Pre-Feasibility Study

MILK PASTEURIZING UNIT

Small and Medium Enterprise Development Authority

Government of Pakistan
www.smeda.o rg.pk
HEAD OFFICE
6th Floor LDA Plaza Egerton Road, Lahore
Tel 111 111 456, Fax: 6304926-7 Website www.smeda.org.pk
helpdesk@smeda.org.pk

REGIONAL OFFICE REGIONAL OFFICE REGIONAL OFFICE REGIONAL OFFICE

PUNJAB SINDH NWFP BALOCHISTAN

th
8 Floor LDA Plaza Egerton
Road, Lahore
Tel 111 111 456, Fax: 6304926-
7 Website www.smeda .or g.pk
helpde sk@ smeda.org.pk
5TH Floor, Bahria Complex II, Ground Floor State
M.T. Khan Road, Karachi. Life Building The
Tel: (021) 111-111-456 Mall, Peshawar.
Fax: (021) 5610572 Tel: (091) 9213046-47
helpdesk -khi@smeda.org.pk Fax: (091) 286908
helpde sk -pew@smeda.org.pk
Bungalow No. 15-A
Chaman Housing Scheme
Airport Road, Quetta.
Tel: (081) 831623, 831702
Fax: (081) 831922
helpdesk -qta@ smeda.or g.pk

January 2007
Pre-Feasibility Study Milk Pasteurizing Unit

DISCLAIMER
The purpose and scope of this information memorandum is to introduce the subject
matter and provide a general idea and information on the said area. All the material
included in this document is based on data/information gathered from various sources
and is based on certain assumptions. Although, due care and diligence has been
taken to compile this document, the contained information may vary due to any change
in any of the concerned factors, and the actual results may differ substantially from the
presented information. SMEDA does not assume any liability for any financial or
other loss resulting from this memorandum in consequence of undertaking this activity.
Therefore, the content of this memorandum should not be relied upon for making
any decision, investment or otherwise. The prospective user of this memorandum is
encouraged to carry out his/her own due diligence and gather any information
he/she considers necessary for making an informed decision.
The content of the information memorandum does not bind SMEDA in any legal or
other form.

DOCUMENT CONTROL
Document No. PREF-15
Revision 2
Prepared by SMEDA-Punjab
Issue Date April, 2002
Revision Date January , 2007

Issued by Library Officer

PREF-15/January, 2007/ Rev 2

Pre-Feasibility Study Milk Pasteurizing Unit

1 INTRODUCTION 4
1.1 Project Brief 4
1.2 Opportunity Rationale 4
1.3 Proposed Milk Processing Capacity 4
1.4 Project Cost 4
1.5 Product Mix 4
1.6 Process Flow Chart 5
2 CURRENT INDUSTRY STRUCTURE 6
3 MARKETING 6
3.1 Total Market Size and Growth 6
3.2 Major Urban Market 7
4 RAW Milk 7
5 MANPOWER REQUIREMENTS 7
5.1 Number of People Required 7
6 MACHINERY DETAILS 8
6.1 Plant and Machinery 8
7 LAND & BUILDING 8
7.1 Total Land Required (Area) 8
7.2 Recommended mode for acquiring Land 9
7.3 Suitable Locations 9
7.4 Infrastructure Requirements 9
8 PROJECT ECONOMICS 9
9 REGULATIONS 10
10 KEY SUCCESS FACTORS 10
11 THREATS FOR THE BUSINESS 10
12 FINANCIAL ANAlysis 11
12.1 Projected Sales Revenue 11
12.2 Projected Income Statement 12
12.3 Projected Cash Flow Statement 13
12.4 Projected Balance Sheet 14
13 KEY ASSUMPTIONS 15

PREF-15/January, 2007/ Rev 2

 Pre-Feasibility Study Milk Pasteurizing Unit

1 INTRODUCTION

1.1 Project
ect Brief
Mini dairy is a small scale-milk-processing unit where milk is pasteurized and packed
into plastic pillow-type pouches. Pasteurization is the process of heating the milk up
to
70ºC for a certain period of time and then cooling it to 4ºC. The heat treatment must
guarantee the destruction of unwanted pathogenic microorganisms and should not affect
the taste & nutritional value of the milk. The commercial significance of pasteurizing
milk is to increase the shelf life of milk up to 72 hours at cooling temperature.
For pasteurized milk, a standard formula of 3.5% fat contents and 9.5% SNF (solids
not fat) have to be maintained according to law. The fresh milk has 4 to 6% fats. The
extra fat contents are removed through cream separator during milk processing.
After cream separation, some milk powder is mixed and homogenized to make
standardized milk of
3.5% fat and 9.5% SNF. This extra milk cream is sold to the sweet makers fetching
higher prices in the range of Rs 40-50 per kg.

1.2 Oppo
Opportunit
unity Rat
Rationale
Mini dairy is an economically viable and financially profitable project. Pasteurized
milk is a marketable product and its demand is increasing with the increase in
awareness among the consumers. Also the mass sale of adulterated milk by Milkmen
(Dhodies) is letting the urban low-income segment to shift from home delivered
adulterated milk to self-purchased pasteurized milk from branded milk shop.

1.3 Proposed Milk Proces cessing

ing Cap
Capacity
Mini dairy unit with 2000 liters milk intake capacity per hour is an economical size for
starting a milk processing business. However, due to the time required in installation and
running of the unit, it is expected that the plant would achieve 100% efficiency in sixth
year of operations.

1.4 Project
ect Cos
Cost
Total project cost of this Milk Pasteurizing Unit is Rs. 27.411 million. Out of this, capital
cost of the project is Rs. 27.21 million, and the rest is the working capital.

1.5 Produc
duct Mix
The product mix consists of Milk Pouches of 1 liters and 0.5 liter in the following
ratio.

Product %age of Production Selling Price (Rs.)

1 Liter 75 27
0.5 Liters 25 15

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Pre-Feasibility Study Milk Pasteurizing Unit

1.6 Process Flow Chart

After the fresh milk is received it is filtered and pumped into the dump tank. It is
then chilled with help of a chiller so that the growth of bacteria is minimized. On
average, fresh milk contain 4.5% fats which will be reduced to 3.5% with the help of
a cream separator. The milk will then undergo the pasteurization process. This is based
on heating the milk to 75ºC and holding at that temperature for at least 15-20 seconds.
This heat treatment ensures the destruction of unwanted micro-organisms and all
bacteria. During this process the temperature is reduced to 4ºC as at this temperature
ideal growth of bacteria is stopped.
After milk processing, the pasteurized milk is filled in the cooling tanks for delivery
to urban milk distribution centers. Milk is also filled and sealed in plastic pouches of 1
liter and 0.5 Ltrs capacity and then are ready for distribution in market. After
the pasteurization process is completed, the tanks will be cleansed through steam
for sterilization.
Figure 1-1: Proces
cess Flow of Milk Proces
cessing
ing
Plant

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Pre-Feasibility Study Milk Pasteurizing Unit

QA Approved
Milk Reception Lab Testing milk

Rejection Chilling 4 °C

Cream Separator

Cream

Standardization

Homogenization

Distribution Filing / Packing Balance Tank

in Pouch Packs

PREF-15/January, 2007/ Rev 2

2 CURRENT INDUSTRY
STRUCTURE
Milk processing industry has shown a growing trend in the country during the last
decade. Dairy plants have been established in various parts of the country. Majority of
the milk processing plants have been installed around the major urban cities. Lahore
is a location where most of the plants are located. Nestle milkpak and Haleeb are the
big players, which are currently in different milk and milk products like tetra pack UHT
milk, yogurt, milk powder and other products. Small pasteurization units, which include
Halla, Prime, Nurpur dairies, Dairy King, Butt dairies are successfully running.
Currently, pasteurized milk is being supplied in Lahore market at open milk centers
with a daily volume of approximately 80,000 liters.
Many of the milk processing plants are also closed, mostly due to management
problems.
Table 2-1: Major Milk Processin
ssing
g Plants in
Pakis
kist an
Project Location Products
Am-Pak Dairy Ltd. Raiwind Past milk/Yogurt
Chaudhry Dairy Ltd. Bhaipheru UHT Milk, powder
Idara Kisan (Halla) Pattoki/Lahore Pasteurized Milk/Yogurt, UHT
Noon Pakistan Ltd. Bhalwal Milk powder/butter
Nestle` Milkpak Ltd. Sheikhupura/Kabirwala UHT Milk/Ghee
Prime Dairies Ltd. Manga Pasteurized milk/yogurt
Pakistan Milk Food Jhang Condensed Milk/Powder
United Dairies Ltd. Lahore Butter/Ghee
Gourmet Lahore Pasteurized milk

3 MARKETING
The market for pasteurized milk has shown a growth trend of 3% during the last decade.
Currently, pasteurized milk has created a market in big urban city like Lahore where
about 50,000 liters of milk is being sold at specialized milk shops. Open pasteurized
milk centers have 2.5% of market share in 2 million liters daily milk consumption of
Lahore City.
There are two ways of milk distribution i.e. through company's own distribution
network or through third party distributor. Milk can be supplied once in a day at
evening or in morning time.

3.1 Total Market Siz

Size and Growt
owth
Processed milk has about 4% market share while rest of the market is with the informal
(Dhodi) sector. The milk consumption is growing at a growth rate of 4.5% per annum,
while milk production is growing at 4% per annum. The gap between supply and demand
is fulfilled through adulteration and milk powder imports. Pakistan is the seventh
largest producer of milk but even then we have to import powder milk to meet our
domestic needs. About 30,000 tons of milk powder is imported from Poland and other
European countries to meet the country requirements.
3.2 Major Urban Market
Urban markets are deficient in milk supply. Metropolitan cities like Lahore, Karachi,
Multan, Rawalpindi, etc are the major markets of milk.
Milk collection and distribution for the urban areas, although commercially organized,
is almost entirely handled by the informal sector. Organized collection, processing
and marketing of milk represent hardly two percent of the total demand of the urban
milk market.

4 RAW MILK
Fresh milk is purchased on fat content basis at the factory gate or collected through a
milk collection agency. Fresh Milk on average contains 4.5% fats and 6.75% solids, to
reach the standardized milk requirement (3.5% fats and 9% solids) 1% of fats is removed
with the help of cream separator and milk powder is added to increase the solid
contents of milk so that it reaches 9%. Raw milk price varies in the range of Rs 15 – 20
depending on the season. The feasibility study has taken an average price of Rs 18 per
liter. Raw material must be free from dirt and have very low bacteria, and any
powders must be easy to dissolve.

5 MANPOWER REQUIREMENTS

5.1 Number of People Requirequired d

14 persons can handle the operations of a mini dairy unit easily. The unit will be
working on one shift basis. Technical staff with a level of secondary education is
sufficient to look after specific tasks at the plant except for qualified laboratory staff.
Table 5-1: Manpow
npoweer Requir
quirement
Title Number Monthly Salary (Rs) Annual Salary (Rs)
Factory Manager 1 30,000 360,000
Laboratory Technician 2 15,000 360,000
Boiler Operator 2 15,000 360,000
Operator 3 15,000 540,000
Distribution Supervisor 2 20,000 480,000
Watchman / Driver 2 5,000 120,000
Office Clerk 2 5,000 120,000
TOTAL 14 2,340,000

PREF-15/January, 2007/ Rev 2

6 MACHINERY DETAILS

6.1 Plant and Machinery

In a pasteurization unit, the major cost of equipment is that of pasteurizer. Second hand
used milk pasteurizer is also available in the market.
Tale 6-1 shows the list of machinery required for a pasteurization & packing unit:
Table 6-1: Machinery Requir
quired
Equipment No. Cost/ Machinery
Dairy Plant: (including)
Pasteurization Plant
Boiler
Chiller
Cream Separator - Centrifugal Clarifier / Standardizer 1 11,500,000
Thermostatic Tank
Sanitary Centrifugal Electro-pump
Platform
Pre-assemblage on Platform
High Pressure Milk Homogenizer 1 2,800,000
Stand-A-Pac Form, Fill & Seal Machine 1 1,500,000
Generator 1 275,000
Total Machinery Cost

7 LAND & BUILDING

7.1 Total Land Requirquired (Area)

About 1.4 Kanal (6,750 sq. ft.) of land along the roadside is sufficient for the
installation of plant and machinery of a mini dairy.
Table 7-1: - Buil
uilding
ding Requir
uirement
Description Sq ft Construction (Rs/ Sq. ft) Total
Management building 400 800 320,000
store Room 240 600 144,000
Factory 2,600 700 1,820,000
Washrooms 500
Pavement/driveway 2,000 40,000
Grounds 1,048 20,960
Total Construction Cost 2,344,960
Total Cost of Land 6,986,666
Total Land & Building/Construction Cost 9,331,626
8

PREF-15/January, 2007/ Rev 2

7.2 Reco
ecommende
nded mode for acquirquiring
ing Land
It is recommended that the unit of this size should be installed on purchased land.

7.3 Suit
Suitable Locations
Sub-urban areas around the major cities of the country would be a suitable location for
a milk-pasteurizing unit.

7.4 Infrastructure Requi

quirements
 Road
 Electricity
 Water
 Diesel fuel
 Drainage
 Gas
 Telephone and Fax

8 PROJECT ECONOMICS
Table 8-1 Total Project
ect Cos
Cost
Account Head Total Cost (Rs)
Land 6,986,666
Building/Infrastructure 2,344,960
Plant & Machinery 16,075,000
Furniture & Fixtures/Office Equipment 248,500
Pre-operating costs 100,000
Vehicle 1,454,400
Total Capital Cost 27,209,526
Upfront Insurance Payment 101,808
Cash 100,000
Total Working Capital 201,808
Total Project Cost (Rs) 27,411,334

PREF-15/January, 2007/ Rev 2

Table 8-2 Project
ect Returns
Project
IRR 43%
Payback Period (Years) 2.77
Table 8-3 Fina
inancing
ing Plan
Financing Ratio Rs
Equity 50% 13,705,667
Debt 50% 13,705,667

10

PREF-15/January, 2007/ Rev 2

9 REGULATIONS
Food laws are applicable as pasteurized milk has standard formula of 3.5% fats and
9.5% SNF according to food act 1965. There are no needs of getting a license prior to
start a dairy unit in rural surroundings.

10 KE Y SUCCESS
FACTORS
 The commercial viability of this project depends upon the availability of regular
milk supply.
 Another important aspect is the quality check at different stages of production. This
is very important after the distribution of milk where there is a need to check that
the
distributors do not supply adulterated milk.
 Smart milk distribution networks also play an important role in the success of this
business.
 To establish a brand name, aggressive marketing efforts are also
required.

11 THREATS FOR THE BUSINESS

 Shortage of milk supplies in the summer season.
 Higher milk prices in summer.
 Competition with milkmen supplying adulterated
milk.
 Pre-Feasibility Study Milk Pasteurizing
Unit

12 FINANCIAL ANALYSIS

12.
12.1 Project
ected Sales Revenue
nue

Revenue Generation

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Production capacity
5,280,000 5,280,000 5,280,000 5,280,000 5,280,000 5,280,000 5,280,000 5,280,000 5,280,000 5,280,000
(units)
Starting capacity
75% 75% 75% 75% 75% 75% 75% 75% 75% 75%
utilization
Capacity utilization
5% 5% 5% 5% 5% 5% 5% 5% 5%
growth rate
Capacity utilization for
75% 80% 85% 90% 95% 100% 100% 100% 100% 100%
the year
Production 1 - Ltr (units) 2,970,000 3,168,000 3,366,000 3,564,000 3,762,000 3,960,000 3,960,000 3,960,000 3,960,000 3,960,000
Production 0.5 - Ltr
990,000 1,056,000 1,122,000
(Units) 1,188,000 1,254,000 1,320,000 1,320,000 1,320,000 1,320,000 1,320,000
Production per year 3,960,000 4,224,000 4,488,000 4,752,000 5,016,000 5,280,000 5,280,000 5,280,000 5,280,000 5,280,000
Sale price per unit in year
1 - 1 Ltr 27
Sale price per unit in year
1 - 0.5 Ltr 15
Revenue 95,040,000 106,444,800 118,752,480 132,024,816 146,327,504 161,730,400 169,816,920 178,307,766 187,223,154 196,584,312

11

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 Pre-Feasibility Study Milk Pasteurizing
Unit

12.
12.2 Project
ected Income Statement

In co m e S ta tem en t

R s. in ac tuals
Y ea r 1 Y e ar 2 Y ea r 3 Y e ar 4 Y e ar 5 Y e ar 6 Y ear 7 Y e ar 8 Y e ar 9 Y ear 10

R eve nue 95 ,04 0,0 00 1 06, 444 ,80 0 1 18 ,752 ,48 0 132 ,02 4,8 16 146 ,32 7,5 04 1 61 ,73 0,4 00 1 69 ,81 6,9 20 17 8,3 07, 766 1 87 ,22 3,1 54 1 96 ,58 4,3 12
C os t of goo ds so ld 75 ,31 9,2 00 84, 572 ,92 8 94 ,603 ,45 0 105 ,47 0,0 22 117 ,23 6,4 32 1 29 ,97 1,3 62 1 36 ,90 3,6 09 14 4,2 25, 835 1 51 ,96 1,8 77 1 60 ,13 7,1 97
G ros s P rofit 19 ,72 0,8 00 21, 871 ,87 2 24 ,149 ,03 0 26 ,55 4,7 94 29 ,09 1,0 72 31 ,75 9,0 37 32 ,91 3,3 11 3 4,0 81, 931 35 ,26 1,2 77 36 ,44 7,1 15

G e ne ra l adm inis tra tion & sellin g e xp ens es

A dm inis tratio n exp ens e 2 ,34 0,0 00 2,5 67 ,82 6 2, 817 ,83 3 3 ,09 2,1 81 4 ,35 0,3 08 4 ,77 3,8 60 5 ,23 8,6 50 5,7 48, 692 6 ,30 8,3 93 6 ,92 2,5 87
R enta l exp ens e - - - - - - - - - -
U tilities exp ens e - - - - - - - - - -
C om m unicatio ns e xpe nse (pho ne, fax, etc .) - - - - - - - - - -
R ep airs & rene wa ls - - - - - - - - - -
O ff ice ve hic les running e xpens e - - - - - - - - - -
O ff ice e xpens es (sta tiona ry, etc. ) 1 1,7 00 12 ,83 9 14 ,08 9 1 5,4 61 2 1,7 52 2 3,8 69 2 6,1 93 28, 743 3 1,5 42 3 4,6 13
P rom otio nal e xpens e - - - - - - - - - -
In s uranc e e xpe nse 10 1,8 08 91 ,62 7 81 ,44 6 7 1,2 66 6 1,0 85 5 0,9 04 4 0,7 23 30, 542 2 0,3 62 1 0,1 81
P rofes sio nal fee s (le gal, a udit, etc. ) - - - - - - - - - -
D ep rec iation expe nse 1 ,89 5,0 38 1,8 95 ,03 8 1, 895 ,03 8 1 ,89 5,0 38 1 ,89 5,0 38 1 ,89 5,0 38 1 ,89 5,0 38 1,8 95, 038 1 ,89 5,0 38 1 ,89 5,0 38
A m o rtiz atio n exp ens e 1 0,0 00 10 ,00 0 10 ,00 0 1 0,0 00 1 0,0 00 1 0,0 00 1 0,0 00 10, 000 1 0,0 00 1 0,0 00
M is ce llane ous exp ense 4 ,41 5,4 00 4,9 45 ,24 8 5, 517 ,04 2 6 ,13 3,6 53 6 ,79 8,1 32 7 ,51 3,7 25 7 ,88 9,4 11 8,2 83, 882 8 ,69 8,0 76 9 ,13 2,9 79
S ub total 8 ,77 3,9 46 9,5 22 ,57 8 10 ,335 ,44 9 11 ,21 7,5 98 13 ,13 6,3 14 14 ,26 7,3 96 15 ,10 0,0 15 1 5,9 96, 898 16 ,96 3,4 10 18 ,00 5,3 98
O pe rating Inco m e 10 ,94 6,8 54 12, 349 ,29 4 13 ,813 ,58 2 15 ,33 7,1 95 15 ,95 4,7 58 17 ,49 1,6 41 17 ,81 3,2 96 1 8,0 85, 033 18 ,29 7,8 66 18 ,44 1,7 17

O ther inc om e 25 8,4 86 807 ,06 7 1, 518 ,87 3 2 ,41 2,7 77 3 ,42 0,7 82 4 ,74 5,6 45 6 ,41 1,8 82 8,2 17, 705 10 ,16 4,7 00 12 ,25 3,4 85
G ain / (lo ss ) on sale of a ss ets - - - - - - - - - -
E a rnings B e fo re Intere st & T axe s 11 ,20 5,3 40 13, 156 ,36 1 15 ,332 ,45 5 17 ,74 9,9 72 19 ,37 5,5 40 22 ,23 7,2 86 24 ,22 5,1 77 2 6,3 02, 738 28 ,46 2,5 67 30 ,69 5,2 01

Inte res t exp ense 1 ,79 1,4 69 1,4 87 ,49 6 1, 138 ,12 7 73 6,5 83 27 5,0 71 - - - - -
E a rnings B e fo re T a x 9 ,41 3,8 71 11, 668 ,86 5 14 ,194 ,32 8 17 ,01 3,3 89 19 ,10 0,4 68 22 ,23 7,2 86 24 ,22 5,1 77 2 6,3 02, 738 28 ,46 2,5 67 30 ,69 5,2 01

T axa ble earnings for the ye ar 9 ,41 3,8 71 11, 668 ,86 5 14 ,194 ,32 8 17 ,01 3,3 89 19 ,10 0,4 68 22 ,23 7,2 86 24 ,22 5,1 77 2 6,3 02, 738 28 ,46 2,5 67 30 ,69 5,2 01
T ax 3 ,29 4,8 55 4,0 84 ,10 3 4, 968 ,01 5 5 ,95 4,6 86 6 ,68 5,1 64 7 ,78 3,0 50 8 ,47 8,8 12 9,2 05, 958 9 ,96 1,8 98 10 ,74 3,3 20
N E T P R O FI T /(L O S S ) A F T E R T A X 6 ,11 9,0 16 7,5 84 ,76 2 9, 226 ,31 3 11 ,05 8,7 03 12 ,41 5,3 04 14 ,45 4,2 36 15 ,74 6,3 65 1 7,0 96, 780 18 ,50 0,6 68 19 ,95 1,8 81

B a lance b ro ught forw ard 6,1 19 ,01 6 13 ,703 ,77 9 22 ,93 0,0 92 33 ,98 8,7 95 46 ,40 4,0 99 60 ,85 8,3 35 7 6,6 04, 700 93 ,70 1,4 80 1 12 ,20 2,1 48
T otal profit ava ilab le for a pp ropria tion 6 ,11 9,0 16 13, 703 ,77 9 22 ,930 ,09 2 33 ,98 8,7 95 46 ,40 4,0 99 60 ,85 8,3 35 76 ,60 4,7 00 9 3,7 01, 480 1 12 ,20 2,1 48 1 32 ,15 4,0 29
D ivide nd - - - - - - - - - -
B a lance c arried fo rwa rd 6 ,11 9,0 16 13, 703 ,77 9 22 ,930 ,09 2 33 ,98 8,7 95 46 ,40 4,0 99 60 ,85 8,3 35 76 ,60 4,7 00 9 3,7 01, 480 1 12 ,20 2,1 48 1 32 ,15 4,0 29

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Pre-Feasibility Study Milk Pasteurizing
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12.
12.3 Project
ected Cas
Cash Flow Statement
Cash Flow Statement

Rs. in actuals
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Operating activities
Net profit - 6,119,016 7,584,762 9,226,313 11,058,703 12,415,304 14,454,236 15,746,365 17,096,780 18,500,668 19,951,881
Add: depreciation expense - 1,895,038 1,895,038 1,895,038 1,895,038 1,895,038 1,895,038 1,895,038 1,895,038 1,895,038 1,895,038
amortization expense - 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000
Deferred income tax - 50,904 50,904 50,904 50,904 50,904 (50,904) (50,904) (50,904) (50,904) (50,904)
Accounts receivable - (4,320,000) (4,838,400) (1,077,840) (1,162,728) (1,253,410) (1,350,254) (1,067,701) (753,517) (791,192) (830,752)
Finished good inventory - - - - - - - - - - -
Equipment inventory - - - - - - - - - - -
Raw material inventory - - - - - - - - - - -
Pre-paid building rent - - - - - - - - - - -
Pre-paid lease interest - - - - - - - - - - -
Advance insurance premium (101,808) 10,181 10,181 10,181 10,181 10,181 10,181 10,181 10,181 10,181 10,181
Accounts payable - 3,240,000 3,628,800 808,380 872,046 940,058 1,012,690 800,776 565,137 593,394 623,064
Other liabilities - - - - - - - - - - -
Cash provided by operations (101,808) 7,005,139 8,341,285 10,922,976 12,734,144 14,068,075 15,980,987 17,343,755 18,772,715 20,167,185 21,608,508

Financing activities
Change in long term debt 13,705,667 (2,035,414) (2,339,387) (2,688,755) (3,090,300) (3,551,811) - - - - -
Change in short term debt - - - - - - - - - - -
Change in export re-finance facility - - - - - - - - - - -
Add: land lease expense - - - - - - - - - - -
Land lease payment - - - - - - - - - - -
Lease principal repayment - - - - - - - - - - -
Issuance of shares 13,705,667 - - - - - - - - - -
Purchase of (treasury) shares - - - - - - - - - - -
Cash provided by / (used for) financing activities27,411,334 (2,035,414) (2,339,387) (2,688,755) (3,090,300) (3,551,811) - - - - -

Investing activities
Capital expenditure (27,209,526) - - - - - - - - - -
Acquisitions - - - - - - - - - - -
Cash (used for) / provided by investing activ (27,209,526) - - - - - - - - - -

NET CASH 100,000 4,969,725 6,001,899 8,234,220 9,643,844 10,516,263 15,980,987 17,343,755 18,772,715 20,167,185 21,608,508

Cash balance brought forward 100,000 5,069,725 11,071,624 19,305,844 28,949,688 39,465,952 55,446,939 72,790,693 91,563,409 111,730,594
Cash available for appropriation 100,000 5,069,725 11,071,624 19,305,844 28,949,688 39,465,952 55,446,939 72,790,693 91,563,409 111,730,594 133,339,101
Dividend - - - - - - - - - - -
Cash carried forward 100,000 5,069,725 11,071,624 19,305,844 28,949,688 39,465,952 55,446,939 72,790,693 91,563,409 111,730,594
133,339,101

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 Pre-Feasibility Study Milk Pasteurizing
Unit

12.
12.4 Project
ected Balance Shee
Sheett
Balance Sheet

R s . i n a c t u a ls
Y ear 0 Y ear 1 Y ear 2 Y ear 3 Y ear 4 Y ear 5 Y ear 6 Y ear 7 Y ear 8 Y ear 9 Y ear 10

A ssets
C u r r e n t a s s e ts
C ash & Bank 1 0 0 ,0 0 0 5 ,069,725 1 1 ,0 7 1 ,6 2 4 1 9 ,3 0 5 , 8 4 4 2 8 , 9 4 9 ,6 8 8 3 9,465,952 5 5,446,93 7 2,790,693 9 1 ,5 6 3 ,4 0 9 1 11,730,59 1 3 3 ,3 3 9 ,1 0 1
A c c o u n t s r e c e iv a b le - 4 ,320,000 9 ,1 5 8 ,4 0 0 1 0 ,2 3 6 , 2 4 0 1 1 , 3 9 8 ,9 6 8 1 2,652,378 9
1 4,002,63 1 5,070,333 1 5 ,8 2 3 ,8 4 9 41 6 , 6 1 5 , 0 4 1 7 , 4 4 5 ,7 9
F in i s h e d g o o d s in v e n to r y - - - - - - 2 - - - 2 - 4 -
E q u ip m e n t s p a r e p a r t in v e n to r - - - - - - - - - - -
y a w m a t e r ia l in v e n to r y
R - - - - - - - - - - -
P r e - p a i d a n n u a l l a n d le a s e - - - - - - - - - - -
P r e - p a i d b u i ld in g r e n t - - - - - - - - - - -
P r e - p a i d l e a s e in te r e s t - - - - - - - - - - -
P re-paid insurance 1 0 1 ,8 0 8 9 1,627 8 1 ,4 4 6 7 1,266 6 1 ,0 8 5 5 0,904 4 0,723 3 0,542 2 0 ,3 6 2 1 0,181 -
T o ta l C u r r e n t A s s e t s 2 0 1 ,8 0 8 9 ,481,353 2 0 ,3 1 1 ,4 7 0 2 9 ,6 1 3 , 3 5 0 4 0 , 4 0 9 ,7 4 1 5 2,169,234 6 9,490,29 8 7,891,568 1 0 7 ,4 0 7 ,6 2 0 1 28,355,81 1 5 0 ,7 8 4 ,8 9 5

F ix e d a s s e ts
L and 6 ,9 8 6 ,6 6 6 6 ,986,666 6 ,9 8 6 ,6 6 6 6 ,9 8 6 , 6 6 6 6 , 9 8 6 ,6 6 6 6 ,986,666 6 ,986,66 6 ,986,666 6 ,9 8 6 ,6 6 6 6 ,986,66 6 ,9 8 6 ,6 6 6
B u ild i n g / I n f r a s t r u c tu r e 2 ,3 4 4 ,9 6 0 2 ,227,712 2 ,1 1 0 ,4 6 4 1 ,9 9 3 , 2 1 6 1 , 8 7 5 ,9 6 8 1 ,758,720 16 , 6 4 1 , 4 7 1 ,524,224 1 ,4 0 6 ,9 7 6 16 , 2 8 9 , 7 2 1 ,1 7 2 ,4 8 0
M a c h in e r y & e q u i p m e n t 1 6 ,0 7 5 ,0 0 0 1 4,467,50 1 2 ,8 6 0 ,0 0 0 1 1 ,2 5 2 , 5 0 0 9 , 6 4 5 ,0 0 0 8 ,037,500 2
6 ,430,00 4 ,822,500 3 ,2 1 5 ,0 0 0 8
1 ,607,50 -
F u r n itu r e & f ix tu r e s 1 6 0 ,0 0 0 0 1 44,000 1 2 8 ,0 0 0 1 12,000 9 6 ,0 0 0 8 0,000 0 6 4,000 4 8,000 3 2 ,0 0 0 0 1 6,000 -
O f f ic e v e h i c le s 1 ,4 5 4 ,4 0 0 1 ,308,960 1 ,1 6 3 ,5 2 0 1 ,0 1 8 , 0 8 0 8 7 2 ,6 4 0 7 27,200 5 81,760 4 36,320 2 9 0 ,8 8 0 1 45,44 -
O f f ic e e q u ip m e n t 8 8 ,5 0 0 7 9,650 7 0 ,8 0 0 6 1,950 5 3 ,1 0 0 4 4,250 3 5,400 2 6,550 1 7 ,7 0 0 0 8 ,850 -
T o ta l F ix e d A s s e ts 2 7 ,1 0 9 ,5 2 6 2 5,214,48 2 3 ,3 1 9 ,4 5 0 2 1 ,4 2 4 , 4 1 2 1 9 , 5 2 9 ,3 7 4 1 7,634,336 1 5,739,29 1 3,844,260 1 1 ,9 4 9 ,2 2 2 1 0,054,18 8 ,1 5 9 ,1 4 6

I n ta n g ib l e a s s e ts
P r e - o p e r a ti o n c o s ts 1 0 0 ,0 0 0 9 0,000 8 0 ,0 0 0 7 0,000 6 0 ,0 0 0 5 0,000 4 0,000 3 0,000 2 0 ,0 0 0 1 0,000 -
T r a in in g c o s ts - - - - - - - - - - -

T o ta l I n t a n g ib l e A s s e t s 1 0 0 ,0 0 9 0,000 8 0 ,0 0 0 7 0,000 6 0 ,0 0 0 5 0,000 4 0,000 3 0,000 2 0 ,0 0 0 1 0,000 -

0
L ia b il it ie s & S h a r e h o l d e r s ' E q u i
C u r r e n t l ia b il iti e s
A ccounts payable - 3 ,240,000 6 ,8 6 8 ,8 0 0 7 ,6 7 7 , 1 8 0 8 , 5 4 9 ,2 2 6 9 ,489,284 1 0,501,97 1 1,302,750 1 1 ,8 6 7 ,8 8 7 1 2,461,28 1 3 , 0 8 4 ,3 4
E x p o r t r e -f in a n c e fa c il ity - - - - - - 4 - - - 1 - 5 -
S h o r t te r m d e b t - - - - - - - - - - -
O t h e r l ia b ilit ie s - - - - - - - - - - -
T o ta l C u r r e n t L ia b i lit ie s - 3,240,000 6 ,8 6 8 ,8 0 0 7 ,6 7 7 , 1 8 0 8 , 5 4 9 ,2 2 6 9,489,284 10,501,974 11,302,750 1 1 ,8 6 7 ,8 8 7 12,461,281 1 3 , 0 8 4 ,3 4 5

O t h e r l ia b i liti e s
L ease payable - - - - - - - - - - -
D e fe r r e d ta x - 50,904 1 0 1 ,8 0 8 152,712 2 0 3 ,6 1 6 254,520 203,616 152,712 1 0 1 ,8 0 8 50,904 -
L o n g te r m d e b t 1 3 ,7 0 5 ,6 6 7 11,670,253 9 ,3 3 0 ,8 6 6 6 ,6 4 2 , 1 1 1 3 , 5 5 1 ,8 1 1 - - - - - -
T o ta l L o n g T e r m L ia b i lit ie s 1 3 ,7 0 5 ,6 6 7 11,721,157 9 ,4 3 2 ,6 7 4 6 ,7 9 4 , 8 2 3 3 , 7 5 5 ,4 2 7 254,520 203,616 152,712 1 0 1 ,8 0 8 50,904 -

S h a r e h o l d e r s ' e q u it y
P a id - u p c a p ita l 1 3 ,7 0 5 ,6 6 7 1 3 , 7 0 5 , 6 6 7 1 3 ,7 0 5 ,6 6 7 1 3 ,7 0 5 , 6 6 7 1 3 , 7 0 5 ,6 6 7 13,705,667 13,705,667 13,705,667 1 3 ,7 0 5 ,6 6 7 13,705,667 1 3 , 7 0 5 ,6 6
7
R e ta i n e d e a r n i n g s - 6 , 1 1 9 , 0 1 6 1 3 ,7 0 3 ,7 7 9 2 2 ,9 3 0 , 0 9 2 3 3 , 9 8 8 ,7 9 5 46,404,099 60,858,335 76,604,700 9 3 ,7 0 1 ,4 8 0 112,202,148 1 3 2 ,1 5 4 ,0 2
9
T o ta l E q u it y 1 3 ,7 0 5 ,6 6 7 1 9 , 8 2 4 , 6 8 3 2 7 ,4 0 9 ,4 4 6 3 6 ,6 3 5 , 7 5 9 4 7 , 6 9 4 ,4 6 2 60,109,766 74,564,002 90,310,367 1 0 7 ,4 0 7 ,1 4 7 1 2 5 , 9 0 7 , 8 1 5 1 4 5 ,8 5 9 ,6 9 6
T O T A L C A P I T A L A N D L I A B I L I T I E S 2 7 ,4 1 1 ,3 3 4 34,785,840 4 3 ,7 1 0 ,9 2 0 5 1 ,1 0 7 , 7 6 2 5 9 , 9 9 9 ,1 1 5 69,853,570 85,269,592 1 0 1 , 7 6 5 , 8 2 8 1 1 9 ,3 7 6 ,8 4 2 138,42
0,000 1 5 8 ,9 4 4 ,0 4 1

14

PREF-15/January, 2007/ Rev 2

 Pre-Feasibility Study Milk Pasteurizing Unit

13 KEY ASSUMPTIONS
Table 13-
13-1 Machine
hinery Assu
ssumptions
Maximum capacity utilization 100%
Maximum capacity utilization (Year 1) 75%
Total Capacity intake per Hour (liters) 2,000
1
Actual Production of the unit per day (liters) 16,000
Total Production of the unit (Year 1) @ 100% 5,280,000
Table 13-
13-2 Ope
Operating
ing Assu
ssumptions
Hours operational per day 8
Processing Hours 6
Cleaning Hours 2
Days operational per year 330
Table 13-
13-3 Economy-Related Assu
ssumptions
Electricity price growth rate 10%
Gas price growth rate 10%
Wage growth rate 2%
Table 13-
13-4 Cas
Cash Flow Assumptions
Accounts Receivable cycle (in days) 7
Accounts payable cycle (in days) 15
Raw material inventory (in day) 15
Equipment and spare part inventory (in days) 30
Table 13-
13-5 Revenue
nue Assu
ssumptions
Production capacity of the unit in Year 1(liters) @ 75% 3,960,000
Sale price -1 Ltr pouch Year 1 (in Rs.) 27
Sale price – 0.5 Ltr pouch in Year 1 (in Rs) 15
Maximum capacity utilization 100%
Sale price growth rate 5%
Table 13-
13-Table
ble 13-
13-6 Fina
inancial Assu
ssumptions
Project life (Years) 10
Debt 50%
Equity 50%
Interest rate on long-term debt 14%
Debt tenure (Years) 5
Debt payments per year 12

1
Total Production per day is calculated on the basis processing hours operational.
15

PREF-15/January, 2007/ Rev 2