PROJECT REPORT

Background: Mrs. Vidya Mankar, The proprietor of Dairy Farm is a successful farmer running a dairy farm from past five years in Raigadh. She has now decided to open a new dairy farm in Mangaon, dist. Raigadh. The proprietor herself is a competent farmer, well educated, creative & talented business person who is involved in the above business & possesses dynamic management skills & leadership qualities. She will be responsible for carrying out day-to-day activities of the business.

Business Prospects: The Milk Production is a business which nourishes the development of rural area. The total milk production in country for year 2008-09 was estimated at 108.5 million metric tonnes & demand is expected to be 180 million tonnes by 2020. To achieve this demand annual growth rate in milk production has to be increased from the present 2.5% to 5%. Thus, there is a tremendous scope for increasing the milk production through profitable dairy farming.

Location of the Project: As the proprietor is setting up a dairy farm in village area, this locality seems to be ideal because It will be located in Vithhalwadi village, Mangaon Taluka of the Raigad district. There is an agricultural plot of 1acre owned by proprietor . It is only 0.5 km away from Mumbai-Goa National Highway no. 17 It is 10 km away from Mangaon Railway Station. It is just 30 km away from Dighi Port. Project will be near to 2 milk dairies.

This project area due to its nearness to Port & proposed Panvel International Highway is supposed to be come under SEZ (Special Economic Zone) in coming years. Good connectivity & accessibility due to close proximity of NH 17.

With the Dighi Port just 30 km away from the project area & due to rail siding from Dighi Port to Mangaon Railway Station, trade activities around Mangaon will increase. Government clearance to develop a port based special economic zone for multi products inclusive of free trade warehousing zone will ensure appreciation in property rates making the project a sound capital investment.

Dairy Venture Capital Fund Scheme Sponsored Bu GoI Objectives: To promote setting up modern dairy farms for production of clean milk. To bring structural changes in the unorganized dairy sector to improve the hygiene & quality of the products. Eligibility: Farmers / individual entrepreneurs, SHGs, NGOs, Cooperatives, Public & Private Sector Undertakings. Scheme Funding/ Pattern of Investment: Entrepreneurs Contribution: 10% of total outlay Revolving Funds (GoI) share: 50% of total outlay No interest Banks share: 40% of total outlay interest as applicable to agricultural loans For regular repayments, interest paid on the bank loan will be reimbursed to an extent of 50% Implementing Institutions: NABARD (National Bank for Agriculture And Rural Development) will be the Nodal Agency for implementation of the scheme through Commercial Banks, Cooperative Banks & Regional Rural Banks.

Viability of the project The proprietor has very well used his expertise & experience & has scrutinized the pros & cons of the project. The market survey depicts that the sales service would be slow but after a period of six months, as customers will be assured of quality of milk & service, the business would grow exponentially. The proprietor intends to use advanced machines, best facilities to animals & well trained sales staff so that he can make the quality service as per the requirement & demand of customers. The financial viability of the project is depicted in this t report in various project statements & schedules. The margin for the business is adequate & the report itself is showing a positive & substantial cash flow. The Debt Service Coverage Ratio (DSCR) is also positive, & the financials of the company seems to be strong enough after repaying the bank borrowings. Here follows the statement showing financial projections of the business for ten years & the total cost of the project along with borrowings & cash inflows & outflows.

INTRODUCTION

BANK LOAN: A loan is a type of debt. Like all debt instruments, a loan entails the redistribution of financial assets over time, between the lender & the borrower. In a loan, the borrower initially receives or borrows an amount of money, called the principal, from the lender, & is obligated to pay back or repay an equal amount of money to the lender at a later time. Typically, the money is paid back in regular installments, or partial repayments; in an annuity, each installment is the same amount. The loan is generally provided at a cost, referred to as interest on the debt, which provides an incentive for the lender to engage in the loan. In a legal loan, each of these obligations & restrictions is enforced by contract, which can also place the borrower under restrictions known as loan covenants. Although this article focuses on monetary loans, in practice any material object might be lent. Acting as a provider of loans is one of the principal tasks for financial institutions. For other institutions, issuing of debt contracts such as bonds is a typical source of funding.

OBJECTIVE OF THE PROJECT

Primary objectives:i. ii. iii. iv. To find out different financial sources available for the loan proposal. To understand the working process of bank i. e. how banks sanction loans. To study the procedure of payback of loans. To study the different financial statements required for the loan proposals.

Secondary objectives:i. ii. iii. iv. v. vi. vii. To provide better services to the customers. To establish ourselves as a significant player. To provide highest level of customer satisfaction. To effectively compete with the existing player. To learn installment patterns of loan. To witness continues growth & become a large organization in the few years. To earn more & better profits.

ASSUMPTIONS
i. Interest rate is calculated at 13% on term loan.

ii.

Tax rates are calculated as per the existing Income Tax Slab. Sr. No. 1 2 3 4 Income Range Up to 1,90,000 1,90,001 to 5,00,000 5,00,001 to 8,00,000 Above 8,00,000 Tax Percentage No Tax / Exempt 10% 20% 30%

iii.

Depreciation on fixed assets is considered on written down value method. (W. D. V.)

iv.

Depreciation on fixed assets is considered as per Income Tax Act, 1956. Sr. No. 1 2 3 4 Particulars Sheds Equipments Furniture & Fixtures Vehicle Depreciation rates 10% 15% 15% 20%

v.

Term loan is repaid in 10 years.