Feasibility Report on Fruit Juice Industry

PROJECT PROFILE

1.1  OPPORTUNITY RATIONALE

The fruit juice industry coupled with beverage industry is considered to be one of the largest industrial sectors in Pakistan. It is expected to growing at a robust rate of 20- 25%1. Modernization of this industry, in consonance with the change in urban life style, massive shift of rural population to the urban areas, growth in population, etc., predict a growing potential for instant solutions in fruit juice segment of the beverage industry. Traditionally in Pakistan and generally all over the world people prefer to use natural drinks rather then carbonated soft drinks and this perception is gaining more currency day by day which also adds to the advantage of the fruit juice industry. Common people especially young generation is inclined to have ready to consume drinks; in addition hotels, hospitals are also expanding day by day where juices could be marketed successfully. Moreover the global trend of preferring fresh fruits and juices also

marks possibilities of growth in this sector. Furthermore, the growing exports volume and withdrawal of CED (customs and excise duty) on fruit juices (produced locally) could further supplement significant growth in the fruit juice industry.

1.2 PROJECT BRIEF

Fruit juices are produced and consumed for their refreshing character and nutritional qualities being rich in vitamins and minerals and having regulatory functions to the body systems; such as argumenting of alkaline reserve of the blood and proper functioning of blood vessels, including capillary, permeability and fragility as a result of contained flavonoids. Juices also increase body retention of calcium, magnesium, nitrogen and are also good sources of quick energy. These qualities need to be maximized in technologies used to process fruit juices.

JUICE is generally defined as liquid extracted from the fruit, although many fruit juices are the results of expressing the liquid from the whole or cut fruit. There are some fruits where the distinction is not so apparent, e.g. fruits like mango, apple and banana when squeezed yields little or no juice; rather flesh is obtained which when comminutes will result in a dense puree and directly cannot be consumed as drink. Whereas in case of lemon, expressed fluid cannot be called juice, it is too sour to consume and can only be used as juice when diluted with sugar and water.

For commercial purposes, procedure involved in juice manufacturing varies from fruit to fruit. This process is a bit technical and lengthy which we will discuss in detail later in this document; however, broadly the fruit juice making process starts from fruit washing, drying, skin removing (normally for citrus fruits i.e. orange), deseeding, pulp macerating, pressing, pasteurizing and storage which is then used for producing fruit juices. The process takes place using fruit processing machinery and during the process, preservatives are also added in order to avoid microbial growth and increasing shelf life. During the discussions with the industry experts and business stakeholders it was found that usually C grade (A grade is of export quality, B is consumed locally) fruit is used for the juicing or pulping purposes. For industrial scale manufacturing of fruit juice, pulp is used which is available round the year; on the other hand, fresh fruits are also being used for 100% pure juice production. However, based on our discussions with industry experts, we understand that business viability could be a question mark when fruit juice business starts with fresh fruits processing.

The primary objective of the fruit processing is to preserve the perishable fruits in a stable form or juice that can be stored and supplied to local and distant markets during all months of the year. Processing also can change fruits into new or more usable forms and make fruits more convenient to prepare.

In Pakistan, people generally prefer fresh fruit juice which is extracted directly from the fresh fruit by using simple equipments like blender or squeezing machine. This type of micro scale commercial setups can be seen in mega cities and towns as an unorganized sector. However, preserved juices using tetra packs and other packaging forms and intended for direct consumption are obtained by the mechanical process from ripe fruits and subsequently preserved exclusively by physical means. The juice may be turbid or clear. The juice may have been concentrated and later reconstituted with water suitable for the purpose of maintaining the essential composition and quality factors of the juice.

It is absolutely necessary for someone starting a juice manufacturing operation to be familiar with the regulations and requirements of the market. For commercial purposes, it is important to define the differences (from other juice products) carefully and ensure that specifications and labeling are correct. There are circumstances where a 100 percent juice or puree product is impractical while dilution with other juices and/or water and sweeteners are practical, as long as the products are correctly identified. Water, sugar, organic acids and low cost bulk juices are much cheaper than higher value fruit solids. Thus, unlabelled dilution and adulteration practices are common in the market.

Following are the main types of fruit drinks:

·        Sport or isotonnesic beverages

·        Energy beverages

·        Nutraceutical beverages

·        Herbal beverages

·        Smart beverages

·        Fun beverages

Sport or Isotonnesic Beverages:

These products are designed to replace fluids and electrolytes and provide extra energy during periods of intense exercise. Typically they have a low content juice base of 5 to 10 percent juice, added levels of sucrose, glucose (less sweet).

Energy Beverages:

These are designed to increase the consumers' perception that they could have more energy either by increasing the levels of sugars in the beverage or having a stimulant like caffeine. These can be marketed to office workers in cities or to laborers who need additional energy during a long day.

Nutraceutical Beverages:

This category is designed to provide healthful benefits beyond the calories they contain and are aimed at reducing the risk of various diseases. These beverages can contain vitamin C from citrus, vitamin A from fruits or vegetable juices and a mixture of plant extracts that are believed by local consumers to promote good health.

Herbal Beverages:

These are similar to Nutraceutical drinks, but are made by adding herbs to a beverage. A word of caution is necessary here - while many of these herbs are safe at low levels of consumption they can become toxic at higher levels.

Smart Beverages:

This popular group of beverages is believed to increase mental capacities on a short-term basis. Some of these drinks contain carbohydrates, such as glucose that is readily absorbed. Smart beverages may contain local herbs assumed to be effective for increasing mental capabilities.

Fun beverages:

This category of beverages is designed to have a maximum eye appeal and must taste very good. Some of these have suspended colored particles or have weird names that appeal to kids. Typically Fun beverages contain a minimal amount of juice, but a maximum amount of advertising and label hype.

1.3.Market Entry Timing:

Beginning of summer (May, in most of the country regions) season is supposed to be the best time to start fruit juice marketing operations, where, production operations could be started from January to February Since fruit juice is considered to be a highly agro based industry, juice production should be started when fresh crop is coming into the market and pulp is easily available at low prices. This will also be highly dependable on what fruit is being selected for juice production, however, for the purpose of this pre-feasibility

we propose to go for Mango, Guava and Orange juices for which pulp is available throughout the year at reasonable prices. Hot weather increases liquid consumption all over the country; and instantly available drinks become more attractive and valuable for the general public in metro cities and towns & for seasonal consumers (especially in Northern areas). All these conduce to a mass consumption of drinks in the form of plain water, carbonated drinks and fresh/instant fruit juices etc. People everywhere in general and in northern areas

especially are inclined to use fruit juices for gaining extra energy which supports extra physical activities. This is the most suitable time to market fruit juice. Another thing that has to be taken into account before entering into this business is that usually in the peak seasons when fresh crops coming into the market people shift to the freshly extracted juices rather than preserved solutions.

1.4.0 PROPOSED BUSINESS LEGAL STATUS

The legal status of business tends to play an important role in any setup; the proposed Fruit Juice Manufacturing setup is assumed to operate on Sole Proprietorship basis. The reason being it is easy to setup and manage. Another thing is that people in Pakistan generally do not know the procedures involved in operating a private limited or public limited business setups.

1.5.0 PROJECT CAPACITY AND RATIONALE

1.5.1 Basis/Rationale

In recommending the plant capacity we have considered the following main factors:

·  Current and future demand for the products in the local market.

·  Trend of imports by the local market, which is not more, then 2%2 of the total

    juice consumed locally.

·  Availability of raw materials (fruit pulp) and the seasonal supply.

·  The need to have a medium sized but manageable fruit juice processing plant.

   Discussions with the industry experts and entrepreneurs

1.5.2 Plant Capacity:

The proposed project will have a capacity to produce 8,391 liters (around 1400 trays of 24 packs in 250ml tetra pack servings) of fruit juice daily and the juice specifications and other details would be as follows:

The plant will be operated at 70% capacity utilization for 8 hours a day in the beginning; however, a 2% annual increase in capacity utilization is assumed with a cap of 90%. Expansion to a higher capacity can be considered later and will mainly be dictated by the level of business performance.

Raw Material Sourcing – Backward Integration

To support the production operations, continuous supply of fruit pulp plays a key role for the success in the fruit juice business. Therefore, it is proposed for the fruit juice manufacturer to finalize the buying deal with the pulp processor six months prior to the commencement of the production operations.

1.6 PROJECT INVESTMENT

Total cost of the project is estimated at around Rs. 50.12 million. The working capital requirement is around Rs 10.2 million and the rest will be the fixed capital. It has been estimated that the proposed business will need to inject around Rs. 05 million to meet requirements i.e. contingency cash for initial stages and to finance the receivables. For this purpose a provision of Rs. 5 million has been included in the working capital.

1.7 PROPOSED PRODUCTMIX

For the purpose of this feasibility, the product mix is assumed to be as follows:

Around 70% of the total fruit juice market is accounted for by 250ml tetra pack servings while the rest 30% includes 500ml and 1000ml packs. This shows significant convenience (from consumer’s perspective) and high sales frequency in 250ml package category. Based on this market situation, it could be observed that the entrepreneur should focus more on small serving packs rather than one liter or other serving sizes. Since a 100 percent juice or puree product is  impractical especially in the case of fleshy/pulpy fruits i.e. mango, to convert them into consumable drink, dilution with other juices and/or water and sweeteners is required. Therefore we have proposed the product mix as presented in the table above. It is expected to be practically workable and financially viable for an entrant in the fruit juice business. Another reason for proposing the above product mix is that high quality 100% pure juices would cover the manufacturing cost only if provided in big size serving packs i.e. one liter or 1 ½ liter or bulk supply to contract customers and mass availability of fruit pulp is ensured, which is a difficult task for a new starter. In the context of the aforesaid, it is suggested that a new entrant should consider the 100% pure juice production once the first course is complete and understanding of the typical business demographics, export market as well as contemporary fruit juice business skill is developed.

1.8. PROPOSED LOCATION

Location to setup a fruit juice-processing unit largely depends on the continuous (and at reasonable price) availability of raw material; however, factors like availability of manpower, utilities and easy market access should also be carefully assessed. Most of the existing fruit juice units are being operated in Lahore, Bahawalpur, Karachi, Hyderabad, Hattar (NWFP), Loralai, and Sargodha. For citrus fruits Sargodha is the best location; and NWFP or Balochistan are preferred locations for setting up processing units for apple, apricot, pear, grape and pomegranate. Province wise proposed locations are provided below:

·  Punjab - Lahore, Sargodha, Gujranwala

·  Sindh --- Hyderabad, Karachi

·  NWFP - Malakand or Hattar Industrial State

·  Balochistan – Loralai

Southern belt from Hyderabad to Sahiwal is supposed to be the potential area for fruit juice business. During the discussions with the industry experts, it was observed that in this region on average, daily fruit juice consumption is estimated at more then 15,000 trays (one tray comprises of 24 packs of 250ml). High population density and growth rate, people belonging to lower and middle income groups (but with income levels sufficient to buy small serving packs); easy availability of skilled labor and established agriculture and fruit farming base coupled with easy access to other facilities like water and utilities make this region fit for starting fruit juice business.

1.9 KEY SUCCESS FACTORS/PRACTICAL TIPS FOR SUCCESS

Fruit Juice Business is highly dependent on the trade margins given to the  distributors and retailers; however, following additional factors are considered as important for success:

1.9.1 Backward Integration

Frequent and continuous availability of quality fruit pulp is a prerequisite for Fruit Juice Business. It is the only way to integrate operations from fruit orchards to pulp processing to juice making and packing. Integrated and earlier pulp supply arrangements with pulp producers and suppliers would be critical in business success.

1.9.2 Product Quality

Quality should be emphasized at each step right from the beginning to the marketing of the product. Over the years, an image of high quality products should be cultivated.

1.9.3 Distribution Network

Distribution network should be given extra emphasis. Market share could be gained by enhancing retailer and distributor margins. Normally distribution and retailer margins in fruit juice business are from 15 to 20%.

1.10 PRODUCTMARKETING AND EXISTING COMPETITION

1.10.1 Existing Competition

Imported fruit juices are not more than 2% of the total quantity consumed locally; and are generally available on those departmental stores, hotels, and foodstuff specialty shops almost reserved for high income groups. Therefore, imported juices are not considered as direct or indirect competitors.

Competition from the formal sector might be with FROST and TWIST who are enjoying major share of the Punjab market in 250ml serving packs, where in Sindh, FROOTO is almost a household name in the same fruit juice category. However, there are other juice brands i.e. Golden, Tropico, etc. which could be considered as likely competitors.

The major competition threat would be from informal sector units who are engaged bulk juice manufacturing. They produce chemical based, adulterated, fake juices using artificial flavorings and colors with minimum overheads and substandard juice manufacturing methodology, which result in low manufacturing cost and high margins for distributors and retailers. A detailed account of the local competitors and players has been provided in the second section of the report in sector analysis.

Despite the stiff competition, given the right marketing strategies, market penetration is still possible because the market is growing at an annual rate of 25% as given in the Digest of Agricultural Statistics of Pakistan 2003.

1.11.0 Other Marketing Aspects

1.11.1 Seasonality of Demand

Processed food products are in great demand during July-December. This is the peak period for tourists and hoteliers as well as tour operators to stock the products in large quantities to cater for the increased number of arrivals. It is also a dry season when the fruit juices are in great demand by the local consumer.

1.11.2 Market Characteristics

Customers are sensitive to the quality, price, color and size (weight) of the product. They would purchase the products frequently, immediately and with minimum effort; to the marketer of food-processed products, this calls for prompt and regular supply of the products and effective marketing/advertising.

1.11.3 Packaging

Processed food products are packed in tins/cans, Tetra packs and aluminum laminate pouch packaging in milliliters/liters or kilograms. The quantity of fruit juice products varies from 200 ml to over 1 ½ liter. Most of the local juice manufacturers penetrating the Pakistani market using tetra pack cartons, which come in 1 liter, 500ml and 250 ml handy packs. Our study has shown that except in few cases, locally processed fruit juice products are characterized by poor packaging, labeling and absence of vacuum packing unlike the imported products, which are well packed and marked. Thus, appropriate and attractive

packaging is one of the areas, which a new entrepreneur should strive to effect and maintain.

1.11.4 Product Distribution

The effectiveness of distribution coverage and practice is of paramount importance in achieving the desired fruit juice sales. Understanding of the distribution channels is crucial in order for the manufacturer to plan and implement an effective distribution strategy. Our study shows that the distribution of fruit products and juices is done through multiple channels involving producers, importers, wholesalers, retailers and users. While it is the common practice for the individual customers to buy the products from the retail

outlets; institutional/ organizational buyers such as tourist hotels and agencies would normally place orders directly with the producers/importers and  wholesalers. A typical distribution setup in fruit juice business involves the

following hierarchy starting from the manufacturer to the consumer:

Fruit Juices are consumed both in rural and urban areas without any exception and brand loyalty does exist for fruit juices i.e. Frooto in Karachi and Twist and Frost have a strong penetration in Punjab’s urban and rural markets, whereas, low cost and cheap juices having token juice element are available in the rural areas. As in case of other consumer goods, the effectiveness of distribution network for fruit juices is a function of similar parameters, i.e. distribution margins, frequency of distribution and product penetration. However, ‘sale first pays after’ type distribution strategy was also observed during the study in which usually new comers of the industry offers to the retailers to keep the fruit juice in their shop and pay as the product is sold.

The distribution and retail margin is around 15% to 20% for the fruit juice industry which is relatively higher than the other consumer goods due to the strong competition. A domestic producer is generally able to handle distribution within his home city and surrounding areas. Most manufacturers use their own sales force for distribution in the

1.12.0 FINANCIALANALYSIS & KEYASSUMPTIONS

The project cost estimates for the proposed “Fruit Juice Business” have been formulated on the basis of discussions with industry stakeholders and experts. The projections cover the cost of land, machinery and equipment including office equipment, fixtures etc. Assumptions regarding plant and machinery have been provided, however, the specific assumptions relating to individual cost components are given as under.

1.12.1 Land & Building

As we have given above, factory land would be purchased and space for city office will acquired on rent. Initial deposit of 6 months and initial advance rent of 6 months would be paid for the possession of city office after which the rent will be payable on a monthly basis. In addition construction and renovation will cost around Rs. 40,000/- which will depreciate at 10% per annum using diminishing balance method. Total initial outflow for acquisition of land and city office would be as follows:

	Months	Rent
Security Deposit – City Office	6	Rs.	60,000
Advance Rent - City Office	6	Rs.	60,000
Land for factory	Purchased	Rs.	1,800,000
Total		Rs.	1,920,000

1.12.2 Overall Factory & Office Renovation

To renovate the factory / office premises in Year 5 and Year 10 a cost would incur for which an amount equivalent to 5% of the total factory/office construction cost is estimated.

1.12.3 Factory / Office Furniture

A lump sum provision of Rs. 150,000 for procurement of office/factory furniture is assumed. This would include table, desk, chairs, and office stationery. The breakup of Factory Office Furniture & Fixtures is as follows:

Item	Number	Total Cost
Table & Chair for Owner	1	6,000
Tables & Chairs for Staff	6	25,000
Carpet for Office	1	10,000
Air Conditioner	2	30,000
Waiting Chairs	6	9,000
Sofa Set	1	10,000
Curtains & Interior Decoration only for city office	-	10,000
Electrical Fittings & Lights	-	35,000
Others	-	15,000
Total		150,000

1.12.4 Vehicles for Transportation

The proposed setup would require two vehicle (second hand delivery vans are proposed) to carryout all factory and office activities and to cater urgent delivery requirements, if any. The cost of vehicles is assumed to be Rs. 800,000.

1.12.5 Second Hand Power Generator

Due to the perishable nature of the product, finished goods and raw material (fruit juice and pulp) could be spoiled in case of power failure/non-availability. Therefore to cover up this risk, a second hand power generator with 150 KVA capacities will be purchased. A used generator of this capacity will cost around Rs. 1,000,000/-.

1.12.6 Depreciation Treatment

The treatment of depreciation would be on a diminishing balance method at the rate of 10% per annum on the following.

1. Plant & machinery

2. Land & Building Construction and Renovation

3. Vehicles

4. Furniture and Fixtures etc.

This method is also expected to provide accurate tax treatment.

1.12.7Utilities

The proposed fruit processing machinery will be operated using electricity for running production, packaging and refrigeration machineries. This would draw considerable amount of electricity. The cost of the utilities including electricity, Gas, Diesel/fuel (for power generator), telephone, and water is estimated to be around Rs. 1,800,000/- per annum. The utility expenses are assumed to increase at 10% per annum:

Utility			Total Monthly Cost (Rs.)	Total Annual Cost (Rs.)
1.	Electricity		75,000	900,000
2.	Gas or Furnace Oil, Lubricants etc.		25,000	300,000
3.	Diesel for Generator		20,000	240,000
4.	Water		20,000	240,000
5.	Telephone		10,000	120,000
		Total	150,000	1,800,000

1.12.8 Working Capital Requirements

It is estimated that an additional amount of approximately Rs. 10.2 million will be required as cash in hand to meet the working capital requirements, contingency cash for initial stages and to finance the receivables. These provisions have been estimated based on the following assumptions for the proposed fruit juice business.

Cost	Amount in Rs.
First Three Months Salaries (Production staff)	360,000
First Three Months Utilities Charges	450,000
First Three Months Misc. Expenses	120,000
Inventory (Raw Material-2 Month)	6,138,418
Permanent portion of working capital in the form of Cash	5,000,000
Total	12,068,418

1.12.9 Plant & machinery Installation & trial run expenses

Plant and machinery installation and trial run expenses has been assumed to be around Rs. 400,000/-. It has been included in the plant and machinery cost.

1.12.10 Preliminary Expenses

A lump sum provision of Rs. 250,000 is assumed to cover all preliminary expenses like registration, documentation charges, etc. which will be amortized over the 5 year period.

1.12.11 Miscellaneous Expenses

Miscellaneous expenses of running the business are assumed to be Rs. 40,000 per month. These expenses include various items like office stationery, daily consumables, fuel expenses of vehicles, traveling allowances etc. and are assumed to increase at a nominal rate of 10% per annum.

1.12.12 Finished Goods Inventory

The proposed setup is assumed to maintain a Finished Goods Inventory of 15 days of the total annual production.

1.12.13 Losses during Transportation and Delivery

As per our findings during the discussions with existing industry players and experts, losses during transportation and delivery are expected in fruit juice industry because of the delicate packaging. The losses are assumed to be around 0.5% of the total gross production.

1.12.14 Revenue Projections

For the revenue projections, fruit juice is assumed to be produced in 250ml Tetra pack with initial average price Rs. 123 per tray which will increase by 5% annually. Of total juice production Mango juice will be 50%, Guava and Blended juice is 30% and Orange juice is assumed to be 20%.It has been assumed that it will take some time for the business to reach the optimal capacity utilization point for the projected period. Therefore the first year sales are assumed to be based on 70% capacity utilization and an annual increase of 2% in capacity utilization is assumed over the projection period. It is assumed that machine will operate at a maximum of 90% capacity utilization (around 8 working hours/day). It is also assumed that the sales price of the product will increase at 5% in the projected year 3, 6 and 9. A provision for wastage is assumed to be around 0.01% of the daily production.

1.12.15 Accounts Receivables

A collection period of 90 days is assumed for sales which are based on our findings during the discussions with the industry experts. A provision for bad debts has been assumed equivalent to 2% of the annual gross sales.

1.12.16 Accounts Payables

A payable period of 90 days is assumed for raw material purchases.

1.12.17 Raw Materials Inventory

It is assumed that an initial raw material inventory for two month would be purchased the total cost of which would be around Rs.2 million. The cost of raw materials is expected to increase at the rate of 3% per annum for the projected period.

1.12.18 Financial Charges

It is assumed that long-term financing for 5 years will be obtained in order to finance the project investment cost. This leasing facility would be required at a rate of 15% (including 1% insurance premium) per annum with 60 monthly installments over a period of five years. The installments are assumed to be paid at the end of every month.

1.12.19 Taxation

The business is assumed to be run as a sole proprietorship; therefore, tax rates applicable on the income of an individual tax payer are used for income tax calculation of the business.

1.12.20 Cost of Capital

The cost of capital is explained in the following table:

Particulars	Rate
Required return on equity	20%
Cost of finance	15%
Weighted Average Cost of Capital	17.5%

The weighted average cost of capital is based on the debt/equity ratio of 50:50.

1.12.21 Owner’s Withdrawal

It is assumed that the owner will draw funds from the business once the desired

profitability is reached from the start of operations. The amount would depend on business sustainability and availability of funds for future growth.

PROJECTED BALANCE SHEET

Projected Balance Sheet (Rs.)	Year 0	Year 1	Year 2	Year 3	Year 4	Year 5	Year 6	Year 7	Year 8	Year 9	Year 10
Assets
Current Assets
Cash & Bank Balance	5,930,000	559,699	9,328,218	18,383,100	26,682,741	32,352,218	43,385,609	47,497,049	49,422,672	48,484,827	44,139,116
Raw Material Inventory	6,138,418	9,207,627	9,673,533	10,163,014	10,677,262	11,217,532	11,785,139	12,381,467	13,007,969	13,666,173	14,357,681
Finished Goods Inventory	0	1,483,862	1,563,331	1,647,259	1,735,916	1,829,590	1,928,587	2,033,236	2,143,886	2,260,912	2,384,714
Accounts Receivable	0	20,132,168	20,893,329	22,377,051	22,823,829	23,279,495	24,932,671	25,430,407	25,938,038	27,780,008	28,334,500
Prepaid Rent	60,000	60,000	60,000	60,000	60,000	60,000	60,000	60,000	60,000	60,000	60,000
Total Current Assets	12,128,418	31,443,356	41,518,411	52,630,424	61,979,749	68,738,835	82,092,007	87,402,159	90,572,565	92,251,920	89,276,011
Fixed Assets
Plant Machinery & Facility	28,000,000	25,200,000	22,680,000	20,412,000	18,370,800	16,533,720	14,880,348	13,392,313	12,053,082	10,847,774	9,762,996
Factory Construction	6,990,000	6,291,000	5,661,900	5,095,710	4,586,139	4,477,025	4,029,323	3,626,390	3,263,751	2,937,376	2,993,139
Land for Factory	1,800,000	1,800,000	1,800,000	1,800,000	1,800,000	1,800,000	1,800,000	1,800,000	1,800,000	1,800,000	1,800,000
Furniture & Fixtures	150,000	135,000	121,500	109,350	98,415	88,574	79,716	71,745	64,570	58,113	52,302
Vehicle	800,000	720,000	648,000	583,200	524,880	472,392	425,153	382,638	344,374	309,936	278,943
Total Fixed Assets	37,740,000	34,146,000	30,911,400	28,000,260	25,380,234	23,371,711	21,214,540	19,273,086	17,525,777	15,953,199	14,887,379
Intangible Assets
Preliminary Expenses	250,000	200,000	150,000	100,000	50,000	0	0	0	0	0	0
Total Assets	50,118,418	65,789,356	72,579,811	80,730,684	87,409,983	92,110,546	103,306,546	106,675,244	108,098,342	108,205,120	104,163,390
Owner's Equity	25,059,209	35,160,931	45,708,782	58,272,392	70,127,713	80,893,014	91,521,407	94,293,777	95,090,373	94,538,947	89,805,709
Short-term Liabilities
Account Payable	0	9,207,627	9,673,533	10,163,014	10,677,262	11,217,532	11,785,139	12,381,467	13,007,969	13,666,173	14,357,681
Long Term Liability	25,059,209	21,420,798	17,197,496	12,295,278	6,605,008	0	0	0	0	0	0
Total Equity & Liabilities	50,118,418	65,789,356	72,579,811	80,730,684	87,409,983	92,110,546	103,306,546	106,675,244	108,098,342	108,205,120	104,163,390

                                                PROJECTED INCOME STATEMENT

Net (Adjusted Sales) Projected Income Statement (Rs.) Cost of Sales	80,528,671 Year 1 40,070,509	83,573,316 Year 2 42,258,133	89,508,204 Year 3 44,572,456	91,295,317 Year 4 47,021,490	93,117,980 Year 5 49,613,812	99,730,684 Year 6 52,358,609	101,721,626 Year 7 55,265,726	103,752,150 Year 8 58,345,721	111,120,033 Year 9 61,609,918	113,337,998 Year 10 65,070,474
Labor (Production Staff) Raw Material	1,440,000 36,830,509	1,584,000 38,694,133	1,742,400 40,652,056	1,916,640 42,709,050	2,108,304 44,870,128	2,319,134 47,140,556	2,551,048 49,525,868	2,806,153 52,031,877	3,086,768 54,664,690	3,395,445 57,430,724
Utilities
	1,800,000	1,980,000	2,178,000	2,395,800	2,635,380	2,898,918	3,188,810	3,507,691	3,858,460	4,244,306
Gross Profit Margin Gross Profit	50% 40,458,162	49% 41,315,183	50% 44,935,748	48% 44,273,827	47% 43,504,168	48% 47,372,075	46% 46,455,900	44% 45,406,429	45% 49,510,115	43% 48,267,524
General Administrative & Selling Expenses
Salaries
	828,000	910,800	1,001,880	1,102,068	1,212,275	1,333,502	1,466,853	1,613,538	1,774,892	1,952,381
Rent Expense	120,000	126,000	132,300	138,915	145,861	153,154	160,811	168,852	177,295	186,159
Factory/Office Miscellaneous Expenses	480,000	528,000	580,800	638,880	702,768	773,045	850,349	935,384	1,028,923	1,131,815
Amortization of Preliminary Expenses	50,000	50,000	50,000	50,000	50,000	-	-	-	-	-
Depreciation Expense	3,594,000	3,234,600	2,911,140	2,620,026	2,358,023	2,157,171	1,941,454	1,747,309	1,572,578	1,415,320
Maintenance Expense	420,000	420,000	420,000	420,000	420,000	700,000	700,000	700,000	700,000	700,000
Selling & Distribution	16,105,734	16,714,663	17,901,641	18,259,063	18,623,596	19,946,137	20,344,325	20,750,430	22,224,007	22,667,600
Operating Income Subtotal	18,860,428 21,597,734	19,331,120 21,984,063	21,937,987 22,997,761	21,044,875 23,228,952	19,991,645 23,512,523	22,309,066 25,063,009	20,992,108 25,463,792	19,490,917 25,915,513	22,032,422 27,477,693	20,214,250 28,053,275
Financial Charges (15% Per Annum)	3,515,471	2,930,580	2,251,665	1,463,611	548,874	-	-	-	-	-
Earnings Before Taxes	15,344,957	16,400,540	19,686,322	19,581,264	19,442,771	22,309,066	20,992,108	19,490,917	22,032,422	20,214,250
Tax
	5,243,235	5,612,689	6,762,713	6,725,942	6,677,470	7,680,673	7,219,738	6,694,321	7,583,848	6,947,487
Net Profit	10,101,722	10,787,851	12,923,609	12,855,321	12,765,301	14,628,393	13,772,370	12,796,596	14,448,574	13,266,762
Monthly Profit After Tax	841,810	898,988	1,076,967	1,071,277	1,063,775	1,219,033	1,147,697	1,066,383	1,204,048	1,105,564

                                                                        CASH FLOW STATEMENT

Projected Statement of Cash Flows						Year 0	Year 1	Year 2	Year 3	Year 4	Year 5	Year 6	Year 7	Year 8	Year 9	Year 10
(Rs.)
Cash Flow From Operating Activities
Net Profit						-	10,101,722	10,787,851	12,923,609	12,855,321	12,765,301	14,628,393	13,772,370	12,796,596	14,448,574	13,266,762
Add: Depreciation Expense						-	3,594,000	3,234,600	2,911,140	2,620,026	2,358,023	2,157,171	1,941,454	1,747,309	1,572,578	1,415,320
Amortization Expense						-	50,000	50,000	50,000	50,000	50,000	-	-	-	-	-
(Increase) / decrease in Receivables						-	(20,132,168)	(761,161)	(1,483,722)	(446,778)	(455,666)	(1,653,176)	(497,736)	(507,631)	(1,841,971)	(554,491)
Increase / (decrease) in Payables						-	9,207,627	465,906	489,481	514,249	540,269	567,607	596,328	626,502	658,203	691,508
(Increase) / decrease in RM						-	(3,069,209)	(465,906)	(489,481)	(514,249)	(540,269)	(567,607)	(596,328)	(626,502)	(658,203)	(691,508)
(Increase) / decrease in FG Inventory							(1,483,862)	(79,469)	(83,928)	(88,657)	(93,674)	(98,997)	(104,649)	(110,650)	(117,026)	(123,802)
Net Cash Flow From Operations						-	(1,731,890)	13,231,821	14,317,099	14,989,912	14,623,985	15,033,391	15,111,440	13,925,623	14,062,155	14,003,789
Cash Flow From Financing Activities
Receipt of Long Term Debt						25,059,209
Repayment of Long Term Debt							(3,638,411)	(4,223,302)	(4,902,217)	(5,690,271)	(6,605,008)	-	-	-	-	-
Owner's Equity						25,059,209	0	(240,000)	(360,000)	(1,000,000)	(2,000,000)	(4,000,000)	(11,000,000)	(12,000,000)	(15,000,000)	(18,000,000)
Net Cash Flow Activities		From		Financing		50,118,418	(3,638,411)	4,463,302)	(5,262,217)	(6,690,271)	(8,605,008)	(4,000,000)	(11,000,000)	(12,000,000)	15,000,000)	(18,000,000)
Cash Flow From Investing Activities
Capital Expenditure						(37,590,000)					(349,500)					(349,500)
Factory/Office Furniture						(150,000)
Preliminary Operating Expenses						(250,000)
Security Deposit and Advance Rent						(60,000)
Raw Material Inventory (2 Months)						(6,138,418)
Net Cash Activities	Flow		From		Investing	(44,188,418)	-	-	-	-	(349,500)	-	-	-	-	(349,500)
NET CASH FLOW						5,930,000	(5,370,301)	8,768,519	9,054,882	8,299,641	5,669,477	11,033,391	4,111,440	1,925,623	(937,845)	(4,345,711)
Cash at the Beginning of the Period						-	5,930,000	559,699	9,328,218	18,383,100	26,682,741	32,352,218	43,385,609	47,497,049	49,422,672	48,484,827
Cash at the End of the Period						5,930,000	559,699	9,328,218	18,383,100	26,682,741	32,352,218	43,385,609	47,497,049	49,422,672	48,484,827	44,139,116