Business plan for establishment of Agra petha industry

Challenging task

1. Challenging task ELP-402 BUSSINESS PLAN FOR PRODUCTION OF AGRA PETHA SUBMITTED TO: Dr.E.Padma Associate professor SUBMITTED BY: D.Mahesh Reddy VH/16-133

2. BUSINESS PLAN FOR ESTABLISHMENT OF AGRA PETHA INDUSTRY Executive summary Mission statement Product description Business environment analysis Market analysis Market plan Operations plan Management summary Financial plan Achievements & milestones

3. EXECUTIVE SUMMARY This project profile consists of establishment of Agra petha industry in Ongole , Prakasam district with a capacity of 18 tons per annum. The total cost of proposed project Rs.2 9 , 84 ,172/- This project will create employment to a total of five people. This project is financially feasible with a BC ratio of 2.04:1 The demand of petha is about 700-800 tonnes per year but supply of petha is 600 tonnes only,hence there is a scope for establishment of my project.

4. MISSION STATEMENT We nurture the idea that our offerings of Agrapetha are enjoyed by our customers. As a quality focused firm we are engaged in offering a high quality range of product. We are different from our competitors because we offer good quality & illachi and pista flavoured candies to our customers. We are planning on selling chocolate flavoured candies in future.

5. PRODUCT DESCRIPTION The Wax gourd also called Ash gourd,White gourd,Winter gourd is a vine grown for its very large fruit,eaten as vegetable when mature. It is native to South East Asia. The immature melon has thick white flesh that is sweet when eaten. By maturity the fruit loses its hairs & develops a waxy coating, giving rise to name Wax gourd & providing long shelf life.

6. AGRA PETHA The Indian candy that is as loved as Tajmahal in Agra. It is said that petha was originated in the kitchen of Shah Jahan some 360 years back. Petha is a translucent soft candy from North India,usually rectangular or cylindrical. Petha is one of the purest sweet meals in the world as it contains only vegetable,water & sugar.

7. USES OF AGRA PETHA All petha products are highly recommended for growing childern,lactating mother,during jaundice due to richness in glucose & minerals. Petha preparation does not involve the use of fat cooking oils.So it has negligible fat content and free from cholesterol. Used for treatment of tuberculosis,weakness of heart & Anaemia . Due to its cooling properties,it protects people from high summer temperature.

8. BUSINESS ENVIRONMENT ANALYSIS STRENGTHS Easy availability of cheap labour . Comfortable availability of raw materials & other inputs. Production capacity is more than sufficient. The sweet is affordable. It has many health benefits.

9. WEAKNESS Low levels of modernization and upgradation of technology. Low productivity. Product diversification is limited. High dependence on commission agents for marketing.

10. OPP O RTUNITIES Scope of export to USA & Middle East countries. Favorable government policies(ministry of food processing industries) Crashed scheme for rural development. Food for work program.

11. THREATS Improvement in quality to national & international standards. Growth of mallculture . Poor assistance. Power failure. Capacity utilisation .

12. MARKET TREND AND ANALYSIS The industry is famous for petha , a type of sweet, which has satisfied the taste buds of both domestic, as well as foreign customers. The Rs-300 crores industry employ over 25,000 people in around 650 micro units that manufacture more than 30 varieties of petha . Agra petha is exported all most all the North Indian states as well as to foreign countries like USA & Middle East .

13. COMPETITORS R.K.Petha House,Agra Siri Swagruha Foods,Agra

14. Preparation process of Agra petha Petha fruit(Ash gourd) Washing , peeling,cutting Seed removal Cutting into desirable shapes & sizes Piercing

15. Soaking in lime water Washing Boiling in alum Dipping in sugar syrup Draining and flavouring Cooling and packing

16. Step1:Washing,peeling,cutting and seed removal. The Ash gourd is washed clean, it is peeled first using a knife, where the skin of Ash gourd is removed.Then , it is cut and the seeds and mushy centres are separated. Cutting of Asg gourd Peeling of skin

17. Removal of seeds and mushy centres

18. Step 2: cutting into desired shapes and sizes. Further cutting into desired shapes and sizes is done where it is cut into cubical, rectangular or spherical shapes.

19. Step 3: Piercing. Further the petha pieces as cut above, are pierced with a special fork or metal skewer to make it porous.

20. Step 4: Soaking in lime water The pierced petha pieces are then soaked in lime water (calcium hydroxide) for about two hours.The proportion used is 20 kilograms to 100 liters of water.This process tends to harden the petha and make it compact.

21. Step 5: Washing Petha is continuously washed in plain running water till the lime is fully washed away and there is no traces of lime residues in the petha pieces.

22. Step 6: Boiling Petha pieces are boiled in water containing Alum for one hour.This process is called “Josh lena ” which is very critical step and has to be done carefully and skillfully so as to maintain the quality of Agra petha .

23. Step 7: Dipping in sugar syrup The Josh petha is dipped in boiling sugar syrup.This is boiled till the sugar syrup becomes thick. This is kept covered with a mesh overnight.

24. Step 8: Draining and flavouring The excess syrup is drained out as per the requirement.Then flavouring agents such as Illachi , Pista are added as desired.This is cooled before it is packed into different boxes and containers.

25. Step 9: Cooling and packing Then the Agra petha pieces are cooled for sometime and are then packed into different containers and boxes as required by market.

26. FINANCIAL ASPECTS BASIS AND PRESUMPTIONS Production in one day = 64kg Production in one month = 64*30 = 1920kg Production per annum =1920*12 =23,000kg Cost of one kg Agra petha =Rs.200 / Total income = 200*23000 =Rs.46,00,000/-

27. Fixed costs Implements Number Unit cost Total cost Motor 1 12,000 12,000 Water tank 1 12,000 12,000 Exhaust fan 2 1,000 2,000 Drums 2 1,000 2,000 Ss top working table 1 1,200 1,200 Weighing balance 2 3,000 6,000 Polythene sealer 1 2,000 2,000

28. Metal skewer 1 15,000 15,000 Knives 5 50 250 Metal tubes 5 50 250 SS vessels 2 3,000 6,000 Total 58,700 Total fixed cost= 9 ,00,000+58,700= 9 ,58,700 PARTICULARS COST Land 6 ,00,000 Building 2 , 5 0,000 Furniture 5 0,000 Total 9 ,00,000

29. VARIABLE COSTS RAW MATERIALS Total cost per annum = 68,956 × 12 = 8,27,472 PARTICULARS REQUIREMENT/MONTH(kg) UNIT COST MONTHLY COST Ash gourd 2,010 6 12,060 Sugar 1,020 32 32,640 Lime 23 40 920 Alum 12 28 336 Cardamom 10 1,100 11,000 Pista 10 1,200 12,000 Total 68,956

30. MAN POWER Total cost per annum = 12 × 64,000 = 7,68,000 DESIGNATION NUMBER SALARY PER MONTH Permanent workers 2 30,000 Temporary workers 2 24,000 Marketing & sales person 1 10,000 Total 64,000

31. WORKING CAPITAL Total working capital = 18,81,472 PARTICULARS COST Raw material 8,27,472 Salaries & wages 7,68,000 Packing 15,000 Power 15,000 Water 45,000 Gas 1,36,000 Transport 75,000

32. Total costs = 29 , 84 ,172 Means of finance: Loan taken from bank = Rs.1 2 ,00,00/- Interest rate = 9% Promoters contribution =Rs.17, 84 ,172/-

33. ESTIMATED NET INCOME Year Variable costs(in lakhs ) Fixed costs(in lakhs) Depreciation@10%(in lakhs) Interest@9%(in lakhs) Interest@8%(in lakhs) Loan paid(in lakhs) Total costs(in lakhs) Gross income(in lakhs) Net income(in lakhs) 1 18.81 9.58 - 0.86 1.50 - 21.17 46 24.83 2 18.9 - 0.35 0.86 1.51 2.39 24.02 47.9 23.88 3 19 - 0.32 0.64 1.52 2.39 23.87 48 24.13 4 19.2 - 0.29 0.43 1.53 2.39 23.85 48.2 24.35 5 19.4 - 0.26 0.29 1.52 2.39 23.81 48.4 24.59

34. NET PRESENT WORTH(NPW) NPW is positive,hence the project is financially feasible and accepted. Year Gross returns (in lakhs) Costs(in lakhs ) Net income(in lakhs) Discount factor @12 % Net present worth (in lakhs) 1 46 21.17 24.83 0.892 22.14 2 47.9 24.02 23.88 0.797 19.03 3 48 23.87 24.13 0.712 17.18 4 48.2 23.85 24.35 0.635 15.46 5 48.4 23.81 24.59 0.567 13.94 TOTAL 87.75

35. INTERNAL RATE OF RETURNS Year Net income (in lakhs ) Discount factor @12% Net present worth (in lakhs ) @12% Discount factor @43% Net present worth (in lakhs )@ 43% 1 24.83 0.892 22.14 0.699 17.36 2 23.88 0.797 19.03 0.489 11.67 3 24.13 0.712 17.18 0.341 8.25 4 24.35 0.635 15.46 0.231 5.64 5 24.59 0.567 13.94 0.167 4.11 87.76 47.03

36. IRR = (Lower discount rate)+(difference b/w 2 discount rates * NPW of lower discount rate/Absolute diff. b/w the PWs of cash flow at 2 discount rates IRR =12+31(87.76/87.76 - 47.03) =12+31(87.76/40.73) =12+31(2.15) =12+66.65 =78%

37. BENEFIT COST RATIO(BC RATIO) Year Gross returns ( in lakhs) Costs(in lakhs) Discount factor@12 % Present worth of gross (in lakhs) Present worth of costs (in lakhs) 1 46 21.17 0.892 41.03 18.88 2 47.9 24.02 0.797 38.17 19.14 3 48 23.87 0.712 34.17 16.99 4 48.2 23.85 0.635 30.60 15.14 5 48.4 23.81 0.567 27.44 13.50 Total 171.41 83.65

38. Benefit cost ratio = Present worth of gross returns/present worth of costs = 171.41/83.65 =2.04:1 BC ratio is >1.Hence the project is financially feasible .

39. ACHIEVEMENTS AND MILESTONES I am selling different flavours of Agra petha . Demand of my product can raise. BEP is reached in 1. 2 yrs after sale of 19,174 kg of petha . Bank loan is cleared at the end of 4 th year. My annual turnover is 23,000kg petha .

40. THANK YOU