Business: Muffin Production

ASSUMPTIONS FOR DPR (Detailed Project Report) PREPARATION

1. Production Capacity of baked products (muffins) is 20 Kgs per day.

2. Working hours/Day: 8 h (7h for production and 1h for regular maintenance and other activities)
3.Total batches per day: 5
4. No of working days in a year: 300 days (150 days working in 1st year and remaining 150 days on pr
5. Raw Material stock is for 10 days and finished goods Closing Stock for 7 days.
6. Interest on working Capital Loan and Term loan are taken at 10%.
7. Salary and wages rates are taken as per the Current Market Scenario.
8. Power Consumption is considered at 15 kW.
9. Selling Prices & Raw material costing is considered fixed for the calculation.
10. Means of finance (Self contribution: 25%, Bank loan: 75%)
Table 1: Sample expenditure norms for muffins production business

1. Fixed expenditure
Sl No. Particulars Nos

A Land & Site Development

1 Land purchasing Nil
2 Registration charges Nil
Sub Total
B Building Structure
1 Raw material storage unit (with refrigeration ) 1
2 Main production area 1
3 Quality control lab 1
4 storage unit 1
5 Office/ staff room/ Restroom 1
7 Boundary wall 1
Subtotal
6 Architect Plan Fees
Subtotal
C Plant & Machinery
1 Planetary mixer(10L) 1
2 Baking oven 1
3 Packaging machine 1
4 Weighing machine 1
5 Muffin moulds 20
6 Labelling and printing machine 1
7 Water pump 1
8 Water storage tank 1
9 RO water plant (500 l/h) 1
Sub Total

D Electrification
1 Electric connection
 2 Wiring
Subtotal

E Water line connection

1 Pipeline connection
2 PVC connection
Subtotal

F Miscellaneous Fixed Assets

1 Furniture and other equipment

G Pre-operative Expenses
1 Legal expenses, Start-up expenses, Establishment cost, consultancy fees, trials and others.
Total of fixed asset
2. Variable expenditure
A Raw material Expenditure Unit rate per kg /L/pcs(₹
1 Wheat flour(kg) 40
2 Egg(pcs) 6.33
3 Sugar(kg) 42
4 soyabean oil(L) 110
5 Baking powder(kg) 110
6 Baking soda(kg) 300
7 Milk (L) 50
Dry fruits(kg) cashew 584
8 raisin 72
9 Toppings (tutti frutti)(kg) 250
10 vanilla essence(L) 710
11 Salt(kg) 26
12 Parchment paper-A4 size(sheet) 1.94
Total raw material expenditure

B Labour/staffs Expenditure No. of staff

1 Supervisor/Manager 1
2 Accountant 1
3 Skilled operator 2
4 Unskilled operator 2
5 Storekeeper 1
6 Security staff 1
7 Helper 1
Annual Total labour Expenditure

C Fuel & electricity Charges

Daily consumption (Unit) 50
`per unit electricity charge (₹) 7.5
Daily electricity charges (₹) 375
no. of working days in a year 300
Annual fuel & electricity charges (₹) 112500

D Other charges rate (%)

 1 Transport Expenditure at 0.5% revenue/year 0.005
2 Packaging Expenditure (Rs) at 1% revenue/year 0.01
3 Advertisement Expenditure at 1% revenue/year 0.01
4 Insurance amount at 0.5% revenue/year 0.005
5 Depreciation on fixed capital (10% annum) 0.1
Total Expenditure (₹)

Total variable cost(₹)

Profitability table

Sl no. 1 yr
1 Yield per day (kg) 100
2 No. of working days 150
3 Total Yield per year (kg) 3750
4 Selling price/kg 250
5 Gross income/Benefit 937500

Expenditure
Particulars 1st Year
Capital Cost 5,178,190
Recurring cost 1,313,533
Total cost 6,491,723
Income/Benefit 937500
Income/Benefit (Rs. in Lakhs) 9.375
Net income -5,554,223
Net income (in lakhs) -55.5422275

Financial Analysis
Particulars 1
1 Total cost (Rs.) 6,491,723
2 Total cost (Rs. in Lakhs) 64.9172275
3 Income/Benefit (Rs.) 937500
4 Income/Benefit (Rs. in Lakhs) 9.375
5 Net Income/Benefit (Rs.) -5,554,223
6 Net Income/Benefit (Rs. in Lakhs) -55.5422275
7 Discounting factor @ 15% 0.869565217391304
8 Discounted Cost @ 15% DF 56.4497630434783
9 Discounted Benefit @ 15% DF 8.15217391304348
10 NPW (Net Present Worth) @ 15% DF 41.9774721719228
11 (Benefit Cost Ratio) BCR @ 15% DF 1.27549887400893
12 IRR (%) 54%

Debt-Equity Ratio

Sl.no. Amount (Rs. in Lakhs)

Description
1 Debt 48.69
2 Equity 16.23
3 Debt-Equity Ratio 3
Term Loan Repayment
 Output
Number of batch
Production per batch (kg)
Production per day(kg)
Production per year(kg)
Selling price of product/kg
Revenue
e and other activities)

emaining 150 days on preliminary and preoperative activities i.e. 25% production capacity in 1st year)

Unit Basis

Sq ft Nil
Nil Nil

Sq ft 18X10
Sq ft 50X40
Sq ft 25X10
Sq ft 20X10
Sq ft 15X10

Nil Nil
Nil Nil
Nil Nil
Nil Nil
Nil Nil
Nil Nil
Nil Nil
Nil Nil
Nil Nil
cy fees, trials and others.

Quantity required per day (kg) No. of working days in the year
14.4 300
200 300
12 300
6 300
1.1 300
0.55 300
23 300
0.15 300
0.0625 300
4.2 300
0.015 300
0.35 300
600 300

Labour Expenditure per month (₹) Yearly labour Expenditure (₹)

20000 240,000
15000 180,000
15000 180,000
10000 120,000
7500 90,000
8000 96,000
6000 72,000
81500 978,000

For 1st year 0

150
56250

Expenditure (₹) For 1st year

 37500 4687.5
75000 9375
75000 9375
37500 4687.5
517819 517819
742819 545944

3,863,674

2 yr 3 yr
100 100
300 300
30000 30000
250 250
7500000 7500000

2nd Year 3rd Year

0 0
3,863,674 3,863,674
3,863,674 3,863,674
7500000 7500000
75 75
3,636,326 3,636,326
36.36326 36.36326

Year
2 3
3,863,674 3,863,674
38.63674 38.63674
7500000 7500000
75 75
3,636,326 3,636,326
36.36326 36.36326
0.756143667296787 0.657516232431988
29.2149262759924 25.4042837182543
56.710775047259 49.3137174323991

:1

Means of Finance

1
2
:1
Total Financial Outlay
Margin @25%
Bank loan
 5
20
100
30000
250
7500000

tion capacity in 1st year)

Unit Expenditure(₹) Quanity (Sq.ft)

1000 3000
Nil 8%

300 180
350 2000
400 250
250 200
250 150
250 200

2%

50,000 Nil
125,000 Nil
300,000 Nil
850 Nil
434 Nil
7,330 Nil
4,000 Nil
21,000 Nil
60,000 Nil
Annual Raw Material Expenditure (₹) No. of working days in 1st year
172800 75
379800 75
151200 75
198000 75
36300 75
49500 75
345000 75
26280 75
1350 75
315000 75
3195 75
2730 75
349200 75
2030355

1st year labour expenditure (₹)

50000
37500
37500
25000
18750
20000
15000
203750
 4 yr 5 yr
100 100
300 300
30000 30000
250 250
7500000 7500000

4th Year 5th Year

0 0
3,863,674 3,863,674
3,863,674 3,863,674
7500000 7500000
75 75
3,636,326 3,636,326
36.36326 36.36326

r
4 5
3,863,674 3,863,674
38.63674 38.63674
7500000 7500000
75 75
3,636,326 3,636,326
36.36326 36.36326
0.571753245593033 0.49717673529829
22.0906814941342 19.2092882557689
42.8814934194775 37.2882551473717

Particulars Unit

Term Loan %
Own contribution %
Total Financial Outlay 64.92
Margin @25% 16.23
Bank loan 48.69
Total Expenditure (₹)

3000000
240000
3240000

54000
700000
100000
50000
37500
50000
991500
19830
1011330

50,000
125,000
300,000
850
8,680
7,330
4,000
21,000
60,000
576,860

55000
 65000
120000

35000
40000
75000

55000

100000
5,178,190

1st year raw material expenditure (₹)

43200
94950
37800
49500
9075
12375
86250
6570
337.5
78750
798.75
682.5
87300
507588.75
Total

152.368942787628 104.5674 1.858576

194.346414959551 194.3464

Amount
Unit Rate (Rs. in
Lakhs)
75 48.69
25 16.23
ASSUMPTIONS FOR DPR (Detailed Project Report) PREPARATION
1. Production Capacity of baked products (muffins) is 25kg per batch.
2. Working hours/Day: 8 h (7h for production and 1h for regular maintenance and other activities)
3. Total batches per day: 5 (3 batches for 1st year, 4 batches for 2nd year and 5 batches from 3rd year on
4. No of working days in a year: 300 days(200 days for 1st year and 300 days from 2nd year onwards)
5. Raw Material stock is for 21 days and finished goods Closing Stock for 10 days.
6. Interest on working Capital Loan and Term loan are taken at 10%.
7. Salary and wages rates are taken as per the Current Market Scenario.
8. Daily Power Consumption is considered at 40 KWH (24 KWH for 1st year, 32KWH for 2nd year and 40K
9. Means of finance (Self contribution: 25%, Bank loan: 75%)

Machine capacity per batch- 30 kg

Raw material requirement per batch- 27 kg
Final output per batch – 25 kg
Final product to be packed in 1kg packet.
Number of packets per batch – 25 packets

Total area=3000ft2
Project duration=5yr
nce and other activities)
and 5 batches from 3rd year onwards)
ys from 2nd year onwards)

, 32KWH for 2nd year and 40KWH from 3rd year onwards)

Production of muffins per batch

batch- 27 kg Production Capacity Kg
1 year
st
70% 17.5
2nd year 75% 18.75
3rd year 80% 20
4 year
th
85% 21.25
5 year
th
90% 22.5
Table 1: Sample expenditure norms for muffin production business

1. Fixed expenditure
Sl No. Particulars
A Land & Site Development
1 Land purchasing
2 Registration charges
Sub Total
B Building Structure
1 Raw material storage unit
2 Main production area
3 Quality control lab
4 Refrigeration and storage unit
5 Office/ staff room/ Restroom
7 Boundary wall
Subtotal
6 Architect Plan Fees
Subtotal
C Plant & Machinery
1 Planetary mixer(20L)
2 Baking oven
3 Packaging machine
4 seiving machine
5 muffin batter dispositor machine
6 Weighing machine
7 Muffin moulds
8 color label printing machine
9 computer
10 Water pump
11 Water storage tank (1000 lit)
12 RO water plant (500 lit/hr)
Sub Total

D Electrification
1 Electric connection
2 Wiring
Subtotal

E Water line connection

1 Pipeline connection
2
Subtotal

F Miscellaneous Fixed Assets

1 Furniture and other equipment

G Pre-operative Expenses (legal expenses, start-up expenses, Consultancy fees, trials, others)
 Total of fixed asset

2. Variable expenditure
A Raw material Expenditure
1 Wheat flour(kg)
2 Egg(pcs)
3 Sugar(kg)
4 Soyabean oil(L)
5 Baking powder(kg)
6 Milk (L)
7 Dry fruits(kg) cashew
8 Raisin
9 Toppings (cherry)(kg)
10 Vanilla Essence(L)
11 Salt(kg)
12 Parchment paper cup (pcs)
Total raw material expenditure
with @3% incremental cost

B Labour/staffs Expenditure
1 Manager
2 Accountant
3 Skilled operator
4 Unskilled operator
5 Storekeeper
6 Security staff
7 Helper
Annual Total labour Expenditure
with @3% incremental cost

land tax
Tax amount

Fuel & electricity Charges

Daily consumption (Unit)
C Per unit electricity charge (₹)
Daily electricity charges (₹)
No. of working days in a year
Annual fuel & electricity charges (₹)
with @3% incremental cost

Other charges
D Transport Expenditure at 0.5% revenue/year
1 Packaging Expenditure (Rs) at 1% revenue/year
2 Advertisement Expenditure at 1% revenue/year
3 Insurance amount at 0.5% revenue/year
5 Total Expenditure (₹)
with @3% incremental cost

Particulars
Capital Cost

Recurring cost @ 3% Compounding factor

Total cost
Nos Unit

sq ft

1 Sq ft
1 Sq ft
1 Sq ft
1 Sq ft
1 Sq ft
1

2 Nil
2 Nil
1 Nil
1
1
1 Nil
22 Nil
1 Nil
1
2 Nil
1 Nil
1 Nil
Unit rate per kg. (₹) Quantity required per batch (kg) 1st year expenditure

25 8.334 125008.06
4 35 83225.81
40 4.166 99987.10
75 2.083 93737.90
50 0.191 5733.87
42 8.334 210016.80
448 1.081 290477.42
135 0.665 53825.81
126 3.870 292572.00
162 0.005 470.32
7.5 0.450 2025.00
0.1 625.000 37500.00
28.856 18.76 1294580.09
1294580

No. of staff Labour Expenditure per month (₹) 1st year Labour expenditure (₹)
1 13500 94500
1 11500 80500
2 9500 66500
2 7500 52500
1 6500 45500
1 6500 45500
1 6000 42000
427000
427000

Quantity (sqft) Amount (₹) 1styr

3000 1000 1000

1st year 2nd year 3rd year

24 32 40
10 10 10
240 320 400
200 300 300
48000 96000 120000
48000 98880 127308

rate (%) For 1st year for 2nd year

0.005 12390.00 26887.50
0.01 24780.00 53775.00
0.01 24780.00 53775.00
0.005 12390.00 26887.50
74340 161325
 74340 166165

1st Year 2nd Year 3rd Year

3708319 0 0

1843920 3685840 4568501

5552239 3685840 4568501
Basis Unit Expenditure(₹) Quanity (Sq.ft)

nil 0 0

25X15 400 375

40X30 450 1200
20x16 450 320
25X15 400 375
15X10 350 224
300 506
3000
2.0%

Nil 55,000 Nil

Nil 285,000 Nil
Nil 360,000 Nil
58,000
500,000
Nil 6,990 Nil
Nil 780 Nil
Nil 327,105 Nil
28,500
Nil 3,540 Nil
Nil 10,000 Nil
Nil 90,000 Nil
 Annual raw material expenditure
2nd year expenditure 3rd year expenditure 4th year expenditrure

250016.13 312520.16 312520.16

166451.61 208064.52 208064.52
199974.19 249967.74 249967.74
187475.81 234344.76 234344.76
11467.74 14334.68 14334.68
420033.60 525042.00 525042.00
580954.84 726193.55 726193.55
107651.61 134564.52 134564.52
585144.00 731430.00 731430.00
940.65 1175.81 1175.81
4050.00 5062.50 5062.50
75000.00 93750.00 93750.00
2589160.18 3236450.23 3236450.23
2666835 3433550 3536557

2nd year Labour expenditure (₹) 3rd year Labour expenditure (₹) 4th year Labour expenditure (₹)
162000 162000 162000
138000 138000 138000
114000 114000 114000
90000 90000 90000
78000 78000 78000
78000 78000 78000
72000 72000 72000
732000 732000 732000
753960 776579 799876

2styr 3rdyr 4thyr

1030 1061 1093

4th year 5th year

40 40
10 10
400 400
300 300
120000 120000
131127 135061

for 3rd year for 4th year for 5th year

36300.00 39046.88 41850.00
72600.00 78093.75 83700.00
72600.00 78093.75 83700.00
36300.00 39046.88 41850.00
217800 234281 251100
231064 256005 282615

4th Year 5th Year

0 0

4723565 4884202
4723565 4884202
Total Expendit ure (₹)

0
95,000
95000

150000
540000
144000
150000
78400
151800
1214200
24284
1238484

110000
570000
360000
58000
500000
6990
17160
327105
28500
7080
10000
90000
2084835

50000
60000
110000

40000

40000

60000

80000
3708319
No. of production days in year
5th year expenditure 1st year 2nd year 3rd year 4th year 5th year

312520.16 200 300 300 300 300

208064.52 200 300 300 300 300
249967.74 200 300 300 300 300
234344.76 200 300 300 300 300
14334.68 200 300 300 300 300
525042.00 200 300 300 300 300
726193.55 200 300 300 300 300
134564.52 200 300 300 300 300
731430.00 200 300 300 300 300
1175.81 200 300 300 300 300
5062.50 200 300 300 300 300
93750.00 200 300 300 300 300
3236450.23
3642653

5th year Labour expenditure (₹)

162000
138000
114000
90000
78000
78000
72000
732000
823872

5thyr
1126
 Quantity required per day
1st year (3 batches per day) 2nd year (4 batches per day)

25.00 33.34
104.03 138.71
12.50 16.66
6.25 8.33
0.57 0.76
25.00 33.34
3.24 4.32
1.99 2.66
11.61 15.48
0.01 0.02
1.35 1.80
1875.00 2500.00
 Quantity required per day
3rd year (5 batches per day) 4th year (5 batches per day )

41.67 41.67
173.39 173.39
20.83 20.83
10.42 10.42
0.96 0.96
41.67 41.67
5.40 5.40
3.32 3.32
19.35 19.35
0.02 0.02
2.25 2.25
3125.00 3125.00
5th year (5 batches per day)

41.67
173.39
20.83
10.42
0.96
41.67
5.40
3.32
19.35
0.02
2.25
3125.00
Profitability table

Sl no. 1 yr 2 yr 3 yr 4 yr
1 No of batch per year 3 4 5 5
2 Targeted Yield per batch (kg) 25 25 25 25
3 Targeted Yield per day (kg) 75 100 125 125
4 No. of working days 200 300 300 300
5 Total Yield per year (kg) 10500 22500 30000 31875
6 Selling price/kg 236 239 242 245
7 Gross income/Benefit 2478000 5377500 7260000 7809375
8 Gross income/Benefit (in lakh) 24.78 53.78 72.60 78.09
 5 yr
5
25
125
300
33750
248
8370000
83.70
Financial Analysis Year
Particulars 1 2 3
Capital Cost 3708319
Recurring cost 1843920 3685840 4568501
1 Total cost (Rs.) 5552239 3685840 4568501
3 Income/Benefit (Rs.) 2478000 5377500 7260000
5 Net Income/Benefit (Rs.) -3074239 1691660 2691499
7 Discounting factor @ 15% 0.8696 0.7561 0.6575
8 Discounted Cost @ 15% DF 4828034 2787024 3003863
9 Discounted Benefit @ 15% DF 2154783 4066163 4773568
10 NPW (Net Present Worth) @ 15% DF 3872971
11 (Benefit Cost Ratio) BCR @ 15% DF 1.25
12 IRR (%) 67%
Year
4 5 Total
3708319
4723565 4884202 19706028
4723565 4884202 23414347
7809375 8370000 31294875
3085810 3485798 7880528
0.5718 0.4972
2700714 2428312 15747947
4465036 4161369 19620918
Debt-Equity Ratio
Sl.no. Description
1 Debt 41.64
2 Equity 13.88
3 Debt-Equity Ratio 3 :1

Term Loan Repayment

Amount (Rs. in lakhs)

year Loan O/S at beginning of the year interest @10%
2 41.64 4.16
3 37.14 3.71
4 27.64 2.76
5 14.14 1.41
 Means of Finance
Particulars Unit
1 Term Loan %
2 Own contribution %
3 Total %

Total Financial Outlay 55.52

Margin @25% 13.88
Bank loan 41.64

net surpluss repayment of principal repayment of interest total outgo net amount in hand
16.92 4.50 4.16 8.66 8.25
26.91 9.50 3.71 13.21 13.70
30.86 13.50 2.76 16.26 14.59
34.86 14.14 1.41 15.56 19.30
13.1367699614436
 Unit Rate Amount Amount (Rs. in lakhs)
75 4164179 41.64
25 1388060 13.88
100 5552239

loan O/S at the end of the yearDSCR

37.14 1.95
27.64 2.04
14.14 1.90
0.00 2.24
Sum 8.13
average 2.03