This is a business plan including market , technical and financial analysis for setting up a coffee powder anufacturing plant

1. Plan for setting up Coffee
Powder Manufacturing Business
presented by
V VIJAY KUMAR
113158

2. Coffee - History
• Coffee culture in India started with a muslim saint
Baba Budan in 1670
• He smuggled seven coffee seeds from Yemen to
Mysore and planted the on chandragiri hills in
Karnataka
• Later they did spread to other parts of Karnataka ,
Nilagiris , and Kerala
• In 1942 , Indian government decided to regulate
export of coffee under Coffee Board of India

4. Coffee market in India
• India, the world's sixth-largest coffee exporter, may turn a net importer the next decade, Tata
Coffee Managing Director Hameed Huq said.
• Domestic consumption is growing five-six per cent a year, while production is stagnating,
watchers said. “Domestic per capita consumption is at 90g a year; even if the consumption
goes up to 270g per person a year, the country will turn a net importer the next decade.”
• Consumption in India is estimated at 125,000 tonnes a year against a production of 315,000
tonnes. For 2013-14, production is estimated at 311,000 tonnes, a decline of two per cent
from a year ago.
• In 2012-13, India exported 308,916 tonnes, a decline of 10.3 per cent compared to 2011-12.
• The market for coffee outlets in India was estimated at around $190 million last year and is
expected to grow by around 30% over the next five years

5. Production (in tonnes) Consumption (in tonnes)
2009-10 289600 120300
2010-11 302000 108400
2011-12 314000 113480
2012-13 315000 124000
2013-14 311000 N/A

6. The graph above shows how coffee is slowly penetrating in to Tea market in India
•India is largely a tea-drinking country
•Domestic consumption of coffee is rising at about 5%-6% every year, while tea
consumption is increasing only at about 2% annually, according to government data
released earlier this year.
•Over 80% of visitors to Indian coffee retail chains are below the age of 40
Coffee vs Tea

7. Existing Brands
There are about 75 registered coffee brands in India of which
majority are local brands. When it comes to market share the
dominant players are
• Nescafe
• Tata Coffee
• Bru

8. SWOT analysis
• Strengths
 excellent growing conditions and hence wide availability of crop
 Reasonably cheap machinery
 technical expertise of labour is not much required
 Good export market
• Weakness
 High production when compared to domestic market
 Well established players and brands
 Places suitable for coffee cultivation in India are to one end of map. Hence sales involve a lot of transport
• Opportunity
 Vast export market
 Penetration into Tea market
 Youth preferring coffee over Tea
• Threats
 Replacement by other beverages
 Climatic conditions change which may badly effect coffee production


9. Threats to the business
Well established
market of
Nescafe sunrise
bru
Suppliers upper hand
Distance concerns
Tea market
Other beverages
Branded Coffee stores
Suppliers favouring
existing brands
Gives them upperhand in
bargain
Coffee store chains
STARBUCKS COSTA CAFÉ
Are destroying
traditional coffee
consution

11. Raw materials
• Two of the 50 known species of coffee beans dominate the
beverage coffee industry.
• Coffee arabica varieties, grown primarily in Latin America,
India, and Indonesia, are relatively mild in flavor and,
consequently, bring a higher price. They are also relatively
expensive to harvest, since individual coffee cherries must
be hand picked at their peak of ripeness. They form 90% of
total coffee produced across the world
• Coffee robusta varieties, grown mainly in Africa, India, and
Indonesia, have a harsher flavor, but they are cheaper to
grow since they can be harvested over a range of ripeness
and are more resistant to diseases and insects. Because of
their more attractive price, the robustas are widely used in
the manufacture of instant coffees.

12. Process
Coffee bean extraction
Separation of wastes in
centrifuges
Roasting of coffee beans and
cooling
Grinding roasted coffee beans
Packaging

13. • CLEANING & BLENDING OF GREEN COFFEE
The first step is thorough cleaning of defective beans, & separation
of nails, stones, dirt & dusts. Blending of beans is carried out before
roasting by installing volumetric feeders at the outlet of the silos.
Through this process various kinds of blends are obtained
depending on the taste and demand of the market.
• ROASTING & GRINDING OF GREEN COFFEE
Roasting of coffee beans develops the flavor & aroma which
depends on various physical & chemical changes which occur during
roasting. Degree of roast & roasting temperature are very
important and plays an important role in deciding the flavor and
colour of the final product.
• Ground coffee is then packaged in air free and aroma preserving
packets

14. Machinery Requirements & Technical
Specifications
• Coffee beans extractor for extracting beans out of coffee seeds
Capacity : 4 kg/ hr
Power rating : 0.8 kw
• Centrifuge
Dimensions : 3000 litres
Capacity : 10 kg/hr
Power rating :1.5 kw
• Roaster
Capacity : 20kg /hr
• Grinder
Capacity : 15kg/hr
Power rating : 1.2 kw
• Packaging machinery
Capacity :2000 packs / hr
Power rating : 2.5 kw

15. Financial Analysis

16. Machinery expenses
Machinery Cost ( in INR) No. of units
Coffee beans
extractor
45,000 5 225000
Centrifuge 55,000 2 1,10,000
Coffee bean roaster 5,00,000 2 10,00,000
Grinder 82,000 2 1,64,000
Packaging
Machinery
6,50,000 1 6,50,000
Total machinery
cost
21,49,000

17. • Coffee is manufactured into 250gm packets
• No. of packets manufactured in an hour = 80
• Price on each Packet = 40 rs
• Assume a day has 8 working hours and an year
has 250 working days
• Total packets manufactured = 250*8*80
=1,60,000

18. • Estimates of Production
• Installation Capacity = 1,60,000 units /year
• Unit price = 40rs
Year % utilization
of installed
capacity
Sales (in
units)
Sales (in
rupees)
1st year 50 80,000 32,00,000
2nd year 75 1,20,000 48,00,000
3rd year 90 1,44,000 57,60,000
4th year 100 1,60,000 64,00,000

19. • Land
Land requirement : 10 ,000 sq.m or 2.5 acres
nearly
Lease rates : 6.5 lacs per annum / acre
Lease period :20 yrs
Land rentals per year 16.25 lacs
Building Construction cost : 35 lacs

20. Fixed Assets
Asset Value (in INR)
Land 16,25,000
Building 35,00,000
Machinery 21,49,000
Furniture , electrical and plumbing works 2,00,000
Total 74,74,000
Depreciation on fixed assets is 10 %
Depreciation on value of fixed assets is Rs. 7,47,000 per year

21. Working Capital
• Raw Materials
• Coffee seeds = 30 rs/kg
• Requirement = 1,00,000 kg /year
• Total cost = 30,00,000 /year
Designati
on
Number Annual
pay
Total
Manager 1 5,00,000 5,00,000
Accounta
nt
1 3,60,000 3,60,000
Technicia
ns
20 2,40,000 48,00,00
0
Gaurds 3 60,000 1,80,000
Staff and labour :
WORKING CAPITAL :
Amount ( in INR)
Raw Material & utilities 30,00,000
Labour 11,60,000
Total 44,60,000
Year Utilization
of capacity
Cost of
production
1st 50% 15,00,000
2nd 75% 22,50,000
3rd 90% 27,00,000

22. 1st year 2nd year 3rd year
Cost of production 15,00,000 22,50,000 27,00,000
Administrative expenses 11,60,000 11,60,000 11,60,000
Utilities expense 87,303 96,033 105,636
Office expenses 7,759 6,875 6,265
Promotional expenses 198,335 359,979 272,712
Proffesional fee 49,584 68,178 89,995
Total administarative expenses 262,983 2,451,065 2,394,607
Total sales expenses 1,131,491 1,225,533 1,197,304
Cost of production 2,332,383 4,407,326 5,251,674
Expected sales
64,00,000 96,00,000 1,15,20,000
Gross profit before intrest 4,171,377 5,192,674 6,268,326
Total financial
expenses expenses
rental 1,625,000 1,625,000 1,625,000
intrest on debt 1,409,831 1,409,831 1,409,831
Depreciation 747,000 747,000 747,000
Operating profit 389,546 1,410,843 2,486,495
Preliminary expenses written off 500,000 300,000
Profit before taxation 389,546 910,843 2,186,495
Provision for taxation 53,236 170,319 393,059
Profit after tax 336,310 740,524 1,793,437
Less dividend on sharing capital 318,248 477,929 693,745
Retained Profits 18,062 258,447 1,099,692
PROFITABILITY
PROJECTIONS

23. Fixed and Variable costs
Particular Fixed cost Variable cost
Rental 16,25,000
Depreciation 74,700
Salaries & wages 11,60,000
Utilities 87,303
Raw materials 30,00,000
Office expenses 7759
Promotional expense 198,335
Professional fees 49584
total 29,17,043 32,85,638

24. Liabilities 1st year 2nd year 3rd year Assets 1st year 2nd year 3rd year
Accounts payable 56778 153333 662488 Cash
35,000 123,000 465,000
long term debt 5000000 5000000 5000000 accounts recievable 351240 542380 772660
share holders equity 1825400 2237600 2834480 finished goods inventory 200000 350000 500000
Retained earnings
18,062 258,447 1,099,692
Raw material inventory 250000 380000 700000
Debts 1460000 1370000 1065000 Land 1625000 1625000 1625000
Total equity 1825400 2237600 2834480 Building & infrastructure 3600000 3600000 3600000
machinery 2149000 2149000 2149000
Total liabilities 8310240 8869380 10661660 furniture 100000 100000 100000
Intangible assets 500000 600000 750000
Total assets 83,10,240 88,69,380 10,661,660
Balance Sheet

25. Break even Analysis
• Fixed costs per unit = 18.23 rs /unit
• Variable costs per unit = 20.53 rs/ unit
• Contributions per unit = SP/unit – V.C/unit
= 40-20.53 = 19.47rs/unit
• Break even point = fixed cost / (contribution / unit)
= 29,17,043 / 19.47
= 149822 units

26. Benefit to Cost Ratio
• Profits = Rs. 17,93,437
• Investment = Rs. 62,02,681
• BCR = Profits / Investment
= 0.289