Challenging task

1. Challenging task
ELP-402
BUSSINESS PLAN FOR PRODUCTION
OF AGRA PETHA
SUBMITTED TO:
Dr.E.Padma
Associate professor
SUBMITTED BY:
D.Mahesh Reddy
VH/16-133

2. BUSINESS PLAN FOR ESTABLISHMENT
OF AGRA PETHA INDUSTRY
Executive summary
Mission statement
Product description
Business environment analysis
Market analysis
Market plan
Operations plan
Management summary
Financial plan
 Achievements & milestones

3. EXECUTIVE SUMMARY
 This project profile consists of establishment of
Agra petha industry in Ongole,Prakasam district
with a capacity of 18 tons per annum.
 The total cost of proposed project Rs.29,84,172/-
 This project will create employment to a total of
five people.
 This project is financially feasible with a BC ratio
of 2.04:1
 The demand of petha is about 700-800 tonnes
per year but supply of petha is 600 tonnes
only,hence there is a scope for establishment of
my project.

4. MISSION STATEMENT
We nurture the idea that our offerings of
Agrapetha are enjoyed by our customers.
As a quality focused firm we are engaged in
offering a high quality range of product.
We are different from our competitors because
we offer good quality & illachi and pista flavoured
candies to our customers.
We are planning on selling chocolate flavoured
candies in future.

5. PRODUCT DESCRIPTION
 The Wax gourd also called Ash gourd,White
gourd,Winter gourd is a vine grown for its very large
fruit,eaten as vegetable when mature.
 It is native to South East Asia.
 The immature melon has thick white flesh that is sweet
when eaten.
 By maturity the fruit loses its hairs & develops a waxy
coating, giving rise to name Wax gourd & providing
long shelf life.

6. AGRA PETHA
 The Indian candy that is as loved as Tajmahal in Agra.
 It is said that petha was originated in the kitchen of
Shah Jahan some 360 years back.
 Petha is a translucent soft candy from North
India,usually rectangular or cylindrical.
 Petha is one of the purest sweet meals in the world as
it contains only vegetable,water & sugar.

7. USES OF AGRA PETHA
 All petha products are highly recommended for
growing childern,lactating mother,during jaundice due
to richness in glucose & minerals.
 Petha preparation does not involve the use of fat
cooking oils.So it has negligible fat content and free
from cholesterol.
 Used for treatment of tuberculosis,weakness of heart
& Anaemia.
 Due to its cooling properties,it protects people from
high summer temperature.

8. BUSINESS ENVIRONMENT ANALYSIS
STRENGTHS
 Easy availability of cheap labour.
 Comfortable availability of raw materials & other inputs.
 Production capacity is more than sufficient.
 The sweet is affordable.
 It has many health benefits.

9. WEAKNESS
 Low levels of modernization and upgradation of
technology.
 Low productivity.
 Product diversification is limited.
 High dependence on commission agents for marketing.

10. OPPORTUNITIES
 Scope of export to USA & Middle East countries.
 Favorable government policies(ministry of food
processing industries)
 Crashed scheme for rural development.
 Food for work program.

11. THREATS
 Improvement in quality to national & international
standards.
 Growth of mallculture.
 Poor assistance.
 Power failure.
 Capacity utilisation.

12. MARKET TREND AND ANALYSIS
 The industry is famous for petha, a type of sweet, which
has satisfied the taste buds of both domestic, as well as
foreign customers.
 The Rs-300 crores industry employ over 25,000 people
in around 650 micro units that manufacture more than
30 varieties of petha.
 Agra petha is exported all most all the North Indian
states as well as to foreign countries like USA & Middle
East.

13. COMPETITORS
 R.K.Petha House,Agra
 Siri Swagruha Foods,Agra

14. Preparation process of Agra petha
Petha fruit(Ash gourd)
Washing ,peeling,cutting
Seed removal
Cutting into desirable shapes & sizes
Piercing

15. Soaking in lime water
Washing
Boiling in alum
Dipping in sugar syrup
Draining and flavouring
Cooling and packing

16. Step1:Washing,peeling,cutting and seed removal.
The Ash gourd is washed clean, it is peeled first using a
knife, where the skin of Ash gourd is removed.Then, it is
cut and the seeds and mushy centres are separated.
Cutting of Asg gourd Peeling of skin

17. Removal of seeds and mushy centres

18. Step 2: cutting into desired shapes and sizes.
Further cutting into desired shapes and sizes is
done where it is cut into cubical, rectangular or
spherical shapes.

19. Step 3: Piercing.
Further the petha pieces as cut above, are
pierced with a special fork or metal skewer to
make it porous.

20. Step 4: Soaking in lime water
 The pierced petha pieces are then soaked in lime
water (calcium hydroxide) for about two hours.The
proportion used is 20 kilograms to 100 liters of
water.This process tends to harden the petha and
make it compact.

21. Step 5: Washing
Petha is continuously washed in plain running
water till the lime is fully washed away and there
is no traces of lime residues in the petha pieces.

22. Step 6: Boiling
 Petha pieces are boiled in water containing Alum for
one hour.This process is called “Josh lena” which is
very critical step and has to be done carefully and
skillfully so as to maintain the quality of Agra petha.

23. Step 7: Dipping in sugar syrup
 The Josh petha is dipped in boiling sugar syrup.This is
boiled till the sugar syrup becomes thick. This is kept
covered with a mesh overnight.

24. Step 8: Draining and flavouring
The excess syrup is drained out as per the
requirement.Then flavouring agents such as Illachi,
Pista are added as desired.This is cooled before it
is packed into different boxes and containers.

25. Step 9: Cooling and packing
 Then the Agra petha pieces are cooled for sometime
and are then packed into different containers and
boxes as required by market.

26. FINANCIAL ASPECTS
BASIS AND PRESUMPTIONS
 Production in one day = 64kg
 Production in one month = 64*30
= 1920kg
 Production per annum =1920*12
=23,000kg
 Cost of one kg Agra petha=Rs.200/
 Total income = 200*23000
=Rs.46,00,000/-

27. Fixed costs
Implements Number Unit cost Total cost
Motor 1 12,000 12,000
Water tank 1 12,000 12,000
Exhaust fan 2 1,000 2,000
Drums 2 1,000 2,000
Ss top working
table
1 1,200 1,200
Weighing
balance
2 3,000 6,000
Polythene sealer 1 2,000 2,000

28. Metal skewer 1 15,000 15,000
Knives 5 50 250
Metal tubes 5 50 250
SS vessels 2 3,000 6,000
Total 58,700
•
Total fixed cost=9,00,000+58,700=9,58,700
PARTICULARS COST
Land 6,00,000
Building 2,50,000
Furniture 50,000
Total 9,00,000

29. VARIABLE COSTS
RAW MATERIALS
Total cost per annum = 68,956×12 = 8,27,472
PARTICULARS REQUIREMENT/
MONTH(kg)
UNIT COST MONTHLY COST
Ash gourd 2,010 6 12,060
Sugar 1,020 32 32,640
Lime 23 40 920
Alum 12 28 336
Cardamom 10 1,100 11,000
Pista 10 1,200 12,000
Total 68,956

30. MAN POWER
Total cost per annum = 12×64,000 = 7,68,000
DESIGNATION NUMBER SALARY PER
MONTH
Permanent workers 2 30,000
Temporary workers 2 24,000
Marketing & sales
person
1 10,000
Total 64,000

31. WORKING CAPITAL
Total working capital = 18,81,472
PARTICULARS COST
Raw material 8,27,472
Salaries & wages 7,68,000
Packing 15,000
Power 15,000
Water 45,000
Gas 1,36,000
Transport 75,000

32.  Total costs = 29,84,172
Means of finance:
 Loan taken from bank = Rs.12,00,00/-
 Interest rate = 9%
 Promoters contribution =Rs.17,84,172/-

33. ESTIMATED NET INCOME
Year Variable
costs(in
lakhs)
Fixed
costs(in
lakhs)
Depreciation
@10%(in
lakhs)
Interest
@9%(in
lakhs)
Interest
@8%(in
lakhs)
Loan
paid(in
lakhs)
Total
costs(in
lakhs)
Gross
income(in
lakhs)
Net
income(in
lakhs)
1 18.81 9.58 - 0.86 1.50 - 21.17 46 24.83
2 18.9 - 0.35 0.86 1.51 2.39 24.02 47.9 23.88
3 19 - 0.32 0.64 1.52 2.39 23.87 48 24.13
4 19.2 - 0.29 0.43 1.53 2.39 23.85 48.2 24.35
5 19.4 - 0.26 0.29 1.52 2.39 23.81 48.4 24.59

34. NET PRESENT WORTH(NPW)
NPW is positive,hence the project is financially feasible and
accepted.
Year Gross
returns(in
lakhs)
Costs(in
lakhs)
Net
income(in
lakhs)
Discount
factor
@12%
Net
present
worth(in
lakhs)
1 46 21.17 24.83 0.892 22.14
2 47.9 24.02 23.88 0.797 19.03
3 48 23.87 24.13 0.712 17.18
4 48.2 23.85 24.35 0.635 15.46
5 48.4 23.81 24.59 0.567 13.94
TOTAL 87.75

35. INTERNAL RATE OF RETURNS
Year Net income
(in lakhs)
Discount
factor
@12%
Net present
worth (in
lakhs)
@12%
Discount
factor
@43%
Net present
worth (in
lakhs )@
43%
1 24.83 0.892
22.14
0.699
17.36
2 23.88 0.797
19.03
0.489
11.67
3 24.13 0.712
17.18
0.341
8.25
4 24.35 0.635
15.46
0.231
5.64
5 24.59 0.567
13.94
0.167
4.11
87.76 47.03

36. IRR = (Lower discount rate)+(difference b/w 2 discount rates
* NPW of lower discount rate/Absolute diff. b/w the PWs of
cash flow at 2 discount rates
• IRR =12+31(87.76/87.76 - 47.03)
=12+31(87.76/40.73)
=12+31(2.15)
=12+66.65
=78%

37. BENEFIT COST RATIO(BC RATIO)
Year Gross
returns
(in lakhs)
Costs(in
lakhs)
Discount
factor@12%
Present worth
of gross (in
lakhs)
Present worth of
costs (in lakhs)
1 46 21.17 0.892 41.03 18.88
2 47.9 24.02 0.797 38.17 19.14
3 48 23.87 0.712 34.17 16.99
4 48.2 23.85 0.635 30.60 15.14
5 48.4 23.81 0.567 27.44 13.50
Total 171.41 83.65

38. Benefit cost ratio = Present worth of gross returns/present
worth of costs
=171.41/83.65
=2.04:1
 BC ratio is >1.Hence the project is financially feasible.

39. ACHIEVEMENTS AND MILESTONES
 I am selling different flavours of Agra petha.
 Demand of my product can raise.
 BEP is reached in 1.2 yrs after sale of 19,174kg of
petha.
 Bank loan is cleared at the end of 4th year.
 My annual turnover is 23,000kg petha.

40. THANK YOU