FINANCIAL MANAGEMENT

A FEASIBILITY REPORT ON IMPERIAL BAKERS

IMPERIAL BAKERS

ACKNOWLEDGEMENT
In the name of Allah, the most merciful & beneficial, we are very thankful to Almighty Allah, who strengthened us to complete this report.

We acknowledge our sincere gratitude to our subject teacher, without his kind guidance, support & encouragement; we may not be able to complete this report.

We hope that any short comings, errors & mistakes are purely accidental and would be pardoned.

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TABLE OF CONTENTS
S.No PARTICUALAR PAGE NUMBER 5

1.

EXECUTIVE SUMMARY

2.

INTRODUCTION TO FESIBILITY

3.

INTRODUCTION TO BAKERY

4.

PROJECT AT A GLANCE

11

5.

SWOT ANALYSIS

13

4.

FINANCIAL FEASIBILTY

16

5.

CONCLUSION

38

6.

REFERENCES

38

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EXECUTIVE SUMMARY

Feasibility reports address things like where and how the business will operate. They provide in-depth details about the business to determine if and how it can succeed, and serve as a valuable tool for developing a winning business plans.

This project is a feasibility report for establishing a bakery. The name of our partnership firm has been decided as Imperial Bakery. We will enter into the business with breads, buns, pizza, toasts, cream rolls & tea cakes, as our chief products. This project studies and analyses various parameters that decide the establishment of a bakery and whether the venture shall be feasible or not. The project has been divided into four major branches of feasibility study, namely, technical, human resource, marketing and financial. Our team has made an all out effort to present a comprehensive feasibility report and depict the feasibility of the project.

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INTRODUCTION TO FEASIBILITY

FEASIBILITY REPORT

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DEFINITION OF FEASIBILITY
A feasibility report looks at the viability of an idea with an emphasis on identifying potential problems and attempts to answer one main question: Will the idea work and should you proceed with it? Before you begin writing your business plan you need to identify how, where, and to whom you intend to sell a service or product. You also need to assess your competition and figure out how much money you need to start your business and keep it running until it is established. Feasibility studies address things like where and how the business will operate. They provide in-depth details about the business to determine if and how it can succeed, and serve as a valuable tool for developing a winning business plan.

Why Are Feasibility Reports so Important?

Feasibility reports contain comprehensive, detailed information about your business structure, your products and services, the market and help you to know the logistics of how you will actually deliver a product or service, the resources you need to make the business run efficiently, as well as other information about the business.

The Components of a Feasibility Report

Description of the Business: The product or services to be offered and how they will be delivered. Market Feasibility: Includes a description of the industry, current market, anticipated future market potential, competition, sales projections, potential buyers, etc. Technical Feasibility: Details how you will deliver a product or service (i.e., materials, labour, transportation, where your business will be located, technology needed, etc.). Financial Feasibility: Projects how much start-up capital is needed, sources of capital, returns on investment, etc. Organizational Feasibility: Defines the legal and corporate structure of the business (may also include professional background information about the founders and what skills they can contribute to the business). Conclusions: Discusses how the business can succeed. Be honest in your assessment because investors wont just look at your conclusions they will also look at the data and will question your conclusions if they are unrealistic.

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INTRODUCTION TO BAKERY

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HISTORY
Baking is the technique of prolonged cooking of food by dry heat acting by convection, normally in an oven, but also in hot ashes, or on hot stones. It is primarily used for the preparation of bread, cakes, pastries, pies, cookies, biscuits and crackers. Such items are sometimes referred to as "baked goods," and are sold at a bakery. A person who prepares baked goods as a profession is called a baker. It is also used for the preparation of baked potatoes, baked apples, baked beans, and various other foods. Many commercial ovens are provided with two heating elements: one for baking, using convection and conduction to heat the food, and one for broiling or grilling, heating mainly by radiation. The baking process does not require any fat to be used to cook in an oven. Some makers of snacks such as potato chips or crisps have produced baked versions of their snack items as an alternative to the usual cooking method of deep-frying in an attempt to reduce the calorie or fat content of their snack products. In ancient history, the first evidence of baking occurred when humans took wild grass grains, soaked them in water, and mixed everything together, mashing it into a kind of broth-like paste. The paste was cooked by pouring it onto a flat, hot rock, resulting in a bread-like substance. Later, this paste was roasted on hot embers, which made bread-making easier, as it could now be made anytime fire was created.

Baker putting bread into an oven with a peel, 1568

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Baking flourished in the Roman Empire. In about 300 BC, the pastry cook became an occupation for Romans. This became a respected profession because pastries were considered decadent, and Romans loved festivity and celebration. Thus, pastries were often cooked especially for large banquets, and any pastry cook who could invent new types of tasty treats was highly prized. Around 1 AD, there were more than three hundred pastry chefs in Rome, and wrote about how they created all sorts of diverse foods, and flourished because of those foods.. A great selection of bakery products like breads and pastries, with many different variations, different ingredients, and varied patterns, were often found at banquets and dining halls. The Romans baked bread in an oven with its own chimney, and had mills to grind grain into flour. Eventually, because of Rome, the art of baking became known throughout Europe, and eventually spread to the eastern parts of Asia. Bakers often baked goods at home and then sold them in the streets. In London, pastry chefs sold their goods from handcarts. This developed into a system of delivery of baked goods to households, and demand increased greatly as a result. In Paris, the first open-air caf of baked goods was developed, and baking became an established art throughout the entire world, thus leading to the successful birth of bakeries and baked products.

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IMPERIAL BAKERS

PROJECT AT A GLANCE

FEASIBILITY REPORT

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IMPERIAL BAKERS

Name Products

: :

Imperial Bakers Breads, Buns, Pizza, Toasts, Cream Rolls & Tea cakes Medium Scale Main University Road, Gulshan-e-Iqbal, Karachi. Partnership Firm 1st April, 2013 Rs. 62,18,180 Partners capital - Rs.30, 47,525 Bank Loan - Rs.31, 09,090 Our mission is to provide quality products at lowest prices . To be the leader of quality bakery products provider in the region. This will be achieved by the dedication of each employee in conjunction with supportive participation from management at all levels.

Status Address Type of firm

: : :

Date of incorporation : Cost of project Source of finance : :

Mission statement

Vision

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IMPERIAL BAKERS

SWOT ANALYSIS

Strengths

Opportunities

Threats

Weaknesses

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SWOT ANALYSIS
A scan of the internal and external environment is an important part of the strategic planning process. Environmental factors internal to the firm usually can be classified as strengths (S) or weaknesses (W), and those external to the firm can be classified as opportunities (O) or threats (T). Such an analysis of the strategic environment is referred to as a SWOT analysis. The SWOT analysis provides information that is helpful in matching the firm's resources and capabilities to the competitive environment in which it operates. As such, it is instrumental in strategy formulation and selection. The SWOT Analysis of our firm is

Strengths
The prices of our products are very reasonable and less than our competitors. New and different varieties of products have been introduced which shall give us the benefit of product differentiation. Our sales are through tie-ups with grocery stores and supermarkets across Karachi. This gives us a wide consumer base and a chance to serve different levels of customers. The firm also gives a little more commission to its distributors to encourage dealership. The labor required does not need any specific qualification & skill and hence can be made easily available.

Weaknesses
Bakery products are perishable items hence need to be sold as soon as possible to gain maximum benefit. The customers also prefer fresh products. But the far location of the factory can increase the time between baking and actual selling. Our bakery has introduced few bakery items from the possible product lines. We are not making cakes, pastries, chocolates and other various products. This limited menu can be seen as a weakness. We are not introducing our own outlets but are selling through tie-ups across the city. This delays our brand establishment time.

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IMPERIAL BAKERS

Opportunities
Expansion of the product line in the future with the introduction of biscuits and cakes and pastries. Scope for expansion with the establishment of our own outlets and bakery cafs Growing concern for health and multigrain food products shall become a reason for increase of our sales of food items such as brown breads, tomatospinach bread and white-coriander bread.

Threats
Severe competition in the industry with well-established players like United King, Continental Bakery, Sajjad Bakery, Disco Bakery etc.

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FINANCIAL FEASIBILITY

FEASIBILITY REPORT

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IMPERIAL BAKERS
Note: 1 Cost of Land
No. 1. 2. 3. Particular Basic Cost of Land 1% Commission of Agent Stamp duty @ 10% TOTAL Amount 1480000 14800 148000 1642800

Note: 2 Cost of Construction

No 1. 2. 3. 4. 5. 6. 7. 8. 9. Particular Production area Storage area Administrative office Water room & wash room Finished goods storage Loading Dock Parking space Security cabin Open land TOTAL Area(in sq. feet) 1813 300 375 244 300 168 150 56 194 3600 Amount 1313950 230500 321750 174600 237500 109700 52500 27400 102600 2340000

Note: 3 Machinery
No. 1 3 4 5 6 7 8 9 10 11 12 Particular Deck oven Dough mixer Dough molder Sugar grinder Packing machine Toast slicer/bread slicer Freezer Mixer Rolling racks Trays Stainless steel utensils/tools/equipment knives TOTAL Quantity 1 3 2 1 2 2 2 1 6 100 Price per unit 264000 46500 42350 35000 47650 38000 16400 3600 7500 200 Amount 264000 139500 84700 35000 95300 76000 32800 3600 45000 20000 83400 879300

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Note: 4 Cost of Furniture
No. 1 2 3 4 5 6 7 8 9 10 11 12 13 Particular Sofa Set Revolved Chairs Comfort Chairs Office desk Office Cupboard Cabinet Working table Dustbin Air Conditioner Lights Fans Exhaust Fans Others TOTAL Quantity 2 4 8 3 1 1 1 4 1 50 10 4 Price per unit 10400 1500 950 3000 8000 11300 9000 100 25000 40 1200 1500 Amount 20800 6000 7600 9000 8000 11300 9000 400 25000 2000 12000 6000 5000 122100

Note: 5 Cost Of equipments

No. 1 2 3 4 Particular Computer Telephone instruments Fire extinguisher equipment Generator TOTAL Quantity 3 2 3 1 Price per unit 23900 600 5000 25000 Amount 71700 1200 15000 275000 362900

Note: 6 Cost Of Vehicle

No. 1 Particular Tempo TOTAL Quantity 2 Price per unit 247000 Amount 494000 494000

Note: 7 Preliminary Exp.

No. 1 2 3. Particular Licence Fees Registration Fees (1%) Partnership deed TOTAL Amt. 35000 14800 7000 56800
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FEASIBILITY REPORT

IMPERIAL BAKERS

Note: 8 Pre-operatives Exp.

No. 1 2 Particular Market Survey Exp. Connection Charges 1) A.E.C. (Three phase) 2) Electricity connection charges 3) Plumbing 4) Telephone charges 5) Gas pipe line charges TOTAL Amount 2500 48000 18500 9000 2500 40000 120500

WORKING CAPITAL
No. 1. A. B. C. D. E. Particular Current Assets Raw material requirement W.I.P requirement Finished Goods requirement Debtors Requirement Cash Balance Total Current Assets 2. A. B. Current Liabilities Creditors Deferred Wages Total Current Liabilities TOTAL WORKING CAPITAL 567564 22000 589564 138215 30270 -----25870 546750 124889 727779 Amount

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A STATEMENT SHOWING COST OF PROJECT

SR. NO 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. PARTICULAR Land Building Machinery Furniture & Fixtures Equipments Vehicles Preliminary expenses Pre-operative Expenses Working Capital Reserves for contingency TOTAL COST AMOUNT (in Rs.) 1642800 2340000 879300 122100 362900 494000 56800 120500 138215 61565 6218180

MEANS OF FINANCE
NO. 1. 2. 3. PARTICULAR Partners capital (50%) Secured loans (50%) Reserve and surplus TOTAL AMOUNT 3047525 3109090 61565 6218180

FEASIBILITY REPORT

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SALARY
Particulars No. Monthly salary 13000 13000 10000 13000 8000 4500 3500 3000 3000 1ST YEAR 156000 156000 ---------156000 96000 54000 210000 72000 36000 2ND YEAR 156000 156000 120000 156000 96000 54000 210000 72000 36000 3RD YEAR 156000 156000 120000 156000 96000 54000 420000 108000 36000 4TH YEAR 163800 163800 120000 163800 100800 54000 420000 110160 37080 5TH YEAR 163800 163800 126000 163800 100800 54000 546000 110160 37080 Factory 1 manager Finance 1 manager Accountant 1 Marketing 1 manager Production 1 supervisor Master 1 baker Utility Varies workers Drivers 2 Security 1 guard Peon 1 Total 13

3000 36000 36000 36000 37080 37080 64000 972000 1092000 1338000 1370520 1502520

BONUS
Particulars Factory manager Financial manager Marketing manager Accountant Production supervisor Master baker No 1 1 1 1 1 1 1 YEAR 13000 13000 13000 -----8000 4500
ST

2ND YEAR 13000 13000 13000 12000 8000 4500

3RD YEAR 13000 13000 13000 12000 8000 4500

4TH YEAR 13650 13650 13650 12000 8400 4500

5TH YEAR 13650 13650 13650 12600 8400 4500

FEASIBILITY REPORT

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DEPRECIATION
PARTICULARS 1ST YEAR 2ND YEAR 747405 112111 635294 2106000 210600 1895400 109890 10989 98901 296400 118560 177840 3RD YEAR 635294 95294 540000 1895400 189540 1705860 98901 9890 89011 177840 71136 106704 4TH YEAR 540000 81000 459000 1705860 170586 1535274 89011 8901 80110 106704 42682 64022 5TH YEAR 459000 68850 390150 1535274 153527 1381747 80110 8011 72099 64022 25609 38413

MACHINERIES 15% Op balance 879300 Less: depreciation 131895 Closing balance 747405 BUILDING 10% Op balance 2340000 Less: depreciation Closing balance FURNITURE 10% Op balance Less: depreciation Closing balance VEHICLE 40% Op balance Less: depreciation Closing balance COMPUTERS 60% Op balance Less: depreciation Closing balance Total depreciation Add Tempo Less: depreciation Closing balance TOTAL DEPRECIATION 234000 2106000 122100 12210 109890 494000 197600 296400

71700 43020 28680 618725 ---------------------618725

28680 17208 11472 469468 ---------------------469468

11472 6883 4589 372743 247000 98800 148200 471543

4589 2753 1836 305922 148200 59280 88920 365202

1836 1101 735 257099 88920 35568 53352 292667

FEASIBILITY REPORT

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IMPERIAL BAKERS

FACTORY OVERHEAD EXPENSES

PARTICULARS 1ST YEAR 2ND YEAR 3RD YEAR 4TH YEAR 5TH YEAR

Salary Factory manager Production supervisor Peon Security guard Bonus Factory manager Supervisor Peon Security guard Depreciation Machinery Building Insurance Machinery Building Electricity charges Power and fuel Repairs and maintenance Building Machinery TOTAL 2340 8790 1146895 2340 8790 1131099 2340 8790 1171683 2340 8790 1101919 2340 8790 1041284 13190 4680 2,21,000 180000 11211 4212 225694 205141 9529 3791 285415 225984 8100 3412 233598 226983 6885 3071 235690 285741 131895 234000 112111 210600 95294 189540 81000 170586 68850 153527 13000 8000 3000 3000 13000 8000 3000 3000 13000 8000 3000 3000 13650 8400 3150 3150 13650 8400 3150 3150 156000 96000 36000 36000 156000 96000 36000 36000 156000 96000 36000 36000 163800 100800 37080 37080 163800 100800 37080 37080

FEASIBILITY REPORT

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IMPERIAL BAKERS

ADMINISTRATIVE OVERHEADS
PARTICULARS Salary Accountant Finance manager Bonus Accountant Finance manager Depreciation Computer Furniture Telephone Stationery Electricity charges TOTAL 1ST YEAR 2ND YEAR 120000 156000 12000 13000 17208 10989 17750 6550 92546 446043 3RD YEAR 120000 156000 12000 13000 6883 9890 15310 6854 93568 433505 4TH YEAR 120000 163800 12000 13650 2753 8901 21680 7045 94871 444700 5TH YEAR 126000 163800 12600 13650 1101 8011 15650 7520 95862 444194

156000

13000 43020 12210 26000 5000 90000 345230

SELLING & DISTRIBUTION OVERHEAD

Particulars Salary Marketing manager Driver Bonus Marketing Manager Driver Depreciation of vehicle Fuel & maintenance of vehicle Advertisement Commission on sales Insurance of vehicle TOTAL 1ST YEAR 156000 72000 13000 6000 197600 155200 2ND YEAR 156000 72000 13000 6000 118560 160580 3RD YEAR 156000 108000 13000 9000 169936 165847 4TH YEAR 163800 110160 13650 9300 101962 178450 5TH YEAR 163800 110160 13650 9300 61177 182560

18500 175800 17290 811390

20500 205150 15215 767005

25000 226680 22034 895497

25000 258100 16970 877392

27000 269750 13481 850878

FEASIBILITY REPORT

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IMPERIAL BAKERS

REPAYMENT OF LOAN
Year Principle Remaining 3109090 2487272 1865454 1243636 621818 TOTAL Installment Paid 621818 621818 621818 621818 621818 3109090 Interest Total Amt. Paid 963818 895418 827018 758618 690218 4135090 Balance of Principle 2487272 1865454 1243636 621818 _

1st Year 2nd Year 3rd Year 4th Year 5

th

342000 273600 205200 136800 68400 1026000

Year

STATEMENT OF INTEREST ON PARTNERS CAPITAL

Particular Opening balance of capital Add: Interest Add: Profit 1st Year 3047525 2nd Year 3136287 3rd Year 3581981 4th Year 4063263 5th Year 5027221

182852 88762 3319139

188177 445694 3770158 (188177) 3581981

214919 481282 4278182 (214919) 4063263

243796 963958 5271017 (243796) 5027221

301633 1091076 6419930 (301633) 6118297

Less: Interest TOTAL

(182852) 3136287

FEASIBILITY REPORT

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IMPERIAL BAKERS

COST SHEET
Particular Opening Stock of R.M. Add:Purchases Less:- Cl. Stock of R.M. Cost Of R.M. Consumed Add:Direct Labour Bonus Prime Cost Add:Factory O.H. Total Factory Cost Add:Office O.H. Cost of Production Add:Opening stock of FG Less:Closing Stock of FG Cost of Sales Add:- Selling & Distribution Exp Cost of goods sold Add:- Profit TOTAL SALES 1st Year 2nd Year 3rd Year 4th Year 5th Year

0 4540510 30270 4510240 264000 22000 4796240 1146895 5722135 345230 6067365

30270 5297170 35200 5292240 264000 22000 5578240 1131099 6709339 44604ss3 7155382

35200 5853040 38950 5849290 474000 39500 6362790 1171683 7534473 433505 7967978

38950 6664340 42150 6661140 474000 39500 7174640 1101919 8276559 444700 8721259

42150 6964530 45890 6960790 600000 45500 7606290 1041284 8647574 444194 9091768

25870

27850

29950

30500

25870 6041495

27850 7127532

29950 7938028

30500 8690759

32950 9058818

811390 6852885 908115 7761000

767005 7894537 1159813 9054350

895497 8833525 1170975 10004500

877392 9568151 1823089 11391240

850878 9909696 1994674 11904370

FEASIBILITY REPORT

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TRADING AND PROFIT & LOSS A/C

Particulars INCOME:Cash Sales Credit Sales Total Sales Income Closing Stock of FG Less:- Opening Stock of FG Total Income Raw Material Consumed Direct Labour & Bonus Factory Cost Administrative Cost Selling & Distribution Cost Preliminary Expenses Written Off Interest on Partners' Capital Total Expenditure Gross Profit (PBDIT) Less:Depreciation PBIT Interest - Long Term Loan @ 11% PBT Tax Paid @ 30% PAT 1st Year 7114250 646750 7761000 25870 -----7786870 4510240 286000 781000 290000 2nd Year 8201750 852600 9054350 27850 25870 9056330 5292240 286000 808388 417846 3rd Year 8978600 1025900 10004500 29950 27850 10006600 5849290 513500 886849 416732 4th Year 10132840 1258400 11391240 30500 29950 11391790 6661140 513500 850333 433046 5th Year 10419370 1485000 11904370 32950 30500 11906820 6960790 645500 818907 435082

613790

648445

725561

775430

789701

35460

35460

35460

35460

35460

182852 6699342 1087528 618725 468803

188177 7676556 1379774 469468 910306

214919 8642311 1364289 471543 892746

243796 9512705 1879085 365202 1513883

301633 9987073 1919747 292667 1627080

342000 126803 38041 88762

273600 636706 191012 445694

205200 687546 206264 481282

136800 1377083 413125 963958

68400 1558680 467604 1091076

FEASIBILITY REPORT

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IMPERIAL BAKERS

BALANCE SHEET
Particulars Year 1 Year 2 Year 3 Year 4 Year 5 SOURCE OF FUNDS Owners Funds Reserve & Surplus Bank Loan TOTAL SOURCE OF FUND 3136287 61565 2487272 5685124 3581981 61565 1865454 5509000 4063263 61565 1243636 5368464 5027221 61565 621818 5710604 6118297 61565 0 6179862

APPLICATION OF FUNDS Fixed Assets Land Building Less: Depreciation Machinery Less: Depreciation Furniture Less: Depreciation Vehicle Less: Depreciation Computer Less: Depreciation

1642800 2340000 234000 2106000 879300 131895 747405 122100 12210 109890 494000 197600 296400 71700 43020 28680 291200

1642800 2106000 210600 1895400 747405 112111 635294 109890 10989 98901 296400 118560 177840 28680 17208 11472 291200

1642800 1895400 189540 1705860 635294 95294 540000 98901 9890 89011 424840 169937 254903 11472 6883 4589 291200

1642800 1705860 170586 1535274 540000 81000 459000 89011 8901 80110 254903 101962 152941 4589 2753 1836 291200 4163161

1642800 1535274 153527 1381747 459000 68850 390150 80110 8011 72099 152941 61177 91764 1836 1102 734 291200 3870494

Other equipment TOTAL FIXED 5222375 4752907 4528363 ASSETS CURRENT ASSETS, LOANS AND ADVANCE Inventory Raw Material 30270 35200 38950 Finished Goods 25870 27850 29950

42150 30500

45890 32950
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FEASIBILITY REPORT

IMPERIAL BAKERS
Sundry Debtors Cash & Bank Balance TOTAL CURRENT ASSETS 546750 307583 910473 850123 410680 1323853 926540 554151 1549591 1025360 1288113 2386123 1125460 2083908 3288208

LESS : CURRENT LIABILITIES AND PROVISION Creditors Deferred Wages TOTAL CURRENT LIABILITY NET CURRENT ASSETS Miscellaneous Expenditure (To the extent not written off) TOTAL APPLICATION OF FUNDS 567564 22000 589564 652140 22000 674140 758410 22000 780410 852140 22000 874140 956840 22000 978840

320909 141840

649713 106380

769181 70920

1511983 35460

2309368 0

5685124

5509000

5368464

5710604

6179862

FEASIBILITY REPORT

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CASH FLOW STATEMENT

1st year 2nd year 3rd year 4th year CASH FLOW FROM OPERATING ACTIVITIES PAT 88762 445694 481282 963958 Interest 524852 461777 420119 380596 Tax Provision 38041 191012 206264 413125 Depreciation 618725 469468 471543 365202 Preliminary 35460 35460 35460 35460 Expenses CHANGES IN (13326) (225707) 24003 (8840) WORKING CAPITAL Tax Paid (38041) (191012) (206264) (413125) Net Cash Flow 1254473 1186692 1432407 1736376 From Operating Activities CASH FLOW FROM INVESTMENT ACTIVITIES Purchase of (5841100) -----(247000) -----Assets Preliminary (177300) ---------------Activities Net Cash Flow (6018400) -----(247000) -----From Investing Activities CASH FLOW FROM FINANCIAL ACTIVITIES Capital 3109090 ---------------Term Loan 3109090 ---------------Taken Repayment of (621818) (621818) (621818) (621818) Term Loan Interest on Loan (342000) (273600) (205200) (136800) Interest on (182852) (188177) (214919) (243796) Capital Net Cash Flow 5071510 (1083595) (1041937) (1002414) From Financial Activities Total 307583 103097 143470 733962 Add:- Opening 0 307583 410680 554151 Balance Closing 307583 410680 554151 1288113 Balance Particular 5th year 1091076 370033 467604 292667 35460 (1590)

(467604) 1787646

----------------

----------(621818) (68400) (301633) (991851)

795795 1288113 2083908

FEASIBILITY REPORT

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RATIO ANALYSIS
PARTICULARS PROFITABILITY RATIO Net profit ratio (%) (Net profit/sales)100 Operating ratio (%) (PBIT/sales)*100 Cash profit ratio (%) [(PAT+depreciation)/sales]*100 EFFICIENCY RATIO Fixed assets turnover ratio Sales/fixed assets Total asset turnover ratio (Sales)/(total assets-misc.exp.) SOLVANCY RATIO Proprietor's ratio (%) Proprietor's fund/total assetmisc.exp*100 COVERAGE RATIO Interest coverage ratio PBIT/interest on debt LIQUIDITY RATIO Current ratio Current asset/current liabilities 1st year 2nd year 3rd year 4th year 5th year

1.14 6.04 9.12

4.92 10.05 10.11

4.81 8.92 9.52

8.46 13.29 11.67

9.17 13.67 11.62

1.49 1.27

1.91 1.49

2.21 1.65

2.74 1.74

3.08 1.66

52.14

60.00

67.87

77.70

86.33

1.37

3.32

4.35

11.07

23.79

1.54

1.96

1.99

2.73

3.36

FEASIBILITY REPORT

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TREND OF RATIOS
1. NET PROFIT RATIO Net Profit Ratio
Percentage

Year

Interpretation: The firm has continuously made profit for five years. It shows the firms capability to increases revenue from its business.

2. OPERATING RATIO

Operating Ratio
Percentage

Year

Interpretation: Operating profit of the firm is continously increasing over the five years. It does not increase with more margins because of increses in revenues expenses in that years, but it also does not decrease which shows continuous increment in revenue.

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3. CASH PROFIT RATIO Cash Profit Ratio

Percentage

Year

Interpretation: Cash profit of the firm is continously increasing in five years and it will help the firm to repay its loans and liabilites. Cash profit increment also indicate that the firm has more source to earn cash revenue.

4. FIXED ASSETS TURNOVER RATIO Fixed Assets Turnover Ratio

Percentage

Year

Interpretation: As the revenue is increasing year by year and the depreciation is written off the value of fixed assets reduces and thus there is an increase in the fixed asset turnover ratio.

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5. TOTAL ASSETS TURNOVER RATIO Total Assets Turnover Ratio

Percentage

Year

Interpretation: The total asset turnover ratio of the firm continously increses in 5 years. It shows that firm has optimum uses of its assets to generate its revenue.

6. PROPRIETORS RATIO

Proprietor's Ratio
Percentage

Year

Interpretation: Proprietor ratio indicate that the share of owners in the firm aganist the other liabilites. The Proprietor ratio of the firm is continously increasing in five years and in the 5th year its is nearly 86.33% and its equal to half of the balance sheet total and its gives encourage the firm to take more risk.

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7. INTEREST COVERAGE RATIO

Interest Coverage Ratio

Percentage

Year

Interpretation: The interest coverage ratio indicates capacity of firm to pay interest on debt out of its profit. The above chart shows that there is continuous increase in this ratio through out 5 years because of increase in revenue. It is maximum 23.79% in the 5th year.

8. CURRENT RATIO Current Ratio

Times

Year

Interpretation: Ideal current ratio is 2:1 but the above ratios are around 3.36:1 which is above ideal ratio that is justifiable in our industry.

FEASIBILITY REPORT

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IMPERIAL BAKERS

CAPITAL BUDGETING
YEA R DEPRE CIATION PRE. EXP. CFA T DISCO UNTING P V OF CASH FLOW DISCO UNTIN G P V OF CASH FLOW CUM CFAT

PAT

FACTO R 11% 1st Year 2nd Year 3rd Year 4th Year 5th Year 887 62 445 694 481 282 963 958 109 107 6 3546 0 3546 0 3546 0 3546 0 3546 0 742 947 950 622 988 285 136 462 0 141 920 3 546 567 7

FACTO R 1% 7429 47 1693 569 2681 854 4046 474 5465 677

618725

0.901

669395

0.990

735518

469468

0.812

771905

0.980

931610

471543

0.731

722436

0.971

959625

365202

0.659

899285

0.961

1311400

292667

0.593

841587

0.951

1349662

Total

3904609

5287814

NET PRESENT VALUE

Particular Total Discounted Cash Inflow Less Total Cash Outflow NPV Amount 3904609 6218180 (2313571)

FEASIBILITY REPORT

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IMPERIAL BAKERS

PAY BACK PERIOD

In our project Pay Back Period is beyond 5 years. As at the end of the 5 years net cumulative Cash flow is Rs. 5465677 and our initial investment is of Rs. 6218180.

PROFITABILITY INDEX
Particular Total Cash Inflow Divide Total Cash Outflow P.I Amount 3904609 6218180 0.6279

INTERNAL RATE OF RETURN

In case of IRR we require two NPV i.e. one negative and one positive at two different discounting factor. Hence in our project we have taken in to consideration two discounting factor i.e. 1 and 11% discount level and at both the levels NPV is negative so it is not feasible within the scope of five years.

FEASIBILITY REPORT

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IMPERIAL BAKERS

BREAK EVEN ANALYSIS

Particular Total Income Less : Variable Cost Direct Material Direct Labour Electricity Charges Repairs Maintenance Power and Fuel Commission on sales Total Variable Cost Contribution Less : Fixed Cost Salary & Wages Depreciation Insurance Telephone & Internet Stationery & Postage Advertisement interest on Partner's Capital Interest on Loan Preliminary Exp. Total Fixed Cost Profit PV Ratio =Contribution/Sales BES=Fixed cost/PV ratio (In Rupees) 1st Year 2nd Year 3rd Year 4th Year 5th Year 7786870 9056330 10006600 11391790 11906820

45,10,240 5292240 286000 286000 311000 318240 166330 180000 175800 171710 205141 205150

5849290 513500 378983 176977 225984 226680 7371414 2635186 938000 471543 35354 15310 6854 25000 214919 205200 35460 1947640 687546 26.33%

6661140 513500 328469 189580 226983 258100 8177772 3214018 973470 365202 28482 21680 7045 25000 243796 136800 35460 1836935 1377083 28.21%

6960790 645500 331552 193690 285741 269750 8687023 3219797 889350 292667 23437 15650 7520 27000 301633 68400 35460 1661117 1558680 27.04%

56,29,370 6478481 2157500 2577849 767000 618725 35160 26000 5000 18500 899000 469468 30638 17750 6550 20500

182852 188177 342000 273600 35460 35460 2030697 1941143 126803 636706 27.71% 28.46%

7328390 6820600

7397038

6511645

6143184

FEASIBILITY REPORT

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IMPERIAL BAKERS

CONCLUSION
We would finally like to conclude the project with a great feeling of having gained enormous knowledge about bakery industry. First of all we are thankful to our teacher who gave us such a wonderful opportunity to learn about the practical aspects of knowledge. By conducting an extensive research on all the aspects of establishing a bakery, we conclude that the project is feasible as per capital budgeting techniques. While making the project we learnt how to communicate or deal with people and how to maintain contacts with them. We saw all the marketing factors and were able to understand more about it because of seeing them practically. It has been said that practical knowledge is more important than theoretical knowledge.

REFERENCES
www.bakerybazaar.com www.wikipedia.org www.justdial.com www.fao.org www.blog.franchiseindia.com

FEASIBILITY REPORT

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