A PRODUCT PROPOSAL REPORT

ON
BUTTER MILK

PREPARED BY
Aparnathi Kishan m

GUIDED BY
PROF. PARITA DAVDA

SUBMITTED TO
SAURASHTRA UNIVERCITY

INSTITUTE
SHRI V.J. MODHA COLLEGE OF
B.B.A.
PORBANDAR

ACADEMIC YEAR
2016-2017

PREFACE

The small-scale industry has a place of pride in our economy.

They have a high potential among other for generating employment
dispersal to semi-urban rural areas, promoting entrepreneurship and
earning foreign exchange. Aware of this S.S.I have been awarded
strategic position in the successive five year plans towards the fulfillment
of the social economies objectives, particularly in achieving growth with
equity.

I am extremely happy to submit this report for S.S.I. under

the prescribe syllabus of saurashtra university, Rajkot. It is the modest
way to develop entrepreneur skill, ability and aptitude.

In this regard, I have prepared a project report on BUTTER

MILK I have got a chance to acquire practical knowledge at the time of
collecting information. I have tried to cover all the relevant point. I have
tried to give in most precise yet systematic manner.

DECLARATION

I undersigned APARNATHI KISHAN M a student of 5th semester

of BBA hereby declares that the product project report presented is my
own work and has been carried out under the guidance of Prof. Parita
Davda

Date:
Place:
Signature,

.
(APARNATHI KISHAN)

INDEX

NO.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.

PARTICULARS

Page No.

Acknowledgment
Project At A Glance
Justification Of Location
Market Analysis
Manufacturing Process
Raw Material
Manufacturing Capacity Schedule
Financial Detail
Source of Finance
Total Fixed Assets
Working Capital Requirement
Total Cost of Project
Interest
Depreciation
Cost of Production
Loan Payment
Final Account
Profitability Statement
Ratios
BEP Analysis
Cash Flow
Fund Flow
Future Plan

ACKNOWLEDGEMENT

It is really a matter of great pleasure for me to present

their creative and practical work. At this stage product every
entrepreneur prepares report of learning and it before starting
of actual production.
I would like to express my deep gratitude to Prof. Parita
Davda for his co-operation and guidance. Without her support
my report would have been very difficult to complete.

I am also thankful to all those who consisted me in

preparation of the manuscript. I would like to thank my friends
and family member who helped me in this project.

Yours faithfully,

(APARNATHI KISHAN M.)

Project at a Glance
Name of Unit

Aparnathi & Sons Co.

Address of the unit :

APARNATHI & SONS Co.,

Shapar Industrial Area,
Rajkot Gondal Highway,
Rajkot 360 002.

Name of the Product

Drinkers Delight

Form of Organization

Partnership Firm

SSI Registration No.

Applied for

Sub. Registration No.

Applied for

.
Profit or Loss

Profit [estimated]

Means of finance

Ownership
Borrowed Loan from
Gondal Nagrik Sahakari
Bank Ltd.

Market Area

Rajkot city [in 1st year]

Average Cost of Capital: 10.50%

Return on Investment

18.46%

As R.O.I. is greater than C.O.C., it shows unit is making

profit & therefore project is feasible.

Implementation Schedule
1)

Scheme preparation & approval

1 months

2)

SSI provisional registration

1-2 months

3)

Sanction of loan by financial institutes :

2-5 months

4)

Installation of machinery & Power

connection

5-8 months

Trail & Production will start from 8th month onwards.

Owners Background
Name

:
Aparnathi Kishan
8, Premlaxmi Appt.
Behind Virani School,
R.K. Nager West.
Tagore Road,
Rajkot.

Age

19Yrs.

Educational Qualification

B.B.A.

Work Experience

No

Function

Capital Contribution

Mktg. & Personnel

:

26,30,200 Rs.

Introduction to Small Scale

Industry
India is a developing country & most of the people in
India depend on agriculture but slowly & gradually people are
coming in Industrial sector. Due to less rainfall &
unemployment in agriculture.
Before 1991, there was huge importance given to large
scale industry but after govt. realize that only Small Scale
Industry can lead to overall development of country. So govt.
started to give emphasis on Small Scale Industry.
The industries are classified into three categories.
a) Large Scale Industry
b) Medium Scale Industry
c) Small Scale Industry
Small Scale Industry is most important part of any
country. SSI provides platform to entrepreneurs for starting
business. Govt. has defined SSI many times on different
parameters. The industry whose investment in plant &
machinery is up to 3 crores is termed as SSI.
SSI is the base for medium & large scale industry. It also
give chance to new & young entrepreneurs to start a unit with
very limited capital & it would ultimately play great role in
shaping the countrys economy.
Project Report is very important for any business unit.
Each unit is required to prepare project report for finance or for
other purposes. A successful project contributes towards
increase in Gross National Product which results into ultimate
well being of the people in general. An unsuccessful project on
the contrary, proves a burden on the scarce national resources
as it does not contribute towards Gross National Product. Even9

though it has developed resources for creation of assets lying

unutilized or underutilized.
This project report is on Small Scale Unit which is
engaged in producing buttermilk. Buttermilk is a fast
developing product which falls under dairy industry. Low Cost,
easy installation of machinery, simple production process, easy
storage make it ideal for the purpose.

10

Justification of location

At present the plant is located at :

SONS Co.

APARNATHI

&

Shapar Industrial Area,

Rajkot-Gondal Highway,
Village Veraval,
Rajkot 360 002.
It is situated on Rajkot Gondal Highway. Mainly it is an
industrial area & therefore enjoys some favourable advantages
& benefits that are as under :
a)

Availability of Raw Materials :

The unit is situated in Rajkot. Here dairy products are
available in bulk as well as in variety. The main Raw
Material is milk which can be acquired easily. Salt, water
& masala are also available easily.

b)

A proximity to market :
The unit deals in Rajkot market thus, market is very near
for the unit. In the future to expand market is also easy
because Gondal, Morbi, Shapar, Verval etc. small towns
are also near.

c)

Availability of land :
The unti is situated in industrial area & thus land is
available at cheaper rates. This is one of the greatest
advantages.

d)

Availability of transport facility :

Being located in an industrial area it gets the benefit of
various facilities like transportation & telecommunication
of reasonable cost, which helps in efficient working of the
firm.

e)

Availability of utilities :
The industry as such does not face any difficulty
regarding power supply & gas cylinders as it gets a
regular power supply & gas cylinders at their plant
location.

f)

Availability of man power :

11

Such problems are not faced in city like Rajkot. As it is

one of the leading Engineering cities, technical & skilled
personnel are available. Also, the unskilled labour is
easily available from the rural areas of the city. Thus,
the co. has an ideal location for the plant situated at
Shapar.

Product Details
Butter milk is a very common household product in
Gujarat. It is used daily in almost all the houses. There are
many families that they consume buttermilk twice a day. The
market version of buttermilk will ease the work of housewives.
Butter milk is a product which falls under the category
of Dairy Industry & thus, it has a wider scope of usage. The
raw materials used & manufacturing process is also simple.
The product is more famous in Gujraties & Gujarati public is
spreaded all over India. Thus, our product can cover more area
of market for the sale of product. Hence, in general the product
is accepted by all & used on a large scale.

12

13

Market Potential
The market potential for packed buttermilk is huge. While
there are a vast no. of people who refuse to accept market
version as their opinion is homemade is butter than market
product. But Rajkot is that kind of market where variety of
people lives in. So there are huge public who prefer to buy
their buttermilk rather than making it themselves. Thus,
initially we will try to exploit this segment of market & later as
words of mouth spreads. We would also like to draw the non
buyers.
Gujarati public is crazy about buttermilk. Not only daily
sales will be taken care of. In occasions of marriage function,
party, religious function, etc. We will provide buttermilk on
order basis also. Even we will take care of those potential
customers who are traveling for a long route. Thus, on railway
stations our product will be available easily. Because of this
facility travelers will not have to carry buttermilk as their
luggage.
As the public gets more & more health conscious &
demands value added, our product Drinkers Delight is sure
to meet those expectations. We decided to come-up with this
product, precisely, because of the fact that there exists virtual
monopoly in this area because the product sold by local dairy
can easily be surpassed by our product.

14

Details of Raw Materials

The two basic raw materials used in the product is milk
& water. Secondly, Salt & masalas are added to it for
obtaining flavours. The raw materials used in the product are
simple & are available easily in city like Rajkot.
However to maintain quality of final product a bit higher
prices are to be paid for inputs. Easy availability & enough
quantity are the best features of the raw materials. Even it is
really easy to transport the materials. Milk, Masala, Salt &
Water are common household product that ease the task of
material management & thus, it reduces overlapping or
backtracking in manufacturing process also.

Details of Machinery
Like raw materials machinery is also available easily.
Some of the mare acquired from local market only & some are
acquired from Ahmedabad city.
Charmers, bowls, freezers, heater are the machinery
used in production process of buttermilk.
Sr. Name of
Name of
Unit
N Machiner Suppliers
s
o.
y
1. Charmers Classic
22
Machinery
Ahmedaba
d
2. Bowls
Jaysons
180
Steel Shop
0
Rajkot
3. Freezers
Evernew
5
Ahmedaba
d
4. Heaters
Samkirt
1
Enterprise
Ahmedaba
d
15

Rs. Per
Unit
3,500

Amount
77,000

200 3,60,000
50,000 2,50,000
4,000

4,000

6,91,00
0

16

Manufacturing Process
Manufacturing process of Buttermilk is very simple; it is
so widely prepared in households. Curds have to be put into
charmers along with the required quantity of water, to get rich
buttermilk in no time. Once refrigerated its stimulating taste is
hard to beat. Prepared plain, salted or masalas it is a Drinkers
Delight. Ease of manufacture is a primary reason for selecting
this product for manufacture.
Buying Milk

Pasteurizing the Milk

Curding the Milk

Empting the curd into charmers

Adding water & masalas

Churing

Refrigeration

17

Production Capacity Schedule

Year

Installed
Capacity

Utilised
Capacity

1st year

100%

50%

13,15,100

2nd year

100%

75%

19,72,650

3rd year

100%

100%

26,30,200

i)

Units
Produced

No. of shifts per day

shift

ii)

No. of working days p.m.

25 days

iii)

No. of working days p.a.

300 days

hours]

18

[i.e.

FINANCIAL DETAILS OF THE

PROJECT
Finance is the blood of business unit. Finance is required for
establishment of a unit, for its smooth running and for
innovations. The following are the Fixed Assets acquired by
the unit.

19

DETAILS OF INVESTMENT

Sr. No Particulars
1
2
3
4
5

2016-17

Land
Building & Premises
Furniture
Machinery
Fixed Capital Cost
Working Capital
Total Cost of Project

20

On rent
1100000
300000
550000
1950000
680200
2630200

Fixed cost
FIXED COSTS
Wages

72000

Office expense

20000

Interest on loan

107926

Depreciation

237500

Rent

100000

Bank charges

1500

Auditors fees

20000

Total

558926

P/V ratio

40.625

BEP

1375817

21

Variable cost
VARIABLE COSTS
Material costs

258000

Power and fuel

5000

Electricity

6000

Bad depts.

3000

Commission

2300

Travelling expense

30000

Total

304300

22

SOURCES OF FINANCE
Owned Fund
Owner

1800000
-

Total Owned Fund

Borrowed Fund

1800000

Bank Loan
Total Funds

830200
2630200

23

Profit & loss A/C

Expenditure

2016-17

Incomes

2016-17

Material Cost
Wages and Salary
Power and fuel
Electricity
office expenses
interest on bank loan
Depreciation
Rent
Bad debt
Commission
Travelling Expenses
Banks charges
Auditors Fees
Net Profit

304300
720000
50000
60000
20000
107926
237500
100000
3000
2300
30000
1500
20000
669774
4602000

Sales
Other Incomes

4590000
12000

4602000

24

Balance Sheet
Liabilities

2016-17

Owned Capital
1800000
Borrowed capital
Current year Profit
Current Liabilities
1. Creditors

830200
669774
412800
3712774

Assets

2016-17

Net Fixed Assets

Current Assets
1. debtors
2. cash and bank balance
3. Stock
Investments

1712500
918000
125000
50000
907274
3712774

25

2nd Year Profit & loss A/C

Expenditure
Material Cost
Wages and Salary
Power and fuel
Electricity
office expenses
interest on bank loan
Depreciation
Rent
Bad debt
Commission
Travelling Expenses
Banks charges
Auditors Fees
Net Profit

2017-18
334730
792000
55000
66000
22000
118718.6
261250
110000
3300
2530
33000
1650
22000
736751.4
5062200

26

Incomes

2017-18

Sales
Other Incomes

5049000
13200

5062200

2nd Year Balance Sheet

Liabilities

2017-18

Assets

2017-18
1883750

1980000

Net Fixed Assets

Current Assets
1. debtors
2. cash and bank balance
3. Stock
Investments

137500
55000
998001.4

Owned Capital

Borrowed capital
Current year Profit
Current Liabilities
1. Creditors

913220
736751.4
454080
4084051.4

1009800

4084051.4

27

3rd Year Profit & loss A/C

Expenditure

2018-19

Incomes

2018-19

Material Cost
Wages and Salary
Power and fuel
Electricity
office expenses
interest on bank loan
Depreciation
Rent
Bad debt
Commission
Travelling Expenses
Banks charges

368203
806400
56000
67200
22400
120877.12
266000
112000
3360
2576
33600
1680

Sales
Other Incomes

5140800
13440

Auditors Fees
Net Profit

22400
750146.88
5154240

28

5154240

3rd Year Balance Sheet

Liabilities

2018-19

Owned Capital
2016000
Borrowed capital
Current year Profit
Current Liabilities
1. Creditors

929824
750146.88
462336
4158306.88

29

Assets

2018-19

Net Fixed Assets

Current Assets
1. debtors
2. cash and bank balance
3. Stock
Investments

1918000
1028160
140000
56000
1016146.88
4158306.88

4th Year Profit & loss A/C

Expenditure

2019-20

Incomes

2019-20

Material Cost
Wages and Salary
Power and fuel
Electricity
office expenses
interest on bank loan
Depreciation
Rent
Bad debt
Commission
Travelling Expenses
Banks charges

380400
820800
57000
68400
22800
123035.64
270750
114000
3420
2622
34200
1710

Sales
Other Incomes

5232600
13680

Auditors Fees
Net Profit

22800
763542.36
5246280

30

5246280

4th Year Balance Sheet

Liabilities

2019-20

Owned Capital
2052000
Borrowed capital
Current year Profit
Current Liabilities
1. Creditors

946428
763542.36
470592
4232562.36

31

Assets

2019-20

Net Fixed Assets

Current Assets
1. debtors
2. cash and bank balance
3. Stock
Investments

1952250
1046520
142500
57000
1034292.36
4232562.36

5th Year Profit & loss A/C

Expenditure

2020-21

Incomes

2020-21

Material Cost
Wages and Salary
Power and fuel
Electricity
office expenses
interest on bank loan
Depreciation
Rent
Bad debt
Commission
Travelling Expenses
Banks charges

380455
864000
60000
72000
24000
129511.2
285000
120000
3600
2760
36000
1800

Sales
Other Incomes

5508000
14400

Auditors Fees
Net Profit

24000
803728.8
5522400

32

5522400

5th Year Balance Sheet

Liabilities

2020-21

Owned Capital
2160000
Borrowed capital
Current year Profit
Current Liabilities
1. Creditors

996240
803728.8
495360
4455328.8

Assets

2020-21

Net Fixed Assets

Current Assets
1. debtors
2. cash and bank balance
3. Stock
Investments

2055000
1101600
150000
60000
1088728.8
4455328.8

33

PROJECTED INCOME STATEMENT FOR 3

YEARS
2016Particulars17
2017-18 2018-19
Non cash
Incomes
or Capital
Receipts

2016- 2017Particulars 17
18
Net Profit

0 Depreciation

Funds
From
Operations 907274

998001.4

1016146.88

907274

998001.4

1016146.88

669774 760501.4
237500

237500

2018-19
778646.88
237500

907274 998001.4 1016146.88

PROJECTED INCOME STATEMENT FOR 2

YEARS
34

Particulars
Non cash Incomes
or Capital Receipts
Funds From
Operations

2019-20

2020-21

Particulars 2019-20
Net Profit
0 Depreciation

0
1034292.36

1088728.8

1034292.36

1088728.8

35

796792.36
237500

2020-21
851228.8
237500

1034292.36 1088728.8

Particulars

2016-17

36

2017-18

2018-19

2019-20

202

Cash Flow Generated from

Business Operations
A. Net Profit
Add: Non Cash Expenses:
.Depreciation (All
Fixed Assets)
Profit Before Change in
Working Capital
Closing Stock
Debtors
Increase/Decrease in
Creditors
Net Change

669774

760501.4

778646.88

796792.36

8512

237500

237500

237500

237500

237

907274
-50000
-918000

998001.4 1016146.88 1034292.36 1088

-55000
-56000
-57000
-60
-1009800 -1028160
-1046520 -110

412800
-555200

454080
-610720

462336
-621824

470592
-632928

495
-66

352074

387281.4

394322.88

401364.36

4224

-998001.4 1016146.88 1034292.36

-907274
1950000 -2145000 -2184000
-2223000
2857274 3143001.4 3200146.88 3257292.36

-108

Cash Flow generated from

Financing Activity
Owned Contribution
Borrowed Capital

1800000
830200

1980000
913220

2016000
929824

2052000
946428

216
996

Net Cash flow Generated

From Financing Activity

2630200

2893220

2945824

2998428

315

Net Cash Flow of Business

125000

137500

140000

142500

150

Net Cash Flow From

Business Operations
Cash Flow Generated
From Investment Activities
Purchase of Investments
Purchase of Fixed Assets
Net Cash Flow Generated
from Investment Activities

PROJECTED CASH FLOW STATEMENT FOR 5 YEAR

37

-234

-342

PROJECTED FUND FLOW STATEMENT FOR 3

YEARS
Sources of Funds

2016-17

2017-18

2018-19

Owner

1800000

1980000

2016000

Partner 2

Borrowed Fund

830200

913220

Funds from Business

907274

998001.4

929824
1016146.8
8

3537474

3891221.4

3961970.8
8

Application
of Funds

2016-17

2017-18

1950000

2121250

680200

748220

907274

998001.4

3537474

3891221.4

Owned Capital

38

Purchase of
Fixed Assets
Increase in
w.c.
purchase of
Investments

PROJECTED FUND FLOW STATEMENT FOR 2

YEARS

39

Sources of Funds
Owned Capital

20192020

2020-21

946428
1034292.
36

Purchase
of Fixed
2160000 Assets
Increase
0 in w.c.
purchase
of
Investme
996240 nts
1088728
.8

4032720.
36

4244968
.8

Partner 1

2052000

Partner 2

Borrowed Fund
Funds from Business

Applicati
on of
Funds
2020-21

BEP STATEMENT

40

2019-2

2292500

21

816240

1088728.8

10342

4244968.8

40327

Break even analysis shows the level of

production or sales where total revenue of the firm is just equal to total
cost of production. BEP is the points of production at no profit no loss.

Sales
Less
V.C.
Contribution
Less
F.C.
Profit

=4590000
= 2725300
= 1864700
= 558926
= 1305774

P/V Ratio:Contribution*100
Sales
= 1864700*100
4590000
= 40.625%
B.E.P. Point:Fixed Cost
P/V Ratio
= 558926
40.625%
= 13,75,817

BEP TABLE
PARTICULAR

1ST

2ND

3RD
41

4TH

5TH

YEAR
BEP IN Rs

YEAR

YEAR

YEAR

13,75,817 12,50,000 10,75,000 10,06,000

PROJECT SUMMARY

42

YEAR
9,85,750

Preparation of PPR provides should platform from which to

start the actual production by small entrepreneurs. In short, the efficiency
and effectiveness have its own role to play in the success of Largescale
unit.
I have found that market for the items is very much wide and
it is also need for all types of people and profit is also good in this
industry.

Name & address of the Raw

Material Suppliers
43

a)

Milk :

Ramkrishna Dairy Farm

End of 20 new Jagnath,
Dr. Yagnik Road,
Rajkot - 360 001.

b)

Salt & Masala :

Rajani Provision Stores

Purnima Complex,
Vidhyanagar Main Road,
Nr. Virani Chowk,
Rajkot - 360 002.

c)

Distilled Water :

Dhara Water Suppliers

Hanumanmadhi Chowk,
Aamrapali Road,
Nr. Kismat Water,
Rajkot - 360 005.

Name & address of Machinery

Suppliers
44

a)

Charmers :

"Classic Machinery"
Vidhya Complex,
Nehru nagar Chowk,
Near Bhopal,
Ahmedabad.

b)

Bowls :

"Jaysons" Steel Shop

Opp. 20 new Jagnath
Dr. Yagnik Road,
Rajkot - 360 001.

c)

Freezers :

"Evernew"
Jaishal Complex,
Navrangpura
Nr. ICICI Bank Branch
Ahmedabad.

d)

Heater / Gas :

"Samkirt Enterprise"
Ishan Chambers
Behind Law Garden
Ellisbridge,
Ahmedabad.

45

Disclosure of significant
accounting entries
1)

Method of accounting :-

Double Entry System

2)

Method of Depreciation :-

Reducing balance method

3)

Valuation of Inventory :

First in First out [FIFO] method

4)

Deferred Revenue Expenditure :

Preliminary expenses & write off of preliminary expenses

46

CONCLUSION
The unit is located near the city which is an appropriate location for
a dairy. The dairy is manufacturing quality Buttermilk products by
using modern machinery and equipments. This shows that the
dairy has adopted dynamic approach in the production.
The personals of the dairy work properly and efficiently with
a team spirit. And there are no disputes between them. During my
training period, I found that marketing is done in a systematic
manner by the dairy. In the dairy, the management of finance and
accounts is done with perfection and accuracy.

47

BIBLIOGRAPHY
I have referred the following books for gaining theoretical
knowledge about various fields of management:
Personnel Management:
Varma & Varma, C. B. Mamoria
Marketing Management:
Philip Kotler, S. A. Sherlarkar
Finance Management:
Khan & Jain, Varma & Agraval

48