.

(4)

Education qualification:

M.B.A. (Operation Mgt.)

(5)

Responsibility: Mr. Jignesh 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. Jignesh is having a good experience in the field of production unit. He has two years of experience with Rahul Food Product industry.

(7) (8)

Financial Contribution: 10, 00,000 Profit Share: 25%

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Time Schedule for Implementation

Sr. No.
1.

Particulars

Starti Period ng of Time Comple tion

0 to 2 months

Collection of data about concern industry its current demand consumer preference Survey Identify & fulfill the required primary finance Land & Site Selection Construction of Building Power and fuel Arrangement Installation of Plant & Machinery Selection of Raw Material Sources & Suppliers Laboratory installation Starting of Production

2. 3. 4. 5. 6. 7. 8. 9.

2 to 3 to 4 to 6 to 7 to 8 to 9 to

3months 4months 6months 7months 8months 9months 11months 12months

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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 labor 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.

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(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.

15

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.

16

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

17

Dispatched for transportation

18

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. industry. Our efforts are driven towards maximizing customer satisfaction and this is in synergy with our quality pledge. Biscuit

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

19

employees and to provide them an open & participative environment.

20

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
Rate Per Sq. Feet Total value of Land ( Rs. 167x 3000 Sq. Feet) Stamp Duty Registration Fee and Documentation Charge Estimated Land Development Expenses Total

Amount (Rs.)
166 5,00,000 10,000 40,000 5,50,000

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

Sr. No.
1. 2. 3. 4. 5.

Particulars
Project & Shed (40%) R. & D. Dept. (10%) Office Area (20%) Store Room (20%) Cooling Room (10%)

Sq. feet used

960 240 480 480 240

Rate Per Sq. feet

150 120 110 130 200 Total

Total amt.
1,44,000 28,800 52,800 62,400 48,000 3,26,000

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 Sr. No. 1.

Plant & Machineries:-

2. 3. 4. 5. 6. 7. 8. 9. 10.

Name of Machine Cooling Conveyor With Stacking Cream Mixer Roller Cutting Machine Oil Spray Machine Dough Mixer Biscuit Luminator Biscuit Grinder Sugar Grinder Rotery Moulding Machine Extra Cutting Die-Roller

Amt. 25,00,000

Qty. 1

Total 25,00,000

90,000 70,000 90,000 1,00,000 38,000 8,000 1,00,000 5,00,000 1,00,000

1 1 1 1 1 1 1 1 1 Total

90,000 70,000 90,000 1,00,000 38,000 8,000 1,00,000 5,00,000 1,00,000 36,00,000

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Other Miscellaneous Fixed Assets:

Sr. No.
1. 2. 3. 4.

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

Amt.

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. No.
1. 2. 3. 4. 5. 6.

Particulars
Maida flour Ghee Soda bi Carbonate Sugar Salt Oil

Rate per k.g. / ltr.

6 Rs. 30 Rs. 3 Rs. 12 Rs. 3 Rs. 20 Rs.

Req. per k.g. / ltr. Annum

1,00,000 30,000 8,700 75,000 1,500 10,000 Total

Total Amt.
6,00,000 9,00,000 26,100 90,000 4,500 2,00,000 72,20,600

At 60% Capacity

= =

72, 20,600 x 60 % Rs. 43, 32,360

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Consumable & Spares:

Sr. No.
1. 2. 3.

Description
Lubricant Diesel Water Total

At 100%
10,000 60,000 5,000 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 Amt. Head
1. 2. 3. 4. R. & D. Department Skilled Persons Unskilled Persons Accountant 2 5 20 1 10,000 5,000 3,000 5,000 Total 2,40,000 1,20,000 7,20,000 60,000 11,40,000

Skilled Persons includes store keeper, clerk cum computer operator, sales purchase officer.

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Administrative Expense:

Sr. No.
1. 2. 3. 4.

Description
Traveling Expense Stationary Expense Telephone Expense Sundry Expense Total

Total Amt.
1,20,000 5,000 60,000 60,000 2,45,000

Selling Expenses:

Sr. No.
1. 2. 3.

Description
Packing Materials Freight Sales Promotional Expense Total

Total Amt.
60,000 1,50,000 50,000 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.

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

Depreciation:

Sr. No.
1. 2. 3. 4. 5.

Particulars
Building Plant & Machinery Tools & Machinery Electrification Office Furniture

Actual cost
3,26,000 36,00,000 50,000 3,00,000 1,50,000

Rate
10% 25% 25% 25% 15% Total

Amt.
32,600 90,000 12,500 75,000 22,500 2,32,600

Tools & Equipments: The total tools & equipments cost will be Rs. 50,000 annually. Packing Expenses: Packing Expenses = Rs. 60,000

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Capacity Utilization:

Total daily production 1000 K.g. x 16 hours Total annual Production 8000 x 300 days 60,000 packets of 200 gms. Will be produce.96,000 Boxes of 10 packets of 200 g.m. per Annum at 100% capacity.

16000 kg.

48, 00,000kg.

Now, At 60% capacity, 96,000 x 60 100 Total annual production at 60% capacity will be 28,80,000 k.g. (57,600 boxes) 57,600 Boxes

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Statement of Profitability

28

Installed Capacity ( No. of Boxes) Capacity Utilization Production per annum ( no. of Boxes) Sales Per annum Total Sales Revenue ( 57000 x 150) Less:- Cost of production Raw material Cost Consumables Tools & Equipments Power Salary & Wages Preliminary Expense Repair & Maintenance Depreciation Cost of Production Opening Stock of Finished Goods O/P. of F.G. = 22,74,040 57,600 = Rs. 40 x 600 Closing Stock of Finished Goods Gross Profit Less: Administration Expense 2,45,000 Selling Expense 2,60,000 Net Profit before int. & tax Less: int. on securities Secured 1,40,000 Unsecured 1,17,957 Net Profit Before Tax Less: Tax @ 25% Net Profit After Tax

96,000 60% 57,600 57,000 85,50,000 43,32,360 45,000 50,000 4,00,000 11,40,000 40,000 36,000 2,32,600 62,75,960 22,74,040

24,000 2,25,0040 5,05,000 17,45,040

2,57,957 14,87,083 3,71,770 11,15,312

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Computation of W.C. Requirement:

Sr. No.

Particulars

Amount Rs.

Current Assets
1 2 3 4 Raw Material Tools & Pack 1 month Finished Goods (Closing Stock) Debtors 3,64,780 9,166 24,000 7,12,500

Total Current Assets

11,10,446

Sr. No.

Particulars

Amount Rs.

Current Liabilities Creditors

Total Working Caital Requirement 53

7,43,893
3,66,5

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Projected Balance Sheet

Particulars
Source of Funds: Partners Capital P&L A/c. Secured Loan Unsecured Loan Current Liabilities Total

Amt.
40,00,000 11,15,312 10,00,000 7,76,000 7,43,893 76,35,205

Application of Funds: Fixed Assets: Less: Gross Block Depreciation 52,76,000 2,32,600

50,43,400

Current Assets: Stock 24,000 Debtors 7,12,500 Loan & Advance Cash 17,61,716 Preliminary Expense Total

24,98,216 93,589

76,35,205

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Cost of Project & Means of Finance

Particulars Land & Site Development Building Plant & Machine Tools & Equipments Electrification Other Misc. Assets Preliminary & Pre Operating Expenses Margin of Working Capital Total

Amt. 5,50,000 3,26,000 36,00,000 50,000 3,00,000 4,50,000 2,00,000 66,513 58,42,553

Means of Finance

Particulars Partners Capital Secured Loan (14%) Unsecured Loan (14%) Total

Amt. 40,00,000 10,00,000 8,42,553 58,42,553

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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 Contribution (Sales- Variable Cost) = 27, 73,327 39, 36,640 (85, 50,000 46, 13,360) = 70.45% X 100

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

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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 # Secured loan Partners capital Unsecured loan expenses Surplus Preliminary Equity includes

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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 = = = Where, Capital Employed includes Secured Loan Unsecured Loan Partners Capital Surplus Preliminary Expenses Net Profit after Tax x 100 Capital Employed 11, 15,312 67, 97,723 16.41 x 100

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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.

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37

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.

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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.

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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.
100 80 60 40 20 0 All Biscuits Marie Creams Urban Rural

(2) (3)

We will start on new & emerging segments like sugar Free cream cakes and diet biscuits to fuel its growth. 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.

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Bibliography
Magazines:
0 0 Business Today (Oct. 9, 2006) Competition Success Review (Dec., 2006)

Web Sites:
0 0 www.parleproducts.com www.thehindubusinessline.com

Books:
0 0 0 Production & Operation Management -Chunawalla Patel Financial Management - By Khan & Jain Financial Management - By I.M. Pandey

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