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PROJECT REPORT ON PAPER PRODUCTS

Project by: M/s. Sanjus Paper Products No. 2210, Kothari Mill Lane, Trichy Road, Singanallur, Coimbatore 641 005. Cell: 9790005160

Manufacture of PAPER CUPS


(Disposable & Bio-degradable)

INDEX SL. No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Introduction Market potential Manufacturing process Flow sheet diagram About the promoter Basis and Presumption Inspection and quality control Production Capacity Pollution control Electrical requirements Financial aspects - Fixed capital Recurring expenditure Working capital assessments Other financial aspects Break-even analysis Repayment Schedule Depreciation Profitability Statement DESCRIPTION PAGE NO.

MANUFACTURE OF PAPER PRODUCTS (PAPER CUPS)


1. INTRODUCTION
Disposable food service products were initially developed to enhance public health by improving practices in the food service industry. This requirement when combined with the environmental threat faced by us at the turn of the 20th Century and need of strong efforts in order to conserve the environment, gave birth to the concept of PAPER CUPS. There are several inherent advantages in using Paper Cups as compared to cups of other materials. These Paper Cups are gaining popularity all across the globe as a beautiful and stylish way of minimizing exposure to food borne infections. Paper Cups have numerous advantages like, they are manufactured in a very simple process using Food Grade Raw Materials with least waste and are easiest to recycle. They are ideal for individual servings at all kinds of parties, functions, picnic occasions, marriages, chat, tea & food joints, etc. Non-toxic in nature, the shapes and surface designs on these paper cups are attractive and present an inviting look. These paper cups can also be custom printed with an outlet's logo, brand punch line or advertising message. Available in a wide variety of designs, textures, colors and sizes, disposable paper cups are gorgeous, stylish and eloquent. Adding premium aura wherever used, these cups are made with utmost care to detail and are a unique addition to any table setting. Hence, the future of the proposed unit for manufacturing paper cups is very vibrant and will be a gesture towards supporting the usage of Eco-friendly products.

A paper cup is a cup made out of paper and often lined with plastic or wax to prevent liquid from leaking out or soaking through the paper. It may be made of recycled paper and is widely used around our regular life. Landmark events for common household items are not coming often these days. At its 100th anniversary, paper cup still retains the imperative status in the worlds drink consumption. Therefore the object was to dispense a pure drink of water in a new, clean, and individual drinking cup instead of common jug in public places.

2. MARKET POTENTIAL
It is necessary to recognize that in a globalize economic environment the business outlook for any paper product will depend on the global demand supply balance for that product. For Paper Cups there is production less capacity at a global level which was built up over the last decade or so in response to a boom in global growth and increased levels of awareness of eco friendly products. The growth of the manufacturing sector will be largely influenced by the growth consumption. A wide range of paper cups are now produced and marketed in India. The paper cups are reckoned to be a high potential business for India. Manufacturing Paper Cups is the purpose of satisfying needs and wants of Consumers is the market place. Developing a strategy for delivering an effective combination of food grade quality and cost-effective features for consumers within the target market is done. The prospects of paper cups depend on the value of customers who utilize it. But in our country paper cups are used by all the people as it is easy to use, hygienic and eco-friendly. Hence, the per capita consumption has increased and the demand for it is recognized. While the demand for paper cups has shown a good growth, the company will be successful in strategizing its market operations. As paper cups is a product of daily consumption and necessity, their marketing will not be a problem as the consumers are aware of the advantages of using paper cups. The raw materials are indigeneously available and the manufacturing process is also simple. SANJUS PAPER PRODUCTS has decided to market their PAPER CUPS to IT companies, Educational Institutions Canteens, Industrial Canteens,

Restaurants, Fast Foods, Catering People, Tea Shops, Paper Product Dealers and Super Markets SANJUS PAPER PRODUCTS has made marketing survey and potential for our product and had a very good responses. We have the regular market for our manufacturing capacity. In future SANJUS PAPER PRODUCTS will increase the

capacity to meet the demand of our product. So it will not be a difficult to find market for paper cups in this growing paper product industry.

The increasing demand is being vast, thrust for the development of this industry is very big. SANJUS PAPER PRODUCTS will assimilate novel and innovative methods to improve its competitiveness for its growth and contribute to the country.

In conclusion, I would like to stress that present status of the industry is in very good scope and this industry will provide ample employment opportunities to the underprivileged of our society. Therefore to sum up the setting up of PAPER CUP manufacturing unit is predictable and feasible for its marketing aspects.

3. MANUFACTURING PROCESS OF PAPER CUPS :


We have proposed to use the Automatic Paper Cup Forming Machine for our manufacturing process of Paper Cups.

The general structure of paper cup forming machine is composed of three stages. They are :

1. The first stage : mainly finishes transmission of the paper cup's side-wall paper, shaping side-wall and transferring them to the second stage after shaped.

2. The second stage : transmission of the cup-bottom paper, shaping cupbottom, joining the shaped side-wall and cup bottom, automatic transmission and discharging of the shaped cup, and curling the shaped cup's edge.

3. The third stage: mainly includes 45 degree angle separating, preheating, curling bottom, rouletting, curling rim and so on mechanisms, which are the important parts in finishing paper cup.

4. FLOW SHEET DIAGRAM

BLANK

BOTTOM

CONE FORMING + BOTTOM FIXING

LOADED TO MOULD

BOTTOM KNURLING + TOP KURLING

FINISHED CUP DELIVERY

5. About the Promoter


Name :

Father Name

DOB

Sex

Permanent Address

Marital Status

Nationality

Languages Known

Educational Qualification

Working Experience

6. BASIS AND PRESUMPTION OF THE PROJECT :


i. The process of manufacture is on the basis of double shift of eight + eight hours per day with three hundred working days in a year.

ii. iii. iv.

Labor and wages mentioned in profile are as per prevailing local rates. Interest rate at 12.5% considered in the project The Promoter contribution will be 10% of the total project cost. However it may be vary for women entrepreneurs. Subsidy and other concessions may be applicable as per the MSME Act of Tamilnadu 2006. The capacity of the plant 40,000 nos. of paper cups per day on the double shift basis.

v.

vi.

7. INSPECTION AND QUALITY CONTROL :


SANJUS PAPER PRODUCTS will strictly adhere to the International FDA standards and Indian BIS standards in the process of manufacturing Paper Cups from procuring high quality food grade raw materials to hygienic methods of packaging, as we know that the satisfaction of the customers is the foundation of any business.

8. PRODUCTION CAPACITY PER ANNUM : Quantity: 40,000 nos. of paper cups per day 1,20,00,000 nos. of paper cups per annum (300 days)

9. POLLUTION CONTROL
The technology adopted for making paper cups is eco-friendly. Cup forming process is totally automatically done by the machine, only feeding and packaging involves manual work. The scrap papers created out of this manufacturing process also can be sold for recycled paper converters. Hence there is no chance of any pollution out of this industry.

10. Electrical HP Details:


Sl No 1 2 Name of the Machine Automatic Paper Cup Forming Machines Other electrical fittings/ lighting etc No: of Machines / Units 1 ---H.P Connected 4 1 5

Total H.P Connected

11. FINANCIAL ASPECTS 11.1. FIXED CAPITAL: (a) Land & Building : SL. NO 1 DESCRIPTION Land & Building (400 - 500 Sq. ft.) AMOUNT .Rs 5,000 per month

(b) Machinery and Equipment :


Sl No 1 2 3 4 5

DESCRIPTION
Automatic Paper Cup Forming Machines Servo Stabilizers

No: of Machines / (Units in Nos) 1 No. ---1 No. 1 Set 1 No.

Rate (Rs.) 7,50,000 40,000 15,000 50,000 20,000 8,75,000

Electronic Weighing Machine


Office equipment ( Computer, Table Chair etc.,) Plastic Storage Racks TOTAL

12. RECURRING EXPENDITURE (PER MONTH): (A) Raw Material Per Month:
SL. NO. 1 2 3 DESCRIPTION Printed Blank Side Wall Bottom Reel Paper PP cover & Carton Boxes QUANTITY 2,500 kgs 800 kgs. As Required RATE 75.00 72.00 ----TOTAL (A)

Rs.
AMOUNT 1,87,500 57,600 10,000 2,55,100

(b) Salaries & Wages Per Month :


SL. NO. 1 2 3 4 DESCRIPTION Production cum Marketing Manager Machine Operators Checking & Packaging Women Office Assistant NO 1 2 2 1 SALARY 7500 5000 3000 3000 TOTAL Perquisites 15 % Total (B)

Rs.
AMOUNT 7,500 10,000 6,000 3,000 26,500 3,975 30,475

C) Utilities per Month: SL. NO. 1 2 DESCRIPTION Power 5 HP 750 Units @ Rs. 5 per Unit Machine Oil, grease & other consumables TOTAL (C) (D) Other Expenses Per Month: SL. NO. 1 2 3 4 5 6 7 8 Rent Marketing expenses & Advertisement Postage and stationery Repairs and maintenance Traveling and transportation Insurance Telephone & Mobile Packing Materials TOTAL (D) DESCRIPTION

Rs. AMOUNT 3,750 1,000 4,750 Rs. AMOUNT 5,000 3,000 250 500 1,000 250 2,000 500 12,500

13. RECURRING EXPENDITURE PER MONTH: a + b + c + d = Rs. 3,02,825/-

Recurring Expenditure for three months = Rs. 9,08,475/-

14. WORKING CAPITAL ASSESSMENT SL. NO. DESCRIPTION Raw Material (Required for One Month) AMOUNT (RS.)

2,55,100

Work in progress (Required for One Month)

43,750

Finished Goods (Required for 15 Days)

1,50,000

Bill receivable (Required for 15 days)

2,00,000

TOTAL SAY

6,48,850 6,50,000

15. FINANCIAL ASPECTS 15. a. Total Project Cost

Rs.

COST OF THE PROJECT AND MEANS OF FINANCE PARTICULARS I.COST OF THE PROJECT: (i) Plant and Machinery (ii) Working Capital 8,75,000 6,50,000 Rs. In lakhs

TOTAL COST OF PROJECT

15,25,000

15. b. MEANS OF FINANCE: Term loan from Bank 90% Promoters contribution 10% TOTAL FINANCE 13,72,000 1,52,500 15,25,000

Finance required from the Bank 13,72,500/(Rupees Thirteen Lakhs Seventy Two Thousand Five Hundred Only)

15. c. Cost of Production Per Annum :

Rs.

SL. NO

DESCRIPTION

AMOUNT

1 2 3 4

Total recurring cost Interest on Bank Loan @12.5% Total Depreciation on Machinery @15% Total Depreciation on furnitures and other equipments @ 20% TOTAL

36,33,900 1,71,563 1,31,250 5,000 39,41,713

16. Turnover Per Annum : Proposed sale of Paper Cups of sizes at market value : : 1,20,00,000 110 ml @ 0.36 210 ml @ 0.42 Nos.

Average Price for Sale of Paper cups on an average @ Rs. 0.39 x 1,20,00,000 cups Total Turnover Per Annum : Rs. 46,80,000/-

17. Profit Per Annum : Turnover - Cost of Production Rs. 46,80,000 Rs. 39,41,713 Profit per Annum = Rs. 7,38,287/-

18. % of profit on sales

Profit/annum X 100 Turnover

738287 X 100 46,80,000

% of profit on sales

15.77%

19. Rate of Return

Profit / Annum * 100 Total Capital investment

738287 X 100 1525000

Rate of Return

48.41%

20. Break Even Analysis: (1) Fixed expenditure per annum: Interest on Loan Total Depreciation 40% of salary and wages 40% of other expenses & Utilities 1, TOTAL Rs. 1,71,563 1,31,750 1,46,280 82,800 ======= 5,32,393 =======

(2) Profit per annum = Rs. 7,38,287/-

Break Even Point

Fixed Cost / Annum * 100 Fixed cost / Annum + Profit / Annum

532393 X 100 1270680

Breakeven

41.89%

21. Repayment Schedule


Repayment of total loan Rs. 13.72 lakhs will be repayable in 6 years with 66 installments with 6 months holiday period. The rate of interest has been calculated @ 12.5% per annum however the rate of interest will be vary while implementing the project.

(Rs. in lakhs)
Principal Outstanding at the beginning of the Quarter

Year

Quarter Beginning

Repayment of Principal at Quarter

Interest

Principal And Interest

31-03-2013 31-03-2014

December March June September December March June September December March June September December March June September December March June September December March June September

13.72 13.15 12.58 12.01 11.43 10.86 10.29 9.72 9.15 8.58 8.00 7.43 6.86 6.29 5.72 5.15 4.57 4.00 3.43 2.86 2.29 1.72 1.14 0.57

0.57 0.57 0.57 0.57 0.57 0.57 0.57 0.57 0.57 0.57 0.57 0.57 0.57 0.57 0.57 0.57 0.57 0.57 0.57 0.57 0.57 0.57 0.57 0.57

0.43 0.41 0.39 0.38 0.36 0.34 0.32 0.30 0.29 0.27 0.25 0.23 0.21 0.20 0.18 0.16 0.14 0.13 0.11 0.09 0.07 0.05 0.04 0.02

1.00 0.98 0.96 0.95 0.93 0.91 0.89 0.88 0.86 0.84 0.82 0.80 0.79 0.77 0.75 0.73 0.71 0.70 0.68 0.66 0.64 0.63 0.61 0.59

31-03-2015

31-03-2016

31-03-2017

31-03-2018

31-03-2019

22. Depreciation
Depreciation has calculated @ written down value method for the period of 6 years for Machinery and other equipments @ 10% & 20% respectively.

(Rs. In Lakhs) Total. Depreciation Depreciation (b) (a + b)

Depreciation Machinery (a)

Tools

Value Dep. W.D.V Dep. W.D.V Dep. W.D.V Dep. W.D.V Dep. W.D.V Dep.

7.90 0.79 7.11 0.71 6.40 0.64 5.76 0.57 5.19 0.51 4.68 0.46 0.46 0.51 0.57 0.64 0.71 0.79

0.75 0.15 0.60 0.12 0.48 0.09 0.39 0.07 0.32 0.06 0.26 0.05 0.05 0.51 0.06 0.57 0.07 0.64 0.09 0.73 0.12 0.83 0.15 0.94

23. Profitability Statement


Year S. No Capacity Utilization 1 Turnover

1
65%
46.80

2
70%
49.14

3
75%
51.59

4
80%
54.17

5
85%
56.88

6
90%
59.72

Raw Materials

30.61

32.14

33.74

35.43

37.20

39.06

Manpower

3.65

3.83

4.02

4.22

4.43

4.65

Utilities Other Expenses Depreciation

0.57

0.59

0.62

0.65

0.69

0.72

1.50

1.57

1.65

1.73

1.82

1.91

0.94

0.83

0.73

0.64

0.57

0.51

Total Interest Repayment of Loan Total (2 to 8) Profit before Tax Provision for Tax Profit after Tax Less Depreciation Cash Accrual

1.70

1.48

1.16

0.86

0.54

0.51

2.29

2.29

2.29

2.29

2.29

2.29

9 10 11

41.3

42.7

44.2

45.8

47.5

49.7

5.54

6.41

7.38

8.35

9.34

10.10

1.50

2.00

2.50

3.00

3.50

4.00

12

4.04

4.41

4.88

5.35

5.84

6.07

13 14

0.94

0.83

0.73

0.64

0.57

0.51

3.10

3.58

4.15

4.71

5.27

5.56

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