33351007-Flour-Mill

Feasibility Report on United Flour Mill

(AL-ALAQ)

READ! AND THY LORD IS THE MOSTBOUNTENOUS, WHO TEACHETH

BY THE PEN, TEACHETH MAN THATWHICH HE KNEW NOT.

ALLAH DOES NOT LOOK AT YOURFORMS AND POSSESSIONS

BUT HE LOOKS AT YOUR HERTS ANDDEEDS.

(MUSLIM)

U 4 YOU Session 2008-101


SMALL INDUSTRIAL ESTATE

BAHAWALPUR




OUR PARENTS&

RESPECTED TEACHER

MR JAVED IQBAL

DEDICATED TO


PREFACE

Department of Commerce, The Islamia University Bahawalpur has

always been admirable in its efforts to equip the future executives with arms

of creativity, flexibility and adaptability to meet the challenges offered by

fast changing business environment.

To achieve the above goals the department is providing both text and

practical knowledge to its students with its available resources. Text

knowledge is very well transferred to the students within the premises of the

department; Practical knowledge requires the kind co-operation of various

business organization of the country. Faculty members are always trying

their best to ask the students to explore the market by assigning these

different field activities and to conduct the “Feasibility Report”.

This report has been made on “UNITED FLOUR MILLS”

The key function of our work was to make Feasibility study and Feasibility

Report.

We have done our best efforts to complete this report efficiently and

effectively with all abilities. We hope this report fulfills the criteria and

expectations of Department of Commerce. We have tried our best to make it

analytical as well as informative.

May Allah help us in this world.



ACKNOWLEDGMENT

We first thanks to Allah, The Almighty who bestowed knowledge,

health, vigor, to complete this report.

“Life is a learning experience”. We have learned the validity of this

statement time and time again. Every time we think we know something, we

look back a year later and realize how little we know and how much we have

learned. This Feasibility Report has convinced us again, not in the learning

but also in terms of the vast team of talented people that take part in

creating this report. We believe each person plays a piece of a puzzle to

make the complete picture, some pieces are bigger then others, but without

anyone piece the picture would not be completed.

We feel great pleasure and honor to express our gratitude from the

citadel of our hearts to the people whom we met, for their cooperation. Their

sympathetic behavior has an ever-lasting impression on the pages of our

memory.

We also give honor to (In charge of Project Appraisal) Mr. Javed

Iqbal who provide us an opportunity to get practical experience in fieldwork

and whose guidance remained with us during completing this report.

We are specially thankful to Ch Masood Majeed (owner of ASIA

Flour Mill located in state of small industries Bahawalpur)who provide us

necessary information and show us the working of flour mill.

We also wordless to pay our humble gratitude to our parent, who

have supported us to reach the point where we stand now and have been a

great and enormous source of inspiration for us throughout the life.



TABLE OF CONTENTS

Sr# Name Page No

1 PROJECT SUMMARY 1

2 ASSUMPTIONS 8

3 EXECUTIVE SUMMARY 9

4 MANAGEMENT 10

5 Estimated Cost of Land 11

6 Estimated Cost of Civil Works 11

7 Estimated Cost of Machinery 12

8Estimated cost of the Project and interset during construction

13

9 Initial Net Working Capital Requirement 14

10 Estimated Income Statement 15

11 Production at 100% Capacity 16

12 Capacity Utilized 17

13 Raw Material: 18

14 Estimated Cost of Labour 18

15 Year Wise Wages of Labor: 19

16 Manufacturing Overhead Cost: 20

17 Administrative And General Expenses 21

18 Year Wise Administrative Salaries: 22

19 Year Wise Depreciation: 23

20 Pre-Production Expenses: 23

21 Cash Flow Statement 24



22 Balance Sheet 25

23Calculation of Internal Financial Rate of Return and Loan Repayment Schedule

26

24 Financial ratios 27

25 Financial Plan 28

27 Market Analysis 29

28 Technical Analysis 30

29 Manufacturing process/flow chart/diagram 31

30 Personel Analysis 33

31 SWOT Analysis 34

32 List of Machinery 35

33 Conclusion and Recomendations

34 Special Thanks



PROJECT SUMMARY

Name of Project. Unitied Flour Mills

Location. Small industries estate bahawalpur

Nature of Industry. Flour Mills - A new Project

Product range Flour,Maida and bran

Installed Capicity 8 body flour mill

1.M.FARHAN KHIZAR

2.Amir Fraz

3 humaira kanwal

Purpose of Loan. To meet the Capital cost of the Project.

Brief Description of Machinery

Machinery would be purchased from local suppliers of machinery having good reputation in market in this regard.

Estimated cost of the project Debt60% 40,687000 Eqyity40%

27,125000

total 67,812000

Names of loans PicicLong term loan

Name of civil contractor



Name of machinery supplier M younas malikSatluj industries Small industries estate shop 5’6Cell no: 03017711033

Introduction

Wheat is one of the most important products for all of region of the world. Without wheat

human life is uncompleted. It is become more important not only by the fact of

improvement international value. It’s a first food item that an important for all over the

world. That business also important for a Pakistan. And last decades the flour mill are

increase due increase in demand of flour.

Reasons for Motivation

1. Availability of raw material

2. Availability of utilities

3. Availability of labor

4. Technical facilities

5. Whole year producing process

6. Large demand of the people.

7. Profitable Business

Proposed Location

The most feasible location for the plant would be in or near the wheat producing regions

of Punjab. This is advisable as transportation costs would be reduced and contact with

growers/farmers directly can be made. It is usually the case that the farmers are willing to

approach the manufacturing plant directly if it is located near to their lands. However, the

availability of trained personnel in the locality has to be kept in mind as well as the

availability of suitable residences because costs could rise if there was a problem in the

accessibility of the location from other urban area.



Decide Location

When we make investment and open a plant than we first decide the location and study

some regard about the location. The best location of any plant is important and greater

effect on business. The business can run if all input is available. We decide location the

small industrial area of Bahawalpur followings factor should be examined.

1. Availability of raw material

The location that we decide, in that location the raw material of our plant is available.

And we also examined the input constraint. And study any short and fall of raw material

and how we can avoid that.

2. Availability of utilities

After the analyses of the raw material then we examine the utilities. For example power

water telecommunication road and other facilities. If the all facilities are available than

open a project other wise rejects.

3. Availability of labor

Then we examine labor. The workers are available for running a project.

Available of skilled labor.

Available of unskilled labor.

Wage rate.

Training of employees.

Nature of the Business

The nature of the business is partnership. Although selection totally depends upon the

choice of entrepreneur. This business is based on the partnership and registered under

partnership act 1932.



Name

We decide that the name of our flour mill is Bahawal Flour Mill.

Covered Area The total area, which we want to establish a Flour mill, is 2 acres. The cost of one acre is 5million. The area required to the machinery building is 2kenal.

Human Resource Required

Labor

There are three types of the labor are required

1. Technical Labor

2. Supervisors

3. Loaders

Technical Labor

Technical labor is a permanent employee of the factory. 15 to 20 employees are required.

1. Miller.

2. Manager.

3. Shift Incharge.

4. Rule man.

5. Washer Man.

6. Silk Man.

7. Accountant.

8. Packers.

9. Others Helper.

Supervisors



These are also the permanent employee of the factory.10 to 15 employees are required.

Loaders

Loaders are the contractor employee of the company. 15to20 employees are required.

What legal aspects do I need to consider while starting my business?

While starting your business, government regulations need to be considered. These

regulations may also cover special incentives offered by the government for that

particular sector and other laws that may govern the business. You also must decide

about the form of your organization (sole proprietorship, partnership etc). Establish Flour

Mill following legal procedure is follows.

Legal Procedure

Application for license to Establish Flour Mill

Applications for licenses shall be made in Form “B” (annexed herewith as annex “A”) to

the Licensing Authority of the district in which the applicant carries on or intends to carry

on business involving the purchase, sale or storage for sale of food grains in wholesale

quantities. To obtaining license applicant have to undertake on the application Form that

he agrees to abide the conditions of license given in Form “A” (annexed herewith as

annex “B”). If any applicant carries on such business or intends to carry on such business

in more than one district he shall apply to the District Magistrate of the district in which

he usually resides. A single application may include a request to carry on business in a

number of districts.

APPLICATION FORM FOR LINCENSE

1. Applicant's name.

2. Applicant's profession.

3. Applicant's residence.



4. Situation of applicant's place(s) of business with full particulars regarding the number

of house or premises, which he wants to get this license.

5. Place (s) of storage.

6. How long has the applicant been trading in food grains mentioned in the Schedule I to

this order and any other food grains.

7. Quantities of foodgrains handled annual during the past three years.

8. Food grains in respect of which license is required.

9. I have carefully read the conditions of license given in Form 'A' in Schedule II

appended to the West Pakistan Foodgrains (Licensing Control) Order, 1957 and I agree to

abide to them.

Date…………………….. Signature of the applicant.

9. Issuance of License

On receipt of application and on payment of a license fee of Rs. 10 for one district and

Rs. 2 for each subsequent district the licensing authority shall issue license.

10. Renewal of License

A license granted under this order shall, unless suspended, withdrawn or cancelled

continue to be in force for one year from the date of the issue of the said license but shall

be renewable annually by the licensee to the licensing authority by which the license was

granted and on payment of the renewal fee of Rs. 5 for the first district and Rs. 1 for each

subsequent district. Renewal of licenses shall be granted on the Renewal Endorsement

Form shown in Form “C” (annexed herewith as annex “D”). If any person fails to apply

and to deposit the renewal fee before the date when it is due to expire the license shall not

be renewed

Unless: -

A. the licensing authority is satisfied that there were good and sufficient reasons for the

delay; and

B. the licensee pays an extra fee of Rs. 5 for the first district and Rs. 1 for each

subsequent district.



11. Duplicate License

In the case of lost or damage of the license, a duplicate license shall be issued on payment

of Rs. 5 for one district and Rs. 1 for each subsequent district when it is proved to the

satisfaction of the licensing authority that the original license was lost or damage in a

bona fide manner.

No Objection Certificate. (NOC)

After the issue of license the owner get the No Objection Certificate (NOC) from the

following department.

1-Industry Department

2- Environment Department

After the issue of (NOC) the owner starts the business properly.

No Objection Certificate Fee. (NOC)

No Objection Certificate Fee (NOC) pay the to the Industry Department and Environment

Department is Rs.25000

Food Department

Food Department gives the permission of quota of wheat on the base of urban bodies live

in the district.



ASSUMPTIONS

1. Direct labour will increase every year 20%.

2. Administration salaries will be increase 20% per year.

3. Selling expense are 5% of sales revenue.

4. Depreciation will be constant over the life of assets.

5. The economic life of the project would be 10 year.

6. The entire capital outlay would be incurred one year prior to the

commencement of commercial operation.

7. Motor vehicles, furniture, fixtures, and equipments would be replaced

after 10 years.

8. Salvage value at the end of the life of the project represents recovery

of working capital original value of land, book value of land and book

value of building.



EXECUTIVE SUMMARY

We are the fresh graduates of MSc A/c & Finance double specialization.

We are going to start a new business. We have made a research and seek

different type of investment opportunities in Bahawalpur region. As

Bahawalpur is an agricultural area having two major crops wheat and

cotton. We have decided to invest the flour mill because there is much

potential in this business and raw material is easily available.

As population is increasing day by day so the demand of flour is increasing

day by day so it is a very profitable project and it will contribute in the

industrial sector of Bahawalpur region.

United Flour Mill is a registered firm established with the objective of

providing flour and to fulfill the increasing demand of Bahawalpur region.

The two buy products are Maida and Bran. The mill is intending to starts it

operations initially with one plant in Chak 12BC Yazman road Bahawalpur.

It plans to expand its network latter in others Tehsils of Bahawalpur.

Initially United Flour Mill operates at 75% of the capacity. United Flour

Mill will starts its operations in September 2010.



MANAGEMENT

1. Mr. Amir Fraz CEO

2. Mr. Farhan Khizar GM

3. Miss. Humaira kanwal MD



Annexure - IUNITED FLOUR MILLEstimated Cost of Land

Sr. No.

DescriptionArea in

Unit Cost

Rs ("000")

Marlas

Total Cost

1 Land 120 68,000

8,160

2Registratioin & Legal Requirements 1% of cost of Land 120 680 82

3 Stamp Duty 2% of Cost of Land 120 1,360 163

4 District Council Fee 1% of Cost of Land 120 680 82

Total Cost of Land 8,486

Annexure - II

UNITED FLOUR MILL Estimated Cost of Civil Works

Sr. No. DescriptionType of Unit of Covered Rate Per Rs ("000")Building Construction area Unit Total Cost

1 Machinery Hall(4 floor) RCC Square feet 10,880 700 7,616 2 Ware House(single story) RCC Square feet 5,440 400 2,176 3 office RCC Square feet 2,720 550 1,496 4 garage RCC Square feet 2,720 350 952 5 mchinery store RCC Square feet 2,720 350 952 6 work shop RCC Square feet 2,720 350 952

boundry wall 1 130000 130 main gate 1 30000 30 Total Cost of Civil Works 9,792



UNITED FLOUR MILLEstimated Cost of Machinery

Rupees ("000")Sr.No. Description Qty Unit Cost Total Cost

Grinding Section1 Ruler bodies(USSR type)(1000mm Ruler size with ruler) 8 700,000 5,600 2 Plant Shifter(4 Section each) 4 470,000 1,880 3 Bran Finisher 1 255,000 255 4 High Pressure Suction Fan 1 300,000 300 5 Battery Cyclone 1 300,000 300 6 Air lock with Cyclone with Dividing Walls 20 155,000 3,100 7 Main Pipe(size 24inch,lenth 50feet) 2,300 8 Purification Machine 1 450,000 450 9 Low Pressure Suction Fan 1 200,000 200

10 Cyclone with Pipe(size 4*8) 1 200 11 Flour,Maida,sujji,Chollar Packing Bin(Steel) 8 155,000 1,240 12 Conveyor Werm 9" Size(feet) 2000 1,000 2,000 13 Lift Pipe(4 inch with band,8 gage) 1500 1,000 1,500 14 Ruler Body Receiver with Happer 20 5,000 100 15 Production Pipe(5 inch, 16 gage) 1500 500 750

Cleaning Section1 Washing Machine Full Size USSR type Steel 1 550,000 550 2 Elevators with belt with bucket 56 feet length 5 312,000 1,560 3 Seperater Polland Type 4 300,000 1,200 4 Scorer 2 270,000 540 5 Suction Fan with Cyclone with Suction Pipe 4 325,000 1,300 6 Cocle Salender Polland type 2 550,000 1,100

OthersNut Bolt,Angle,Steel Sheet,Belt,Steel Jalli,Resham Jalli,etc 100 Total Cost of Machinery 26,525



Annexure - IIIUNITED FLOUR MILL

Estimated cost of the Project

Sr.No. Description LCY FCY Total cost ("000")1 Land 8,486 - 8,486 2 Building 9,792 - 9,792 3 Machinery 26,525 - 26,525 4 Installation & Erection of Machinery 5,305 5,305 5 Insurance 10% of Cost of Machinery 2,653 2,653 6 Transportaion 10% of Machinery 2,653 2,653 7 Vehicles 1,400 1,400 8 Furniture and Fixture 900 900 9 Office Equipment 3,320 3,320 10 Pre-operating expenses 2,580 2,580 11 Interest during construction 1,846

Estimated fixed cost - 65,459 Add: Net Initial Net Working Capital 2,352 Total Estimated Cost of Project 67,812

interest during construction "000"

total cost of project 67812 interestloan loan 40687 60% 1845.964

equity 27125 40%

interest during construction 1846



UNITED FLOUR MILL

Initial Net Working Capital Requirement

Rs. "000"

A. Current Assets:

1 Inventories:

a) Raw Material 5 Days Requirement: I)Wheat 134

b) Finished Goods 2,721 Total Cost of Inventory 2,855

2 Advances and Deposits, & Prepayments 4 3 Accounts Receivables (2% of Sales) 1,613 4 Cash 1% of Amount withdrawn from Bank for Inventory 21

Total Current Assets 4,494

B. Possible Current Liabilities:

Less: Bank Borrowing 75% of Inventories 2,141

Initial Net Working Capital 2,352



Annexure-VI

UNITED FLOUR MILLEstimated Income Statement

Years ending September 30 : 2009 2010 2011

Sales 80,669 95,010 100,985 COST OF SALESRaw Material 16,536 17,633 18,742 Labor 15,439 18,527 22,232 Manufacturing Overheads 22,450 23,356 24,263 Depreciation 2,576 2,576 2,576 Total Cost of Goods Manufactured 57,001 62,093 67,814 Inventory Adjustment - Less 5,700 509 6,272 Cost of Sales 51,301 61,583 61,541 Gross Profit 29,368 33,426 39,444 OPERATING EXPENSES:Administrative Expenses 3,780 4,536 5,443 General Expenses 1,750 2,100 2,520 Seling Expenses 4,033 4,750 5,049 Total Operating Expenses 9,563 # 11,386 # 13,012 Operating Profit 19,804 22,040 26,431 OTHER EXPENSES:Financial Charges on:Long Term Loan 6,103 5,493 4,882 Amortization of Pre-Production Expenses 860 860 860 Total Other Expenses 6,963 6,353 5,742 Profit Before Tax and Worker's Fund 12,841 15,687 20,689

Profit/(Loss) Before Tax 12,841 15,687 20,689 Tax Provisions @ 40% 5,136 # 6,275 # 8,276 Net Profit 7,705 9,412 12,413

Ratios:1 Gross Profit/Sales 36.41 35.18 39.06 2 OperatingProfit/Sales 24.55 23.20 26.17 3 Pre-Tax Profit/Sales 15.92 16.51 20.49 4 Net Profit/Sales 9.55 9.91 12.29 5 Net Profit/Equity 22 21 22

Annexure-VI-AProduction at 100% Capacity



Crushing Of Wheat:

6400kg Kg of Wheat/day/machine No. of Machines % Output Quantity (000)Flour 1 80 256 Maida 1 10 32 Bran 1 10 32 Total 100 320

Annexure-VI-A



Year ending 30th September:

Capacity Utilized2009 2010 2011

75% 80% 85%Quantity ("000")

Production of Flour:

a) Number of Units Manufactured 192 205 218 Add: Opening Inventory - 19 21

Total Units available for Sales 192 224 238 Less: Closing Inventory 10% of Production 19 21 22

Units Sold 173 204 217

Production of Maida:

b) Number of Units Manufactured 24 26 27 Add: Opening inventory - 2 3

Total Units available for Sales 24 28 30 Less: Closig Inventory 10% of Production 2 3 3

Quantity Sold 22 25 27

c) Production of Bran:

Number of Units Manufactured 24 26 27 Add: Opening Inventory - 2 3

Total Production available for Sales 24 28 30 Less: Closing Inventory 10% of Production 2 3 3

Quantity Sold 22 25 27

Sales Revenue:

Description Unit PriceRupees

75% 80% 85% a Flour 420 72,667 85,585 90,968 b Maida 250 5,407 6,368 6,768 c Bran 120 2,595 3,057 3,249 Total Sales (a+b+c) 80,669 95,010 100,985

Annexure-VI-A

Raw Material:

Years 2009 2010 2011



Capacity Utilized75% 80% 85%

Consumption of Raw Material:

Description Quanity ("000")

Wheat 6400kg/day/Machines 240 256 272

Cost of Raw material:

Description Rs. ("000")

Wheat @ 40/kg 9,612 10,253 10,894 Packing material 6,924 7,380 7,848 Total Cost 16,536 17,633 18,742

Annexure-VI-A UNITED FLOUR MILL Estimated Cost of Labour

Labour Cost:

a) Direct Labor:No. of Salary/Month Annual

Sr. No. Milling Staff Employees /Worker Salary ("000")1 Miller 1 35,000 420 2 Shift Incharge (Asst. miller) 1 25,000 300 3 Ruleman 2 20,000 480 4 Washing man 1 25,000 300 5 Silk man 1 22,000 264 6 Helper 8 24,000 2,304 7 Unskilled labour 12 25,000 3,600

Total 26 176,000 7,668 Add: Fringe Benefits (40% of Basic Salary) 3,067

Total Cost of Milling Staff 10,735

No. of Salary/Month AnnualSr. No. Office Staff & Production Staff Employees /Worker Salary ("000")

1 Manager 1 35,000 420 2 Accountants 2 25,000 600 3 Cashier 1 20,000 240 4 Production Clerk 2 23,000 552 5 Wheat Clerk 2 22,000 528 6 Field Supervisor 1 26,000 312 7 Gunman/Chowkidar 3 15,000 540



8 Peon 1 14,000 168 Total 13 180,000 3,360

Add: Fringe Benefits (40% of Basic Salary) 1,344 Total Cost of Office Staff & Production Staff 4,704

Assumptions:1 Direct labor will increase every year @ 20%.

Year Wise Wages of Labor:

Sr. No. DescriptionYears

2009 2010 2011Rs ("000")

1 Milling Staff 10,735 12,882 15,459 2 Office Staff & Production Staff 4,704 5,645 6,774

Total Cost of Labor 15,439 18,527 22,232

Annexure-VI-A

Manufacturing Overhead Cost:

Description Rs ("000")a) Fixed Cost:

Power: @ 288/400/KW/Month 2,765 Insurance: @ 10% of Fixed Assets Cost 4,923



Maintenance and Depreciation:

Overhauling Expenses @ 40000 Per machine 40 Maintenance of Building @ 10% of Cost of Building 979 Maintenance of Vehicles 10% of Cost of Vehicles 140

Total Fixed Cost 8,847 b) Variable Manufacturing Expenses:

Power: @ 7.71/unit of 400/KW/Month 85% of which will be utilized 18,119 Machinery Re. 3.00 Per 40/Kg on Crusing of wheat 18

Total Variable Cost 18,137

Year ending Manufacturing Overheads as per Different Capacities:

Description Years2009 2010 2011

Rupees ("000")75% 80% 85%

Fixed Cost 8,847 8,847 8,847 Variable Cost 13,603 14,510 15,417 Total Cost of Manufacturing Overheads 22,450 23,356 24,263

‘

Annexure-VI-A

Administrative And General Expenses

Rupees ("000")

Sr. No. DesignationNo. of Salary/ Annual

Employees Month Salary1 Manager 1 40,000 480 2 Accountants 2 30,000 720 3 Production Clerk 2 20,000 480



4 Cashier 1 25,000 300 5 Chowkidar/Gunman 3 15,000 540 6 Peon/Sweeper 1 15,000 180

Total 9 145,000 2,700 Add: Fringe Benefits @ 40% 58,000 1,080

Total Cost of Administrative Staff 203,000 3,780

General Expenses:

Sr. No. Description Year Exp. ("000")1 Travelling Expenses 300 2 Printing & Stationary 200 3 Telephone, Telex, Postage 250 4 Rents, Rates and Taxes 300 5 Entertainment 200 6 Legal & Audit 250 7 Miscellaneous 250

Total 1,750

Year Wise Administrative Salaries:No. of Rupees ("000")

Sr. No. Designation Employees 2009 2010 2011

1 Manager 1 480 576 691 2 Accountants 2 720 864 1,037 3 Production Clerk 2 480 576 691 4 Cashier 1 300 360 432 5 Chowkidar/Gunman 3 540 648 778 6 Peon/Sweeper 1 180 216 259

Total 10 2,700 3,240 3,888 Add: Fringe Benefits @ 40% 1,080 1,296 1,555



Total Administrative Salaries per Year 3,780 4,536 5,443

General Expenses:

Sr. No. Description Rupees ("000")1 Travelling Expenses 300 360 432 2 Printing & Stationary 200 240 288 3 Telephone, Telex, Postage 250 300 360 4 Rents, Rates and Taxes 300 360 432 5 Entertainment 200 240 288 6 Legal & Audit 250 300 360 7 Miscellaneous 250 300 360

Total 1,750 2,100 2,520

Selling Expenses:

Selling Expenses are assumed to be 5% of Sales Revenue

Sr. No. Description Rupees ("000")1 Selling Expenses 5% of Sales Revenue 4,033 4,750 5,049

Annexure-VI-A

Depreciation Schedule of Fixed Assets:

Total Cost (Rs.) Rs. ("000")Sr. No. Description

1 Plant & Machinery 37,135 1,857 2 Building 9,792 490 3 Vehicles 1,400 140 4 Furniture & Fixture 900 90

- Total 49,227 2,576



Note:- Depreciation will be constant over the life of assets.

Year Wise Depreciation:

DescriptionYears

2009 2010 2011Rupees ("000")

Depreciation 2,576 2,576 2,576

Pre-Production Expenses:

Sr. No. Description Rs. ("000")1 Registration Charges 400 2 Sales Tax Registration Charges 300 3 Consultancy & Report Preparation Charges 350 4 Printing & Stationary 250 5 Conveyance Charges 280 6 Telephone & Postage 300 6 Salaries and Wages during Construction 700

Total Preproduction Expenses 2,580

Annexure-VII

UNITED FLOUR MILLCash Flow Statement

End ofOperating Years

years ending 30th September:Construction

2008 2009 2010 2011

SOURCES OF FUNDS:

Operating Profits - 19,804 22,040 26,431 Add: Depreciation - 2,576 2,576 2,576

Total Funds from Operation - 22,381 24,616 29,008

Other Sources:Long Term Loan 40,687 - -



Paid-Up Capital 27,125 - -

Total Sources of Funds 67,812 22,381 24,616 29,008

APPLICATION OF FUNDS:

Investment in Fixed Assets 57,713 - - - Financial Charges during Construction 1,846 - - - Pre-Production Expenses 2,580 - - - Repayment of:Long Term Loan - - 4,069 4,069 Bank Borrowings - - - Financial Charges On:Long Term Loan - 6,103 5,493 4,882 Bank Borrowings - - PAYMENT OF:Taxes - 5,136 6,275 Dividends - - - -

- - - short term investment 3,000 - 5,000 10,000 Increase in Current Assets (Other than Cash) 138 4,811 573 438

Total Application of Funds 65,277 10,914 20,271 25,664 Cash Surplus/(Deficit) 2,535 11,467 4,345 3,344 Cash at the Beginning of the Year - 2,535 14,002 18,347 Cash at the end of the year 2,535 14,002 18,347 21,691

Annexure-VIII

UNITED FLOUR MILLBalance Sheet

End of Operating Years

Year ending 30th September:Construction

2008 2009 2010 2011ASSETS: Rupees ("000")

CURRENT ASSETS:Cash and Bank Balance 2,535 14,002 18,347 21,691 Short Term Investment 3,000 3,000 8,000 18,000 Accounts Receivable - 1,613 1,900 2,020 Inventories:

Wheat 134 481 513 545 Finished Goods - 2,850 3,105 3,391

Advances, Deposits and Prepayments 4 4 4 4 Total Current Assets 5,672 21,950 31,868 45,650

FIXED ASSETS:



Fixed Assets at Cost 59,559 59,559 59,559 59,559 Accumulated Depreciation on Fixed Assets - 2,576 5,153 7,729 Fixed Assets Net 59,559 56,983 54,407 51,830 Intangibles 2,580 1,720 860 - Total Assets 67,812 80,653 87,135 97,480

LIABILITIES AND EQUITY:CURRENT LIABILITIES:Taxes Payable - 5,136 6,275 8,276 Dividend Payable - - Worker's Fund Payable - - - - Current Maturity of Log Term Debt - 4,069 4,069 4,069 Total Current Liabilities - 9,205 10,344 12,344

LONG TERM DEBTS:Long Term Debt 40,687 36,618 32,550 28,481 Total long Term Debt 40,687 36,618 32,550 28,481 EQUITY:Paid-Up-capital 27,125 27,125 27,125 27,125 Retained Earnings - 7,705 17,117 29,530 Total Equity 27,125 34,829 44,242 56,655 Total Liabilities and Equity 67,812 80,653 87,135 97,480

Annexure - XII

UNITED FLOUR MILLLoan Repayment Schedule

YearsOpening

Interest PrincipleClosing

Balance Balance 1 40,687 6,103 4,069 36,618 2 36,618 5,493 4,069 32,550 3 32,550 4,882 4,069 28,481 4 28,481 4,272 4,069 24,412 5 24,412 3,662 4,069 20,344 6 20,344 3,052 4,069 16,275 7 16,275 2,441 4,069 12,206 8 12,206 1,831 4,069 8,137 9 8,137 1,221 4,069 4,069 10 4,069 610 4,069 -



Annexure-XIUNITED FLOUR MILL

Calculation of Internal Financial Rate of Return

YearsCapital Operating

DepreciationWorker's

TaxesNet Cash Net Cash Inflow

Outlay Profit Fund Return (Outflow) - 60,431 - - - - - (60,431) 1 4,811 19,804 2,576 22,381 17,570 2 573 22,040 2,576 - 5,136 19,480 18,906 3 438 26,431 2,576 - 6,275 22,733 22,295 4 - 26,431 2,576 - 8,276 20,732 20,732 5 - 26,431 2,576 - 8,276 20,732 20,732 6 2,300 26,431 2,576 - 8,276 20,732 18,432 7 - 26,431 2,576 - 8,276 20,732 20,732 8 - 26,431 2,576 - 8,276 20,732 20,732 9 - 26,431 2,576 - 8,276 20,732 20,732 10 - 26,431 2,576 - 8,276 20,732 20,732

IFRR 30%

RATIOSNetprofit margin ratio

net profitnet sale

year 2010 2011 2012net profit 7704.727 9412.266 12413.34sale 80668.71 95009.81 100985.3

net profit margin ratio 9.551073 9.906625 12.29223

Current ratio

current asst current liability

year 2010 2011 2012current asst 21950.04 31868.3 45650current liability 9205.197 10343.56 12344.27



Current ratio 2.384526 3.080981 3.69807

Debt/equity ratio

total debttotalequity

year 2010 2011 2012total debt 45823.61 42893.26 40825.26totalequity 34829.48 44241.74 56655.09

Debt/equity ratio 1.315656 0.96952 0.720593

Sponsors stake27124.75

Amir fraz 10849.9 40%Farhan khizar 10849.9 40%Humaira kanwal 5424.95 20%

27124.75



Annexure - XIIIUNITED FLOUR MILL

Financial Plan

Rupees ("000")

Description LCY FCY Total cost Total Fixed cost of the project 65,459 - 65,459 Initial Permanent working capital 2,352 - 2,352 Total cost of the project 67,812 67,812

Long Term Debt 40,687 - 40,687 Equity Participation 27,125 - 27,125 Total Capital Required 67,812 67,812

Debt/Equity Ratio

Debt-to-Equity Ratio: 60 : 40



Market Analysis

Brief description of market:

Like every other industry, milling is subject to increased market pressures. Customers demand consistent quality and product variety while production efficiency must be maintained if not improved. A FOSS solution can prove an important ally in walking such a tightrope.

Pakistan has a rich and vast natural resource base, covering various ecological and climatic zones; hence the country has great potential for producing all types of food commodities. Agriculture has an important direct and indirect role in generating economic growth. The importance of agriculture to the economy is seen in three ways: first, it provides food to consumers and fibres for domestic industry; second, it is a source of scarce foreign exchange earnings; and third, it provides a market for industrial goods

Production in Pakistan for the last 5 years (000 tons):

2004-05 2005-06 2006-07 2007-08 2008-0921612 21277 23295 20959 23421

Present demand:

Present demand of flour is about 25525000 tons in this current year.

Demand supply gap:

The supply of flour is about 23225000 tons and demand is about 25525000 tons.

Ex-factory price(price which u will sell to whole sellers)

The ex-factory price of 20kg bag of floure is 540The ex-factory price of 20kg bag of maida is 740The ex-factory price of 20kg bag of bran is 220

Retail priceThe retail price of 20kg bag of floure is 560The retail price of 20kg bag of maida is 760



The retail price of 20kg bag of bran is 240

Distribution channel:

First of all our salse man collect the orders from whole sale dealers than from whole sale dealer the shop keeper collect the flour than ultimate consumers purchase from retail store

Strategic Recommendations

Initially, the product would be launched in the local market. The preferred mode of distribution is going directly to the wholesalers. There is an option of having no involvement of any distributor between the manufacturer and the wholesaler in the city where manufacturing is being done. By giving healthier profit margins to the wholesalers, the wholesalers will hence promote the product. This strategy is important to introduce such a product and to create an extensive distribution and sales channel. The company will later expand into other cities through a distributor network.

Technical analysis

Brief description of technical aspects:

There are five roll systems in a flour mill: break, sizing, midds (for middlings), low grade, and residue.

In the break system, the kernel is opened, the bran flattened and the endosperm broken into large chunks. Al-though some flour is produced here, the goal in the break system is not to produce a lot of flour but to maximize separation of bran from endosperm. Because the break rolls are at the beginning of the milling process, the quality of the work done here effects each subsequent step, thus determining both the yield of flour and the quality of that flour. If the rolls are too aggressive, portions of the bran may be torn or ground into dust that will be impossible to separate from the endosperm in later steps.

In the sizing system, rolls are used to further flatten and separate bran and germ from the endosperm. Sizing rolls are either finely corrugated or smooth. Coarse and fine sizings are produced on these rolls.



Most of the high quality flour is produced in the midds reduction system. Here the rolls are either very finely corrugated or smooth.

Each time stock passes between a pair of rolls, the resulting milled stock is run through a purifier, primarily gyratory bolters with stacks of sieves with different screen and cloth meshes. Vibration and air flow contribute to stratification and separation of the material. The material which will pass through ("thrus") the finest (bottom) sieve cloth in the purifier is flour. Each set of rolls thus has its own flour "stream," identified by the roll the stock came from before arriving at the purifier: 1st Break, 2nd Break, 1st Midds, Sizings, etc.

The "overs" of each sieve (particles not fine enough to pass through) are directed to another set of rolls for further reduction, or to one of the residue streams: bran, germ, shorts, or red dog. None of these end up in the flour. Indeed, any part of the wheat that does not enter one of the flour streams will be one of these four "by-products." These materials, unless there is a specialty market for them, are generally sold as feedstock.

The separation by size, grade, etc. at each stage of the milling process creates many dozens of "streams" which wind their way through the mill. In the end, the various streams are blended and mixed to make various grades of flour, then treated with the addition of malted barley, bleaching agents, enrichments, etc. before packaging. If all the flour streams are combined and blended, the resulting flour is "Straight Grade." 'Patent" is the flour from those streams containing the least bran and germ particles, thereby the whitest and lowest in ash. "Clear" flour, on the other hand, is from the "dirtier" flour streams. While straight and clear flours will have more protein than the patent flour from the same wheat on the same mill run, this additional protein is from the aleurone and germ, not gluten from the endosperm.

Area we will cover:

Our flour mill established in bahawalpur. We can supply of flour in bahawalpur division. There are three district in this region in which we will supply our products.



Manufacturing process/flow chart/diagram:


Wheat received in the Factory

Wheat is weighted on the Plate Form

Elevator 1 Elevator 2 Elevator 3 Elevator 4

Wheat goes to Separators for

Clearing

Separator 1

Separator 2

Separator 3

Wheat goes to Bin to send it for

Washing

Washing Machine

Wheat goes to Bin to send it for

Grinding

Roller Body

Sifter

Packing

Output is send to Market

32


3)Personnel analysis:

Factory staff:

S.NO Type of Staff

Number required

Basic salary per Person, per month

Total salaries per year

1 skilled 14 30000 4068000

2 Un-skilled 12 25000 3600000

ADMINISTRATION AND GENERAL STAFF

No. of Salary/Month AnnualSr. No. Office Staff & Production Staff Employees /Worker Salary ("000")

1 Manager 1 35,000 420 2 Accountants 2 25,000 600 3 Cashier 1 20,000 240 4 Production Clerk 2 23,000 552 5 Wheat Clerk 2 22,000 528 6 Field Supervisor 1 26,000 312 7 Gunman/Chowkidar 3 15,000 540 8 Peon 1 14,000 168

Total 13 180,000 3,360 Add: Fringe Benefits (40% of Basic Salary) 1,344

Total Cost of Office Staff & Production Staff 4,704

Assumptions:

SWOT Analysis



Strengths:

The labor to manufacture flour is easily available we can reach easily to low cost labor. Moreover the location for our project is very attractive. We can avail maximum advantage from this market.

Weaknesses:

Our weakness is that we are not producing flour up to the present demand of the consumer. Because we have dependend on govt for wheat and electricity problem is also our weakness.

Opportunities:

Pakistan is an agricultureal country, the production of wheat is very high.flour is neccessry for all kind of people so, demand of wheat is repedly increases.also there is no enough flour mills to fullfill the demand so, there is great opportunity to establish flour mill.

Threats:

Competitive Structure of the marketThe market of the flour mills is highly competitive; therefore if the entrepreneur isnot well responsive and fulfilling the demand of the consumer he/she may not be able to capitalize the opportunity properly.and the qotta system is used the supply of wheat not provided to flour mills according to their demands.

.



List of machinery

Now we will discuss the process of converting Wheat into Flour

There are two section of working area in the Hafiz flour mill

1. Washing section.

2. Grinding section.

Now we will discuss these sections and what is happening in these sections in

detail.

WASHING SECTION

There are few machineries are used for the processing of flour. We will

discuss these machineries in detail one by one. Following are the machineries.

1. SEPRATOR.

2. ELEVATOR.

3. SCOLDER MACHINE.

4. LOW PRESSURE FAN.

5. WASHING MACHINE.

6. STORAGE BIN.

7. MAGNETIC MACHINE.



1. Seprator

separator is the first machine which is used in the washing section and the

person who operate this machine is roll man.

First when the wheat pool, there are lot of dust and mummnies in the wheat.

This machine’s main function is that to separate the dust and mummnies from

the wheat.



2. ELEVATORElevator is the machine which is help full for lifting the wheat at each section. it is

just like the lift and performing the same function of lift. There are two types of

elevator are used in the mill. First is traditional elevator and other is new

technological elevator. Traditional way is that the wheat is lift through the simple

belt.



Scolder Machine.

With the help of elevator the wheat is shift to the scorer machine.The scorer

machine is one of the most important machines. The main function which is

performed by this machine is to put out the outer layer of the wheat. This is

necessary to understand that this machine put out the outer layer of dry wheat. It

is necessary that the wheat is dry at least twelve hours and then put into the

scorer machine.



LOW PRESSURE FAN

Low pressure fan is the fan that pressurized the wheat for the purpose of

cleaning. This means that after outing the scorer machine some dust include and

this fan clean such dust. This fan is not too much power full as the high pressure

fan.


Low pressure Fan

39


WASHING MACHINEWashing machine acutely performs three types of functions.

1. Wash with water.

2. Further put out the outer layer

3. To put out the stones.

Wash with water. This machine firstly washed the wheat through

the water after passing the water the wheat will be too much clean and then

transfer for further process.

Further putout the outer layer of wheat After wash with the water wheat is transferred for again thrashing. In during the trashing again put out the outer layer of wheat. Put out the Stones

Washing machine also performs the function

to put out the stones from the wheat.

Magnetic Machine



Magnetic machine is used to catch the iron particles included in the wheat. In this

machine magnets are installed which help to catch the iron particles.

Grinding Section



Ruler Body Ruler body is the machine through which grinding of wheat takes place. This is

the first step of grinding. Wheat comes after the washing section firstly put into

the ruler body for the grinding purpose.



Shifter The other machine which is used in the grinding section is the shifter.

This machine main function is that it shifts the flour into different categories.

Categories means that special type of flour is separate from the bran and suji.

There are separate boxes for each item.



PURIFIERPurifier machine is used to make the suji.It is independent from the shifter.purifier has different boxes and each box has show different effect which means that from one box wastage material is stored and other boxes are for the preparation of suji.



Air Lock



Air lock is used to cease the air because if the air is include in the production

then all the production may be destroy. So that’s why air lock is used to cease

the air.

High pressure Fan



High pressure fan has a same function as the low pressure fan but the main

difference is that the high pressure fan has a high voltage power full machine.

Battery Cyclones



Battery cyclones is also help full for the cleaning and it take the pressure from the

low pressure fan and the high pressure fan.

Production worm



Production worm is the line through which the final product is being passed at

the packing room.

The above all the machinery is used to convert the wheat into flour. The above is all the process of production of flour.



Conclusion and Recomendation

We conclude that on the basis of field work and surveu of flour mills that the flour is neccessry product so its demand increse day by day. There is no chance to decrease the demand of flour. Pakista is an agricultural country and wheat is the one of the major crop. Availability of raw material is very easy. So, conclusion is that the flour mill is a profit motive business because no chance of decrease of demand.Our recommendation to new investors is that they must invest in flour mill because from the last year there is the shortage of flour in pakistan. So, they step forward to minimize this shortage, and also contribute in the economic as well as social groth of Pakistan.



Special Thanks

We bow our head, before ALLAH Almighty, who blessed us with potential and

stamina to complete our fesibility report on flour mill.

First of all would like to pay our special regards to Respected “Sir Mr. JAVED

IQBAL” who provides us guidance at each and every step, in completion of all

this fesibility report. We are especially thankful to those personalities who help us

in collecting data during the fieldwork and also in our practical work.

In this regard our thanks goes to:

Mr:Arsalan rabbani, Mr: Jawad-ul-hasan, Mr: Hunain khan, Mr: hasan

qureshi, Mr: Farzan rafi, mr: Shakeel ahmed, Mr: Mohsin shazad, Mr:

Adnan ch and all of our class fellows.


33351007-Flour-Mill

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