Model Detailed Project Report

MOUTH FRESHNER (FLAVOURED)

Prepared by

National Institute of Food Technology

Entrepreneurship and Management(NIFTEM)
Plot No. 97, Sector 56, HSIIDC, Industrial Estate, Kundli,
Sonipat, Haryana 131028
Ministry of Food Processing Industries, Government of India
1. INTRODUCTION

MOUTH FRESHNER (FLAVOURED)

Mouth Freshener known as Mukhwas is an after-meal snack or digestive

aid widely used as a mouth freshener. Unlike the common idea of mouth
freshener which is associated with mint or mint sprays, mukhwas generally
contain various seeds and nuts, like fennel seeds, anise seeds and sesame
seeds to name a few. Mouth fresheners help freshen the breath, cover up
bad odor and maintain good oral hygiene.
Indian meals are divided in multiple courses and is heavy is nature, therefore
mukhwas /mouth fresheners become an essential part of the meal, as it acts
both as a digestive aid after a heavy meal and breath freshener. Several
Indian restaurants too serve mukhwas after the meal.

2. MARKET POTENTIAL:

The global mouth freshener market was worth USD 12.31 billion in 2018 and
is expected to expand at a significant CAGR of 5.0% during the forecast
period. Increasing awareness regarding oral care is among the prominent
factors driving growth. Moreover, increasing the usage of tobacco and
alcohol is propelling product demand.
Furthermore, the high consumption of junk food, tobaccos, and alcohol has
led to an increase in oral problems such as plaque, stained teeth, and bad
odor. For instance, according to the World Health Organization (WHO), half
of the global population suffers from oral problems. This factor is anticipated
to drive the adoption of mouth fresheners, which in turn is projected to drive
the mouth freshener market growth.

3. PRODUCT DESCRIPTION

3.1 Raw Material sources

Following raw material is required as the major raw material for the mouth
freshener manufacturing process.

S.N. Description Amount

1 plain fennel Rs. 90-110 Per KG

2 Dry Dates Rs. 180-200 Per KG

3 Cardamom Rs.1000 Per KG

4 Sugar candy (Mishri) Rs. 40-50 Per KG

5 Mint Ball Rs. 300-350 Per KG

6 Parafin Oil Rs.120-150 Per Liter

7 Sugar coated Fennel Rs.160-170 Per KG

Average raw material (cost per KG): Rs. 250-300

3.2 MANUFACTURING PROCESS

 Procurement of raw material.

 Putting all the raw material into the mixer machine for mixing of
ingredients.
 Sent the mixture into packaging section after mixing process.
 Packaging and wrapping of raw material with the help of packaging
machine.
 Marking of Batch number, Date of manufacturing and expiry date with the
help of coding machine.
 Packaging of goods in carton.
 Transportation of goods according to market demand.

4. PROJECT COMPONENTS

4.1 Land

Land required 900-1000 square feet approx.

Approximate rent for the same is Rs.18000-20000 per month.

4.2 Plant & Machinery

S.N. Item Description Image

1 Mixing Machine
 2 Packaging machine

3 Batch Coder

Note: cost of the machinery is approx. Rs. 7,00,000 excluding GST and other
transportation cost.

4.3 Misc. Assets

S.N. Item Description Rate

1 Electricity connection 50,000

2 Furniture and equipment’s 50,000

4.4 Power Requirement

The borrower shall require power load of 8-10 HP which shall be applied with
Power Corporation. However, for standby power arrangement the borrower
shall also purchase DG Set.

4.5 Manpower Requirement

5-6 Manpower are required for the Mouth freshener Manufacturing unit.

Includes:

2 Skilled Labour

2 Unskilled Labour

1-2 Helper
5. FINANCIALS

5.1 Cost of Project

COST OF PROJECT
(in Lacs)

PARTICULARS Amount

Land & Building Owned/rented

Plant & Machinery 7.00
miscellaneous Assets 1.00
Working capital 3.33
Total 11.33

5.2 Means of Finance

MEANS OF FINANCE

PARTICULARS AMOUNT

Own Contribution (min 10%) 1.13

Subsidy @35%(Max. Rs 10 Lac) 2.80

Term Loan @ 55% 4.40

Working Capital (bank Finance) 3.00

Total 11.33
5.3 Projected Balance Sheet
(in Lacs)
PROJECTED BALANCE SHEET
PARTICULARS 1st year 2nd year 3rd year 4th year 5th year

Liabilities

Capital

opening balance 4.87 5.54 6.31 7.67

Add:- Own Capital 1.13

Add:- Retained Profit 0.93 1.92 3.27 4.86 6.41

Less:- Drawings - 1.25 2.50 3.50 5.00

Subsidy/grant 2.80

Closing Balance 4.87 5.54 6.31 7.67 9.08

Term Loan 3.91 2.93 1.96 0.98 -

Working Capital Limit 3.00 3.00 3.00 3.00 3.00

Sundry Creditors 1.35 1.56 1.79 2.04 2.30

Provisions & Other Liab 0.20 0.25 0.30 0.36 0.43

TOTAL : 13.33 13.28 13.35 14.05 14.81

Assets

Fixed Assets ( Gross) 8.00 8.00 8.00 8.00 8.00

Gross Dep. 1.15 2.13 2.97 3.69 4.30

Net Fixed Assets 6.85 5.87 5.03 4.31 3.70

Current Assets

Sundry Debtors 1.74 2.10 2.42 2.77 3.14

Stock in Hand 3.31 3.82 4.36 4.95 5.57

Cash and Bank 1.43 1.50 1.54 2.02 2.40

TOTAL : 13.33 13.28 13.35 14.05 14.81

5.4 Projected Cash Flow
(in Lacs)
PROJECTED CASH FLOW STATEMENT
PARTICULARS 1st year 2nd year 3rd year 4th year 5th year

SOURCES OF FUND

Own Margin 1.13

Net Profit 0.93 1.92 3.27 4.86 6.57

Depriciation & Exp. W/off 1.15 0.98 0.84 0.72 0.61

Increase in Cash Credit 3.00 - - - -

Increase In Term Loan 4.40 - - - -

Increase in Creditors 1.35 0.21 0.23 0.25 0.26

Increase in Provisions & Oth lib 0.20 0.05 0.05 0.06 0.07

Sunsidy/grant 2.80

TOTAL : 14.97 3.17 4.39 5.89 7.52

APPLICATION OF FUND

Increase in Fixed Assets 8.00

Increase in Stock 3.31 0.51 0.54 0.59 0.63

Increase in Debtors 1.74 0.36 0.33 0.35 0.37

Repayment of Term Loan 0.49 0.98 0.98 0.98 0.98

Drawings 1.25 2.50 3.50 5.00

Taxation - - - - 0.16

TOTAL : 13.54 3.09 4.34 5.42 7.14

Opening Cash & Bank Balance - 1.43 1.50 1.54 2.02

Add : Surplus 1.43 0.07 0.04 0.47 0.38

Closing Cash & Bank Balance 1.43 1.50 1.54 2.02 2.40
5.5 Projected Profitability
(in Lacs)
PROJECTED PROFITABILITY STATEMENT

PARTICULARS 1st year 2nd year 3rd year 4th year 5th year

Capacity Utilisation % 50% 55% 60% 65% 70%

SALES

Gross Sale

MOUTH FRESHENER 58.00 69.91 80.78 92.39 104.75

Total 58.00 69.91 80.78 92.39 104.75

COST OF SALES

Raw Material Consumed 45.00 51.98 59.58 67.86 76.65

Electricity Expenses 1.05 1.21 1.39 1.60 1.76

Depreciation 1.15 0.98 0.84 0.72 0.61

Wages & labour 5.04 5.54 6.10 6.71 7.38

Repair & maintenance 0.70 1.05 1.21 1.39 1.57

Packaging 1.31 1.75 2.02 2.31 2.62

Cost of Production 54.24 62.51 71.14 80.58 90.59

Add: Opening Stock /WIP - 1.81 2.08 2.37 2.69

Less: Closing Stock /WIP 1.81 2.08 2.37 2.69 3.02

Cost of Sales 52.43 62.23 70.85 80.26 90.26

GROSS PROFIT 5.57 7.68 9.93 12.12 14.49

9.60% 10.99% 12.29% 13.12% 13.84%

Salary to Staff 0.84 0.92 1.02 1.12 1.23

Interest on Term Loan 0.43 0.38 0.27 0.17 0.06

Interest on working Capital 0.33 0.33 0.33 0.33 0.33

Rent 2.16 2.38 2.61 2.87 3.16

selling & adm exp 0.87 1.75 2.42 2.77 3.14

TOTAL 4.63 5.76 6.66 7.26 7.92

NET PROFIT 0.93 1.92 3.27 4.86 6.57

1.61% 2.75% 4.05% 5.26% 6.27%

Taxation 0.16

PROFIT (After Tax) 0.93 1.92 3.27 4.86 6.41

5.6 Production and Yield

COMPUTATION OF PRODUCTION OF MOUTH FRESHENER

Items to be Manufactured

MOUTH FRESHENER

Machine capacity Per Day 100 KG

Total working Hours 10

working days in a month 25 Days

working days per annum 300

machine capacity per annum 30000 KG

Final Output

1 packet size 10 Gram

MOUTH FRESHENER Packets in a Day 10000 Packets

MOUTH FRESHENER Packets Per Annum 3,000,000 Packets

Production of MOUTH FRESHENER

Production Capacity Packets

1st year 50% 1,500,000

2nd year 55% 1,650,000
3rd year 60% 1,800,000
4th year 65% 1,950,000
5th year 70% 2,100,000

Raw Material Cost

Year Capacity Rate Amount

Utilization (per KG) (Rs. in lacs)

1st year 50% 300.00 45.00

2nd year 55% 315.00 51.98

3rd year 60% 331.00 59.58

4th year 65% 348.00 67.86

5th year 70% 365.00 76.65

5.7 Sales Revenue

COMPUTATION OF SALE

Particulars 1st year 2nd year 3rd year 4th year 5th year
Op Stock - 50,000 55,000 60,000 65,000

Production 1,500,000 1,650,000 1,800,000 1,950,000 2,100,000

Less : Closing Stock 50,000 55,000 60,000 65,000 70,000
Net Sale 1,450,000 1,645,000 1,795,000 1,945,000 2,095,000
sale price per 10 Gram Packet 4.00 4.25 4.50 4.75 5.00
Sales (in Lacs) 58.00 69.91 80.78 92.39 104.75
5.8 Working Capital Assessment
(in Lacs)
COMPUTATION OF CLOSING STOCK & WORKING CAPITAL
PARTICULARS 1st year 2nd year 3rd year 4th year 5th year

Finished Goods

1.81 2.08 2.37 2.69 3.02

Raw Material

1.50 1.73 1.99 2.26 2.56

Closing Stock 3.31 3.82 4.36 4.95 5.57

COMPUTATION OF WORKING CAPITAL REQUIREMENT

TRADITIONAL METHOD (in Lacs)

Particulars Amount Own Margin Bank Finance

Finished Goods & Raw Material 3.31

Less : Creditors 1.35

Paid stock 1.96 10% 0.20 90% 1.76

Sundry Debtors 1.74 10% 0.17 90% 1.57

3.70 0.37 3.33

MPBF 3.33

WORKING CAPITAL LIMIT DEMAND ( from Bank) 3.00

Working Capital Margin 0.33

5.9 Power, Salary & Wages Calculation

Utility Charges (per month)

Particulars value Description
Power connection required 7 KWH
consumption per day 70 units

Consumption per month 1,750 units

Rate per Unit 10 Rs.
power Bill per month 17,500 Rs.

BREAK UP OF LABOUR CHARGES

Particulars Wages No of Total

Rs. per Month Employees Salary

Skilled (in thousand rupees) 13,000 2 26,000

Unskilled (in thousand rupees) 8,000 2 16,000

Total salary per month 42,000

Total annual labour charges (in lacs) 5.04

BREAK UP OF Staff Salary CHARGES

Particulars Salary No of Total

Rs. per Month Employees Salary

helper 7,000 1 7,000

Total salary per month 7,000

Total annual Staff charges (in lacs) 0.84

5.10 Depreciation
(in Lacs)
COMPUTATION OF DEPRECIATION
Description Plant & Machinery Miss. Assets TOTAL

Rate of Depreciation 15.00% 10.00%

Opening Balance - - -

Addition 7.00 1.00 8.00

Total 7.00 1.00 8.00

Less : Depreciation 1.05 0.10 1.15

WDV at end of Year 5.95 0.90 6.85

Additions During The Year - - -

Total 5.95 0.90 6.85

Less : Depreciation 0.89 0.09 0.98

WDV at end of Year 5.06 0.81 5.87

Additions During The Year - - -

Total 5.06 0.81 5.87

Less : Depreciation 0.76 0.08 0.84

WDV at end of Year 4.30 0.73 5.03

Additions During The Year - - -

Total 4.30 0.73 5.03

Less : Depreciation 0.64 0.07 0.72

WDV at end of Year 3.65 0.66 4.31

Additions During The Year - - -

Total 3.65 0.66 4.31

Less : Depreciation 0.55 0.07 0.61

WDV at end of Year 3.11 0.59 3.70

5.11 Repayment schedule

REPAYMENT SCHEDULE OF TERM LOAN

Interest 11.00%
Closing
Year Particulars Amount Addition Total Interest Repayment Balance
ist Opening Balance
1st month - 4.40 4.40 - - 4.40
2nd month 4.40 - 4.40 0.04 - 4.40
3rd month 4.40 - 4.40 0.04 - 4.40
4th month 4.40 - 4.40 0.04 4.40
5th month 4.40 - 4.40 0.04 4.40
6th month 4.40 - 4.40 0.04 4.40
7th month 4.40 - 4.40 0.04 0.08 4.32
8th month 4.32 - 4.32 0.04 0.08 4.24
9th month 4.24 - 4.24 0.04 0.08 4.16
10th month 4.16 - 4.16 0.04 0.08 4.07
11th month 4.07 - 4.07 0.04 0.08 3.99
12th month 3.99 - 3.99 0.04 0.08 3.91
0.43 0.49
2nd Opening Balance
1st month 3.91 - 3.91 0.04 0.08 3.83
2nd month 3.83 - 3.83 0.04 0.08 3.75
3rd month 3.75 - 3.75 0.03 0.08 3.67
4th month 3.67 - 3.67 0.03 0.08 3.59
5th month 3.59 - 3.59 0.03 0.08 3.50
6th month 3.50 - 3.50 0.03 0.08 3.42
7th month 3.42 - 3.42 0.03 0.08 3.34
8th month 3.34 - 3.34 0.03 0.08 3.26
9th month 3.26 - 3.26 0.03 0.08 3.18
10th month 3.18 - 3.18 0.03 0.08 3.10
11th month 3.10 - 3.10 0.03 0.08 3.01
12th month 3.01 - 3.01 0.03 0.08 2.93
0.38 0.98
3rd Opening Balance
1st month 2.93 - 2.93 0.03 0.08 2.85
2nd month 2.85 - 2.85 0.03 0.08 2.77
3rd month 2.77 - 2.77 0.03 0.08 2.69
4th month 2.69 - 2.69 0.02 0.08 2.61
5th month 2.61 - 2.61 0.02 0.08 2.53
6th month 2.53 - 2.53 0.02 0.08 2.44
7th month 2.44 - 2.44 0.02 0.08 2.36
8th month 2.36 - 2.36 0.02 0.08 2.28
9th month 2.28 - 2.28 0.02 0.08 2.20
10th month 2.20 - 2.20 0.02 0.08 2.12
 11th month 2.12 - 2.12 0.02 0.08 2.04
12th month 2.04 - 2.04 0.02 0.08 1.96
0.27 0.98
4th Opening Balance
1st month 1.96 - 1.96 0.02 0.08 1.87
2nd month 1.87 - 1.87 0.02 0.08 1.79
3rd month 1.79 - 1.79 0.02 0.08 1.71
4th month 1.71 - 1.71 0.02 0.08 1.63
5th month 1.63 - 1.63 0.01 0.08 1.55
6th month 1.55 - 1.55 0.01 0.08 1.47
7th month 1.47 - 1.47 0.01 0.08 1.39
8th month 1.39 - 1.39 0.01 0.08 1.30
9th month 1.30 - 1.30 0.01 0.08 1.22
10th month 1.22 - 1.22 0.01 0.08 1.14
11th month 1.14 - 1.14 0.01 0.08 1.06
12th month 1.06 - 1.06 0.01 0.08 0.98
0.17 0.98
5th Opening Balance
1st month 0.98 - 0.98 0.01 0.08 0.90
2nd month 0.90 - 0.90 0.01 0.08 0.81
3rd month 0.81 - 0.81 0.01 0.08 0.73
4th month 0.73 - 0.73 0.01 0.08 0.65
5th month 0.65 - 0.65 0.01 0.08 0.57
6th month 0.57 - 0.57 0.01 0.08 0.49
7th month 0.49 - 0.49 0.00 0.08 0.41
8th month 0.41 - 0.41 0.00 0.08 0.33
9th month 0.33 - 0.33 0.00 0.08 0.24
10th month 0.24 - 0.24 0.00 0.08 0.16
11th month 0.16 - 0.16 0.00 0.08 0.08
12th month 0.08 - 0.08 0.00 0.08 -
0.06 0.98
DOOR TO DOOR 60 MONTHS
MORATORIUM PERIOD 6 MONTHS
REPAYMENT PERIOD 54 MONTHS
5.12 DSCR

CALCULATION OF D.S.C.R

PARTICULARS 1st year 2nd year 3rd year 4th year 5th year

CASH ACCRUALS 2.08 2.91 4.11 5.58 7.02

Interest on Term Loan 0.43 0.38 0.27 0.17 0.06
Total 2.52 3.29 4.38 5.75 7.08

REPAYMENT
Instalment of Term Loan 0.49 0.98 0.98 0.98 0.98
Interest on Term Loan 0.43 0.38 0.27 0.17 0.06

Total 0.92 1.36 1.25 1.14 1.04

DEBT SERVICE COVERAGE RATIO 2.73 2.42 3.50 5.03 6.83

AVERAGE D.S.C.R. 4.10

5.13 Break Even Point Analysis

BREAK EVEN POINT ANALYSIS

Year I II III IV V

Net Sales & Other Income 58.00 69.91 80.78 92.39 104.75

Less : Op. WIP Goods - 1.81 2.08 2.37 2.69

Add : Cl. WIP Goods 1.81 2.08 2.37 2.69 3.02

Total Sales 59.81 70.19 81.06 92.70 105.08

Variable & Semi Variable Exp.

Raw Material Consumed 45.00 51.98 59.58 67.86 76.65

Electricity Exp/Coal Consumption at 85% 0.89 1.03 1.18 1.36 1.49

Wages & Salary at 60% 3.53 3.88 4.27 4.70 5.17

Selling & adminstrative Expenses 80% 0.70 1.40 1.94 2.22 2.51

Interest on working Capital 0.33 0.33 0.33 0.33 0.33

Repair & maintenance 0.70 1.05 1.21 1.39 1.57

Packaging 1.31 1.75 2.02 2.31 2.62

Total Variable & Semi Variable Exp 52.45 61.41 70.53 80.16 90.34

Contribution 7.36 8.78 10.53 12.55 14.74

Fixed & Semi Fixed Expenses

Electricity Exp/Coal Consumption at 15% 0.16 0.18 0.21 0.24 0.26

Wages & Salary at 40% 2.35 2.59 2.85 3.13 3.44

Interest on Term Loan 0.43 0.38 0.27 0.17 0.06

Depreciation 1.15 0.98 0.84 0.72 0.61

Selling & adminstrative Expenses 20% 0.17 0.35 0.48 0.55 0.63

Rent 2.16 2.38 2.61 2.87 3.16

Total Fixed Expenses 6.43 6.86 7.27 7.68 8.17

Capacity Utilization 50% 55% 60% 65% 70%

OPERATING PROFIT 0.93 1.92 3.27 4.86 6.57

BREAK EVEN POINT 44% 43% 41% 40% 39%

BREAK EVEN SALES 52.21 54.81 55.91 56.77 58.24

6. LICENSE & APPROVALS

 Obtain the GST registration.

 Additionally, obtain the Udyog Aadhar registration Number.
 Fire/pollution license as required.
 FSSAI License
 Choice of a Brand Name of the product and secure the name with
Trademark if required.

Implementation Schedule

S.N. Activity Time Required

(in Months)

1 Acquisition Of premises 1

2 Procurement & installation of Plant & Machinery 1-2

3 Arrangement of Finance 1-2

4 Requirement of required Manpower 1

Total time Required (some activities shall run 4-5 Months

concurrently)
7. ASSUMPTIONS

1. Production Capacity of Mouth Freshener is 100Kgs per day. First year,

Capacity has been taken @ 50%.

2. Working shift of 8 hours per day has been considered.

3. Raw Material stock is for 10 days and Finished goods Closing Stock has

been taken for 10 days.

4. Credit period to Sundry Debtors has been given for 9 days.

5. Credit period by the Sundry Creditors has been provided for 9 days.

6. Depreciation and Income tax has been taken as per the Income tax Act,

1961.

7. Interest on working Capital Loan and Term loan has been taken at 11%.

8. Salary and wages rates are taken as per the Current Market Scenario.

9. Power Consumption has been taken at 7 KW.

10. Selling Prices & Raw material costing has been increased by 5% & 5%
respectively in the subsequent years.
 Limitations of the Model DPR and Guidelines for Entrepreneurs

Limitations of the Model DPR

i. This model DPR has provided only the basic standard components and methodology to be
adopted by an entrepreneur while submitting a proposal under the Formalization of Micro Food
Processing Enterprises Scheme of MoFPI.

ii. This is a model DPR made to provide general methodological structure not for specific
entrepreneur/crops/location. Therefore, information on the entrepreneur, forms and structure
(proprietorship/partnership/cooperative/ FPC/joint stock company) of his business, details of
proposed DPR, project location, raw material base/contract sourcing, entrepreneurs own SWOT
analysis, detailed market research, rationale of the project for specific location, community
advantage/benefit from the project, employment generation and many more detailed aspects not
included.

iii. The present DPR is based on certain assumptions on cost, prices, interest, capacity utilization,
output recovery rate and so on. However, these assumptions in reality may vary across places,
markets and situations; thus the resultant calculations will also change accordingly.