BUBBLE GUM - East Godavari District

BUBBLE GUM
1.
Introduction
Bubble gum or chewing gum is a favourite pastime chewee among
children and youth. Children like the product because of its minty or fruity flavour
which rolls constantly in the tongue. The youth prefer it as it is habit forming and
as well as a mouth freshner. Moreover, the manufacturers of these products
provide incentives for sale of this product by providing stickers or labels
pertaining to sports, film personalities and events or general awareness which
tempts the children to purchase the product.
2.
Market
The major market outlets are the “ B” and “C” class outlets. The market is
oriented towards children and youth who buy the product as a pastime fun
chewee. The market though highly competitive is good and depends upon the
manufacturer’s promotional strategies to reach the product to the target clients.
3.
Packaging
The processed product is packed in laminated paper wrappers. Each
bubble gum weighs 5 grams.
4.
•
Production capacity
The plant will be in operation for three shifts a day with each shift of 8 hours
duration.
•
The plant operates to a production capacity of 25 kilograms per hour.
•
The estimated production per day is 600 kilograms.
•
The total production per month will be 15 M.T while the annual production is
estimated at 180 M.T
•
5.
•
The time period required for achieving full capacity utilization is one year.
Sales revenue
The ex-factory selling price will be Rs. 0.65 per piece of 5 grams with an MRP
of Re.1.00. A carton of 200 pieces will weigh one kilogram and will cost Rs.
130 inclusive of taxes. The estimated annual sales revenue will be Rs. 234
lakhs.
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6.
Production process outline.
Sugar is ground very fine in the grinder. It is then mixed with the required
quantities of edible gum, water, flavours, emulsifiers and then extruded in the
extruder. The resulting product emerges in the form of strips which is cut to
desired lengths and wrapped in the wax paper by the wrapping machine. The
product passes through a cooling tunnel wherein the product acquires a rigid
texture. The strips are then covered with a paper wrapper and then packed in
cartons for dispatch.
7.
Quality specifications
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8.
Description
Edible gums
Moisture
Sulphated ash
Acid insoluble ash
Reducing sugars as dextrose
Total plate count
Coliforms
Streptococci
Salmonella
Value
Minimum 12.5% by weight
Maximum 3.5% by weight
Maximum 9.5% by weight
Maximum 2.0% by weight
Minimum 4.5% by weight
Maximum 30,000 per gram
Absent
Absent
Absent
Pollution control measures
Not necessary as there are no pollutants or effluents.
9.
Energy conservation measures
Common measures will do.
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10.
Land and construction cost for the proposed unit
The proposed unit is to be set up in a leased area. The total leased area
is 3000 square feet vide details given below.
Sl
Sq. feet
1600
100
100
200
100
200
200
200
200
100
3000
Description
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5
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7
8
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Processing area
Raw material store
Other ingredients store room
Finished goods store room
Packaging material store room
Laboratory
Office space
Machinery spares store room
Toilet space
Miscellaneous space
Total
Lease rentals – Rs. 8.00 per square foot
Total rent per month – Rs. 24000
Lease advance – Rs. 150000
11.
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Costing of machinery and equipment
Rs. lakhs
Description
Sugar grinder with motor
Stainless steel sigma mixer
Gum extruder
Cooling conveyer
Cut and wrap machine
Total
Laboratory equipment
Grand total machinery and equipment
3
0.400
1.650
1.850
2.000
5.000
10.900
0.600
11.500
12.
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19
20
Project cost
13.
Working capital requirements per month
a.
Salaries and wages
Land
Civil works
Plant machinery
Laboratory equipment
Transport vehicle (1 Tata Ace)
Pollution control equipment
Energy conservation equipment
Cost of power connection
Cost of electrification
Erection and commissioning
Cost of machinery spares
Cost of office equipment
Deposits if any
Company formation expenses
Gestation period expenses
Sales tax registration expenses
Initial advertisement and publicity
Contingencies
Working capital margin money
Total
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Description
1
2
Production Manager
Production supervisor cum
chemist
Skilled workers
Unskilled workers
Administration staff
Sales staff
Van driver
Total
3
4
5
6
7
8
Rs. lakhs
On lease
On lease
10.900
0.600
3.600
0.000
0.000
0.500
0.500
1.000
0.250
1.000
0.600
0.100
1.000
0.100
10.000
0.500
3.000
33.650
Description
No of
persons
4
1
3
Total
salary /
month
(Rs. lakhs)
0.150
0.300
6
6
1
1
1
19
0.360
0.180
0.100
0.100
0.060
1.250
b.
Raw material requirement per month
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Description
Qty
(kgs)
3000
Rate / kg
(Rs)
17.00
Value
(Rs. lakhs)
0.510
750
120.00
0.900
11000
12.00
1.320
1
Sugar
2
Edible gums
3
Edible starches
4
Fat
150
60.00
0.090
5
Emulsifiers
150
35.00
0.053
6
Total raw material
c.
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15050
2.873
Packaging material requirement per month
Rate / unit
Qty
Description
Rs)
Wax coated laminated
paper
Wrapper
3
Cartons and straps
4
Total
1500 nos
20
Value
(Rs. lakhs)
2.473
3.000
0.300
5.773
Total raw + packaging material = Rs. 8.646 lakhs
d.
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Utilities per month
Description
Power 20000 kwh @ Rs. 5.50 per unit
Water
Boiler fuel
Total utilities
5
Rs. lakhs
1.100
0.050
0.000
1.150
e.
Contingent expenses per month
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11
12
13
f.
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5
14.
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Description
Rent for processing shed
Postage and stationery
Telephones, fax etc.
Consumable stores
Repairs and maintenance
Local transports, loading and unloading
Advertisement and publicity @ 15% of sales
Insurance
Sales expenses @ 1% of sales
Miscellaneous expenses @ 1% of sales
Trade incentives @ 2% of sales
Taxes @ 12.5%
Total contingent expenses
Rs. lakhs
0.240
0.010
0.050
0.050
0.081
0.100
2.975
0.036
0.195
0.195
0.390
2.437
6.759
Total working capital requirement per month
Rs. lakhs
Description
Salaries and wages
1.250
Raw material and packaging material
8.646
Utilities
1.150
Contingent expenses
6.759
Total
17.805
Means of finance
Rs. lakhs
Description
Total Project Cost
Equity
Debt
Working capital margin money
33.650
11.220
22.430
3.000
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15.
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Financial analysis
Description
Total recurring cost per year
Depreciation on land and building
Depreciation on machinery and vehicle
Depreciation on furnaces
Depreciation on moulds and fixtures
Depreciation on office equipment
Interest on long term loan @ 12%
Interest on short term borrowings@ 12%
Total cost of production
16.
Turnover per year
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Item
Qty
1
Bubble gum
180,000 kgs
17.
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5
Rate/unit
(Rs)
130
Viability analysis
Description
Net profit before income tax (Rs. lakhs)
Net profit ratio
Internal rate of return
Break even percentage
Debt service coverage ratio
Rs. lakhs
213.660
0.000
1.760
0.000
0.010
0.050
2.692
1.396
219.568
Total
Rs. lakhs
234.00
Value
14.432
6.1%
28.3%
51%
2.008
List of machinery suppliers for bubble gum
1. Bombay Industrial Engineers, 13, Crystal Apartments, Gulmohar Cross Road,
11, JVPD, Mumbai. 400049.; Tel: 022 – 26232810, 26201914; Fax: 022 –
26201914
2. Labh Group of Companies, 403-405, Time Square, Near Pariseema
Complex, Ahmedabad 380006, Tel: 079-26569261,26442897, 30070400
3. Paresh Engineering Company, 74 / B, Sanjay Building No. 5, Mittal Industrial
Estate, M. Vasanji Road, Marol Naka, Andheri East, Mumbai. 400059. ; Tel:
022 - 28501794; Fax: 022 - 28509193
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