Introduction
BACKGROUND
K R FOOD INDUSTRIES LIMITED is a private limited company having its business address at banshbaria, sitakunda. The project has been designed and established as flour mill plant to meet the country’s continuous growing demand for those items. At the request of the directors of the company we have undertaken to conduct a evaluation study and to prepare the feasibility study
report on the project considering the investment and taking all the relevant factors into consideration and accordingly this represents the findings of the evaluation study and the outcome of the study has been presented in the succeeding chapters of this report
OBJECTIVE
The main objective of this study and report is to assess the viability of the project with requited facilities and skills. The study has been viewed particularly in the context of the growing competitive situation and prevailing market condition and current worldwide economic crisis. Consequently it has been decided as to whether the proposed project is financially rewarding, commercially viable, technically sound and socio-economically desirable. METHODOLOGY
The study has been carried out and the report prepared on the basis of the information provided by the directors and collected from the market and other different sources. The methodology used for the study consists of both desk research and field survey. MANAGEMENT ASPECTS
CORPORATE SET-UP
K R FOOD INDUSTRIES LIMITED is a private limited company with its business address at banshbaria, sitakunda. OPERATION
The venture will be run and managed by the board of directors. The board of directors will formulate the overall policies and strategies as to the finance. Taslim Uddin, managing director of the company will be responsible for the day to day affairs & administration of the venture and also for the execution of policies framed by board of directors time to time. BACKGROUND & EXPERIENCE OF THE DIRECTORS
The directors of the company have a good background in the field of business for more then twenty years after engaging then in the business for trading and ship breaking and other items. Being actively engaged in the business for such a long period of time he has been able to gain wide and workable experience in running and managing an industrial company. Because of their valuable experience and in-dept knowledge in trading and manufacturing they decide to establish a unit of flour mill. They have quite sound in business knowledge and well experienced in marketing and well capable of running the undertaking in a competitive environment and efficient manner. ORGANIZATION & MANAGEMENT
Although the company is yet to develop its full strength organization structure, but the board of directors feel to have its own organogram for the smooth and efficient running and management of the company. Decision of there to organize the company into separate segment or divisions such as finance and accounts, procurement, maintenance, sales & marketing etc. In order to operate and run these departments, skilled personnel and professional and other support people will be employed. So far, the overall management of the company is concerned; it is vested with the board of directors. The managing directors will be acted as a chip executive officer (CEO) who will assume the overall responsibility of the running the day-to-day operations and administration of the company. In discharging his duties and performing the activities he will however to be assisted by other directors/executives along with the hired personnel. EMPLOYMENT OF THE SKILLED PERSONNEL
The recruitment of the requisite professional and skilled personnel for the establishment and installation of the projects is on going. Science it is pre-requisite to recruit some skilled professionals for its different divisions such as finance and accounts, production, maintenance, quality control etc. for smooth, efficient and effective operation of the company. The board of directors must from a committee to employ these personnel in the company so as to be capable enough to face the competition and also to enjoy competitive edge over other players in the market. MARKETING ASPECTS
THE PRODUCT
It is a flour mill plant to supply flour, Suji, Atta, to local market for consumption of mass people. USERS
Mass people, different income group population as well as different restaurant; bakery would be our main users. Since growth rate of our country is satisfactory and gradually we are forwarding to middle income earning country so there is a huge scope to increase the customers. DEMAND ANALYSIS
Bangladesh current developing market is ripe and ready for better goods and services. Fore sighting the increasing demand we have determined to establish such project. COMPETITOR
Since every day consumers are going to conscious for healthy and quality food so it is pre-requisite to establish such a qualitative food industry. QUALITY CHARACTERISTICS
All quality standards are specific to the requirement of the users in the market. All machines are engineered to such specifications. Most quality issues with regard to strength, weight and look of the product is determined by the use of quality supervision. From the very inception of the company we will establish a good quality control team to ensure to customers satisfaction and day-by-day we are improving the department to enrich ourselves for the competition. PRICING OF THE PRODUCT
Our experience in the market through doing business from last 20 years has allowed us to access the market trend with regard to pricing of the products. All the calculations in the final reports have been based on such a standard and conservative pricing scenario. TECHNICAL ASPECTS
THE PROJECT
The company envisages establishment of flour mill for different users according to the demand of the market. STATUS OF THE PRODUCT
Actually this project is on the implementation stage. Capacity of the proposed project: 60,000 MT yearly capacities
However the project efficiently may be worked out at 55%, 65%, 70% and 75% in the year of 01, 02, 03, and 04. PROJECT LOCATION & SITE
The project is be located at banshbaria, sitakunda
PLANT, MACHINERY AND EQUIPMENTS
The brand new machinery and equipment to be installed considering the price of machinery and equipment as well as after sales services. The plant has been selected on consideration of price competitiveness, quality and ability of machineries in particular and availability of spares in general. FINANCIAL ASPECTS
INTRODUCTION
The company is on the implementation stage. Attempt has been made and a careful analysis done to ascertain the actual cost of the company. The total cost of the company has been calculated on the basis of information provided by the sponsor, physical verification of the company site highlighting the cost to be incurred and also the critical verification of the papers supplied by the sponsors. On implementation of the company, it is however, advisable to maintain proper books of accounts and introduce modern accounting system for the sake of up to date information and transparency. COST OF THE PROJECT
Total cost of the project has been estimated to be at Tk.13.42 crore including net initial working capital of Tk. 4.86 crore. The detailed estimates of total cost of the company, fixed investment and working capital requirement have been given at the financial part of the profile. FINANCING OF THE COMPANY
The expansion of the company has been proposed to avail term loan and working capital loan from bank or financial institution. FINANCIAL EVALUTION
To access the financial viability of the company a detailed projection of its operation based on available information has been done. The projections and analysis have been done on the basis of the following assumptions:
• Economic life of the plant has been considered to be 10(ten) years, whereas projections for 01, 02, 03 and 4 years have been done.
• The capacity utilization of the company has been considered to be 55%, 65%, 70% and 75% in the year 01, 02, 03 and 04 respectively. The cost of imported and local raw materials and also the selling prices of the product have been kept constant throughout the projection period on the assumption that any unusual variations in the cost of inputs will be offset by changes in the selling prices of the product.
• Depreciation and write off against fixed assets have been charged on straight line principle.
• Insurance premium @ 1% of the total cost of all fixed assets and @ 1% on all stocks has been considered.
• Other expenses have been estimated and charged as per the prevailing market prices. PROFITABILITY OF THE COMPANY
The earning prospect of the company has been estimated and shown in the financial analysis on the basis of assumption made on above. Besides, earning forecast has been prepared on the basis of sales estimate. Cost of goods sold estimate, General Administrative & Selling Expenses Estimate and Financial Expenses Estimate. BREAK-EVEN ANALYYSIS
The break-even analysis has been carried out on the basis of cost and sales data of 04 year projected operation. Break-even point can be achieved at 32% of capacity utilization. From this analysis it is clear that the company will be able to make profit if it can run above 32% of the rated capacity. COMPANY CASH FLOW
The assess the liquidity position of the company, cash flow for 4 years of commercial operation has been prepared. From the statement it is evident that the company will be able to generate sufficient fund to meet all its operational expenses, repay its debt obligation, provide substantial return to the sponsor and build a reasonable reserve.
