UNITED FLOOR MILL

Feasibility Report United Floor Mill
Project Report Page 1
Managerial Accounting
Feasibility Report
On
United Floor Mill
Submitted to: Sir. Rashid Pervaiz
Submitted by:
MuntahaMaqbool
Reg no# F1F15BBAM0001
AqsaKhalid
KhadijaArshad
Section: BBA - 3C
University of Central Punjab, Faisalabad Campus
Date: , 2016

Acknowledgement
‘‘In the name of ALLAH, the most merciful and the beneficent’’ The Almighty who bestowed
knowledge, health, vigor, to complete this report.
A person is not perfect. He has a limited mind and thinking approaches. It is the guidance from
the great ALLAH that shows the persons, light in the darkness and the person finds his way in
this light. Person is nothing without the helping lights but a helpless creature.
“Life is a learning experience”. We have learned the validity of this statement time and time
again. Every time we think we know something, we look back a year later and realize how little
we know and how much we have learned. This Feasibility Report has convinced us again, not in
the learning but also in terms of the vast team of talented people that take part in creating this
report. We believe each person plays a piece of a puzzle to make the complete picture, some
pieces are bigger then others, but without anyone piece the picture would not be completed.
We feel great pleasure and honor to express our gratitude from the citadel of our hearts to the
people whom we met, for their cooperation .Their sympathetic behavior has an ever-lasting
impression on the pages of our memory.
We want to pay tribute to our worthy teachers who are the main source of enlightenment for our
minds. We all students are thankful to them as they prepared us for looking at the matters of life
widely with open minds. This project is one of the sources of knowledge about the “Business”
for us. We are especially thankful to our honorable teacher Sir.RashidPervaiz provided us
guidance, inspiration, suggestions and encouragement that helped us in all the time of research
for and writing of this project.
We are specially thankful to Ch Masood Majeed (owner of ASIA Flour Mill located in state of
small industries)who provide us necessary information and show us the working of flour mill.
We are also thankful to the all that person whose cooperation makes us unable to complete the
project. Who helped us in giving information to us for completing this project the end we would
like to thank UCP for allowing us the course which helped us in building our minds to the right
track towards professionalism.

PREFACE
Department of Commerce, The University of Central Punjab has always been admirable in its
efforts to equip the future executives with arms of creativity, flexibility and adaptability to meet
the challenges offered by fast changing business environment.
To achieve the above goals the department is providing both text and practical knowledge to its
students with its available resources.
Text knowledge is very well transferred to the students within the premises of the department ;
Practical knowledge requires the kind co-operation of various business organization of the
country.
Faculty members are always trying their best to ask the students to explore the market by
assigning these different field activities and to conduct the “Feasibility Report”.
This report has been made on
“UNITED FLOUR MILLS”
The key function of our work was to make Feasibility study and Feasibility Report.
We have done our best efforts to complete this report efficiently and effectively with all abilities.
We hope this report fulfills the criteria and expectations of Department of Commerce. We have
tried our best to make it analytical as well as informative.

TABLE OF CONTENTS
Sr # NAME PAGE #
1 Project Summary
2 Assumption
3 Executive Summary
4 Management
5 Estimated Cost of Land
6 Estimated Cost of Civil Works
7 Estimated Cost of Machinery
8 Estimated Cost of the Project & Interest During Construction
9 Initial Net Working Capital Requirement
10 Estimated Income Statement
11 Production at 100% Capacity
12 Capacity Utilized
13 Raw Material
14 Estimated Cost of Labor
15 Year Wise Wages of Labor
16 Manufacturing Overhead Cost
17 Administrative & General Expenses
18 Year Wise Administrative Salaries
19 Year Wise Depreciation
20 Pre-Production Expenses
21 Cash Flow Statement
22 Balance Sheet
23
Calculation of Internal Financial Rate of Return and Loan
Repayment Schedule
24 Financial Ratios
25 Financial Plan
26 Market Analysis
27 Technical Analysis
28 Manufacturing Process/Flow Chart/Diagram
29 Personal Analysis
30 SWOT Analysis
31 List of Machinery
32 Conclusion and Recommendations
33 Special Thanks

ProjectSummary
NAME OF PROJECT UNITED FLOOR MILL
LOCATION Small IndustriesEstate
NATURE OF
INDUSTRY
FloorMill – newproject
PRODUCT RANGE Floor,Maida & Bran
INSTALLED
CAPACITY
8 BodyFloorMill
PURPOSEOF LOAN To meetthe Capital Costof the Project
BRIEF
DESCRIPTION OF
MACHINERY
Machinerywouldbe purchasedfromlocal suppliersof machineryhavinggood
reputationinmarketinthis regard.
ESTIMATED COST
OF THE PROJECT
Debt 60% 40,687000
Equity 40% 27,125000
Total 67,8120
NAMES OF LOAN Picic
Long termloan
NAME OF
MACHINERY
SUPPLIERS
M.YOUNUS MALIK
SUTLUJ INDUSTRIES
SMALL INDUSTRIES SHOP5/6

Introduction
Wheat is one of the most important products for all of region of the world. Without wheat
human life is uncompleted. It is become more important not only by the fact of improvement
international value. It’s a first food item that an important for all over the world. That business
also important for a Pakistan. And last decades the flour mill are increase due increase in demand
of flour.
Reasonsfor Motivation
 Availability of raw material
 Availability of utilities
 Availability of labor4.Technical facilities
 Whole year producing process
 Large demand of the people.
 Profitable Business
ProposedLocation
The most feasible location for the plant would be in or near the wheat producing regions of
Punjab. This is advisable as transportation costs would be reduced and contact with
growers/farmers directly can be made. It is usually the case that the farmers are willing to
approach the manufacturing plant directly if it is located near to their lands. However, the
availability of trained personnel in the locality has to be kept in mind as well as the availability
of suitable residences because costs could rise if there was a problem in the accessibility of the
location from other urban area.

Decisionof Location
When we make investment and open a plant than we first decide the location and study some
regard about the location. The best location of any plant is important and greater effect
on business. The business can run if all input is available. We decide location the small industrial
area of city followings factor should be examined.
 Availability of raw material
The location that we decide, in that location the raw material of our plant is available.And we
also examined the input constraint. And study any short and fall of raw materialand how we can
avoid that.
 Availability of utilities
After the analyses of the raw material then we examine the utilities. For example power water
telecommunication road and other facilities. If the all facilities are available thanopen a project
other wise rejects.
 Availability of labor
Then we examine labor. The workers are available for running a project.
 Available of skilled labor.
 Available of unskilled labor.
 Wage rate.
 Training of employees.

Nature of the Business
The nature of the business is partnership. Although selection totally depends upon the choice of
entrepreneur. This business is based on the partnership and registered under partnership act 1932.
 Name
We decide that the name of our flour mill is UNITED FLOOR MILL.
 CoveredArea
The total area, which we want to establish a Flour mill, is 2 acres. The cost of one acre is
5million. The area required to the machinery building is 2 kanal.
 Human ResourceRequired
 Labor
There are three types of the labor are required
 Technical Labor
Technical labor is a permanent employee of the factory. 15 to 20 employees are required.
 Manager.
 Shift In charge.
 Washer Man.
 Accountant.
 Packers.
 Others Helper.
 Supervisors
These are also the permanent employee of the factory.10 to 15 employees are required.
 Loaders
Loaders are the contractor employee of the company. 15to20 employees are required.

What legalaspects do I need to considerwhile starting my business?
While starting your business, government regulations need to be considered. These
regulations may also cover special incentives offered by the government for that particular sector
and other laws that may govern the business. You also must decide about the form of
your organization (sole proprietorship, partnership etc). Establish Flour Mill following legal
procedure is follows.
 LegalProcedure
Application for license to Establish Flour Mill
Applications for licenses shall be made in Form “B” (annexed herewith as annex “A”) to the
Licensing Authority of the district in which the applicant carries on or intends to carryon
business involving the purchase, sale or storage for sale of food grains in wholesale quantities.
To obtaining license applicant have to undertake on the application Form that he agrees to abide
the conditions of license given in Form “A” (annexed herewith as annex “B”). If any applicant
carries on such business or intends to carry on such business in more than one district he shall
apply to the District Magistrate of the district in which he usually resides. A single application
may include a request to carry on business in a number of districts.
 APPLICATION FORM FOR LINCENSE
 Applicant's name.
 Applicant's profession.
 Applicant's residence.
 Situation of applicant's place(s) of business with full particulars regarding the number of
house or premises, which he wants to get this license.
 Place (s) of storage.
 How long has the applicant been trading in food grains mentioned in the Schedule I tothis
order and any other food grains.
 Quantities of food grains handled annual during the past three years.
 Food grains in respect of which license is required.
 I have carefully read the conditions of license given in Form 'A' in Schedule IIappended
to the West Pakistan Food grains (Licensing Control) Order, 1957 and I agree toabide to
them.
Date…………………….. Signature of the applicant.

 Issuance ofLicense
On receipt of application and on payment of a license fee of Rs. 10 for one district andRs. 2 for
each subsequent district the licensing authority shall issue license.
 RenewalofLicense
A license granted under this order shall, unless suspended, withdrawn or cancelled continue to be
in force for one year from the date of the issue of the said license but shall be renewable annually
by the licensee to the licensing authority by which the license was granted and on payment of the
renewal fee of Rs. 5 for the first district and Rs. 1 for each subsequent district. Renewal of
licenses shall be granted on the Renewal Endorsement Form shown in Form “C” (annexed
herewith as annex “D”). If any person fails to apply and to deposit the renewal fee before the
date when it is due to expire the license shall not be renewed
 Unless:
 The licensing authority is satisfied that there were good and sufficient reasons for the
delay; and the licensee pays an extra fee of Rs. 5 for the first district and Rs. 1 for each
subsequent district.
 Duplicate License
In the case of lost or damage of the license, a duplicate license shall be issued on paymentof Rs.
5 for one district and Rs. 1 for each subsequent district when it is proved to the satisfaction of the
licensing authority that the original license was lost or damage in a bona fide manner.
 No Objection Certificate. (NOC)
After the issue of license the owner get the No Objection Certificate (NOC) from thefollowing
department.
 Industry Department
 Environment Department
After the issue of (NOC) the owner starts the business properly.

 No Objection Certificate Fee. (NOC)
No Objection Certificate Fee (NOC) pay to the Industry Department and Environment
Department is Rs.25000.
 FoodDepartment
Food Department gives the permission of quota of wheat on the base of urban bodies live in the
district.
ASSUMPTIONS
 Direct labor will increase every year 20%.
 Administration salaries will be increase 20% per year.
 Selling expense are 5% of sales revenue.
 Depreciation will be constant over the life of assets.
 The economic life of the project would be 10 year.
 The entire capital outlay would be incurred one year prior to the commencement of
commercial operation.
 Motor vehicles, furniture, fixtures, and equipments would be replaced after 10 years.
 Salvage value at the end of the life of the project represents recovery of working capital
original value of land, book value of land and book value of building.

EXECUTIVE SUMMARY
We are the fresh students of BBA A/c & Finance double specialization. We are going to start a
new business.
As Faisalabad is an agricultural area having two major crops wheat and cotton. We have made a
research and seek different type of investment opportunities in Faisalabad region. We have
decided to invest the flour mill because there is much potential in this business and raw material
is easily available.
As population is increasing day by day so the demand of flour is increasing day by day so it is a
very profitable project and it will contribute in the industrial sector of Faisalabad region.
United Flour Mill is a registered firm established with the objective of providing flour and to
fulfill the increasing demand of Faisalabad region.
The three buy products are:-
 Floor
 Maida
 Bran
The mill is intending to starts it operations initially with one plant in Chak 12 Faisalabad.
It plans to expand its network latter in others Tehsils of Faisalabad. Initially United Flour Mill
operates at 75% of the capacity. United Flour Mill will start its operations soon.

MANAGEMENT
 Mr. Amir Fraz CEO
 Mr. Farhan Khizar GM
 Miss. Humaira kanwal MD

ESTIMATED COST OF LAND
SR # DESCRIPTION AREA
(MARLAS)
UNIT
COST
TOTAL
COST
1 Land 120 68000 816
2 Registration & Legal Requirements 1% of
cost of Land
120 680 82
3 Stamp Duty 2% of Cost of Land 120 1360 163
4 District Council Fee 1% of Cost of Land 120 680 82
Total Cost of Land 6848
ESTIMATED COST OF PROJECT
SR# DESCRIPTION TOTAL
COST
1 Land 8486
2 Building 9792
3 Machinery 26525
4 Installation & Erection of Machinery 5305
5 Installation 10% Cost of Machinery 2653
6 Transportation 10% of Machinery 2653
7 Vehicles 1400
8 Furniture & Fixture 900
9 Office Equipment 3320
10 Pre-Operating expenses 2580
11 Interest during construction 1846
Estimated fixed cost 65459
Net Initial Net Working Capital 2352
Total Estimated Cost of Project 67812

ESTIMATED COST OF MACHINERY
SR # DESCRIPTION QTY UNIT
COST
TOTAL
COST
Grinding Section
1 Ruler bodies(USSR type)(1000mm Ruler size with ruler) 8 700000 5600
2 Plant Shifter(4 Section each) 4 470000 1880
3 Bran Finisher 1 255000 255
4 High Pressure Suction Fan 1 300000 300
5 Battery Cyclone 1 300000 300
6 Air lock with Cyclone with Dividing Walls 20 155000 3100
7 Main Pipe(size 24inch,lenth 50feet) 2300
8 Purification Machine 1 450000 450
9 Low Pressure Suction Fan 1 200000 200
10 Cyclone with Pipe(size 4*8) 1 200
11 Flour,Maida,sujji,Chollar Packing Bin(Steel) 8 155000 1240
12 Conveyor Werm 9" Size(feet) 2000 1000 2000
14 Lift Pipe(4 inch with band,8 gage) 1500 1000 1500
15 Ruler Body Receiver with Happer 20 5000 100
16 Production Pipe(5 inch, 16 gage) 1500 500 750
Cleaning Section
1 Washing Machine Full Size USSR type Steel 1 550000 550
2 Elevators with belt with bucket 56 feet length 5 312000 1560
3 Seperater Polland Type 4 300000 1200
4 Scorer 2 270000 540
5 Suction Fan with Cyclone with Suction Pipe 4 325000 1300
6 Cocle Salender Polland type 2 550000 1100
Others
Nut Bolt,Angle,Steel Sheet,Belt,Steel Jalli,Resham Jalli,etc 100
Total Cost of Machinery 26525

INITIAL NETWORKING CAPITAL REQUIREMENT
PARTICULAR RS
CURRENT ASSETS
INVENTORIES
 Raw Material 5 Days Requirement
 Wheat 134
 Finished Goods 2721
Total Cost of Inventory 2855
Advances, Deposits & Repayments 4
Account Receivables(2% of Sales) 1613
Cash 1% of amount withdrawn from bank for
inventory
21
Total Current Assets 4494
POSSIBLE CURRENT LIABILITIES
Bank borrowing 75% of Inventories 2141
Initial Net Working Capital 2352

ESTIMATED INCOME STATEMENT
Years Ending September 30:- 2013 2014 2015
Sales 80669 95010 100958
COST OF SALES
Raw Material 16536 17633 19742
Labor 15439 18527 22232
Manufacturing Overheads 22450 23356 24263
Depreciation 2576 2576 2576
Total Cost of Goods Manufactured 57001 62093 67814
Inventory Adjustment 5700 509 6272
Cost of Sales 51301 61583 61541
Gross Profit 29368 33426 39444
OPERATING EXPENSES
Administrative Expenses 3780 4536 5443
General Expenses 1750 2100 2520
Selling Expenses 4033 4750 5049
Total Operating Expenses 9563 11386 13012
Operating Profit 19804 22040 26431
OTHER EXPENSES
Financial Charges
Long Term Loan 6103 5493 4882
Amortization of Pre-Production Expenses 860 860 860
Total Other Expenses 6963 6353 5742
Profit Before Tax & Other Funds 12841 15687 20689
Profit/Loss Before Tax 12841 15687 20689
Tax Provisions @ 40% 5136 6275 8276
Net Profit 7705 9412 12413
RATIOS
Gross Profit/Sales 36.41 35.18 39.06
Operating Profit/Sales 24.55 23.20 26.17
Pre-Tax Profit/Sales 15.92 16.51 20.49
Net Profit/Sales 9.55 9.91 12.29
Net Profit/Equity 22 21 22

PRODUCTION @ 100%CAPACITY

UNITED FLOOR MILL

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Similar to UNITED FLOOR MILL

Similar to UNITED FLOOR MILL (20)

More from Trade Expert

More from Trade Expert (20)

Recently uploaded

Recently uploaded (20)

UNITED FLOOR MILL