Detailed Project Report
on
Establishment of a Bakery Unit
by
PACS
Contents
Abbreviations ..............................................................................................................
Introduction .....................................................................................................................
.
Project Profile ............................................................................................................
The Proposal ..................................................................................................................
Business Model .....................................................................................................
Project Details .............................................................................................................
Assumptions .........................................................................................................
Implementation schedule ....................................................................................
Statutory & Government Approvals .......................................................................
Manufacturing Process ...........................................................................................
Process flow Chart .............................................................................................
Financial Statements ............................................................................................
Project Financing .........................................................................................................
Business Projections ..........................................................................................
Cash Flow ......................................................................................................................
Feasibility Assessment ................................................................................................
SWOT Analysis ...........................................................................................................
Risk Assessment & Management ...............................................................................
Training & Development .......................................................................................
Monitoring and
Control ............................................................................................................................
Conclusion ...............................................................................................................
Annexure ..................................................................................................................
Financial Analysis & Ratios
Abbreviations
AC Air Conditioner
CAGR Compound Annual Growth Rate
CU Capacity Utilization
DCCB District Central Cooperative Bank
DSCR Debt-Service Coverage Ratio
FSSAI Food Safety and Standards Authority of India
GoI Government of India
GST Goods and Service Tax
HTCL Haryana Tourism Corporation Limited
IBRTC International Bakery Research & Training Centre
IRR Internal Rate of Return
ISO International Organization for Standardization
MoFPI Ministry of Food Processing Industries
NCDC National cooperative Development Corporation
NCR National Capital Region
NIFTEM National Institute of Food Technology Entrepreneurship and Management
PACS Primary Agriculture Cooperative Societies
RO Reverse Osmosis
SKU Stock Keeping Unit
Introduction
1.1 Background of the study
Bakery products, due to high nutrient value and affordability, are an item of huge
consumption. Due to the rapid population rise, the rising foreign influence, the
emergence of a female working population and the fluctuating eating habits of people,
they have gained popularity among people, contributing significantly to the growth
trajectory of the bakery industry. A number of healthy products have been launched in
the bakery segment and are gaining popularity at a high rate.
The Ethiopian bakery industry is one of the biggest sections in the country’s
processed food industry. Bakery products, which include bread and biscuits, form the
major baked foods accounting for over 82% of the total bakery products produced in
the country. The bakery segment in Ethiopia can be classified into the three broad
segments of bread, biscuits and cakes.
Despite the fact that there are many automatic and semi-automatic bread and biscuit
manufacturing units in Ethiopia, many people still prefer fresh bread and other
products from the local bakery. The popular biscuit variants in Ethiopia are glucose
biscuits, Marie, cream biscuits, crackers, digestive biscuits, cookies and milk biscuits.
1.2 Statement of the problems
Like many industries, retail bakeries see rising costs in fuel, healthcare and other
expenditures cut into their bottom lines and increase the costs of doing business.
Driven by the evolving perception of bakery products in Ethiopia and the changing
consumer preferences.
1.3 Objectives of the study
The project is to be considered to achieve the following objectives:
To generate employment in PACS by production activity
Provide financial benefits to member farmers of the PACS
Develop an attitude of business in PACS.
Women empowerment by generating employment for women
To utilise idle land resources of the PACS and make them business generation entity.
Business Model
Key Partners Key Activities Value Customer Customer
Proposition Relationships Segments
Members of Production
the PACS of Inventory Provide Long term High
Ethiopia- for Management Customers relationship income
providing Sales and healthy and to sustain in Group of
Raw material Marketing digestive the market Delhi –
NCDC atta biscuits Maintain NCR and
DCCB Crispy and hygienic Chandigarh
Machinery, nutritional production Villagers of
Repairs and ingredient the PACS
Ingredient Key Resources Handiness Channels Tourists
Suppliers of product Students
Fund provided on demand Shopping
by NCDC and malls, Big
DCCB bazaars etc.
Training to Local
personnel Retailer
provided by Shops
NIFTEM HTCL shops,
hotels and
resorts
Cost Structure Revenue Streams
Fixed Cost for Plant and Machinery Value added product generate
Attractive Packaging revenue
Distribution and Sales Products are produced as per market
Cost for product replacement in case of segments- High, Middle, Low level
packets are braked. income group and occasional
customers.
Prices are little lower than
competitors.
METHODOLOGY
Manufacturing Process
KHARI
Weigh all ingredients as per formula. Make soft dough in a dough kneader still it
becomes smooth and glossy. Roll the dough into sheets of required dimensions and
thickness, apply flour dusting as required. Apply ghee on layers and fold it still of
required size. Repeat the process still layers are formed. Refrigerate it for 15 minutes.
Remove from refrigerator, cut into pieces of required size and dimensions. Place all
the pieces in baking oven and bake at 200 °C 20-25 minutes. After that lower the
temperature and bake at 180° C for another 15-20 minutes. Cool the pieces, pack as
per weight decided of SKU into poly bags and then put into corrugated carton for
dispatch.
RUSK (TOAST)
Pre-mixing of ingredients as per formulation to form dough of proper consistency.
The dough is then divided and pieces put into moulds for proofing, followed by first
baking, cooling, second baking and again cooling and packing. First baking to do at
200° C and second baking at 180° C.
ATTA BUISCUIT
Weigh all ingredients and make soft dough with addition of sugar, ghee and water as
per formula. Beat the dough still it becomes soft and fluffy. Add yoghurt and best
again. Keep it in such condition for 10-15 min. Press the dough into flatten rounds
and make incision with knife at centre. Sprinkle cardamom, coconut or sesame seeds
just for decoration. Bake the rounds at 200° C for 20-25 minutes.
Process flow Chart
Project Details
Assumptions
The Project Profile has been prepared on the basis of Single Shift of 8 hours a day and
300 working days in a year at 80% efficiency.
It is presumed that in the first year, the capacity utilization (CU) will be 70% followed
by 75%, 80%, 85% and 90% onwards in the subsequent years.
Raw material consumption is 80% for first year then 90% and after that 100% in
subsequent years.
For Calculation purpose CU is adjusted in hike of raw material cost too.
The selling price of the products is kept fixed for calculation purpose.
The rate of salaries and wages for skilled workers and others are on the basis of the
minimum rates in the State of Haryana.
The PACS have Land and Building and have sufficient amount of primary raw
material i.e. Wheat.
The flour machine and RO water plant is already installed in the PACS.
The payback period may be 5-years after the initial gestation period.
The gestation period in implementation of the project may be to the tune of 6 to 9
months which includes making all arrangements, completion of all formalities, market
surveys and tie-ups etc.
Implementation schedule
The implementation of the project includes various jobs/exercises such as
procurement of technical know-how, market surveys and tie-ups, preparation of
project report, selection of site, registration, financing of project, procurement of
machinery and raw materials etc., recruitment of staff, erection/ commissioning of
machines, trial production and commercial production etc. In order to efficiently and
successfully implement the project in the shortest period, simultaneous exercises are
carried out. Project implementation will take a period of 8 months from the date of
approval of the scheme. Breakup of activities with relative time for each activity is
shown below:-
Activity Period (In Months)
Scheme Preparation and approval 0-1
SSI Provisional Registration 1-2
Sanction of loan 2-5
Clearance from State Pollution Control Board 3-4
Placement of order for machinery and delivery 4-5
Installation of machines 6-7
Power connection 6-7
Trial run 7-8
Commencement of Production 9 onwards
Statutory & Government Approvals
It is mandatory for the bakeries to acquire licenses from FSSAI, GST, Local
Municipality, Police Eating House, Fire Department and State Pollution Control
Board. Out of these, the FSSAI, GST and local Municipal Health permits are of
priority before starting the unit.
Financial Statements
Project Financing
Cost of the Project
Sl. No. Heads Amount
1 Land
2 Building
3 Plant & Machinery*
4 Contingency
5 Other capital Investment
Total
* Machinery Particulars are as under:
Sl. Equipment Quantity Rate Total Amount
No. (ETB./Unit) (ETB.)
1 Baking Ovens 4
2 Dough Mixers 2
3 Cutter, Divider, Sheeter 3
4 Rusk Making Machine 1
5 Flour Sifter, Sugar Pulveriser, 3
Biscuit Grinder
6 Trays, Scoops, SS Bins, 1
Pellets,
7 Packing Equipment 2
8 Miscellaneous Equips: Small - -
RO Plant, small flour mill
Total
Note: The rate may vary as per market
Working Capital Requirement
Raw Material
Ingredients Qty./yr.ETB Rate/ETB Amount
Maida/Atta 120
Ghee 55
Edible oil 7
Sugar 4
Salt 2
Other Ingredient 6
Packaging Material - -
Total
Manpower Requirement
Particular Number of Salary/ Wages Amount Total
Employees Per month per Amount
month Per year
Technical Staff 3 12,000 36,000 4,32,000
Admn. Staff 3 12,000 36,000 4,32,000
Marketing Staff 6 10,000 60,000 7,20,000
Labour 10 8,000 80,000 9,60,000
Total 2,12,000 25,44,000
Note: The rates are taken in round figure for the ease of calculation.
Business Projections
Installed plant capacity = 500 Kg/day
Efficiency @ 80% = 400 Kg/day
Production for 300 working days = 1, 20,000 kg
Sales
Khari @ 20%@Rs. 100/ Kg = Rs. 24,00,000/-
Rusk @ 40% @ Rs. 120/Kg = Rs. 57,60,000/-
Atta Biscuits @ 40% @ Rs. 150/Kg = Rs. 72,00,000/-Total sales = Rs. 1,53,60,000/-
Since capacity utilization (CU) is taken different for different years therefore,
projected sales will be:
Year 1 2 3 4 5 6
CU @ 70% 75% 80% 85% 90% 90%
Sales 10752000 11520000 12288000 13056000 13824000 13824000
Feasibility Assessment
Technical
Raw Material for this business is wheat, which is readily available in PACS.
The machines and equipments are not very costly so it can be easily affordable.
The machines and equipments become semi/fully automatic so operation is an easier
task.
The manufacturers of different machines also provide the facility of installation and
repair service for free.
PACS have large storage area and big godowns for storage of raw materials and
finished bakery products.
Socio – Economic
Bakery unit can generate extra income to PACS members and upgrade their socio-
economic status.
Youth of PACS villages can be employed here and it will create the employment
opportunity to young persons.
People can be trained as a salesman, machine operator or manager.
The entrepreneurial zeal and managerial skills of village women will be used which
otherwise wasted.
The entrepreneurial and managerial skills will be developed in PACS members.
Idle resources can be turned into profitable one.
Market
There is always a place of Rusk, Khari & Biscuits in all retail shop. So these products
have good market potential always.
Haryana is a developed state of India. The people of Haryana love the deshi products.
Bakery being pure deshi product has market throughout the Haryana.
Mall culture is spread all over Haryana. In the big cities the bakery products can be
placed in malls and organized retail shops.
Big Bazars and other big retail stores can be approached to sell these products.
Proximity to Delhi – NCR and Chandigarh is on advantage to PACS of Haryana. The
people of these cities are health conscious and they are ready for pay for good bakery
products.
PACS itself has a market for the products. Every PACS almost contain 8-10 villages
so the PACS can put the products in shops of its villages too.
Khari and Rusk are treated as a product of foreign touch. The population of
Chandigarh and Delhi NCR, who has to use these products, may create a good
potential.
Financial
Bakery products are value added products. These have higher value (price) than that
of raw materials. The financial aspects are elaborated in Annexures – attached.
This business have IRR 22% and DSCR = 2.95.
So, this project is financially viable.
SWOT Analysis
Strengths
The PACS of Haryana have ample amount of wheat throughout the year.
PACS have enough area of operation and ample storage space is available.
The labour and raw material is easily available for PACS.
Since Haryana is located near Delhi and Chandigarh so healthy bakery products are in
high demand especially atta biscuit which is easily digestible.
Low Capital Requirements for this business.
Weakness
Bakery products are perishable items.
Sensitive to commodity price fluctuations.
Scarcity of Skilled Human Resource
Lack of experienced staff
Opportunities
The increasing township and mall culture have created market potential for bakery
products.
Haryana have different stores located at bus stops (especially for AC busses) where
these products can be sold to passengers.
The nutritional value and attractive packaging of the products can also create an
opportunity.
The High income group having lavish living standard have passion to use bakery
products instead of packaged products available in market.
The fooding habit of villagers are also been changed and they are also a good
consumer of bakery products.
Threats
Tough competition with other big brands
Price wars among competitors
Product Substitution
Technology Up gradation
Risk Assessment & Management
Bakery products are perishable in nature; therefore Material management is required
for avoidance of the wastage.
There is a tough competition in the market so product mix approach is applicable to
this industry. PACS should produce quality products to sustain in the market.
Proper study of consumer behaviour should be conducted and accordingly the
products can be produced.
The shelf value of these products is very less therefore demand for these products can
be generated through proper advertisement and promotion.
The financing of these types of industries depends on the market factors, though
demand for these products are high but financial institution does not easily finance
these products. The financing agency must be ensured through a proper business plan.
The packaging of product should be attractive. It creates additional demand for
products.
Proper certification of plant is required from the authorities. Food safety standards
should be followed.
PACS may approach for ISO certification for ensuring the quality standards of
products.
Internal Checklist should be in plant / unit and it must be supervised periodically.
Waste disposal - The main waste in the bakery unit is of unused dough, fondant, burnt
product. These need to be removed in a timely manner. Dough and fondant may lead
to fungal growth in the manufacturing premises, whereas burnt product will
contaminate the finished product. Waste should be disposed immediately in covered
bins to avoid contamination.
Training & Development
National Institute of Food Technology Entrepreneurship and Management (NIFTEM)
located at Sonepat district of Haryana, is an autonomous institution under Ministry of
food Processing Industries, Government of India. This institute offers short term
training programmes and workshops on bakery. The PACS may approach to this
institute and provide training to its employees on bakery processing at nominal fees.
International Bakery Research & Training Centre (IBRTC) is opened in the NIFTEM
to undertake the work of training, teaching, research and technology transfer in the
area of: Science of Baking, Bakery Machinery, Hygiene and Sanitation, Bakery
Management, Production Method, New Product Development, Quality Control and
Specification, Packaging and Presentation of Products.
Apart from this there are several private institutes also which provide training and
skill development in bakery and food processing. These institutes are located in
Ambala, Karnal, Chandigarh, Hisar.
Monitoring and Control
Making bakery products experienced skilled worker or qualified baker is needed to
check raw material quality, dough consistency, proofing, first and second baking, etc.
It is necessary to develop right taste, texture and consistency of the products.
It is necessary to avoid waste during flour shifting, dough making, rolling/sheeting,
slicing/cutting etc. Because wastage increase the cost as well disposal of it also cost.
Proper selection of bakery equipment is very much essential.
Water must be of good quality, preferably RO water if total dissolved solids are high
in source water.
Disposal of solid and liquid waste are to work out properly as per pollution laws.
Good level of competence is needed to understand quality of raw materials,
formulation of products, functions of additives used in formulation, control of process
and machinery to produce end product of desired quality, taste and texture, type of
packing material to be used, market trends and penetration, etc.
Technical knowledge and skills are needed for problem solving, and to ensure good
hygiene and safety in the workplace.
Proper pest control is required for preventing insects and rodents.
The guidelines listed in FSSAI manual should be followed strictly.
Conclusion
Bakery products still remain the cheapest of the processed ready to eat products in the
country. The demand for bakery products will continue to increase in future.
Bakery products are becoming quite popular in rural areas as well. Nearly 55% of the
biscuits are consumed by rural sector. The higher consumption of biscuits in rural area
could be attributed to its position as a snack, longer shelf life and better taste which is
liked by different cross sections of population. There is no marketing problem as
every shop is a market for bakery products.
Bakery business is like venturing into spreading your labour of love. A love that is
devoured by millions for its freshness & taste and the warmth that it leaves behind.
