SHAMPOO MANUFACURING UNIT - Invest in Assam

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Sr. No. Particulars Total (Rs.)1 Raw materials 13,167,0002 Packing materials 4,740,1203 Administrative overheads 2,019,6004 Other overheads 1,128,0005 Interest on working capital 364,397Total cost of production 21,419,117Note: Cost of production indicated above is at 100% capacity utilisation.B. TurnoverAnnual sales realisation of the manufacturing unit with the assumed product mix is illustratedbelow. Sales realisation at 100% capacity utilisation is around Rs. 2.63 crore.Sr.No.ParticularsNo. ofBottles(Nos.)SalesRealisationper Bottle(Rs.)Total SalesRealisation(Rs.)1 Shampoo (Various variants) 1,140,000 26,334,000Total 1,140,000 23.1 26,334,000Note: For simplicity purpose all the sales mentioned above are in bottle of 100-ml weightC. Profit and Loss Statement for 10 Years(Unit: Rs. lakhs)Particulars Formula Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7Capacity Utilisation 50% 100 100% 100% 100% 100% 100%%Sales Realisation A 110 263 263 263 263 263 263Operating Costs BRM and PM Costs 75 179 179 179 179 179 179Labour Costs 20 20 20 20 20 20 203. Other Overheads 6 11 11 11 11 11 11Interest on Working2 4 4 4 4 4 4CapitalGross Profit incl.Transport SubsidyC=A-B 7 49 49 49 49 49 49Interest D 8 8 7 6 5 4 3Depreciation E 12 10 9 8 7 6 5PBT F=C-(D+E) -12 31 34 36 37 39 41Tax G 0 0 0 0 0 0 0PAT H=F-G -12 31 34 36 37 39 41Cash Profit I=H+E 0 42 42 43 44 45 46GP Margin J=C/A 7% 19% 19% 19% 19% 19% 19%NP Margin K=H/A -11% 12% 13% 14% 14% 15% 15%Note:1. Figures indicated above are rounded-off2. Annual sales values indicated above are after taking into consideration opening and closing stocksReturn on Investment (ROI): 32%D. Breakeven AnalysisThe breakeven analysis for the proposed shampoo-manufacturing unit is indicated below. Theunit achieves operational breaks-even in the first year of operations.
Particulars Unit Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7Capacity Utilisation (%) 50% 100% 100% 100% 100% 100% 100%Sales Realisation Rs. lakhs 110 263 263 263 263 263 263Variable Cost of SalesDirect MaterialRs. 55 132 132 132 132 132 132lakhsPacking CostRs. 20 47 47 47 47 47 47lakhsConversion CostRs. 6 11 11 11 11 11 11lakhsDirect LabourRs. 20 20 20 20 20 20 20lakhsInterest on Working Rs. 2 4 4 4 4 4 4CapitallakhsTotal Variable Costs Rs. lakhs 102 214 214 214 214 214 214Contribution Rs. lakhs 7 49 49 49 49 49 49Fixed CostsOther overheads (excl. Rs.Repairs and Maintenance) lakhs7 12 12 12 12 12 12Repairs and Maintenance Rs. 6 6 6 6 6 6 6lakhsManpower CostRs. 6 6 6 6 6 6 6lakhsInterest on Term Loan Rs. 8 8 7 6 5 4 3lakhsTotal Fixed Cost Rs. lakhs 27 32 31 31 30 29 28Break Even Point Rs. lakhs 405 173 168 163 159 154 150Actual Sales Realisation Rs. 110 263 263 263 263 263 263lakhsBreak Even Sales at % ofCapacity% 154% 66% 64% 62% 60% 59% 57%Note: 1. Figures indicated above are rounded-off2. Annual sales values indicated above are after taking into consideration opening and closing stocksSOURCE OF RAW MATERIALS AND PACKING MATERIALSThe raw materials that are required for manufacturing shampoo products are not locally availablein NER. In case of the herbal shampoos, certain raw materials like Heena and other herbs areavailable in NER (in hilly states like Meghalaya, Arunachal Pradesh, etc.) through theGovernment approved agencies. The closest source for procuring raw materials (apart fromherbal ingredients) is Hyderabad or Delhi. As far as packing materials are concerned, fewvendors are present in NER but they are relatively small in size.Additionally, the raw materials and packing materials can be procured from West Cluster(Mumbai, Ahmedabad, etc) but the cost of transportation will increase substantially.Mentioned below are few sources of raw materials-
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