CAPSULE MANUFACTURING UNIT Capsule ... - Invest in Assam

Exhibit 2Flow Chart for Capsule Manufacturing Process

lender machine is sent for Intermediate Process Quality Check (IPQC). If approved, the blendedmaterials are taken to the power filling section.In the powder filling section, the blended powder is filled in the empty capsules. Once thecapsules are filled they proceed to polishing section where the capsules are polished to removethe excess powder on the outer side of the filled capsule.Capsules from the polishing section go through an inspection and an Intermediate ProcessQuality Control (IPQC) to remove the empty capsules or capsule having any production defects.IPQC approved capsules are taken to the packing section where primary packing for the capsulesis done. The capsules can be packed in the following ways depending upon the requirement-Strip PackingBlister PackingBulk PackingKEY ASSUMPTIONSThe key assumptions made while preparing the project profile are detailed below:Sr.Items Value BasisNo.1. Land development Developmentcharges: Rs. 250per sq. mtr.Lease Rentals:Rs. 3.5 per sft.2. Machinery and equipmentcost--- Costs of leading machinerysuppliers inclusive of installationcharges3. Miscellaneous fixed assets --- Industry norm4. Provision for contingency 10% of total Assumptioncapitalexpenditure5. Raw material prices --- Landed cost (includingtransportation)6. Labour --- Prevalent rate in NER (Guwahati,Assam)7. Power and fuel --- Prevalent charges in Assam8. Repair and maintenance --- Industry norm9. Inventory: Raw materials 2 Months Industry norm(RM)10. Inventory: Finished goods 1 Month Industry norm(FG)11. Bills receivable 1 Month Industry norm12. Creditors 1 Month Industry norm13. Product distributionexpenses7% Taking into consideration averagedistribution costs.14. Other Expenses --- Includes cost of conversion duringmanufacturing (i.e. utilities) andvariable product distribution costs

15. Interest on working capital 9% 3% subsidy on working capitalloan under the Central InterestSubsidy Scheme, 199716. Subsidy on plant andmachinery15% Under the Central CapitalInvestment Subsidy Scheme,199717. Subsidy on insurancepremium18. Subsidy on Income Tax 100%19. Debt : Equity ratio 60 : 40 Industry normFINANCIAL ASPECTSA. LAND AND SITE DEVELOPMENT100% Under the Central ComprehensiveInsurance Scheme, 1997Sr.No.Particulars Units Unit Rate Total (Rs.)1. Land and Site500 sq. m. Rs. 250/ sq. m. 125,000DevelopmentTotal 125,000B. BUILDING AND CIVIL WORKSSr. Particulars Units Unit Rate Total (Rs.)No.1. Building and Civil Work 400 sq. m. Rs. 7,500/ sq. m. 3,000,000Total 3,000,000C. PLANT AND MACHINERY

Sr.No.ParticularsQuantity(Nos.)Unit Cost(Rs.)Total Cost(Rs.)Manufacturing EquipmentGranulation Section1 Sifter 1 nos. 50,000 50,0002 Multi Mill 1 nos. 70,000 70,000Blending Section3 Blender 1 nos. 150,000 150,000Filling Section4 Powder Filling and Polishing 1 nos. 2,500,000 2,500,000MachinePackaging Section5 Strip Packing Machine 1 nos. 200,000 200,0006 Blister Packing Machine 1 nos. 300,000 300,000Testing Equipment7 PH Meter 1 nos. 10,000 10,0008 Balances 1 nos. 30,000 30,0009 UV Spectrophotometer 1 nos. 100,000 100,00010 High Performance Liquid1 nos. 1,300,000 1,300,000Chromatography (HPLC)11 IR Spectrophotometer 1 nos. 150,000 150,00012 Dissolution Tester 1 nos. 120,000 120,00013 Other Testing Machinery 1 nos. 203,000 203,000Utilities/ Misc. Other Equipment14 Air Handling Units, Ventilation,AC Ducting, etc.15 Electrification, Control Panelsand Cabling, Transformer, etc.16 Water Plant, Generation andDistribution17 Steam Generation Units,Compressors6,000,0003,000,0002,500,000600,000Total Machinery, Utilities andEquipment17,283,000NOTE: ABOVE MENTIONED EQUIPMENT IS INDICATIVE LIST FOR THE PROPOSED CAPSULE-MANUFACTURINGUNIT

D. MISCELLANEOUS FIXED ASSETSSr. No.ParticularsTotal (Rs.)1 Furniture and Fittings 25,0002 Office Equipment 100,0003 Fire Fighting Equipment 50,0004 Cost of Tube-well 20,000Total Misc. Fixed Assets 195,000E. PRELIMINARY AND PRE-OPERATIVE EXPENSESSr. No.ParticularsTotal Cost (Rs.)1 Detailed Techno-economic Feasibility Study 100,0002 Loan Processing Fees 10,0003 Establishment expenses 200,000Total Preliminary & Preoperative Expenses 310,000F. PROVISION FOR CONTINGENCYProvision for contingency- @ 10% of the total capital investmentOPERATING COSTSA. RAW MATERIALRaw materials consumed for manufacturing any drug are of two typesActive Pharmaceutical Ingredients (APIs)Excipients (used as binding materials in manufacturing process)Raw materials consumed differ significantly from product to product in pharmaceutical

Sr. No. Particulars Units Total1 Average cost of raw material Rs. 8752 Raw materials consumed per batch Kg. 1203 Number of batches per year Nos. 300Total raw materials consumed per annum Rs. 31,504,000Note: Above raw material consumption pattern is calculated at 100% capacity utilisation of the manufacturingunit working for 300 days per annum and a single shift per day basis.B. LABOURSr.No.Particulars Qualification Nos. SalaryperMonth(Rs.)Direct Labour1 Factory Manager BE/B.Tech +MBA/MMSAnnualManpowerCost(Rs.)1 20,000 264,0002 Production Manager BE/B.Tech 1 15,000 198,0003 Chemists BE/B.Tech 6 12,000 950,4004 Engineer and Technicians BE/B.Tech 5 10,000 660,0005 Skilled Workers BE 4 5,000 264,0006 Semi-skilled and Un-skilled Matriculate 8 3,000 316,800Workers7 Other Misc. Personnel 8 2,500 264,000Total Direct Labour 33 2,917,200Indirect Labour8 Finance Manager MBA/MMS +CA1 15,000 198,0009 Accountant CA 1 10,000 132,00010 Business Development Graduate 1 8,000 105,600Executives11 Security Personnel 3 3,000 118,800Total Indirect Labour 6 554,400Total Cost of Man-power 39 3,471,600Note: (1) Manpower cost also includes Perks @ 10% of annual salary(2) There is no specific requirement of other highly skilled and specifically trained manpower apart fromthe normally available qualified manpower as mentioned above at the proposed manufacturing location.C. POWER AND FUELParticularsUnits Consumptionper dayUnit Cost(Rs.)Annual Cost(Rs.)Electricity (30 kW) Units 717 6 1,290,000Furnace Oil Litres 75 8 180,000Water Litres 3500 Nil 0Source: It is assumed that ground water is tapped through tubewell and hence water is considered free ofcost.D. OTHER EXPENSESSr. No.FixedParticularsTotal Cost (Rs.)

Sr. No. Particulars Total Cost (Rs.)1 Repairs and maintenance 1,452,4002 Business Development expenses 500,0003 Lease rent for land 210,0004 Office Administration and other misc. expenses 100,0005 Professional and legal fees 300,0006 Bank charges and commissions 20,0007 Printing and stationary 100,0008 Insurance and taxes 100,000Total Other Expenses 2,782,400E. Total Working CapitalParticulars Norms Total (Rs.)Raw Materials 2 Months of raw materials 5,250,667PackingMaterials2 Month of packing materials1,718,400Finished Goods 1 Month of cost of production 3,961,867Bills Receivables 1 Month of sales value 4,773,333Outstandings 1 Month of Raw Material and Packing Material 3,484,533Total 12,219,733Note: 1. Working capital requirement indicated above is at 100% capacity utilisation.2. Margin money @ 25% of total Working Capital – Rs. 3,054,933CAPITAL INVESTMENTThe capital investment required for the project is Rs. 2.61 crore. The break-up of the capitalinvestment is indicated in below.Sr. No. Particulars Total Value (Rs.)1 Land and Site Development Cost 125,0002 Building and Civil Works 3,000,0003 Plant and Machinery 17,283,0004 Misc. Fixed Assets 195,0005 Preliminary and Pre-operative Expenses 310,0006 Provisions for Contingency 2,091,3007 Margin Money for Working Capital 3,054,933Total Cost of the Project 26,059,233Debt and Equity StructureTotal Cost of ProjectPromoter’s Equity:Debt Funds:Rs. 26.06 lakhsRs. 10.42 alkhsRs. 15.64 lakhsFINANCIAL ANALYSISA. Cost of Production

Sr. No. Particulars Total (Rs.)1 Raw materials 31,504,0002 Packing materials 10,310,4003 Administrative overheads 2,917,2004 Other overheads 1,470,0005 Interest on working capital 824,872Total cost of production 47,026,472Note: 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 are around Rs. 5.73 crores.Sr.No.ParticularsNo. ofCapsules(Lakhs)Sales Realisationper '000Capsules (Rs.)Total SalesRealisation(Rs.)1 Tetracycline and Doxycycline 192 1,000 19,200,0002 Omeprazole (Antipeptic Ulcerants) 128 1,000 12,800,0003 Multi-vitamins with minerals 96 900 8,640,0004 Vitamin B complex 96 600 5,760,0005 Antianaemics with iron64 500 3,200,000combinations6 Antirheumatic 64 1,200 7,680,000Total 640 57,280,000Note: Total annual realisation mentioned above is at 100% capacity utilisationC. 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 7 Yr 8 Yr 9 Yr 10Capacity Utilisation 25% 75% 100% 100% 100% 100% 100% 100% 100% 100%Sales Realisation A 95 430 573 573 573 573 573 573 573 573Operating Costs BRM and PM Costs 70 314 418 418 418 418 418 418 418 418Labour Costs 29 29 29 29 29 29 29 29 29 293. Other Overheads 5 12 15 15 15 15 15 15 15 15Interest on WorkingCapitalGross Profit incl.Transport Subsidy1 6 8 8 8 8 8 8 8 8C=A-B -10 69 103 103 103 103 103 103 103 103Interest D 17 17 15 13 11 9 8 6 4 2Depreciation E 27 24 20 18 15 13 11 10 9 7PBT F=C-(D+E) -54 29 67 72 76 80 84 87 90 93Tax G 0 0 0 0 0 0 0 0 0 0PAT H=F-G -54 29 67 72 76 80 84 87 90 93Cash Profit I=H+E -27 52 88 89 91 93 95 97 99 101GP Margin J=C/A -10% 16% 18% 18% 18% 18% 18% 18% 18% 18%NP Margin K=H/A -57% 7% 12% 13% 13% 14% 15% 15% 16% 16%Note:1. Figures indicated above are rounded-off2. Annual sales values indicated above are after taking into consideration opening and closing stockReturn on Investment (ROI): 27%D. Breakeven AnalysisThe breakeven analysis for the proposed capsule-manufacturing unit is indicated below. The

unit does not achieve operational break-even point in the first year of operations. Fromsecond year onwards, the unit achieves operational break-even.

Particulars Unit Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7Capacity Utilisation (%) 25% 75% 100% 100% 100% 100% 100%Sales Realisation Rs. lakhs 98 440 587 587 587 587 587Variable Cost of SalesDirect MaterialRs.lakhs 39 176 235 235 235 235 235Packing CostRs.lakhs 20 88 117 117 117 117 117Conversion CostRs.lakhs 5 12 15 15 15 15 15Direct LabourRs.lakhs 29 29 29 29 29 29 29Interest on WorkingCapitalRs.lakhs 1 6 8 8 8 8 8Total Variable Costs Rs. lakhs 94 311 404 404 404 404 404Contribution Rs. lakhs 3 130 183 183 183 183 183Fixed CostsOther overheads (excl. Rs.Repairs and Maintenance) lakhs5 10 12 12 12 12 12Repairs and Maintenance Rs.lakhs 15 15 15 15 15 15 15Manpower CostRs.lakhs 6 6 6 6 6 6 6Interest on Term Loan Rs.lakhs 17 17 15 13 11 9 7Total Fixed Cost Rs. lakhs 41 47 47 45 44 42 40Break Even Point Rs. lakhs 1,168 158 151 145 139 133 127Actual Sales Realisation Rs. 98 440 587 587 587 587 587lakhsBreak Even Sales at % of %Capacity199% 27% 26% 25% 24% 23% 22%Note: 1. Figures indicated above are rounded-off2. Annual sales values indicated above are after taking into consideration opening and closing stocksSOURCES OF RAW MATERIALSAjanta Chemicals21, Cloth Commercial Centre, Kalupur, Ahmedabad- 380002Tel: +(91)-(079)- 2335755, 2384605Fax: +(91)-(079)- 22121182Alkyl Amines Chemicals Limited207-A, Kakad Chambers, 132, Dr. A. B. Road, Worli, Mumbai- 400018Tel: +(91)-(022)- 24925564, 24930699Fax: +(91)-(022)- 27671932Email: aac.vsh.@alkyl.sprintrpg.ems.vsnl.net.inAbbott Labs (India) Limited17 R, Kamani Marg, Mumbai- 400001Tel: +(91)-(022)- 256319797

Email: webmaster@abbott.co.inGufic Chemical Private LimitedSubhash Road, ‘A’, Vile Parle (E), Mumbai- 400037Tel: +(91)-(022)- 28341521/22, 28344523Fax: +(91)-(022)- 28369008Gujarat Organic Chemicals32, GIDC, Vithal Udyognagar, Kaira, Gujarat- 388121Tel: +(91)-(02692)- 231478, 231489Impex India8-2-333/ 14-A, Road No. 3, Banjara Hills, Hyderabad- 500034Tel: +(91)-(040)- 23548409Fax: +(91)-(040)- 23548409Email: impex.india@gnhyd.globalnet.ems.vsnl.net.inIndian Drugs and Pharmaceuticals LimitedP.O. Virbhadra- 249202 (Rishikesh), Utter PradeshJayant Vitamins Limited12, Bhargava Lane, Civil Lines, Delhi- 110054Tel: +(91)-(011)- 22911653, 22519414Lake Chemicals Private Limited12, Ravi Kiran, Plain Street, Bangalore- 560001Tel: +(91)-(080)- 22860394, 22866353Fax: +(91)-(080)- 22867734Email: md@lake.india.comMentioned below are few sources of packing materials-Ajanata Packing Company8939/1, Multani Dhanda, Paharganj, New Delhi- 110055Tel: +(91)-(011)- 23629420, 23514419Fax: +(91)-(011)- 23629420Email: ajantabottle@usa.netBoxcare Packaging Pvt. Ltd.83, B & C Sheth Govindrao Smruti, Dr. A. B. Road, Worli, Mumbai- 400018Tel: +(91)-(022)- 24960985, 24960986Flexible Packaging Company128/129, New Sadguru Nashik Industrial Estate, Goregaon (E), Mumbai- 400063Tel: +(91)-(022)- 28733602Fax: +(91)-(022)- 28734856Email: vilam@bom4.vsnl.net.inWonderpack Industries (Pvt) LimitedPO Box No. 29127, TV Indl. Estate, S. K. Ahire Road, Worli, Mumbai- 400025Tel: +(91)-(022)- 24936496, 24949580Fax: +(91)-(022)- 24938796Email: wonder@bom3.vsnl.net.inSOURCE OF MACHINERY AND EQUIPMENTMost of the machinery for manufacturing the pharmaceutical products is not manufactured inNER. Most of the machinery manufacturers are based in Mumbai, Ahmedabad. Smaller clustersfor machinery manufacturers include Delhi, Haryana, Kolkata, etc.Mentioned below are few sources of machinery and equipment-

PROCESS EQUIPMENTAlliance Engineering Company97, Trisandhya Building, D. Phalke Road, Mumbai- 400014Tel: +(91)-(022) 24112461, 24156510Fax: +(91)-(022) 24138307Pharmalab Engineering India LimitedStar Metal Compound, L. B. S. Road, Vikhroli (W), Mumbai- 400083Tel: +(91)-(022) 25782559Fax: +(91)-(022) 25775219Email: poma@gbom.3vsnl..net.inTapasya Engineering Works Private LimitedA-212, Road No. 30, Wagle Industrial Estate, Thane, Mumbai- 400604Tel: +(91)-(022)- 25823250Unipack Machines Private LimitedB-270, Joshi Wadi, Off Manpada Road, Dombivali (E), Mumbai- 421201ABMA MachinesPlot No. 40/1, Phase I, GIDC, Ahmedabad- 382445Ambica Engineering WorksPlot No. 1804, Phase-III, GIDC Industrial Area, Vatva, Ahmedabad- 382445Tel: +(91)-(079) 25894796, 25830729Gansons LimitedThe Shopping Mall, Arjun Marg, DLF Qutab Enclave (Phase-I), Gurgaon- 122002Tel: +(91)-(0124) 2359596/7Fax: +(91)-(0124) 2359041Neomachine Mfg. Co. Private Limited39/2A, Purna Das Road, Kolkata- 700053AUXILIARY EQUIPMENTThermax (India) LimitedThermax House, 4, Mumbai-Pune Road, Shivajinagar, Pune- 411019Tel: +(91)-(020)- 25512122Fax: +(91)-(020)- 25512242Website: www.thermaxindia.comAtlas Copco (India) LimitedSevanagar, Dapodi, Pune- 411012Tel: +(91)-(020)- 27146416/17Fax: +(91)-(020)- 27146637Website: www.atlascopco.comAquatech India LimitedPlot No. 3, Baner Park, Near D. P. Road, Aundh, Pune- 411007Tel: +(91)-(020)- 27292103, 27291104Fax: +(91)-(020)- 7291805Website: www.aquatech.comEmail: asa@aquatech.comAlfa Laval (India) LimitedShivajinagar, Pune- 4110112

Tel: +(91)-(020)- 27147721Fax: +(91)-(020)- 27147711Ion Exchange, MumbaiTiecicon House, Dr. E. Moses Road, Mahalaxmi, Mumbai- 400011Tel: +(91)-(022)- 24939520/23/25Fax: +(91)-(022)- 24938737Website: www.ionindia.comEmail: ho.commun@ho.ionxchng.co.inCourtesy:NEDFi