Chalk Manufacturing. 2016
1. EXECUTIVE SUMMARY
The educational institutes have tremendously increased in Bhutan including institutes and education centers with schools. Furthermore, with the emphasis being placed on the educational
sector in the country as a whole, the demand for chalk crayons would continue to grow. Dustless chalk crayons, being much more convenient and less messy, command premium value in
the market. There is good potential for the product, but a good sales network has to be developed first. Thus, the proposed business of Chalk Manufacturing which literally means nations
chalk in national language. The enterprise will be located in Pasakha under Chhukha Dzongkha
since the enterprise will be prompt to the market for the gathering of raw material for the production process.
Chalk Manufacturing intends to provide dustless white chalks for all the education centers and
institutes. The prior aim is to increase the nation’s economy and provide employment opportunities to drop-outs, poor background citizen especially focusing on youths. The production of
the dustless white chalk will be as per the demand since Bhutan has been importing the chalks
from India and other third countries.
FINANCIAL SUMMARY AS
OF YEAR 1
1,800,000
843,900
776,846
194,212
1,089,282
551,681
Dustless White Chalk, which will be nationally called as Chalk Manufacturing
segregates the demographic which includes the nursery schools, primary
schools, secondary schools, colleges
and Institutes, Monastic Centers and
Education Center, etc. Thus, our targeted customer is the Learners in the
Education, since these segmented customers will be using the Chalks at local
market.
In addition to the dustless white chalk, Chalk Manufacturing will be providing part time employment opportunities to those who would like to build up their entrepreneurial skills.
The promoter intends to take a 40 decimal land on lease for the construction of production
house as in Pasakha, Chhukha under the Phuntshogling Dungkhag. Thus 80% worth of BTN
776,846 will be met from the loan while the promoter or the proponent plans to inject equity of
BTN 194,212. For the business to run effectively and efficiently the total investment required is
BTN 917,058.
The office hours will take place from Monday through Friday from 9am until 5pm. Sales and
services hours may be subject to occur outside of office hours determined by the demand of
supply. Bhutan is at a pace of shortage of Indian currency crisis due to import that exceeds the
export.
Thus, Chalk Manufacturing would act on to reducing the import contributing to nation’s economy.
1|Page
Chalk Manufacturing. 2016
The estimated total production
capacity in the year 2016 to
2020 is 1,500 packets of chalk
which comes to 1,50,000 pieces
of chalk monthly. The proposed
business expects to have total
sales of BTN 2,187,911 against
the total expenditure of BTN
1,069,638 by the end of fifth financial year. On an average, the
business would increase its yearly sales by 4.76% on projected
five year financial plan.
1,800,000
1,890,000
1,984,500
2,083,725
2,187,911
964,519
1,015,237
1,069,638
946,067
917,212
905,971
953,164
1,001,671
1,051,456
788,116
551,681
634,179
667,215
701,170
736,019
Year 1
Year 2
Year 3
Year 4
Year 5
Net Profit
Net Income
Expenditure Cost
Total Sales
Therefore the business will prosper within the eight months of the commencement. This can be
illustrated with the Break-even point which shows that the business will cover up the total cost.
Thus the sales will prosper.
BREAK EVEN X
BREAK EVEN Y
LABEL
21,373
2,137,300
break even unit =21373
The cornerstone of the proposed business is expected to be very profitable with net present
value worth BTN 2,215,164 with Internal Rate of Return (IRR) of 77% and payback period of 3
years 7 months based on the five year projection cost.
Net Present Value (NPV)
2,215,164
Internal Rate of Return (IRR)
77%
The proposed enterprise is highly profitable from the first financial year itself which is the cornerstone of the business to carry forward into the consecutive years.
Note: The financial work-out for the Loden foundation and Bank Institution attached in the
Annexure as Part B and Part C.
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Chalk Manufacturing. 2016
TABLE OF CONTENT
1.
EXECUTIVE SUMMARY .......................................................................................................................... 1
2.
MISSION ................................................................................................................................................ 5
3.
VISION ................................................................................................................................................... 5
4.
OBJECTIVE ............................................................................................................................................. 5
5.
COMPANY PROFILE ............................................................................................................................... 5
6.
SWOT ANALYSIS .................................................................................................................................... 6
7.
LOCATION AND ACCESSIBILITY ............................................................................................................. 6
7.1.
REQUIRED RAW MATERIALS AND SUPPLIERS DETAILS ................................................................. 6
8.
SOURCE OF FINANCE ............................................................................................................................ 7
9
MARKET SEGMENTATION ..................................................................................................................... 7
9.
8.1.
MARKETING STRATEGY ................................................................................................................. 8
8.2.
TELEVISION ADVERTISING ............................................................................................................. 8
8.3.
ONLINE ADVERTISING ................................................................................................................... 8
8.5.
PRODUCTION PROCESS OF DUSTLESS CHALKS ............................................................................. 9
FORECAST............................................................................................................................................ 10
9.1.
PRODUCTION FORECAST ............................................................................................................. 10
9.2.
SALES FORECAST ......................................................................................................................... 10
10. FINANCIAL PLAN ................................................................................................................................. 11
10.1.
PROJECT COST PROJECTION .................................................................................................... 11
10.2.
FIXED CAPITAL ASSETS (with its Depreciation) ....................................................................... 12
10.3.
NET FIXED ASSETS ................................................................................................................... 12
10.4.
RAW MATERIAL PROJECTION.................................................................................................. 13
10.5.
MANPOWER COST PROJECTION ............................................................................................. 13
10.6.
TOTAL EXPENDITURE PROJECTION ......................................................................................... 14
11. FINANCIAL ANALYSIS........................................................................................................................... 15
11.1.
INCOME STATEMENT .............................................................................................................. 15
11.2.
CASH FLOW STATEMENT PROJECTION ................................................................................... 16
11.3.
PROJECTION BALANCE SHEET ................................................................................................. 17
11.4.
VALUE ADDITION AND UNIT COST OF PROJECTION ............................................................... 17
11.5.
RETURN ON INVESTMENT (ROI) AND RETURN OF EQUITY (ROE) ........................................... 18
11.6.
COST DATA ANALYSIS .............................................................................................................. 18
11.7.
COST BENEFIT ANALYSIS. ........................................................................................................ 18
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Chalk Manufacturing. 2016
11.8.
NET PRESENT VALUE (NPV) AND INTERNAL RATE OF INTEREST (IRR) .................................... 18
11.9.
PAYBACK PERIOD .................................................................................................................... 19
11.10.
BREAK EVEN ANALYSIS ............................................................................................................ 19
12. CONCLUSION ....................................................................................................................................... 21
13. ANNEXURE (Part A): Cost Breakdown ................................................................................................. 22
13.1 BREAKDOWN COST FOR CONSTRUCTION OF CHALK PRODUCTION HOUSE .................................. 22
13.2. BREAKDOWN COST FOR LABOUR FOR THE CONSTRUCTION OF CHALK PRODUCTION HOUSE .... 22
13.3. BREAKDOWN COST FOR THE CONSTRUCTION OF THE CONCRETE WATER TANK ......................... 22
13.4. BREAKDOWN COST FOR LABOUR .................................................................................................. 22
13.5. BREAKDOWN COST FOR WORKING CAPITAL ................................................................................. 23
PART B: BANK .......................................................................................................................................... 24
13.5 PROJECT TOTAL COST ..................................................................................................................... 24
13.6 INCOME STATEMENT ...................................................................................................................... 25
13.7 BALANCE SHEET .................................................................................................................................. 26
13.8 NET PRESENT VALUE (NPV) AND INTERNAL RATE OF RETURN (IRR) .................................................. 27
13.9 PAY-BACK PERIOD ............................................................................................................................... 27
13.9 BREAK EVEN POINT ............................................................................................................................. 27
Note: ........................................................................................................................................................... 28
13.10 PROJECT COST ................................................................................................................................... 28
13.11 INCOME STATEMENT ........................................................................................................................ 29
13.12 NET PRESENT VALUE (NPV) AND INTERNAL RATE OF RETURN (IRR) ................................................ 30
13.13 PAY-BACK PERIOD ............................................................................................................................. 30
13.14 BREAK EVEN POINT ........................................................................................................................... 30
14. PROJECT TIMELINE .............................................................................................................................. 32
4|Page
Chalk Manufacturing. 2016
2. MISSION
“To make bright and visible learning environment”
3. VISION
“To produce quality-product for the nation builders; to the learners”
4. OBJECTIVE
1. To contribute towards Bhutanese economy.
2. To provide employment opportunities.
3. To provide every schools and institutions with dust free chalks.
4. To earn reasonable profit for the future growth of the business.
5. To utilize resources to optimum level with regard to calcium carbonate.
5. COMPANY PROFILE
PROPOSED NAME OF THE
BUSINESS
PROPOSED BUSINESS TYPE
PROPOSED ACTIVITY
PROPOSED BUSINESS
COST
TOTAL BUSINESS COST
(including working capital)
MEANS OF FINANCING
80% DEBT
20% EQUITY
PROPOSED LOCATION OF
THE BUSINESS
PROPOSED PRODUCTS
LAND REQUIREMENT
POWER REQUIREMENT
SUPPLIER DETAILS
PROPOSED STAFF REQUIREMENT
5|Page
Chalk Manufacturing
Production and manufacturing
Production and manufacturing of dustless White chalk s
BTN 790,644
BTN 917,058
80 % Debt and 20% Equity
BTN 776,846
BTN 194,212
Pasakha, Phuntshogling under Chhukha Dzongkhag
Dustless White Chalk
40 decimal on lease
BTN 2,000 monthly
Devansh Tradings, Siliguri. West Bengal, S.K. Udyog Siliguri and
Ayanavaram Ayanavaram, Chennai
1 Manager cum Accountant (the promoter)
1 Machine Operator
1 Machine Operator
2 Assistant (Manual Helpers)
1 Sales and Marketing Person
5 Others on requirement basis
Chalk Manufacturing. 2016
6. SWOT ANALYSIS





STRENGTHS
Quality product
Reasonable price
Ideal location to run the business
Available of laborer
Good customer base in targeted market
segment.




OPPORTUNITIES
Job opportunities
Can easily sell to the customers
High market demand
To reduce imports of Chalk product and
curb the INR shortage.







WEAKNESSES
Lack of experts
High expenses
New Entrant – will take time and resources to create lasting brand name
in the market.
THREATS
Competitors (India) providing similar
product.
Entrant of similar projects
Unavailability of raw materials
Impact on Human health
7. LOCATION AND ACCESSIBILITY
The proposed business Chalk Manufacturing is to be situated in Pasakha, under Chhukha
Dzongkhag. Pasakha has been potential market for manufacturing sector whereby the location
is accessible to the raw materials and prompt to the market.
7.1. REQUIRED RAW MATERIALS AND SUPPLIERS DETAILS
The table below illustrates the details of the raw materials and from where it will be purchased.
PARTICULARS
UNIT COST
Plaster of paris (POP) (in kg)
China Clay (in kg)
Calcium Carbonate (in kg)
Cartoons for packaging/palate(120*80*210)cm
(Kg)
Miscellaneous
6
4
6
MONTLY REQUIRED
UNITS
100
75
100
3
100
-
1,500
Note:


Plaster of Paris Nu.260 for 50 kg bag. Nu.6 per kg Druk Satair Corporation, Samdrup
Jongkhar.
Calcium Carbonate will be purchased from RSA exporter and importer from
Phuntshogling at nu.6.50 per kg and Nu.325 per 50 kg
6|Page
Chalk Manufacturing. 2016
8. SOURCE OF FINANCE
This table below illustrates the source of finance for the proposed business.
PARTICULAR
TOTAL PROJECT COST
WORKING CAPITAL
TOTAL INVESTMENT
20% EQUITY
80% LOAN
AMOUNT
790,644
180,414
971,058
194,212
776,846
9 MARKET SEGMENTATION
The table below shows the customer targeted for the Chalk Manufacturing;
Level of Schools
Government
Private
Early childhood care and development centre 159
51
(ECCD)
School education
333
12
 Primary schools
86
1
 Lower secondary schools
63
2
 Middle secondary schools
37
17
 Higher secondary schools
TOTAL
Extended classroom
107
Special Institutes
8
Tertiary Institutes
12
Vocational Institute
8
Sanskrit Patshala
1
TOTAL
Monastic Education (Lobdra, Shedra,etc)
388
Continuing Education Centres
6
11
Non-formal Centers
744
TOTAL
1,863
85
Source: Bhutan Education Statistics, 2014
7|Page
Total
210
345
87
65
54
107
8
12
8
1
388
17
744
1,948
Chalk Manufacturing. 2016
8.1. MARKETING STRATEGY
In the case of the proposed business, there are no competitors within the country though the
competition is outside the national boundary (wide range of chalk producers in India) -which is
mainly the imported products from India.
Thus, this statement can be supported with the table below which shows the import of the
chalks from India.
Import India
Other countries
BTC Code
Commodity Description
Unit
Value
Value
Quantity
Quantity
(Nu.)
(Nu.)
Year 2015 January to June (Provisional)
25.09
Chalk
KGM 4563.17
467,894
0.00
0
2509.00.00
Chalk
Year 2015 July to September (Provisional)
25.09
Chalk
KGM 30205.55 2,52,089
0.00
0
2509.00.00
Chalk
Total
KGM 34,768.72 7,19,983
0.00
0
Year 2014 January to December
25.09
Chalk
KGM 11,318.53 1,524,984
0.00
0
2509.00.00
Chalk
Source: Bhutan Trade Statitics, 2014-2015 retrieved from
http://www.mof.gov.bt/publications/reports/bhutan-trade-statistics/
Therefore, the proposed business plans to do innovative, aggressive and strategic marketing
through use of broadcast and print media. The enterprise will also create its online presence
through the social networks and website.
At the same time it is imperative that selling and distribution of the products is a vital element
of marketing strategy. Sometime goods take lengthy route to reach end customer. Therefore
the plan would be engage all the schools in the country to make our business the national chalk
distributor with the help from the Royal Government of Bhutan. Following are other marketing
strategies for Dustless White Chalks.
8.2. TELEVISION ADVERTISING
Selection of right media is what is important while marketing a product to the customers. It is
very much appropriate to promote the Dust Free chalk through television. The Bhutanese people prefer to watch the Bhutan Broadcasting Service (BBS, national channel) during evening at
their homes with the family. So the product awareness can be created if we advertise through
BBS.
8.3. ONLINE ADVERTISING
As Bhutan being an under developing country, people are now being exposed to social networking whereby they share information online, post their ideas and communicate. If the dust
free chalk is being promoted through online with more appropriate pictures, quotes and its
8|Page
Chalk Manufacturing. 2016
benefit then the information will be shared among all the different people within and outside
the country.
8.4.
MANAGEMENT AND OPERATION PLAN
PARTICULARS
Manager Cum Accountant
Machine Operator
Assistant (Manual Helper)
Sales and marketing person
Part-time labor and others
NO OF REQUIRED PEOPLE
1
1
2
1
-
MONTHLY
15,000
9,000
6,000
10,000
8,000
TOTAL
5
48,000
Chalk Manufacturing will have five employed for the first month as of commencing of the firm.
The enterprise plans to employ more of part-time labor so as to reduce the nation’s unemployment rate. At first, the enterprise is small as to increase the employees however in the near
future Chalk Manufacturing plans to recruit for the export of the product.
The Manager cum Accountant will be the spearhead of the unit to oversee the day to day activities. The VTI graduate will be recruited as machine operator. Thereby, the business will help in
reducing the unemployment rate. Others will be recruited as per the required qualification for
various posts. The part-time labor will be recruited on required basis.
8.5.
PRODUCTION PROCESS OF DUSTLESS CHALKS
The plaster of paris and slaked lime must be mixed in proportion of 80 : 20 as the chalk produced by this formula would just not have a good quality but also reasonable production cost.
The production process of making chalks is quite easy. First of all the moulds are cleaned with a
dry piece of cloth and then each cavity of these moulds are well greased (4 parts of Kerosene
and a part of mustered/groundnuts/coconut oil, each) after greasing is done to prevent the
mixture of slaked line and plaster of Paris from sticking on the walls of the moulds. Later, the
mixture of finely powdered plaster of Paris and slaked lime are mixed in the proportion of 80:20
on a tray. Such a quantity of this mixture must be prepared to avoid any kind of wastage because if there is, that material must be reused.
The uneven portion of the mixture over and above the mould must be removed with the help
of a knife and then must be left for 10-15 minutes for drying. After 15 minutes, the above portion of the mould can be touched to find whether the material has dried. If the chalks are half
dried, it might be taken out of the moulds with the help of wooden hammer in the tray and finally exposed to sunlight for better drying. The last step is to fill a box with saw dust and put
100 to 144 chalk sticks and pack it.
9|Page
Chalk Manufacturing. 2016
9. FORECAST
9.1.
PRODUCTION FORECAST
Particular
Month 1
Year 1
Year 2
Year 3
Year 4
Year 5
Dustless white Chalk
1,500
18,000
18,900
19,845
20,837
21,879
1,500
18,000
18,900
19,845
20,837
21,879
Total
TOTAL PRODUCTION
ASSUMPTIONS




9.2.
The Enterprise plans to produce 1,500 packets of chalk at Nu. 100 in a month.
The average inflation is considered at 5% to avoid over estimation of cost projection
across all the projected years and the production capacity forecast kept at optimum.
The enterprise plans to increase its production by 10% in every financial year and accordingly the cost of inventory is increased proportionately.
The average production has been keep at the minimum. The firm will produce more
than the aforementioned production once the project is established.
SALES FORECAST
Unit price (Min)
Month 1
Year 1
Year 2
Year 3
Year 4
Year 5
100
150,000
1,800,000
1,890,000
1,984,500
2,083,725
2,187,911
150,000
1,800,000
1,890,000
1,984,500
2,083,725
2,187,911
Dustless white Chalk
TOTAL SALES
Rec 10%
sales 90%
15,000
135,000
180,000
1,620,000
189,000
1,701,000
198,450
1,786,050
208,373
1,875,353
218,791
1,969,120
ASSUMPTION:

The prices of the products are kept minimum and constant throughout all the financial
years to avoid the over-estimation of the sales though the prices are much higher; and
the probability of price becoming higher is definite in the subsequent years.
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Chalk Manufacturing. 2016
10. FINANCIAL PLAN
10.1. PROJECT COST PROJECTION
COMPONENTS OF PROJECT COST
Amt in Nu.
Forex. CompoDomestic
PARTICULARS
nent
Component
Land
1,744
Civil Works
Construction of production House
463,000
Construction of Concrete Water
43,400
Tank (at source)
Total Cost
506,400
Plant & Machinery
Chalk Making Machine
130,000
Electrical Fittings
70,000
Chalk Mould Machine
62,500
Transporation
30,000
Total
162,500
Miscellaneous Fixed Assets
Tray & Selves
20,000
Sintex Water Tank (5000l)
50,000
HDPE Water Pipe 2 inches (m)
30,000
Total
80,000
Preliminary Expenses
Total Preliminary Expenses
40,000
TOTAL
Total Cost Remarks
1,744
LEASE
506,400
3 Sets
3 sets
162,500
7 Sets
80,000
40,000
790,644
The total project cost for commencing of the enterprise is BTN 790,644. The total project is
concluded at BTN 971,058 by adding up the two month working capital worth of BTN 180,414.
Doing so, the proposed business firm plans to avail 80% loan from BOiC which amounts to BTN
776,846. The rest 20% will be invested by the promoter as equity which amounts to BTN
194,212.
NOTE: Breakdown cost of construction of Chalk Production house, Concrete water tank, labor
cost and working capital is given in the annexure.
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Chalk Manufacturing. 2016
10.2. FIXED CAPITAL ASSETS (with its Depreciation)
PARTICULARS
Building:
Construction of production House
Construction of Concrete Water
Tank (at source)
Total
Plant and Machinery:
Chalk Making Machine
Chalk Mould Machine
Electrical Fittings
Total
Miscellaneous Fixed Assets
Tray & Selves
Sintex Water Tank (5000l)
HDPE Water Pipe 2 inches (m)
Total
Units
Unit Cost
Total Amount
Yearly Dep
Monthly Dep
1
463,000
463,000
13,890
1,158
1
43,400
43,400
1,302
109
506,400
506,400
15,192
1,266
3
3
130,000
62,500
390,000
187,500
70,000
257,500
58,500
28,125
10,500
38,625
4,875
2,344
875
875
7
1
600
20,000
50,000
50
140,000
50,000
30,000
80,000
21,000
7,500
4,500
12,000
1,750
625
375
1,000
TOTAL NET FIXED ASSETS
843,900
65,817
3,141
NOTE: The depreciation has been done according to the Income Tax Act of Kingdom of Bhutan,
2001, Ministry of Finance.
10.3. NET FIXED ASSETS
PARTICULARS
Building:
Year 1
Year 2
Year 3
Year 4
Year 5
Construction of production House
449,110
435,220
421,330
407,440
393,550
Construction of Concrete Water
Tank (at source)
42,098
40,796
39,494
38,192
36,890
Total
491,208
476,016
460,824
445,632
430,440
Chalk Making Machine
331,500
273,000
214,500
156,000
97,500
Chalk Mould Machine
159,375
131,250
103,125
75,000
46,875
Electrical Fittings
59,500
49,000
38,500
28,000
17,500
Total
59,500
49,000
38,500
28,000
17,500
Tray & Selves
119,000
98,000
77,000
56,000
35,000
Sintex Water Tank (5000l)
42,500
35,000
27,500
20,000
12,500
HDPE Water Pipe 2 inches (m)
25,500
21,000
16,500
12,000
7,500
Total
68,000
56,000
44,000
32,000
20,000
TOTAL NET FIXED ASSETS
618,708
581,016
543,324
505,632
467,940
Plant and Machinery:
Miscellaneous Fixed Assets
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Chalk Manufacturing. 2016
10.4. RAW MATERIAL PROJECTION
PARTICULARS
UNIT COST
MONTLY REQUIREDUNITS
MONTHLY COST
Plaster of paris (POP) (in kg)
China Clay (in kg)
Calcium Carbonate (in kg)
Cartoons for packaging/palate
(120*80*210)cm (Kg)
Miscellaneous
6
4
6
100
75
100
600
300
600
3
100
300
1,500
1,500
TOTAL
19
1,875
3,300
PARTICULARS
YEAR 1
YEAR 2
YEAR 3
YEAR 4
YEAR 5
Plaster of paris (POP) (in kg)
China Clay (in kg)
Calcium Carbonate (in kg)
Cartoons for packaging/palate
(120*80*210)cm (Kg)
Miscellaneous
7,200
3,600
7,200
7,560
3,780
7,560
7,938
3,969
7,938
8,335
4,167
8,335
8,752
4,376
8,752
3,600
3,780
3,969
4,167
4,376
18,000
18,900
19,845
20,837
21,879
TOTAL
39,600
41,580
43,659
45,842
48,134
Assumption;




It’s assumed that Chalk Manufacturing will buy its raw material from India (West Bengal
and Chennai)
Inventory is assumed to be increasing by 10% on every financial year.
Plaster of Paris Nu.260 for 50 kg bag. Nu.6 per kg Druk Satair Corporation, Samdrup
Jongkhar.
Calcium Carbonate will be purchased from RSA exporter and importer from
Phuntshogling at nu.6.50 per kg and Nu.325 per 50 kg.
10.5. MANPOWER COST PROJECTION
PARTICULARS
Manager Cum Accountant
Machine Operator
Assistant (Manual Helper)
Sales and marketing person
Part-time labor and others
NO OF REQUIRED PEOPLE
1
1
2
1
MONTHLY
15,000
9,000
6,000
10,000
8,000
YEAR 1
180,000
108,000
72,000
120,000
96,000
TOTAL
5
48,000
576,000
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Chalk Manufacturing. 2016
Particulars
Direct Labor
Salary & Allowances
Wages
Monthly
15,000
25,000
8,000
Year 1
180,000
300,000
96,000
Year 2
189,000
315,000
100,800
Year 3
198,450
330,750
105,840
Year 4
208,373
347,288
111,132
Year 5
218,791
364,652
116,689
Payroll (direct labor, salary
and allowances)
40,000
480,000
504,000
529,200
555,660
583,443
ASSUMPTIONS:

Direct labor, Salary & Allowances and Wages are assumed to be increasing by 5% in second, third and fourth year and 10% in fifth year. Each labor will be paid BTN 400 per
man per day and others required labor on wages basis.
10.6. TOTAL EXPENDITURE PROJECTION
MONTHLY
COST
YEAR 1
YEAR 2
YEAR 3
YEAR 4
YEAR 5
Purchases (inventory & others)
3,300
39,600
41,580
43,659
45,842
48,134
Freight-in
6,000
72,000
Direct labor
15,000
180,000
189,000
198,450
208,373
218,791
Indirect Expenses (electricity)
2,000
24,000
25,200
26,460
27,783
29,172
26,300
315,600
255,780
268,569
281,997
296,097
1,000
1,000
1,000
1,000
1,000
Salary & Allowances
25,000
300,000
315,000
330,750
347,288
364,652
Commissions
1,000
12,000
13,200
14,520
15,972
17,569
Delivery expenses
1,000
12,000
13,200
14,520
15,972
17,569
Depreciation
3,141
65,817
65,817
65,817
65,817
65,817
Insurance
2,000
24,000
24,000
24,000
24,000
24,000
Interest
2,372
28,467
22,632
16,560
10,240
3,663
Maintenance
2,500
30,000
33,000
36,300
39,930
43,923
Miscellaneous
2,500
30,000
33,000
36,300
39,930
43,923
1,000
1,000
1,000
1,000
1,000
PARTICULARS
Cost of Goods Sold:
Less:
Ending Inventory
Total
Expenses:
Advertising
Permits and licenses
Professional fees
500
6,000
6,600
7,260
7,986
8,785
Repairs
3,000
36,000
39,600
43,560
47,916
52,708
Telephone
1,500
18,000
19,800
21,780
23,958
26,354
Utilities
2,000
24,000
26,400
29,040
31,944
35,138
Vehicle expenses
1,000
12,000
13,200
14,520
15,972
17,569
Wages
8,000
96,000
100,800
105,840
111,132
116,689
Total Expenses
55,513
696,284
728,249
762,767
800,057
840,358
Others:
MONTHLY
YEAR 1
YEAR 2
YEAR 3
YEAR 4
YEAR 5
14 | P a g e
Chalk Manufacturing. 2016
COST
Commissions
1,500
12,000
13,200
14,520
15,972
17,569
Maintenance
3,000
30,000
33,000
36,300
39,930
43,923
Repairs
2,000
36,000
39,600
43,560
47,916
52,708
Vehicle expense
1,000
12,000
13,200
14,520
15,972
17,569
Freight-in
6,000
72,000
-
-
-
-
Indirect Expenses (electricity)
2,000
24,000
25,200
26,460
27,783
29,172
Wages
8,000
96,000
100,800
105,840
111,132
116,689
Total
23,500
282,000
225,000
241,200
258,705
277,630
ASSUMPTIONS:



Electricity cost is assumed to be increasing by 5% on every financial year.
Advertising is assumed to be constant throughout the financial year.
Remaining expenses is assumed to be increasing by 10% in every financial year.
11. FINANCIAL ANALYSIS
11.1. INCOME STATEMENT
INCOME STATETMENT PROJECTION FOR 5 YEARS
Revenue
YEAR 1
YEAR 2
YEAR 3
YEAR 4
YEAR 5
1,800,000
1,890,000
1,984,500
2,083,725
2,187,911
Cost of Goods Sold
315,600
255,780
268,569
281,997
296,097
Gross Profit
1,484,400
1,634,220
1,715,931
1,801,728
1,891,814
Expenses
696,284
728,249
762,767
800,057
840,358
Net Operating Income
788,116
905,971
953,164
1,001,671
1,051,456
Net Income (Loss)
788,116
905,971
953,164
1,001,671
1,051,456
30% BIT
236,435
271,791
285,949
300,501
315,437
Net Profit (Loss)
551,681
634,179
667,215
701,170
736,019
Less:
Additional Information
Depreciation expenses
65,817
65,817
65,817
65,817
65,817
% of Net Income (Loss)
-
14.95
5.21
5.09
4.97
% of Average Net Income (Loss)
6.04
% of Net Profit (Loss)
-
14.95
5.21
5.09
4.97
% of Average Net Profit
6.04
Monthly Taxes Payable (30% BIT)
19,703
22,649
23,829
25,042
26,286
15 | P a g e
Chalk Manufacturing. 2016
11.2. CASH FLOW STATEMENT PROJECTION
Projected Cash Flow Statement
Year 1
Year 2
Year 3
Year 4
Year 5
194,212
891,132
1,714,871
2,579,730
3,486,776
Accts. Rec. Collections
180,000
189,000
198,450
208,373
218,791
Loan Proceeds
776,846
Sales & Receipts
1,620,000
1,701,000
1,786,050
1,875,353
1,969,120
2,576,846
1,890,000
1,984,500
2,083,725
2,187,911
2,771,058
2,781,132
3,699,371
4,663,455
5,674,687
Advertising
1,000
-
-
-
-
Delivery
12,000
13,200
14,520
15,972
17,569
Insurance
24,000
24,000
24,000
24,000
24,000
Interest
28,467
22,632
16,560
10,240
3,663
Inventory Purchases
39,600
41,580
43,659
45,842
48,134
Miscellaneous
30,000
33,000
36,300
39,930
43,923
Payroll
480,000
504,000
529,200
555,660
583,443
Professional Fees
6,000
6,600
7,260
7,986
8,785
Taxes & Licenses
1,000
1,000
1,000
1,000
1,000
Utilities & Telephone
42,000
46,200
50,820
55,902
61,492
Other:
282,000
225,000
241,200
258,705
277,630
Subtotal
946,067
917,212
964,519
1,015,237
1,069,638
Capital Purchases
790,644
Loan Principal
143,215
149,049
155,122
161,442
168,019
Subtotal
933,859
149,049
155,122
161,442
168,019
Total Cash Outflows
1,879,926
1,066,262
1,119,641
1,176,679
1,237,658
891,132
1,714,871
2,579,730
3,486,776
4,437,030
Beginning Cash Balance
Other:
Total Cash Inflows
Available Cash Balance
Other Cash Out Flows:
Owner's Draw
Other:
Ending Cash Balance
16 | P a g e
Chalk Manufacturing. 2016
11.3. PROJECTION BALANCE SHEET
Projected Balance Sheet For 5 Years
Year 1
Year 2
Year 3
Year 4
Year 5
Cash
Accounts Receivable
Inventory
Prepaid expenses
Other Current Assets
891,132
180,000
(53,256)
1,714,871
189,000
-
2,579,730
198,450
-
3,486,776
208,373
-
4,437,030
218,791
-
Total Current Assets
1,017,876
1,903,871
2,778,180
3,695,149
4,655,821
Net Fixed Assets
Other Assets
618,708
581,016
543,324
505,632
467,940
Total Assets
1,636,584
2,484,887
3,321,504
4,200,781
5,123,761
900,122
271,791
1,844,667
285,949
2,836,879
300,501
3,878,094
315,437
Assets
Liabilities & Capital
Accounts Payable
20,625
Taxes Payable
236,435
Payroll Taxes Payable
Accrued Wages Payable
Unearned Revenue
Short-Term Notes Payable
Short-Term Bank Loan Payable
Total Current Liabilities
257,060
1,171,913
2,130,616
3,137,380
4,193,531
Long-Term Notes Payable
633,632
484,583
329,461
168,019
0
Total Long-Term Liabilities
633,632
484,583
329,461
168,019
0
Total Liabilities
Owner's Equity
Net Profit
890,692
194,212
551,681
1,656,496
194,212
634,179
2,460,077
194,212
667,215
3,305,399
194,212
701,170
4,193,531
194,212
736,019
Total Capital
745,893
828,391
861,426
895,381
930,231
Total Liabilities & Capital
1,636,584
2,484,887
3,321,503
4,200,781
5,123,761
11.4. VALUE ADDITION AND UNIT COST OF PROJECTION
VALUE ADDITION
Monthly
Year 1
Year 2
Year 3
Year 4
Year 5
Cost of production
86,907
1,049,682
1,024,682
1,075,982
1,130,837
1,189,523
Raw materials cost
3,300
39,600
41,580
43,659
45,842
48,134
Value addition
96
96
96
96
96
96
UNIT COST OF PRODUCTION
Monthly
Year 1
Year 2
Year 3
Year 4
Year 5
Total units
1,500
18,000
18,900
19,845
20,837
21,879
Cost of production
86,907
1,049,682
1,024,682
1,075,982
1,130,837
1,189,523
Unit cost of production
58
58
54
54
54
54
17 | P a g e
Chalk Manufacturing. 2016
11.5. RETURN ON INVESTMENT (ROI) AND RETURN OF EQUITY (ROE)
RETURN ON INVESTMENT AND EQUITY
YEAR
TOTAL SALES
INVESTMENT
ROI %
EQUITY
ROE %
1
971,058
-100%
718,400
-100%
2
1,800,000
971,058
85%
718,400
151%
3
1,890,000
971,058
95%
718,400
163%
4
1,984,500
971,058
104%
718,400
176%
5
2,083,725
971,058
115%
718,400
190%
6
2,187,911
971,058
125%
718,400
205%
11.6. COST DATA ANALYSIS
Cost Data Entry Table
Sl no
Cost Element
0
1
Machinery and plant cost
790,644
2
Startup cost (civil works and others)
180,414
3
Total expenditures
Total cost by year
971,058
Year 1
Year 2
Year 3
Year 4
Year 5
1,089,282
1,066,262
1,119,641
1,176,679
1,237,658
1,089,282
1,066,262
1,119,641
1,176,679
1,237,658
Grand total cost
6,660,578
11.7. COST BENEFIT ANALYSIS.
Cost Benefit Analysis
Sl no
Benefit Sources
0
Year 1
Year 2
Year 3
Year 4
Year 5
1
Dustless white Chalk
0
1,800,000
1,890,000
1,984,500
2,083,725
2,187,911
Total Benefit per year
0
1,800,000
1,890,000
1,984,500
2,083,725
2,187,911
Grand total benefit
9,946,136
Cost Benefit Analysis
Result calculation table
0
Year 1
Year 2
Year 3
Year 4
Year 5
Sl no
Undiscounted flows
1
Cost
(971058)
(1089282)
(1066262)
(1119641)
(1176679)
(1237658)
2
Benefit
0
1800000
1890000
1984500
2083725
2187911
3
Net Cash Flows
(971058)
710718
823738
864859
907046
950254
11.8. NET PRESENT VALUE (NPV) AND INTERNAL RATE OF INTEREST (IRR)
Net Present Value (NPV)
Internal Rate of Return (IRR)
18 | P a g e
2,215,164
77%
Chalk Manufacturing. 2016
11.9. PAYBACK PERIOD
Number of years
0
1
2
3
4
5
Net Cash flow
(971,058)
710,718
823,738
864,859
907,046
950,254
accumulated cash flow
(971,058)
(260,340)
563,399
1,428,258
2,335,304
3,285,558
Payback period
3 years 7 months
3.7
Note:

The company can repay the loan which is pay Back period of Chalk Manufacture is 3
year 7 months.
11.10. BREAK EVEN ANALYSIS
Unit start
Unit increment
Unit price
Unit cost variable
Total fixed costs
-
4,000
100
61
843,900
BREAK EVEN X
21,373
BREAK EVEN Y
2,137,300
Sales
Variable cost
400,000
800,000
1,200,000
1,600,000
2,000,000
2,400,000
2,800,000
3,200,000
3,600,000
4,000,000
4,400,000
242,063
484,125
726,188
968,250
1,210,313
1,452,376
1,694,438
1,936,501
2,178,563
2,420,626
2,662,689
19 | P a g e
Contribution
margin
157,937
315,875
473,812
631,750
789,687
947,624
1,105,562
1,263,499
1,421,437
1,579,374
1,737,311
LABEL
break even unit =21373
Fixed cost
Total cost
Net income
843,900
843,900
843,900
843,900
843,900
843,900
843,900
843,900
843,900
843,900
843,900
843,900
843,900
1,085,963
1,328,025
1,570,088
1,812,150
2,054,213
2,296,276
2,538,338
2,780,401
3,022,463
3,264,526
3,506,589
(843,900)
(601,837)
(359,775)
(117,712)
124,350
366,413
608,476
850,538
1,092,601
1,334,663
1,576,726
1,818,789
Chalk Manufacturing. 2016
BREAK EVEN ANALYSIS
Sales
Fixed cost
Total cost
break even unit =21373
5,000,000
4,500,000
4,000,000
3,500,000
3,000,000
2,500,000
2,000,000
1,500,000
1,000,000
500,000
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
Units
Note: when total unit produced is 21,373, the business reaches the break-even point.
20 | P a g e
50,000
Chalk Manufacturing. 2016
12. CONCLUSION
Chalk Manufacturing is a manufacturing firm for the Dustless White Chalks for the various
schools and institutes. The total investment to commence this business estimates BTN 978,058
with debt equity ratio of 4:1 as per the BOIC. The location of the firm will be at Pasakha since it
is nearby to the promptness to market for raw materials.
Today, Bhutan is suffering from the shortage of INR which affects on the country’s economy. It
is mainly due to the increase imports of merchandise from the neighboring countries especially
India. Thus by reducing to some extends through the manufacturing of Chalks which our country imports from India.
Owing to the feasibility of the business, Chalk Manufacturing is to be established to meet the
needs of the country in reducing import and expanding the economy through exports in near
future. But the effect will be more in the future with its expansion and diversification of the
products which also create more employment opportunities.
As a forward-looking company and as a socially responsible firm, we would bring about benefits
to the local community and our customers. We will create employment to qualified Bhutanese
people and contribute to the nation’s economy in the form of taxes.
The enterprise will give satisfactory salary and allowances with commission to the employees as
they are bedrock of our business and our success depends on the level of satisfaction they derive working in the business house.
Chalk manufacturing business firm will provide dustless white chalk for the smooth writing and
dustless learning in every schools and institutes.
It is assumed the enterprise would make more profit once it starts production and marketing. It
can be guaranteed that it would make more profit than as it is aforementioned.
It is clear that 35% of the total business cost is invested in purchasing fixed assets which is the
production engine of the proposed business. This indicates that the proposed business is feasible and viable in terms of its investment strategy.
21 | P a g e
Chalk Manufacturing. 2016
13. ANNEXURE (Part A): Cost Breakdown
13.1 BREAKDOWN COST FOR CONSTRUCTION OF CHALK PRODUCTION HOUSE
Construction Cost for Chalk Production House
Particulars
Units Requirement
Unit Cost
CGI Sheet 10ft(in no)
75
700
Timber (in cft)
160
500
Sand (in truck)
2
10,000
Stone (in truck)
1
10,000
Cement (in bags)
35
300
Gravel (in truck)
2
10000
Miscellaneous cost (Paints, electrical,
etc.)
Labor cost
TOTAL AMOUNT
Amount
52,500
80,000
20,000
10,000
10,500
20,000
30,000
240,000
463,000
13.2. BREAKDOWN COST FOR LABOUR FOR THE CONSTRUCTION OF CHALK PRODUCTION
HOUSE
Labour Cost for the Construction for chalk production house
Required No. of labour
No. of Working Days
Wage Per Day
10
60
400
Total Wage
240,000
13.3. BREAKDOWN COST FOR THE CONSTRUCTION OF THE CONCRETE WATER TANK
Construction Cost for Concrete water tank
Particulars
Units Requirement
Sand (in truck)
1
Stone (in truck)
1
Cement (in bags)
8
Miscellaneous cost
Labor cost
TOTAL AMOUNT
Unit Cost
10,000
10,000
300
Amount
10,000
10,000
2,400
5000
16,000
43,400
13.4. BREAKDOWN COST FOR LABOUR
Labour Cost for the Construction for Concrete water tank
Required No. of labour
No. of Working Days
Wage Per Day
4
10
400
22 | P a g e
Total Wage
16,000
Chalk Manufacturing. 2016
13.5. BREAKDOWN COST FOR WORKING CAPITAL
PARTICULARS
Advertising
Delivery expenses
Insurance
Interest
Inventory purchases
Miscellaneous
Payroll
Professional fees
Taxes and licenses
Utilities & telephone
Others
Loan Principle
TOTAL
23 | P a g e
MONTLY COST
1,000
900
2,000
2,372
3,300
2,500
40,000
500
700
1,500
23,500
11,935
90,207
Required WC
2,000
1,800
4,000
4,745
6,600
5,000
80,000
1,000
1,400
3,000
47,000
23,869
180,414
Chalk Manufacturing. 2016
PART B: BANK
13.5 PROJECT TOTAL COST
COMPONENTS OF PROJECT COST
Amt in Nu.
Forex. CompoDomestic
PARTICULARS
nent
Component
Land
3,488
Civil Works
Construction of production House
463,000
Construction of Concrete Water
43,400
Tank (at source)
Total Cost
506,400
Plant & Machinery
Chalk Making Machine
130,000
Electrical Fittings
70,000
Chalk Mould Machine
62,500
Transporation
30,000
Total
162,500
Miscellaneous Fixed Assets
Tray & Selves
20,000
Sintex Water Tank (5000l)
50,000
HDPE Water Pipe 2 inches (m)
30,000
Total
80,000
Preliminary Expenses
Total Preliminary Expenses
50,000
TOTAL
Total Cost Remarks
3,488
LEASE
506,400
3 Sets
3 sets
162,500
7 Sets
80,000
50,000
802,388
Note:


When the business goes for the Bank to borrowing, the ratio is 70:30. . The total Investment
amounts to BTN 985,356 including the 70% of debt loan which amounts to BTN 689,794 and
30% of equity amount to be provided by the proponent himself of BTN 298,607. It is assumed
that 42% of amount is spent on purchased of the fixed assets.
The project cost amounts to BTN 802,388 is the actual amount require in commencing the business. The chalk manufacturing unit is the profitable business.
24 | P a g e
Chalk Manufacturing. 2016
13.6 INCOME STATEMENT
INCOME STATETMENT PROJECTION FOR 5 YEARS
Revenue
Cost of Goods Sold
Gross Profit
YEAR 1
YEAR 2
YEAR 3
1,680,000 1,848,000 2,032,800
320,280
260,694
273,729
1,359,720 1,587,306 1,759,071
YEAR 4
2,236,080
287,415
1,948,665
YEAR 5
2,459,688
301,786
2,157,902
Expenses
Net Operating Income
751,388
608,332
768,129
819,177
791,603
967,468
815,760
1,132,905
840,528
1,317,374
Net Income (Loss)
608,332
819,177
967,468
1,132,905
1,317,374
Less:
30% BIT
Net Profit (Loss)
182,499
425,832
245,753
573,424
290,240
677,228
339,872
793,034
395,212
922,162
Additional Information
Depreciation expenses
% of Net Income (Loss)
% of Average Net Income (Loss)
65,817
17.23
65,817
34.66
65,817
18.10
65,817
17.10
65,817
16.28
% of Net Profit (Loss)
% of Average Net Profit
17.23
34.66
18.10
17.10
16.28
Monthly Taxes Payable (30% BIT)
15,208
20,479
24,187
28,323
32,934
Note:

There will be gradual increase in the Net profit earned by the business.
25 | P a g e
Chalk Manufacturing. 2016
13.7 BALANCE SHEET
Projected Balance Sheet For 5 Years
Year 1
Year 2
Year 3
Year 4
Year 5
Cash
Accounts Receivable
Inventory
Prepaid expenses
Other Current Assets
752,361
168,000
(41,512)
1,519,140
184,800
-
2,417,754
203,280
-
3,463,079
223,608
-
4,671,560
245,969
-
Total Current Assets
878,849
1,703,940
2,621,034
3,686,687
4,917,529
Net Fixed Assets
Other Assets
618,708
581,016
543,324
505,632
467,940
Total Assets
1,497,557
2,284,956
3,164,358
4,192,319
5,385,469
704,394
245,753
1,571,176
290,240
2,588,097
339,872
3,772,488
395,212
Assets
Liabilities & Capital
Accounts Payable
8,625
Taxes Payable
182,499
Payroll Taxes Payable
Accrued Wages Payable
Unearned Revenue
Short-Term Notes Payable
Short-Term Bank Loan Payable
Total Current Liabilities
191,124
950,147
1,861,416
2,927,969
4,167,700
Long-Term Notes Payable
584,994
465,778
330,108
175,710
(0)
Total Long-Term Liabilities
584,994
465,778
330,108
175,710
(0)
Total Liabilities
Owner's Equity
Net Profit
776,118
295,607
425,832
1,415,926
295,607
573,424
2,191,524
295,607
677,228
3,103,678
295,607
793,034
4,167,700
295,607
922,162
Total Capital
721,439
869,031
972,835
1,088,640
1,217,769
Total Liabilities & Capital
1,497,557
2,284,956
3,164,358
4,192,319
5,385,469
26 | P a g e
Chalk Manufacturing. 2016
13.8 NET PRESENT VALUE (NPV) AND INTERNAL RATE OF RETURN (IRR)
Net Present Value (NPV)
Internal Rate of Return (IRR)
2,305,460
71%
Note:

The Net present value of the Chalk Business under the Bank lending is 2,305,460 and internal
rate of return is 71%.
13.9 PAY-BACK PERIOD
0
Net Cash flow
(985,356)
accumulated cash flow
(985,356)
Payback period
2 Years 4 Months
Note:

Number of years
1
2
569,393
766,779
(415,963) 350,816
3
898,614
1,249,430
2.4
4
1,045,324
2,294,755
5
1,208,481
3,503,236
The pay-back period is 2 years 4 months to repay the amount lend.
13.9 BREAK EVEN POINT
Unit start
Unit increment
-
5,000
Sales
Variable cost
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
5,000,000
5,500,000
330,538
661,076
991,613
1,322,151
1,652,689
1,983,227
2,313,765
2,644,302
2,974,840
3,305,378
3,635,916
BREAK EVEN X
24,899
27 | P a g e
Unit price
Unit cost variable
Total fixed costs
66
843,900
100
Contribution
margin
169,462
338,924
508,387
677,849
847,311
1,016,773
1,186,235
1,355,698
1,525,160
1,694,622
1,864,084
BREAK EVEN Y
2,489,900
Fixed cost
Total cost
Net income
843,900
843,900
843,900
843,900
843,900
843,900
843,900
843,900
843,900
843,900
843,900
843,900
843,900
1,174,438
1,504,976
1,835,513
2,166,051
2,496,589
2,827,127
3,157,665
3,488,202
3,818,740
4,149,278
4,479,816
(843,900)
(513,362)
(182,824)
147,713
478,251
808,789
1,139,327
1,469,865
1,800,402
2,130,940
2,461,478
2,792,016
LABEL
break even unit =24899
Chalk Manufacturing. 2016
BREAK EVEN ANALYSIS
Sales
Fixed cost
Total cost
break even unit =24899
6,000,000
5,000,000
4,000,000
3,000,000
2,000,000
1,000,000
-
10,000
20,000
30,000
40,000
50,000
60,000
Units
Note:

When break-even unit is 24,899 then the business will be able to cover the total cost of the
business.
PART C: LODEN FOUNDATION
13.10 PROJECT COST
COMPONENTS OF PROJECT COST
Amt in Nu.
Forex. CompoDomestic
PARTICULARS
nent
Component
Land
3,488
Civil Works
Construction of production House
561,500
Construction of Concrete Water
44,000
Tank (at source)
Total Cost
605,500
Plant & Machinery
Chalk Making Machine
130,000
Electrical Fittings
70,000
Chalk Mould Machine
62,500
28 | P a g e
Total Cost Remarks
3,488
LEASE
605,500
3 Sets
3 sets
Chalk Manufacturing. 2016
Transporation
Total
Miscellaneous Fixed Assets
Tray & Selves
Sintex Water Tank (5000l)
HDPE Water Pipe 2 inches (m)
Total
30,000
162,500
20,000
50,000
60,000
110,000
Preliminary Expenses
Total Preliminary Expenses
50,000
TOTAL
PARTICULAR
TOTAL PROJECT COST
WORKING CAPITAL
TOTAL INVESTMENT
162,500
7 Sets
110,000
50,000
931,488
AMOUNT
931,488
215,523
1,147,011
Note:


Under the scheme provided by the Loden Foundation is 0% interest charged and limit of the
budget cost is BTN 15 lakhs.
The total investment under the Loden foundation is BTN 1,147,011 and the pay-back period is 3
years.
13.11 INCOME STATEMENT
INCOME STATETMENT PROJECTION FOR 5 YEARS
Revenue
Cost of Goods Sold
Gross Profit
YEAR 1
1,800,000
315,600
1,484,400
YEAR 2
1,890,000
255,780
1,634,220
YEAR 3
1,984,500
268,569
1,715,931
Expenses
Net Operating Income
675,290
809,110
713,090
921,130
753,680
962,251
Net Income (Loss)
809,110
921,130
962,251
Less:
30% BIT
Net Profit (Loss)
242,733
566,377
276,339
644,791
288,675
673,576
Additional Information
29 | P a g e
Chalk Manufacturing. 2016
Depreciation expenses
% of Net Income (Loss)
% of Average Net Income (Loss)
73,290
3.66
73,290
13.84
73,290
4.46
% of Net Profit (Loss)
% of Average Net Profit
3.66
13.84
4.46
Monthly Taxes Payable (30% BIT)
20,228
23,028
24,056
13.12 NET PRESENT VALUE (NPV) AND INTERNAL RATE OF RETURN (IRR)
Net Present Value (NPV)
Internal Rate of Return (IRR)
305,785
24%
Note:

The internal rate of return is 24% which indicates that the business will be profitable.
13.13 PAY-BACK PERIOD
Net Cash flow
accumulated cash flow
Payback period
Note:

Number of years
0
1
(1,147,011)
500,063
(1,147,011)
(646,948)
2 years 8 months
2
613,083
(33,865)
3
654,204
620,339
The business will have to repay the loan amount within 3 years. Thus the chalk will take around
2 years 8 months to repay the loan amount.
13.14 BREAK EVEN POINT
Unit start
-
Unit
increment
7,000
Sales
Variable cost
700,000
1,400,000
2,100,000
2,800,000
505,531
1,011,062
1,516,593
2,022,124
30 | P a g e
Unit price
Unit cost variable
Total fixed costs
100
72
973,000
Contribution
margin
194,469
388,938
583,407
777,876
Fixed cost
Total cost
Net income
973,000
973,000
973,000
973,000
973,000
973,000
1,478,531
1,984,062
2,489,593
2,995,124
(973,000)
(467,469)
38,062
543,593
1,049,124
Chalk Manufacturing. 2016
3,500,000
4,200,000
4,900,000
5,600,000
6,300,000
7,000,000
7,700,000
2,527,655
3,033,186
3,538,717
4,044,248
4,549,780
5,055,311
5,560,842
BREAK EVEN X
35,024
972,345
1,166,814
1,361,283
1,555,752
1,750,221
1,944,689
2,139,158
973,000
973,000
973,000
973,000
973,000
973,000
973,000
BREAK EVEN Y
3,502,400
3,500,655
4,006,186
4,511,717
5,017,248
5,522,780
6,028,311
6,533,842
1,554,655
2,060,186
2,565,717
3,071,248
3,576,780
4,082,311
4,587,842
LABEL
break even unit =35024
BREAK EVEN ANALYSIS
Sales
Fixed cost
Total cost
break even unit =35024
9,000,000
8,000,000
7,000,000
6,000,000
5,000,000
4,000,000
3,000,000
2,000,000
1,000,000
-
10,000
20,000
30,000
40,000
50,000
Units
31 | P a g e
60,000
70,000
80,000
90,000
Chalk Manufacturing. 2016
14. PROJECT TIMELINE
PROJECT TIME LINE
Activities
2016-2017
Ma
r
Feasibility study and development of the project proposal
Approval from BOiC, Loden or Bank
If the project is going to be funded:
Start of the factory house construction, staff
quarter and concrete water tank
Purchase of plant and machinery and other
required materials and installations
Recruitment of the required staff and training
if necessary
Start of the production and its sale
32 | P a g e
Ap
r
Ma
y
Ju
n
Ju
l
Au
g
Se
p
Oc
t
No
v
De
c
Ja
n
Fe
b