You are on page 1of 36

Chapter-1

Project Background & History


1.1 Project Background:
The main idea of our project is to establish a beverage company named Refresh Beverage
Company concerning the market conditions and consumer preferences overtime and
considering various policies or regulations needed to maintain for the project.

The major project parameters that will be served us as the guiding principles are listed below:

 Our project will be domestic market oriented.

 Geographical levels will be- national, areal, and local.

 Will be the first business of two kinds of products.

 Business will be located a major cities as well as other cities.

 Product variety will include a large variety of different flavored juices and drinks.

 Use of modern and attractive selling system.

 Best quality of advertising by using popular media.

 Quality control for the production.

1.2 Project Promoter(s) or initiator(s):

Name Address Financial possibilities


Masuma Bhuyan Farha 22/13 Khiljee Road, Dhaka. Has the fund about BDT
(Initiator)
1,500,000
Nazia Dilshad (Initiator) 881 Monipur, Mirpur-2, Has the fund about BDT
Dhaka. 1,800,000
Sumia Sultana Nadia 8/2 Kallyanpur, Dhaka. Has the fund about BDT
(Promoter)
950000
Shuvozit Karmokar (Promoter) 69 Pisciculture Housing , Has the fund about BDT
Dhaka. 800000
Md. Imrul Kayes (Promoter) 37, East Badda, Dhaka-1212. Has the fund about BDT
750000
Md. Tanzir Rahman (Promoter) 11/A, Mazar Road, Mirpur, Has the fund about BDT

1
Dhaka. 750000

1.3 Project History:


The essential events of historical development of the projects include-
 Project idea generation on 20 February 2011.
 Conforming members based on financial possibilities on 23rd February.
 The possible studies and investigation for the feasibility test was held between 25th February
to 31 March.
The potential studies and investigations that we have already performed include the
followings:
i. Pre-investment studies:
• Opportunity Studies (for identification of investment opportunities)
• Pre-feasibility studies (for preliminary project selection)
• Feasibility studies (for project formulation)
• Partial studies

ii. Preparatory investigations:


• Land surveys – For choosing appropriate land.
• Quantity surveys- Quantification of building materials.
• Quality tests- laboratory tests
• Other investigations and tests
1.4 Feasibility studies: For the formulation of project we have conducted the following
feasibility studies-
• Market studies
- Industry surveys: To cover production and development plan of industries
we surveyed the industry and the respondents of our questionnaire was
development agencies and organizations, industrial establishment,
development financial institutions and investors.
- Consumer surveys: This survey has been made taking a random sample of
respondents.
• Raw material and input studies
• Laboratory and pilot tests
• Location studies
• Economies of scale studies
• Equipment selection studies
Based on these studies and analysis the decisions taken by us are given on annex part.

2
1.5 Cost of preparatory studies and related investigations: The estimation of total
investment cost for pre-investment studies and preparatory investigations are of total BDT
15,700 (annex-schedule 1-1)
Chapter: 2

Market and plant Capacity


Before the formulation of our project, we have determined the size and composition of the
present effective market demand by segment, in order to estimate the possible degree of
market penetration by our product. We have also project the income from sales taking in to
account the technology, plant capacity production programmed, marketing strategy product
pricing promotional measures, distribution systems and costs. A detailed production
programmed has been made showing the various production activities and their timing. At
final we have determined the plant capacity taking in to account the alternative levels of
production, investment out lay and sales revenues.

2.1 Demand and market Study:

The necessary data we need for demand and market study are-
 Age: Child, young, Old

 Income line: Low, Middle, Rich

 Sex: Female, Male

 Location: Dhaka

Determination of future Demand for determining the future demand. We will survey more in
market in future and extend product line in future by evaluation the data the results are-
 Total size of present effective demand for beverage product is : 70%

 And by segment it is: 10% drink preference group

20% Juice preference group

10% Water preference group

3
The estimated market penetration will be done by the new product in the current
market.

2.2 Sales forecast and marketing of products and by product:


In addition to the results of the demand and market study, we have followed some
other variables
For forecasting our sales which are-
 GDP and per capital income may be rise in future

 Government intervention by increasing subsidies and decreasing tax.

We will select some sales programmers and marketing strategies reasons for selection
of sales programme-
 Introduction with our brand

 Create loyal regular based customers

 To make customers keep faith towards our products

 Distribution of outlet.

Reason for selection of marketing strategies-


 Being a low-cost provider

 Differentiation of product

 Promotional efforts and social service by campaigning and sponsorship

 Offer commission or discount on sales

 After sales facilities and services

We have estimated the sales revenues of upcoming 3 years based on the sales programme and
the marketing strategy which are given on schedule 2-1 in annex part.

4
We also estimated sales and distribution costs which

2.3 Production programme:

 After survey we have seen that there are 10% demand which cannot be filled by the
existing beverage firm. So we have the opportunity to fill up this gap. But at first time
it would not be possible because of lacking of experience. As first mover we may face
technical, social, ecological constraints. The market is very competitive.

 Raw materials:
Carbonated water constitutes up to 94% of a soft drink. The second main ingredient is
sugar, which makes up 7-12% of a soft drink. The overall flavor of a soft drink depends
on an intricate balance of sweetness, tartness, and acidity (pH. The most common acid in
soft drinks is citric acid, which has a lemony flavor. Emulsions are mixtures of liquids
that are generally incompatible. They consist of water-based elements, such as gums,
pectins, and preservatives; and oil-based liquids, such as flavors, colors, and weighing
agents

 The manufacturing process:


 Water Purifier process:
Impurities in the water are removed through a process of coagulation, filtration, and
chlorination. Coagulation involves mixing floc into the water to absorb suspended particles.
The water is then poured through a sand filter to remove fine particles of Roc. To sterilize the
water, small amounts of chlorine are added to the water and filtered out.

5
A schedule of our production programme is given on schedule-2.3

6
 Drinks and juice manufacturing process:
First we have to accumulate the raw materials the purified water is for eery drinks and
juice. The most drinks and juice also processing same. The following steps are-

 Clarifying the water


 Filtering, sterilizing, and dechlorinating the water
 Mixing the ingredients
 Carbonating the beverage
 Filling and packaging

 Technology:
With our mention technology we can produce 1000-2300 bottles per hour. And daily the
machine will produce 18400 bottles (including drink, water& juice).To operate these type
of technology we will hire a expert who train our local manpower.

7
Sales price:
Size of the product Water Drinks Juice

50ml - - Tk-8
100ml - - Tk-12
250ml - - Tk-25
500ml TK-10 TK-18 -
1 liter TK-35 Tk-40
-
2 liter TK-25 TK-66 -

At first we cannot fill up the full demand the market. We will fill up the 10% by following
ways-
 First year: 25%
 Second year: 55%
 Third year: 99.99%
 Based on our target sales we will improve quality, new product line, offer providing
will be a continuous process.

2.4 Plant Capacity:


People spend when he has capable to spend. So when society living condition will improve
they will spend more. With is industry will grow and overall economy will be improved. So,
all things are interrelated. Availability of resources, technological expertise, machine,
transportation& so on things are considered here.
 Feasible normal capacity:
It means with our existing manpower, technology, the units we can produce
normally. As we seen above that 25% of 10% total demand means 5, 00,000unit need per
week. To provide our product with our human resource & technology we need 5-6days. So
before supply we have to consider the technology, human resource, raw materials, uilities
availability.
 Nominal maximum Capacity:
It means the maximum utilization of human resource by over time, holidays, in case of 5
equipment to establish 3-4 extra equipment, stock more raw material than need, to fill up
market demand. But if we continue our production 9-10hours a day by above ways we can
produce 500,000 units in 3-4days.

8
Sl.
Name of Equipment Capacity Nos. / Set
No.
1 Asphalt Plant 60 ton - 120 ton/hr. 4 Sets
2 Asphalt Plant (Mini) 16 tons/hr. 1 Set
3 Air Compressor 185 cfm/10-12 bar 8 Nos.
4 A/C Tanker 20,000-30,000 Liters 5 Nos.
5 Ameter Upto 600 Amp 10 Sets
6 Bull Dozer 140 HP - 175HP, Blade Length 12 - 13 ft. 10 Nos.
7 Bitumen Distributor 6,000 liters 5 Nos.
8 Bitumen Carrier 20,000 Liters 3 Nos.
9 Bitumen Decanter 12,000 Liters 5 Nos.
10 Back hoe Loader 0.5 cum 1 No.
11 Bedford Truck 210 cft. 5 Nos.
12 Concrete Batching Plant 30 cum/hr. 2 Sets
13 Concrete Pump with all accessories 50 cum - 55 cum/hr. 2 Sets
14 Cone Crushing Plant 65 ton - 120 ton/hr. 5 sets
15 Crawler Crane (SUMITOMO-LINKBELT) 50 tons, B.L = 24 m 1 No.
16 Crane (TADANO) 10 ton - 25 tons 5 Nos.
17 Cargo Crane Truck 20 tons 1 No.
18 Concrete Mixer Machine 10 cft. - 17.5 cft. 26 Nos.
19 Concrete Vibrator 1.5" - 2.5" 25 Nos.
20 Concrete Bucket 1 cum - 3 cum 3 Nos.
21 Chips Spreader 6.6 ft. Screed 7 Nos.
22 Concrete Gun Test Machine 1500 KN to 2000 KN 4 Nos.
23 Computer with Printer Pentium 3 & 4 150 Nos
24 Dredger, IHC Holland 400mm cutter Suction 1 Set
25 Dump Truck 350 cft. - 550 cft. 74 Nos.
26 Dumper (mini) 1.5 ton 8 Nos.
27 Drilling Machine 6mm - 25mm 12 Sets
28 Excavator 0.9 cum - 2.10 cum 18 Nos.
29 Fuel tanker 9000 liter 3 Nos.
30 Farm Tractor 3 tons 6 Nos.
31 Generator 5 KVA - 450 KVA 40 Nos.
32 Grinding Machine 100mm - 175mm 18 Sets
33 House Boat 1.5 Ton 1 No.
34 Jaw Crushing Plant 40 ton - 120 ton/hr. 5 Sets
35 Lathe Machine Universal 8 Sets
36 Leveling Machine with Staff SOKKIA 14 Sets
37 Lab Equipment for Concrete Work 7 Lots

9
38 Lab Equipment for Road Work 7 Lots
39 Light Vehicle (Jeep, Microbus, Pick-up & Car) 1300 c.c to 3400 c.c 130 Nos.
40 Motor Grader 125 HP - 172HP, Blade Length 12 ft. 11 Nos.

10
Chapter-3
Materials and Inputs
The selection of materials and inputs by us were required for the manufacture of our products
as well as the supply programme and computation of material costs. The following issues
relating to material and input requirements were covered during the feasibility study-

3.1 Characteristics of materials and inputs:


 Raw material: The project will be market demand oriented. The main product is in
three segment & the raw materials also be in three categories. The followings are-
 Water:
TDS, Calcium, Sodium, Fluoride, Chloride, Cadmium, Led, Nitrate, Nitrate (No),
Mercury (No), Arsenic (No).

 Drinks:
♦ Soft drinks:
Carbonated water, Sugar, Caramel color, Acidulate, Natural flavors &
caffeine.

♦ Energy drinks:
Sugar, Caffeine, Herbs, Vitamins, Taurine, Flavor.

Juice:
Calcium hydroxide, Vitamin D3, Ascorbic acid, Vitamin E Acetate, Calcium
Citrate, Beta Cato tine, Malic & citric acid, Natural flavors.

Above all the materials are unprocessed except sugar, color, citric acid. These are semi
processed.

 Processed industrial materials


 Base metal:
Calcium, Mercury, Sodium Chloride

11
 Process intermediaries:
It means the different production sector oriented will be either production oriented
or import oriented. Basically most of the materials which will be used are
available in our country & also less costly. We will not go for production &
imports either we will purchase raw materials from wholesaler. Some ingredients
have different category& the price is also different.
♦ Acidulates (makes it sour):

 citric acid
 phosphoric acid
 malic acid
♦ Preservatives:

 Sodium benzoate
 Potassium sorbate
 No preservatives (pasteurization
♦ Flavors (natural and artificial):

 citrus
 lemon
 berry
 mango
 cherry
 grapefruit

 Auxiliary Materials & factory supplies:

 Bottles: There are two types of bottles & these are-


• Plastic
• Glass
We will use plastic bottles because of the reasons-
♦ Easy to carry
♦ Light weight
♦ Portable

12
 Cans: There are two types of can available in the market & the followings are-
• 250ml
• 100ml
We will use cans for the following reason-
♦ Light weight
♦ Non breakable

 Tetra Pack:
Tetra Packs are becoming increasingly popular as single serve and multi
serving beverage containers. There are other types of beverage containers available
but the ones discussed on this page make up over 95% of all beverage containers sold
today.
We will use cans for the following reason-
♦ Light weight
♦ Environment friendly

Beside these there are also some materials which is considered as auxiliary like-
 Storage
 Packaging
 Labeling
 Registering
 Cartoon making
 Coding

 Utilities:
 Electricity: Our business is beverage (drink, water& juice) so electricity is
necessary for 24hoursaproduction. In Bangladesh there are two ways to get power
supply.
• Own( Generator)
• Government & own

13
Two types line is available
 220 watt
 440 watt

For our business 440 watt is good. We use hypertension light & we need-
• Substation
• Meter
• Pool
• Fiber
• Underground cable
The above processing will cost 200,000 taka and above

 Water: As our products are mainly water oriented & for other purposes water is
essential. In case of supply water we use purifier and supply to our customer. There
are two ways to get water supply-
 Titas Gas
 Bio-Gas plant
Bio gas plant in not enough for our project. For this we have to consider the titas gas
line and consider the following things-
• Pressure
• Pipe line
• Contractor
The cost will be depending on the location distance. If the plant is in Asulia then the
line will be 300-500ft & cost will be 500,000- 700,000tk.
Recently government also approved the Bio- Gas plant for bigger organization.

 Data and alternative:


 Water: there are no alternative for the ingredients for water. But we can use
fluorides substitute of chloride & potassium as substitute of sodium.
 Drinks In case of soft drinks & energy drinks has little bit difference. A beverage
formulation can consist of blend of flavor, sweetens, preservatives, color Range

14
from color less to dark brown(Using caramel color) to bright red , yellow&
oranges
 Juice: Natural flavor- Mango, orange, Strawberry& so on.

 Reason for selection:


 Carbonated water- carbon
 Sugar-Different acid- Taste to sweet
 Caffeine- Use to refresh body
 Citric acid- Preservatives
 Natural flavor- Different taste and preferences
Availability
 Fluoride- Taste like salt

 Sources & quantities available:


 To make drinks and juice we need raw material & machine. Actually the main ingredients
are from chemical industries. Now Bangladesh has become almost independent in
manufacturing medicine, Here are some industry from whom we will collect our
necessary raw materials.

Dhaka Chemietechs

,Pharmaceutical Raw Materials...


Category: Food & Beverage | Other Fish & Seafood

BDraw International

Products/Services : Feed Additives, Vitamins, Amino Acid...

REMEX Corporation Ltd.

 Other raw materials


 Transportation cost:

15
 We will collect materials from Bangladesh & deliver our product regional and
after that national. So the basic raw material bears less costly for us.

 Technology and Equipment:


To build a beverage industry we need lots of modern technology and equipment.
Some beverage equipment followings-

• 3 In 1 Auto Filling Machine [KMFX-1000]


• 3 In 1 Auto Filling Machine Application: This machine can do washing bottle, filling
and capping by is Suitable for mineral water, tea drinking, cola filling.

• Water Filling Line [XG(16-12-6)]


• filling machine, water filling line is used PLC controller automatic small water bottle
300ml-1.5L washing bottle , filling water filling machine,

• Beverage Straw Machine [oulu]


• Qingdao Oulu Rubber Plastic Machinery Co., Ltd specialized in manufacturing all
kinds of rubber plastic machinery and plastic machinery. We manufacture
concolorous, bicolor and three-color straw ...

16
3.2 Supply Programme:
Supply programme is simply is not for order and receiving that. It depends on the whole
production, technical equipment, manpower& so on. Before placing an order we have to
identify the total demand cover by leading Beverage Company. After that we can measure the
actual demand for our product. Then we will estimate the total working hour per day,
machine capacity per day & availability of raw material. Then we will deliver our product to
our customer. We have not to be worried about supply because our product is not agro based.
So we will supply product twice (2 weeks after). The total production will not fully deliver at
a time; it will be supplied based on demand.

17
Chapter-4

Location, Site and Environment

We have chosen a location from a fairly wide geographical area considering several
alternative sites and also studied the impact of erecting and operating the industrial plant on
the environment for the feasibility study.
4.1 Location:

We find out Gazipur, Dhaka bounded by Dhaka-Mymansingh high road. This enables the
business to be aware of all the major competitors in the markets, as well as the respond of its
product. The location of the site is shown in the Figure-

18
A. The natural environment
In this location has not any negative environmental effect for this company. For this reason,
most of the modern industry is setup in this location. Here temperature, rainfall, flooding, soil
and other factors are acceptable.

The production unit can be established on the road said where the basic raw materials can
easily be transported and other utilities especially electricity is easily available.

Infrastructure Requirements:
 Road
 Electricity
 Water

Socio-economic policies:
The establishment of any food & drink plant in Bangladesh is required to get a license from
the BSTI.

Final choice of location


 Production costs: Available Raw material, skills man power, available of land for expansion
of business that reduces overall production cost.

 Marketing costs: Approximately Gazipur is central of Bangladesh, all the district are
connected with this area. It near about Dhaka so marketing cost will be lower than other place

 Investment costs: We can punches Land from Gazipur at lowest investment cost.
Environmental protection also lower than other places.

 Revenues: Maximum amount of revenue can earn by investing minimum amount of capital.

 Taxes, subsidies, grants and allowances: Government give five years tax holyday for set up
new industry out sit of Dhaka city.

Finally we have selected Gazipur, Dhaka.


4.2 Site selection:

19
For finding the appropriate site of our plant, at first we have collected fundamental data on
various sites in Gazipur considering the following factors:

 To require a total area 2 acre. This area will give ample space in the beginning for
sitting buildings and different services necessary for the project i.e. Machinery
installation, storage and vehicle parking area, etc.

 The lower transportation costs for delivering products

 Easy supply to customers from our location plant

After the collection of data, we have listed possible site alternatives in Gazipur that may
be suit for our plant operation-
Among these possible alternative sites, we have selected the area for establishing our
initial plant there, because of the adaptability of the following aspects-
- Land price is reasonable

- Public policies were favorable to private interests

- Development of infrastructure could be possible and socio-economic environment


is suitable.

20
4.4 Environmental impact :
The environmental impacts that are to be expected because of the creation and operation of
our plant will be-
 Increase of employment will be created.
 Development of traffic network will be enhanced.
 Our operation will not affect the ecological system.

Project Cost estimation:


The cost of the project is estimated at BDT13.69 million having a Capital Investment of BDT
10.97 million and Working Capital provision of BDT 2.72 million.
We have estimated the investment cost and production cost of the site which are given on the
schedule of 4-1 and 4-2 in the annex part in which both of the costs seem to be favorable for
us.

21
Chapter-5
Project Engineering

5.1 Project layouts : For the preparation of our project layout, we collected data about the
following programmes-
 Production Programme
 Supply programme
 Technology
 Equipment
 Civil works
We have selected a layout which requires – a total of 6 floor building in which the
underground will be for parking of cars, and the guard room. The 1 st floor will be for
production of drinks by using drinks filling, that will be treated as product 1. The 2 nd floor
will be same but it will be for the production of juice which will be treated as product 2 and
the 3rd floor will be for the production of water by using water filling, purifier machine and a
portion of the floor will be treated as for water storage that will be treated as product 3.
5.2 Scope of the project: We have selected this project for many reasons but the key reason
is – 90% market demand is covered by existing beverage company. So, there is a opportunity
to cover-up the rest 10%. So, that’s why we have chosen this project.
As we will have some limitation as newcomers, so at first we will cover the 5% of
total market demand. After that, our supply will be based on the customer response. After
covering the 10%, we will focus on mostly product line extension, differentiation, feature and
quality improvement which will help us to capture the major portion of the market.

5.3 Technology & Equipments: We have estimated the production cost of technology and
equipments which are given on the Annex Part.

5.4 Civil Engineering Works: A schedule for Civil Engineering works is given on Annex
Part.

22
Chapter-6
Plant organization and overhead costs

For estimating the overhead cost we have used the a schedule of 6-1 which are represented in
the annex part, which are of a total of BDT

Chapter-7
Manpower
Now time to deal with manpower planning. In this case we have to careful and identify
effective as well as efficient according to the project requirement. To operate the organization
as production programmers have responsibilities such as the following stage for better
understanding;
• Plant capacity
• The technological processes and plant organization have been determined
• The human resource requirements at various levels
• The qualitative and quantitative human resource requirements of the project
• The availability and costs of employer
• The costs of unskilled labour should be shown separately
• Training needs according to project
The successful implementation and operation often industrial project needs different
categories of human resources-management, staff and workers-with sufficient skills and
experience.
7.1 Skilled and unskilled workers
For the beverage organization skilled and unskilled workers is of equal importance to the
availability of managerial and supervisory staff. Experience worker are more embrace
functions and capabilities that are central to the operation and survival of a firm, such as the
setting up of corporate objectives and strategies and the motivation and supervision of staff
and workers. Basically like our beverage company functions are usually divided between two
categories
Management level
Operation level

23
Management Level: The members of the team forming "the management" of a firm,
whereas in the small business sector usually one or two persons have to cover all these
functions. In our Management section there is 45 experience staff for managing activities

Operation level: In operational level there are more than 500 labors to operate functional
activates and most of them skilled and also unskilled workers involved. The level of skilled
labour available in developing organization of the production process and of the machinery
and equipment to be installed in the plant workers, are therefore a precondition for the
preparation of the manning table, recruitment planning and the design of a training plan.

Legislation and labour terms


Labour terms to be regulated by legislation based on common practice. Employment of
women is subject to specific conditions, traditions and policies. The prevailing rules
regarding national holidays, shift work, working hours and annual, sick and training leave
will have an impact on the effective number of working hours and days per year, and
therefore affect the human resource requirements, given the production targets and other
conditions

Occupational safety
We provide the standards of occupational safety and environment for the better performance
of works and also have been established or are enforced strictly enough. Our relevant
existing regulations on occupational safety, including future trends, and analyses their impact
on investment and production costs.

Health care and social security


We also identify and consider necessary plant components regarding arrangements for health
care and social security for the human resources to be employed. The cost of such
components will have to be estimated and included in the cost tables of the study. ILO has
published a number of documents on the subjects of occupational safety, health and working
conditions in developing countries and in different employment situations.

Assessment of supply and demand


The briefly describe and assess the employment situation in the organization, given its
relevance for the project. The assessment of human resources available to be covered

24
employment conditions in the organization unemployment, technical and social infrastructure
and migration trends. General economic development, infrastructure development and plans
regarding industrial projects have analyzed with regard to possible future changes of the
employment situation and availability of personnel. The following factors have given due
consideration when the availability and employment of human resources are analyzed.
• The general availability of relevant human resource for the organization
• The supply and demand situation in the project region
• Recruitment policy and methods
• Training policy and programmers

A certain technology, safety hazards, sophisticated machinery and equipment, international


market orientation and other factors may justify special skills and experience. Strong demand
from existing industries and expected demand from projects under construction might make it
more difficult for the project in question to recruit human resources with the professional
background and skills required.

Recruitment planning
The common term that competitiveness will depend both on the wages and salaries offered
and on social security and fringe benefits. The methods and means of retaining key personnel
for long periods, probable terms of employment and possible fringe benefits to employees
and their families to be identified.
* Recruitment is combined with intensive training of key personnel in order to meet quality
requirements;

Training plan
Since the lack of experienced and skilled personnel can constitute a significant bottleneck for
project implementation and operation in developing Organization, extensive training
programmers have designed and carried out as part of the implementation process of ore
Beverage project. Training is provided at the factory by managerial and technical personnel
and others, by specially recruited experts or by expatriate personnel. In terms of growth of
efficiency and productivity, this will prove to be the most necessary and appropriate. The
requirements of training for various levels of plant personnel, the duration of such training for
each category,

25
The Vital factors of our training program as follows
• The timing of training programs
• Sufficiently to be trained to take up their positions as and when required.
• Personnel at various levels have undergone any training necessary before production
starts, during the pre-production and construction stages.
• The training of supervisory and production personnel would cover production
processes in sufficient detail to enable them to train others in the same fields.
• Provision for training is required mandatory before production starts and also
thereafter.
• Operational training costs accruing during the pre-production phase.
• Training expenses were between 10 and 15 per cent of total investment costs.

Training programmers to be prepared through the following steps:


 Analysis of personnel characteristics and conditions. Verifiable capabilities, numbers,
experience and other characteristics have analyzed.
 Analysis of training requirements. This is related to judgements regarding
performance characteristics of different personnel categories.
 Updating during future plant operations to be required for management and
administrative staff as well as labour.

Labour and Staff Cost estimates:


There is to consider non-production labour costs as fixed and production labour costs as
variable. This is generally too great a simplification, as most labour costs are semi-fixed or
fixed in the short term. Before we have estimated the labor cost for each department and
function. When estimating the total wage and salary costs, provision have made for the
following personnel overhead costs:
 Social security, fringe benefits and welfare costs
 Annual deposits to pension funds
 Direct and indirect costs of training

An estimation of production costs of wages and salaries are given on schedule7-1 in annex.

26
Chapter-8

Implementation Scheduling
To measure a series of simultaneous and interacting investment activities with
different financial implications, we have estimate the investment cost of the project
implementation which are given in schedule 8-1 in annex part and the total costs from
implementation of the project is BDT 78.5 million.

Chapter-9

Financial and Economic evaluation


In this stage, we have computed the total investment costs, total production costs,
sources of financing, and a financial evaluation and economic evaluation.

9.1 Total investment costs: We have calculated the total investment costs by
summarizing all investment components in chapter 1, 2,3,4,5.6,7,8 by using schedule
9-1 in annex part which represented a total investment cost of BDT 1.5 crore.

9.2 Total Production costs: The total production cost is calculated by summarizing all
cost items by using the schedule 9-2 where it represents a total of BDT 2.5 crore.

9.3 Project Financing: Our source of financing for the project is the promoters own
funds, from collaborators, financial institutions or development agencies, government,
commercial banks etc. from which we collected the total amount of financing is BDT
5 crore. A total financing amount with the sources are represented in schedule 9-3 in
which
9.4 Financial evaluation: For the financial evaluation we have calculated the
commercial profitability criteria by calculating the
 Net present value
 Profitability Index
 Break even analysis

27
Conclusion:
After conducting the feasibility study of our expected project, it has seen that, the
project is feasible enough to conduct the business, as the net cash flows of upcoming
three years, net present value, and the profitability indexes are higher.

28
References:
• Manual for the preparation of industrial feasibility study – UNDP.
• www.semda.com

29
Annexes

30
Schedule 1-1
Estimate of Investment Cost
Pre-investment studies and preparations
No. Quantity Unit Item description Unit cost Cost
1. Pre-investment studies
Opportunity Studies 300000
Pre-feasibility studies 300000
Feasibility studies 500000
Partial studies 300000
Experts, consultant and engineering
fees 300000 1700000

2. Preparatory investigations:
Land surveys 1500000
Quantity surveys 500000
Quality tests 500000
Other investigations and tests 500000 3000000

BDT 2,000,000
Total

31
Schedule 2-1
Estimate of sales revenue

Products by Year1 Year2 Year3


product
Description Unit Quantities Sales Quantities Sales Quantities Sales
price To be sold revenues To be sold revenues To be sold revenues
including including including
tax tax tax
Juice 25 52000 1300000 1200000 30000000 1200000 3000000

Drinks 18 10000 1800000 2777777 5000000 2777777 5000000

Water 10 105000 1050000 700000 7000000 1200000 1200000

Grand BDT BDT BDT


total 4,50,00,00 4,20,00,0 4,70,00,000
0 0

Schedule 2-2

Estimate of investment costs


Sales and distribution costs
No. Quanti Unit Item descriptions Unit cost
ty cost
1. Sales cost:
Training of salesman and 200000
merchants
Advertising 150000
After sales services 50000
Communication 200000 60,00,000

2. Distribution costs:
Bottles, cans and packaging 20,00,00
Transport 0
Commissions 20,00,00 60,00,000
Total 0 BDT
20,00,00 1,20,00,000
0

32
Schedule 3-1
Estimate of production cost (Materials& Inputs)
No. Quantity Unit Item description Unit cost Cost

1. Unprocessed or semi processed raw


materials 5,00,000
2. Processed industrial material 12,00,000
3. Auxiliary materials 6,00,000
4. Supplies 5,00,000
5. Utilities 3,00,000

Total BDT
3,000,000

Schedule 4-1
Estimate of Investment Cost
Land
No. Quantity Unit Item description Unit cost Cost
1. Land 400000
2. Taxes 275000
3. Legal expenses 160000
4. Payments to neighbors 115000
Rights of way(on the time payments) 250000
fees

12,000,000
Total

Schedule 4-2
Estimate of Production Cost
Land
No. Quantity Unit Item description Unit cost Cost
1. Annual payments for:
3,500,000
Rights of way
750,000
Easements
200,000
Rents

BDT
Total
13,000,000

33
Schedule 5-1

Estimate of Production Cost


Equipment
No. Quantity Unit Item description Unit cost Cost
1. Production Equipment:
Purifiers 200,000
Beverage filling 200,000
Straw Machine 200,000 600,000
2. Auxiliary equipment:
Bottles 200,000
Can 200,000
Tetra Packs 200,000 600,000

3. Service equipments:
3-in-1 Juice machine 200,000
Plastic glass 300,000
Refrigerator 300,000 800,000

Total BDT 2,000,000

Schedule 6-1

Estimate of Production Cost


Overhead costs
No. Quantity Unit Item description Unit cost Cost
1. Maintenance 300,000
Communication 200,000
2.
Travel 150,000
3.
Rents 200,000
4.
Land charges 100,000
5. Royalties 50,000
6. Property taxes

Total BDT 1,000,000

34
Schedule 7-1
Estimate of Production costs- Wages and salaries
Department (project Variable costs Fixed costs
component)
Product-1 200,000 18,00,00,000
Product-2 500,000 30,00,00,000
Product-3 300,000 22,00,00,000
Total no. of workers
Working hours per day
Working days per year
Hours per year
Wages per hour
Wages per year

Schedule 9-1
Total Investment Cost

Item Category From Schedule Total


1. Pre-investment studies and 2,000,000
preparations
2. Land 11,000,000
3. Project Implementation 3,000,000

Total BDT 15,000,000

Schedule 9-2
Total Production Cost

Item Category From Schedule Total


1. Sales and distribution costs 1,200,000
2. Materials& Inputs 3,000,000
3. Land 13,000,000
4. Wages and salaries 8,000,000
5. Equipment 2,000,000
6. Civil engineering works 4,000,000
7. Overhead costs 1,000,000

Total BDT 25,000,000

35
Cash-flow Table

Item description Year 1 Year 2 Year 3 Total

A. Cash inflow
BDT BDT BDT BDT
1. Sales revenue (from 45,000,00 42,000,00 47,000,00 134,000,000
schedule 2-1) 0 0 0

B. Cash outflow

1. Total
investment costs 15,000,00 10,000,00 11,000,00
0 0 0
2. Total
production costs
25,000,00 21,000,00 20,000,00
C. Net cash flow (A-B) 0 0 0 32,000,000

D. Cumulative net cash flow 32,000,000


5,000,000 11,000,00 16,000,00
0 0
5,000,000
16,000,00 32,000,00
0 0

Calculation of Net Present Value:

Year Net cash flow Discount factor @ 15% NPV


1 500,000 0.870 435,000
2 1,100,000 1.626 1,788,600
3 1,600,000 2.283 3,652,800

Calculation of Profitability Index:

PA1= NPV/Cost of the project *100


=500000/4000000 * 100
= 12.5%

PA2= 1100000/3,100.000* 100


= 35.5%

PA3= 1600000/3,100.000*100
= 51.6%

36