PROJECT REPORT

Of

BABY CEREAL MILK FOOD

PURPOSE OF THE DOCUMENT

This particular pre-feasibility is regarding Baby Cereal Milk Food.

The objective of the pre-feasibility report is primarily to facilitate potential entrepreneurs in project
identification for investment and in order to serve his objective; the document covers various aspects
of the project concept development, start-up, marketing, finance and management.

[We can modify the project capacity and project cost as per your requirement. We can also prepare
project report on any subject as per your requirement.]

Lucknow Office: Sidhivinayak Building ,

27/1/B, Gokhlley Marg, Lucknow-226001

Delhi Office : Multi Disciplinary Training

Centre, Gandhi Darshan Rajghat,
New Delhi 110002

Email : info@udyami.org.in
Contact : +91 7526000333, 444, 555
 PROJECT AT A GLANCE

1 Name of the Entreprenuer xxxxxxxxxx

2 Constitution (legal Status) : xxxxxxxxxx

3 Father / Spouse Name xxxxxxxxxxxx

4 Unit Address : xxxxxxxxxxxxxxxxxxxxxxx

District : xxxxxxx
Pin: xxxxxxx State: xxxxxxxxxx
Mobile xxxxxxx

5 Product and By Product : BABY CEREAL MILK FOOD

6 Name of the project / business activity proposed : BABY CEREAL MILK FOOD MANUFACTURING UNIT

7 Cost of Project : Rs.21.67 Lakhs

8 Means of Finance
Term Loan Rs.13.5 Lakhs
Own Capital Rs.2.17 Lakhs
Working Capital Rs.6 Lakhs
9 Debt Service Coverage Ratio : 2.40

10 Pay Back Period : 5 Years

11 Project Implementation Period : 5-6 Months

12 Break Even Point : 51%

13 Employment : 13 Persons

14 Power Requirement : 25 HP

15 Major Raw materials : Milk,Rice,Wheat, Oats etc.

Estimated Annual Sales Turnover (Max Utilized

16 Capacity) : 111.89 Lakhs

17 Detailed Cost of Project & Means of Finance

COST OF PROJECT (Rs. In Lakhs)

Particulars Amount
Land Own/Rented
Building /Shed 1500 Sq ft Own/Rented
Plant & Machinery 13.85
Furniture & Fixtures 1.15
Working Capital 6.67
Total 21.67

MEANS OF FINANCE
Particulars Amount
Own Contribution 2.17
Term Loan 13.50
Working Capital 6.00
Total 21.67
 BABY CEREAL MILK POWDER

PRODUCT INTRODUCTION:
Baby cereal foods are rich in minerals and nutrients. They have required
levels of nutrition which are helpful for babies to maintain their growth.
Cereal is usually the first solid food that is given to babies and due to its
convenience and has many advantages. Mainly, there are three forms of baby
food which are liquid concentrate, powder, and ready to feed. Cereal powder
is the least expensive form and it’s used, by mixing it with water before
feeding it to infants. Cereal foods are easily digestible by baby and it also helps
in growth of the infant at initial stage of their life.
USES & MARKET POTENTIAL:
The infant cereal food provides soft diets to the babies. Baby cereal food are
completely dissolvable in saliva. In many cases the baby cereal foods are also
used by older children as it makes an excellent hot cereal and are also easily
prepared. Cereals with milk are an excellent source of calcium.

Baby food is one of the fastest growing categories in baby care and overall
FMCG industry of India. Baby cereal food have witnessed an excellent growth
in the past few years. Baby food market size in 2014 was valued at 50.7 billion
dollar and is expected to be 72.7 billion dollars by 2020. In old times babies
were feeded with some home cooked food but in today’s scenario things have
changed, which resulted in increased demand of baby cereal food all over the
country.

INFRASTRUCTURE REQUIREMENT:
1) Land around 1500-2000 sq. Ft.(approx.)

2) Office Furniture and fixtures

MACHINERY REQUIREMENT: Basic Machinery requirement are as

follows:

1. Milk Storage Tank

In dairy and milk processing industry a bulk milk storage tank is a

large storage tank for holding the milk at a cold temperature until it can
be picked up by a milk hauler. It is made up of stainless steel and is used
every day to store the raw milk on the farm in good condition.
2. Baby Boiler

Boilers are basically used in dairy industry for heating of milk and milk
pasteurization. Milk boilers ensures good shelf life.

3. Raw Material Bin

These equipments are class of storage equipments which are

specifically designed for dry raw material of small granule composition.

4. Industrial Mixer Grinder

This machine is used to mix various ingredients in appropriate

quantities and help in the process of making baby cereal milk powder. It
is a multipurpose machine used for various grains, rice, etc.
5. Homogenizer

This equipment is used in the production of liquid mixtures in which the

said mixture, is forced through a small passage at high velocity. This
machine reduces solute globule size to a very small size in order to
prevent aggregate formation.

6. Spray Drier with Atomizer

Spray drier use some type of atomizer or spray nozzle to disperse the
liquid or slurry into a controlled drop size spray. This machine helps in
producing a dry powder from a liquid. It is used for products such as
starch, rice, corn, etc.

7. Can Washing Machine

 Can Washing Machine be used to wash the tin containers and cans in
which given product is to be stored and packed. Before packaging
process takes place, the cans or tins are washed in can washing
machine.

8. Sterilizer

This machine is simply composed of a storage tank, a heating

mechanism and a temperature regulation system so as to sterilize given
mixture.

9. Cereal Powder Packing Machine

This machine is used to fill the finished product in cans or tins of

different sizes and the product is ready for sale in the market.
RAW MATERIAL:
Basic Raw Material requirement are as follows:

1. Milk
2. Rice
3. Wheat
4. Oats
5. Cans
6. Chemicals like Preservatives

MANUFACTURING PROCESS: The General procedure is as follow:

• Mixing Ingredients: The primary ingredients are blended in huge

stainless-steel tanks and are mixed together along with milk at
temperature of 60°C. Then other fat, minerals, nutrients are added.
Some additional heating and mixing may be required to get proper
consistency. When mixing process is completed then the mixed material
is transported to pasteurization equipment.

• Pasteurization: This process is very helpful as it protects the mixture

from getting spoiled, by removing or eliminating bacteria, yeast and
molds. The mixture is quickly heated and then cooled under controlled
conditions, in which micro-organism cannot survive. The heating
temperature is around 85-95°C for approximately 30 seconds.

• Homogenization: This process enhances emulsion uniformly which

helps in reducing the size of the fat and oil particles in the formula. This
process is performed by a variety of mixing equipments which apply
shear load at the product and this mixing breaks fat and other particles
to a very small size.
 • Standardization: This process is used to ensure that the key
parameters like Ph, vitamins and mineral content are correct. If the level
is insufficient the levels are reworked to make it adequate.

• Sterilization: The formula is heated to maintain its bacteriologic quality

so that the product quality is not hampered. In this the formula is
heated at a temperature of 118°C for 10-15 mins.

• Dry Blending: This process can be performed through spray dryers. In

this process the ingredients are received in a dehydrated powdered
form and are mixed together to achive a uniform blend of the macro and
micro nutrients necessary for a complete infant formula product.

• Packaging: This process basically depends upon the equipments used

but commonly the product is packed in different size of cans or small
tins which can be easily sold in a retail market.

Process Flow Diagram:

PROJECTED BALANCE SHEET

PARTICULARS I II III IV V

SOURCES OF FUND
Capital Account
Opening Balance - 2.88 4.32 6.71 9.85
Add: Additions 2.17 - - - -
Add: Net Profit 2.22 3.43 5.90 8.14 10.58
Less: Drawings 1.50 2.00 3.50 5.00 8.00
Closing Balance 2.88 4.32 6.71 9.85 12.43
CC Limit 6.00 6.00 6.00 6.00 6.00

Term Loan 12.00 9.00 6.00 3.00 -

Sundry Creditors 0.46 0.52 0.59 0.66 0.74

TOTAL : 21.34 19.84 19.30 19.52 19.18

APPLICATION OF FUND

Fixed Assets ( Gross) 15.00 15.00 15.00 15.00 15.00

Gross Dep. 2.19 4.06 5.66 7.02 8.18
Net Fixed Assets 12.81 10.94 9.34 7.98 6.82

Current Assets

Sundry Debtors 4.45 5.23 5.92 6.66 7.46

Stock in Hand 2.73 3.02 3.38 3.77 4.19
Cash and Bank 1.36 0.66 0.66 1.11 0.70

TOTAL : 21.34 19.84 19.30 19.52 19.18

- - - - -
PROJECTED PROFITABILITY STATEMENT

PARTICULARS I II III IV V

A) SALES
Gross Sale 66.82 78.42 88.83 99.86 111.89

Total (A) 66.82 78.42 88.83 99.86 111.89

B) COST OF SALES

Raw Mateiral Consumed 27.48 31.26 35.35 39.78 44.54

Electricity Expenses 2.55 2.77 2.98 3.19 3.40

Repair & Maintenance 0.33 0.39 0.44 0.50 0.56

Labour & Wages 10.76 11.83 13.02 14.32 15.75

Depreciation 2.19 1.87 1.59 1.36 1.16

Cost of Production 43.31 48.12 53.38 59.15 65.42

Add: Opening Stock /WIP - 1.44 1.56 1.73 1.91

Less: Closing Stock /WIP 1.44 1.56 1.73 1.91 2.11

Cost of Sales (B) 41.87 48.01 53.21 58.96 65.22

C) GROSS PROFIT (A-B) 24.95 30.41 35.62 40.90 46.68

37.34% 38.78% 40.10% 40.95% 41.72%
D) Bank Interest (Term Loan ) 1.46 1.20 0.87 0.54 0.21

ii) Interest On Working Capital 0.66 0.66 0.66 0.66 0.66

E) Salary to Staff 8.58 9.44 10.38 11.42 12.56
F) Selling & Adm Expenses Exp. 12.03 15.68 17.77 19.97 22.38

TOTAL (D+E) 22.73 26.98 29.67 32.59 35.81

H) NET PROFIT 2.22 3.43 5.94 8.31 10.87

3.3% 4.4% 6.7% 8.3% 9.7%
I) Taxation - - 0.05 0.17 0.29

J) PROFIT (After Tax) 2.22 3.43 5.90 8.14 10.58

PROJECTED CASH FLOW STATEMENT

PARTICULARS I II III IV V

SOURCES OF FUND

Own Contribution 2.17 -

Net Profit 2.22 3.43 5.94 8.31 10.87
Depreciation & Exp. W/off 2.19 1.87 1.59 1.36 1.16
Increase In Cash Credit 6.00
Increase In Term Loan 13.50 - - - -
Increase in Creditors 0.46 0.06 0.07 0.07 0.08

TOTAL : 26.54 5.37 7.61 9.74 12.11

APPLICATION OF FUND

Increase in Fixed Assets 15.00 - - - -

Increase in Stock 2.73 0.29 0.36 0.39 0.42
Increase in Debtors 4.45 0.77 0.69 0.74 0.80
Repayment of Term Loan 1.50 3.00 3.00 3.00 3.00
Taxation - - 0.05 0.17 0.29
Drawings 1.50 2.00 3.50 5.00 8.00
TOTAL : 25.18 6.06 7.60 9.29 12.52

Opening Cash & Bank Balance - 1.36 0.66 0.66 1.11

Add : Surplus 1.36 - 0.70 0.00 0.45 - 0.41

Closing Cash & Bank Balance 1.36 0.66 0.66 1.11 0.70
COMPUTATION OF BABY CEREAL MILK FOOD MANUFACTURING UNIT

Items to be Manufactured BABY CEREAL MILK FOOD

Manufacturing Capacity per Day 80.00 kg

No. of Working Hour 8

No of Working Days per month 25

No. of Working Day per annum 300

Total Production per Annum 24,000 kg

Total Production per Annum 48,000.00 Cans of 500gm

Year Capacity BABY CEREAL

MILK FOOD
Utilisation

I 60% 28,800
II 65% 31,200
III 70% 33,600
IV 75% 36,000
V 80% 38,400

COMPUTATION OF RAW MATERIAL

Quantity of
Total CostPer
Item Name Raw Unit Unit Rate of
Annum (100%)
Material
Milk 72,000 Ltr 28 2,016,000
Rice 11,040 Kgs 35 386,400

Wheat 9,600 Kgs 18 172,800

Oats 5,000 Kgs 190 950,000

Cans 48,000 Pieces 22 1,056,000
Total 145,640.00 4,581,200.00

Total Raw material in Rs lacs at 100% Capacity 45.81

Cost per 500 gm Cans (In Rs) 95.40
Raw Material Consumed Capacity Rate Amount (Rs.)
Utilisation

I 60% 95.40 27.48

II 65% 100.20 31.26
III 70% 105.20 35.35
IV 75% 110.50 39.78
V 80% 116.00 44.54
COMPUTATION OF SALE

Particulars I II III IV V

Op Stock - 960.00 1,040.00 1,120.00 1,200.00

Production 28,800.00 31,200.00 33,600.00 36,000.00 38,400.00

28,800.00 32,160.00 34,640.00 37,120.00 39,600.00

Less : Closing Stock(10 Days) 960.00 1,040.00 1,120.00 1,200.00 1,280.00

Net Sale 27,840.00 31,120.00 33,520.00 35,920.00 38,320.00

Sale Price per 500gm Can 240.00 252.00 265.00 278.00 292.00

Sale (in Lacs) 66.82 78.42 88.83 99.86 111.89

COMPUTATION OF CLOSING STOCK & WORKING CAPITAL

PARTICULARS I II III IV V

Finished Goods
(10 Days requirement) 1.44 1.56 1.73 1.91 2.11
Raw Material
(14 Days requirement) 1.28 1.46 1.65 1.86 2.08

Closing Stock 2.73 3.02 3.38 3.77 4.19

COMPUTATION OF WORKING CAPITAL REQUIREMENT

Particulars Amount Margin(10%) Net

Amount
Stock in Hand 2.73
Less:
Sundry Creditors 0.46
Paid Stock 2.27 0.23 2.04

Sundry Debtors 4.45 0.45 4.01

Working Capital Requirement 6.05

Margin 0.67

MPBF 6.05

Working Capital Demand 6.00

BREAK UP OF LABOUR

Particulars Wages No of Total

Per Month Employees Salary
Supervisor 20,000.00 1 20,000.00
Plant Operator 15,000.00 1 15,000.00
Unskilled Worker 8,500.00 4 34,000.00
Helper 5,000.00 1 5,000.00
Security Guard 7,500.00 1 7,500.00

81,500.00
Add: 10% Fringe Benefit 8,150.00
Total Labour Cost Per Month 89,650.00

Total Labour Cost for the year ( In Rs. Lakhs) 8 10.76

BREAK UP OF SALARY

Particulars Salary No of Total

Per Month Employees Salary

Accountant cum store keeper 15,000.00 1 15,000.00

Administrative Staffs 12,500.00 4 50,000.00
Total Salary Per Month 65,000.00

Add: 10% Fringe Benefit 6,500.00

Total Salary for the month 71,500.00

Total Salary for the year ( In Rs. Lakhs) 5 8.58

COMPUTATION OF DEPRECIATION
Year

Plant &
Description Land Building/shed Machinery Furniture TOTAL

Rate of Depreciation 15.00% 10.00%

Opening Balance Own/Rented - - -
Addition - 13.85 1.15 15.00
- 13.85 1.15 15.00

TOTAL - 13.85 1.15 15.00

Less : Depreciation - - 2.08 0.12 2.19
WDV at end of Ist year - - 11.77 1.04 12.81

Additions During The Year - - - - -

- - 11.77 1.04 12.81

Less : Depreciation - - 1.77 0.10 1.87

WDV at end of IInd Year - - 10.01 0.93 10.94
Additions During The Year - - - - -
- - 10.01 0.93 10.94
Less : Depreciation - - 1.50 0.09 1.59
WDV at end of IIIrd year - - 8.51 0.84 9.34
Additions During The Year - - - - -
- - 8.51 0.84 9.34
Less : Depreciation - - 1.28 0.08 1.36
WDV at end of IV year - - 7.23 0.75 7.98
Additions During The Year - - - - -

- - 7.23 0.75 7.98

Less : Depreciation - - 1.08 0.08 1.16
WDV at end of Vth year - - 6.15 0.68 6.82
 REPAYMENT SCHEDULE OF TERM LOAN 11.0%

Year Particulars Amount Addition Total Interest Repayment Cl Balance

I Opening Balance
Ist Quarter - 13.50 13.50 0.37 - 13.50
Iind Quarter 13.50 - 13.50 0.37 - 13.50
IIIrd Quarter 13.50 - 13.50 0.37 0.75 12.75
Ivth Quarter 12.75 - 12.75 0.35 0.75 12.00
1.46 1.50
II Opening Balance
Ist Quarter 12.00 - 12.00 0.33 0.75 11.25
Iind Quarter 11.25 - 11.25 0.31 0.75 10.50
IIIrd Quarter 10.50 - 10.50 0.29 0.75 9.75
Ivth Quarter 9.75 9.75 0.27 0.75 9.00

1.20 3.00
III Opening Balance

Ist Quarter 9.00 - 9.00 0.25 0.75 8.25

Iind Quarter 8.25 - 8.25 0.23 0.75 7.50
IIIrd Quarter 7.50 - 7.50 0.21 0.75 6.75
Ivth Quarter 6.75 6.75 0.19 0.75 6.00
0.87 3.00
IV Opening Balance
Ist Quarter 6.00 - 6.00 0.17 0.75 5.25
Iind Quarter 5.25 - 5.25 0.14 0.75 4.50
IIIrd Quarter 4.50 - 4.50 0.12 0.75 3.75
Ivth Quarter 3.75 3.75 0.10 0.75 3.00
0.54 3.00

V Opening Balance
Ist Quarter 3.00 - 3.00 0.08 0.75 2.25
Iind Quarter 2.25 - 2.25 0.06 0.75 1.50

IIIrd Quarter 1.50 - 1.50 0.04 0.75 0.75

Ivth Quarter 0.75 0.75 0.02 0.75 -

0.21 3.00

Door to Door Period 60 Months

Moratorium Period 6 Months
Repayment Period 54 Months
CALCULATION OF D.S.C.R

PARTICULARS I II III IV V

CASH ACCRUALS 4.41 5.30 7.49 9.50 11.74

Interest on Term Loan 1.46 1.20 0.87 0.54 0.21

Total 5.87 6.50 8.36 10.04 11.94

REPAYMENT
Repayment of Term Loan 1.50 3.00 3.00 3.00 3.00

Interest on Term Loan 1.46 1.20 0.87 0.54 0.21

Total 2.96 4.20 3.87 3.54 3.21

DEBT SERVICE COVERAGE RATIO 1.98 1.55 2.16 2.84 3.73

AVERAGE D.S.C.R. 2.40

COMPUTATION OF ELECTRICITY
(A) POWER CONNECTION

Total Working Hour per day Hours 8

Electric Load Required HP 25
Load Factor 0.7460
Electricity Charges per unit 7.50
Total Working Days 300
Electricity Charges 3.36

Add : Minimim Charges (@ 10%)

(B) DG set
No. of Working Days 300 days
Hour per
No of Working Hours 0.5
day
Total no of Hour 150
Diesel Consumption per Hour 8
Total Consumption of Diesel 1,200
Cost of Diesel 65.00 Rs. /Ltr
Total cost of Diesel 0.78
Add : Lube Cost @15% 0.12
Total 0.90

Total cost of Power & Fuel at 100% 4.25

Year Capacity Amount

(in Lacs)

I 60% 2.55
II 65% 2.77
III 70% 2.98
IV 75% 3.19
V 80% 3.40
 DISCLAIMER

The views expressed in this Project Report are advisory in nature. SAMADHAN
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