PROJECT REPORT

OF

MULTANI MUD MANUFACTURING UNIT

PURPOSE OF THE DOCUMENT

This particular pre-feasibility is regarding Multani Mud Manufacturing unit.

The objective of the pre-feasibility report is primarily to facilitate potential entrepreneurs in project
identification for investment and in order to serve his objective; the document covers various aspects
of the project concept development, start-up, marketing, finance and management.

[We can modify the project capacity and project cost as per your requirement. We can also prepare
project report on any subject as per your requirement.]

Lucknow Office: Sidhivinayak Building ,

27/1/B, Gokhlley Marg, Lucknow-226001

Delhi Office : Multi Disciplinary Training

Centre, Gandhi Darshan Rajghat,
New Delhi 110002

Email : [email protected]
Contact : +91 7526000333, 444, 555
 PROJECT AT A GLANCE

1 Name of the Entreprenuer xxxxxxxxxx

2 Constitution (legal Status) : xxxxxxxxxx

3 Father / Spouse Name xxxxxxxxxxxx

4 Unit Address : xxxxxxxxxxxxxxxxxxxxxx

District : xxxxxxx
Pin: xxxxxxx State: xxxxx
Mobile xxxxxxx

5 Product and By Product : MULTANI MUD

6 Name of the project / business activity proposed : MULTANI MUD MANUFACTURING UNIT

7 Cost of Project : Rs.18.08 Lakhs

8 Means of Finance
Term Loan Rs.10.22 Lakhs
Own Capital Rs.1.81 Lakhs
Working Capital Rs.6.05 Lakhs

9 Debt Service Coverage Ratio : 2.86

10 Pay Back Period : 5 Years

11 Project Implementation Period : 5-6 Months

12 Break Even Point : 31%

13 Employment : 11 Persons

14 Power Requirement : 15.00 KW

15 Major Raw materials : Water, Multani Mitti Rocks, Packing Material

16 Estimated Annual Sales Turnover (Max Capacity) : 77.95 Lakhs

17 Detailed Cost of Project & Means of Finance

COST OF PROJECT (Rs. In Lakhs)

Particulars Amount
Land Own/Rented
Plant & Machinery 9.46
Miss Assets 1.20
Furniture & Fixtures 0.70
Working Capital 6.72
Total 18.08

MEANS OF FINANCE
Particulars Amount
Own Contribution 1.81
Working Capital(Finance) 6.05
Term Loan 10.22
Total 18.08
 MULTANI MUD MANUFACTURING UNIT

1. INTRODUCTION

Fuller's earth is a clay-like material made largely of

aluminium magnesium silicate. It gets its name
from the fact that it's used to clean dirt and grease
off of wool. It was applied to the wool by a worker at
a wool refinery known as a "fuller." Multani mitti,
or "mud from Multan," is another name for it, and it
originates from the Pakistan's city's history of
mineral-rich clay.

Fuller's earth may be used in skin care products including facial clays and masks that
are claimed to reduce wrinkles and acne. It's also used in cosmetics to bind other
substances, prevent other powders from caking together, give mild exfoliation, and
stabilise products. Fuller's earth is recognised for its capacity to absorb oil and other
impurities, making it a good skin cleanser for those who have oily skin or blocked
pores. It's also supposed to soften the face and enhance skin tone and appearance.
Fuller's earth is also said to have a skin-lightening effect, making it a common
component in treatments aimed at reducing the appearance of black spots. There is
no scientific evidence to support this assertion. Fuller's earth is a safe and reasonably
affordable technique to cleanse and enhance the look of your skin, particularly if you
have oily skin. It might also assist with acne and greasy hair. It's sold commercially
both online and in stores, either as a powder or already incorporated into skin and
hair products. Making your own clay or face masks with fuller's earth might be a
good alternative to masks that contain harsh chemicals and synthetic components.
2.USES & MARKET POTENTIAL

Multani mitti uses can be segmented to various applications like in

pharmaceutical companies for medicinal purpose, skin care and beauty industry
for facial and spas, handicraft sector for decorative items etc.

The Multani mitti market is as energising and useful as the substance itself. It has a
strong rural demand as well as a well-functioning urban demand. Multani mitti is
classified as a sedimentary clay and is mostly constituted of the qualities silica, iron
oxide, lime, magnesia, and water in extremely varied amounts. Olive, green, white,
brown, yellow, blue, and more colours are available. The global market for Fuller's
Earth and Allied Clays is expected to expand by 3.7 million tonnes, with a
compounded annual growth rate of 2.9 percent. One of the sectors studied and
examined in this research is bentonite, which has a growth potential of over 3.9
percent. Because of the changing forces that underpin this expansion, it's vital for
enterprises in this sector to stay on top of the market's pulse. Poised to reach over 3
Million Tons by the year 2025, Bentonite will bring in healthy gains adding
significant momentum to global growth.

RAW MATERIAL REQUIREMENT

Basic raw material are as follows:

 Water
 Multani mitti rocks
 Packing material
MANUFACTURING PROCESS

Because of the increasing awareness of organic and natural skincare and

beauty, people nowa days are shifting from chemically infused beauty products
to natural remedies like multani mitti. Hence, the production of multani mitti
occurs to be simply procurring it natural possible way.

 Procurement of the raw material: This caly is widely obtained from the
Multan region and Barmer part of Rajasthan, readily available with the sellers
in the market.
 Grinding Process: The Pure product is sourced and then put into grinnding
process where it gets grind into finely coarsed powder.

 Filtering the finished product: The next step involves filtering the grinded
powder to remove the impurites. As largely the product is used to make facial
paste and medicinal pupose, hence it is important to remove stone or hard
substances from the powder for final packaging.
 Packaging: Finally the filtered powder is packaged and stored for market
distribution. For eminder it is important to pack the product in dry and damp
free packaging such that the rawness and purety of the product remains intact
wothout getting spoiled or damped.

3. PROJECT COMPONENTS

3.1 Land /Civil Work

The land require for this manufacturing unit will be approx. around 1500-2000
square feet. We have not considered the cost of Land purchase & Building
Civil work in the project. It is assumed that land & building will be on rent &
approx. rental of the same will be Rs.20000.00 per month.
3.2 Plant and Machinery

S.N. Description Amount Qty Amount

1 Multani mitti grinding machine 3,70,000 1 3,70,000

2 Filtering machine 1,72,000 1 1,72,000

3 Packaging machine 2,10,000 1 2,10,000

4 Other Equipment’s - - 50,000

Sub Total 8,02,000

GST 1,44,360

Total 9,46,360

Note: Total Machinery cost shall be Rs 9.46 lakh including GST and Transportation Cost.

3.3 Power Requirement

The borrower shall require power load of 15 KW which shall be applied with Power
Corporation.
However, for standby power arrangement the borrower shall also purchase DG Set .

3.4 Manpower Requirement

Manpower required for this manufacturing unit is depend on the land, type of
manufacturing unit etc. For this unit around 11 people will be required.

3.5 Other Utilities

General electrical apparatus, Water, Telephone, etc.

 4. FINANCIALS

PROJECTED BALANCE SHEET (in Lacs)

PARTICULARS 1st year 2nd year 3rd year 4th year 5th year
Liabilities
Capital
Opening Balance 2.11 3.36 5.44 8.37
Add:‐ Own Capital 1.81
Add:‐ Retained Profit 3.30 4.45 5.58 6.93 8.39
Less:‐ Drawings 3.00 3.20 3.50 4.00 4.50

Closing Balance 2.11 3.36 5.44 8.37 12.26

Term Loan 9.09 6.82 4.54 2.27 ‐
Working Capital Limit 6.05 6.05 6.05 6.05 6.05
Sundry Creditors 1.47 1.73 1.80 2.06 1.81
Provisions & Other Liabilities 0.50 0.75 0.90 1.08 1.20
TOTAL : 19.22 18.70 18.73 19.83 21.32
Assets
Fixed Assets ( Gross) 11.36 11.36 11.36 11.36 11.36
Gross Depreciation 1.67 3.09 4.30 5.34 6.22
Net Fixed Assets 9.69 8.27 7.06 6.02 5.14

Current Assets
Sundry Debtors 3.90 4.10 4.40 5.05 6.22
Stock in Hand 4.30 5.03 5.80 6.62 7.49
Cash and Bank 0.33 0.20 0.27 0.53 0.66
Loans and advances/other current assets 1.00 1.10 1.20 1.60 1.80
TOTAL : 19.22 18.70 18.73 19.83 21.32
PROJECTED CASH FLOW STATEMENT (in Lacs)

PARTICULARS 1st year 2nd year 3rd year 4th year 5th year
SOURCES OF FUND
Own Margin 1.81
Net Profit 3.30 4.45 5.90 7.60 9.44
Depriciation & Exp. W/off 1.67 1.42 1.21 1.03 0.88
Increase in Cash Credit 6.05 ‐ ‐ ‐ ‐
Increase In Term Loan 10.22 ‐ ‐ ‐ ‐
Increase in Creditors 1.47 0.26 0.07 0.26 ‐ 0.24
Increase in Provisions & Other liabilities 0.50 0.25 0.15 0.18 0.12

TOTAL : 25.02 6.37 7.34 9.07 10.20

APPLICATION OF FUND
Increase in Fixed Assets 11.36
Increase in Stock 4.30 0.73 0.77 0.82 0.87
Increase in Debtors 3.90 0.21 0.30 0.65 1.17
Increase in loans and advances 1.00 0.10 0.10 0.40 0.20
Repayment of Term Loan 1.14 2.27 2.27 2.27 2.27
Drawings 3.00 3.20 3.50 4.00 4.50
Taxation ‐ ‐ 0.32 0.67 1.05
TOTAL : 24.69 6.51 7.26 8.81 10.07

Opening Cash & Bank Balance ‐ 0.33 0.20 0.27 0.53

Add : Surplus 0.33 ‐0.14 0.08 0.26 0.13
Closing Cash & Bank Balance 0.33 0.20 0.27 0.53 0.66
PROJECTED PROFITABILITY STATEMENT (in Lacs)

PARTICULARS 1st year 2nd year 3rd year 4th year 5th year
Capacity Utilisation % 40% 45% 50% 55% 60%
SALES
MULTANI MUD 77.95 94.69 110.03 126.34 143.60

Total 77.95 94.69 110.03 126.34 143.60

COST OF SALES
Raw material cost 44.16 51.84 60.00 68.64 77.76
Electricity Expenses 2.88 3.46 4.15 4.98 5.97
Depreciation 1.67 1.42 1.21 1.03 0.88
Wages & labour 7.68 8.83 9.89 10.88 11.97
Repair & maintenance 1.95 2.37 2.75 3.16 3.59
Consumables 4.29 5.21 6.05 6.95 7.90

Cost of Production 62.63 73.13 84.05 95.64 108.07

Add: Opening Stock ‐ 2.09 2.44 2.80 3.19
Less: Closing Stock 2.09 2.44 2.80 3.19 3.60
Cost of Sales 60.54 72.78 83.69 95.25 107.66
GROSS PROFIT 17.41 21.91 26.34 31.08 35.94
Salary to Staff 7.08 9.20 11.51 13.81 16.01
Interest on Term Loan 1.00 0.89 0.64 0.39 0.14
Interest on working Capital 0.67 0.67 0.67 0.67 0.67
Rent 2.40 2.64 2.90 3.19 3.51
Selling & Administration Expenses 2.96 4.07 4.73 5.43 6.17
TOTAL 14.11 17.47 20.44 23.48 26.50
NET PROFIT 3.30 4.45 5.90 7.60 9.44
Taxation ‐ ‐ 0.32 0.67 1.05
PROFIT (After Tax) 3.30 4.45 5.58 6.93 8.39
CALCULATION OF D.S.C.R

PARTICULARS 1st year 2nd year 3rd year 4th year 5th year

CASH ACCRUALS 4.97 5.87 6.80 7.96 9.27

Interest on Term Loan 1.00 0.89 0.64 0.39 0.14
Total 5.98 6.75 7.43 8.35 9.40

REPAYMENT
Instalment of Term Loan 1.14 2.27 2.27 2.27 2.27
Interest on Term Loan 1.00 0.89 0.64 0.39 0.14

Total 2.14 3.16 2.91 2.66 2.41

DEBT SERVICE COVERAGE RATIO 2.79 2.14 2.56 3.14 3.91

AVERAGE D.S.C.R. 2.86
COMPUTATION OF CLOSING STOCK & WORKING CAPITAL (in Lacs)
PARTICULARS 1st year 2nd year 3rd year 4th year 5th year
Finished Goods
(10 Days) 2.09 2.44 2.80 3.19 3.60
Raw Material
(15 Days) 2.21 2.59 3.00 3.43 3.89
Closing Stock 4.30 5.03 5.80 6.62 7.49

COMPUTATION OF WORKING CAPITAL REQUIREMENT

TRADITIONAL METHOD (in Lacs)
Particulars Amount Own Margin Bank Finance
Finished Goods & Raw Material 4.30
Less : Creditors 1.47
Paid stock 2.82 10% 0.28 90% 2.54
Sundry Debtors 3.90 10% 0.39 90% 3.51
6.72 0.67 6.05
MPBF 6.05
WORKING CAPITAL LIMIT DEMAND ( from Bank) 6.05
 REPAYMENT SCHEDULE OF TERM LOAN
Interest 11.00%
Closing
Year Particulars Amount Addition Total Interest Repayment Balance
ist Opening Balance ‐
1st month 10.22 10.22 ‐ ‐ 10.22
2nd month 10.22 ‐ 10.22 0.09 ‐ 10.22
3rd month 10.22 ‐ 10.22 0.09 ‐ 10.22
4th month 10.22 ‐ 10.22 0.09 ‐ 10.22
5th month 10.22 ‐ 10.22 0.09 ‐ 10.22
6th month 10.22 ‐ 10.22 0.09 ‐ 10.22
7th month 10.22 ‐ 10.22 0.09 0.19 10.03
8th month 10.03 ‐ 10.03 0.09 0.19 9.85
9th month 9.85 ‐ 9.85 0.09 0.19 9.66
10th month 9.66 ‐ 9.66 0.09 0.19 9.47
11th month 9.47 ‐ 9.47 0.09 0.19 9.28
12th month 9.28 ‐ 9.28 0.09 0.19 9.09
1.00 1.14
2nd Opening Balance
1st month 9.09 ‐ 9.09 0.08 0.19 8.90
2nd month 8.90 ‐ 8.90 0.08 0.19 8.71
3rd month 8.71 ‐ 8.71 0.08 0.19 8.52
4th month 8.52 ‐ 8.52 0.08 0.19 8.33
5th month 8.33 ‐ 8.33 0.08 0.19 8.14
6th month 8.14 ‐ 8.14 0.07 0.19 7.95
7th month 7.95 ‐ 7.95 0.07 0.19 7.76
8th month 7.76 ‐ 7.76 0.07 0.19 7.57
9th month 7.57 ‐ 7.57 0.07 0.19 7.38
10th month 7.38 ‐ 7.38 0.07 0.19 7.19
11th month 7.19 ‐ 7.19 0.07 0.19 7.01
12th month 7.01 ‐ 7.01 0.06 0.19 6.82
0.89 2.27
3rd Opening Balance
1st month 6.82 ‐ 6.82 0.06 0.19 6.63
2nd month 6.63 ‐ 6.63 0.06 0.19 6.44
3rd month 6.44 ‐ 6.44 0.06 0.19 6.25
4th month 6.25 ‐ 6.25 0.06 0.19 6.06
5th month 6.06 ‐ 6.06 0.06 0.19 5.87
6th month 5.87 ‐ 5.87 0.05 0.19 5.68
7th month 5.68 ‐ 5.68 0.05 0.19 5.49
8th month 5.49 ‐ 5.49 0.05 0.19 5.30
9th month 5.30 ‐ 5.30 0.05 0.19 5.11
10th month 5.11 ‐ 5.11 0.05 0.19 4.92
11th month 4.92 ‐ 4.92 0.05 0.19 4.73
12th month 4.73 ‐ 4.73 0.04 0.19 4.54
0.64 2.27
4th Opening Balance
 1st month 4.54 ‐ 4.54 0.04 0.19 4.35
2nd month 4.35 ‐ 4.35 0.04 0.19 4.17
3rd month 4.17 ‐ 4.17 0.04 0.19 3.98
4th month 3.98 ‐ 3.98 0.04 0.19 3.79
5th month 3.79 ‐ 3.79 0.03 0.19 3.60
6th month 3.60 ‐ 3.60 0.03 0.19 3.41
7th month 3.41 ‐ 3.41 0.03 0.19 3.22
8th month 3.22 ‐ 3.22 0.03 0.19 3.03
9th month 3.03 ‐ 3.03 0.03 0.19 2.84
10th month 2.84 ‐ 2.84 0.03 0.19 2.65
11th month 2.65 ‐ 2.65 0.02 0.19 2.46
12th month 2.46 ‐ 2.46 0.02 0.19 2.27
0.39 2.27
5th Opening Balance
1st month 2.27 ‐ 2.27 0.02 0.19 2.08
2nd month 2.08 ‐ 2.08 0.02 0.19 1.89
3rd month 1.89 ‐ 1.89 0.02 0.19 1.70
4th month 1.70 ‐ 1.70 0.02 0.19 1.51
5th month 1.51 ‐ 1.51 0.01 0.19 1.33
6th month 1.33 ‐ 1.33 0.01 0.19 1.14
7th month 1.14 ‐ 1.14 0.01 0.19 0.95
8th month 0.95 ‐ 0.95 0.01 0.19 0.76
9th month 0.76 ‐ 0.76 0.01 0.19 0.57
10th month 0.57 ‐ 0.57 0.01 0.19 0.38
11th month 0.38 ‐ 0.38 0.00 0.19 0.19
12th month 0.19 ‐ 0.19 0.00 0.19 ‐
0.14 2.27
DOOR TO DOOR 60 MONTHS
MORATORIUM PERIOD 6 MONTHS
REPAYMENT PERIOD 54 MONTHS
Assumptions:

 Production Capacity of Multani Mud is 1600 kg/Day. First year, Capacity has
been taken @ 40%.
 Working shift of 8 hours per day has been considered.
 Raw Material stock is for 15 days and finished goods Closing Stock has been
taken for 10 days.
 Credit period to Sundry Debtors has been given for 10-15 days.
 Credit period by the Sundry Creditors has been provided for 7-10 days.
 Depreciation and Income tax rates has been taken as per the Income tax Act, 1961.
 Interest on working Capital Loan and Term loan has been taken at 11%.
 Salary and wages rates are taken as per the Current Market Scenario.

 Power Consumption has been taken at 15 KW.

 Selling Prices & Raw material costing has been increased by 3% & 2%
respectively in the subsequent years.
 DISCLAIMER

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considering specific requirement of the project, capacity and type of plant and
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intended for general guidance only and must not be considered a substitute for a
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