Pure Milk

Address: Farooqa Road near Government Girls College Tehsil Sahiwal District
Sargodha

Contact: 03046889208

Contents
Layout of Business...4
Vision...5
Mission.....5
Business overview...... 5
Business Nature.......6
Management plan.7
Roles and Responsibilities of Members...7
HUMAN RESOURCES MANAGEMENT....9
MARKETING PLAN...9
Product..9
Packaging.10
Price..10
Place.10
Promotion.10
Customer profile...11
OPERATING PLAN...14
Land Requirement
14
Animal Housing..14
Uses of milk machines..
...14
Farm
....15

Machinery..

Daily Fodder Requirement..

15
FARM OUTPUT...17
Financial Plan.18
Financial
Statements...
.............................20

References
.29

Executive summary
Pure Milk business is a partnership type of business. First it was family business of one of their
partner now they decided to convert it into partnership. It is dairy business its main products are
milk and special Halwa. It is situated in Tehsil Sahiwal District Sargodha. Its tag line is All is
pure. Marketing of products on the basis of quality and price. In this area farmers are charging
very high prices and quality of milk is also low. It required 4 acres more land to continue its
operations thats why they purchased. Milk machines also import form china for extracting milk.
They also obtain loan from ZTBL to meet their financing needs. Their target market will be from
Sargodha city. This investment has 3 years and 2 months pay back period. They will also
provide chiller to their main customers for storing milk. Their strategy to share profit is they will
distribute 30% of net income annually. Balance will be shifted to retained earnings for future
expansion. Advertising will be done through local newspaper, Radio, Cable network. They will
also provide credit facility to their customer but for one month. They have good profits in first
three years and they are expecting more profit in future.

Layout of Business

Vision
4

Through superior performance and sound operations Pure Milk will be the marketplace of choice
for employees and the supplier of choice for customers.
Mission
To make available the highest quality, pure milk and best tasting sweets at reasonable price.
Business overview:
We are three people we want to start a new business. One of our fellows Muhammad Ali Raza
from Sargodha gave us a suggestion that I have my family business of Dairy Farming. He wants
to expand his family business but due to limited resources he cannot do this. Thats why we
decided to invest in his family business and to make some innovations in his business. He has
already 10 Cows in his farm we decided to purchase more 50 buffalos and 50 Cows for Rs.9
Million. Then we will have total 110 animals. We purchased these cows from Sahiwal district
and from other different cities. Approximately we both have Rs.70-80 Million. Nature of our
business will be partnership. Our business will be situated at Farooka road Tehsil Sahiwal
District Sargodha. He has already 1Acre land. We purchase 4 Acres land for Rs.4 Million. Our
target market will be from Sargodha city. We also purchased different office equipment and
furniture. We purchased Chiller to store milk. Our products will be Milk, and special Halwa.
We will provide fresh milk in a special packing. We will differentiate our milk on the basis of
purity and freshness. Thats why we named our business Pure Milk. Our tag line is All is
pure. We will not compromise on our quality. Because there is lot of competitors exists in this
market thats why we will differentiate our products on the basis of quality and price. We will
offer credit facilities to our regular customers. We purchased a vehicle to supply the milk. Our
customers will be households, Cafes and restaurants. Our main customers will be Taj Mahal
5

Sweets, Ambalah Sweet Baker, Shaheen Sweets and Bakers. We will provide milk to our
customers at their door step. We will offer discounts to our customers who will purchase milk in
large quantity. We will get services of medication and vaccination from Dairy Care Pakistan
We also install a shed for animals to protect them from environmental effects. We will also open
a shop at 47 pull Kainchi mor Sargodha. We will also sale our products in this shop. We
purchased cows from Sahiwal. These cows famous and give milk in greater quantity as compared
to others. We estimated that 1 cow will give approximately 10 kg per day. Means 110*10=1100
kg milk will be produced by them in a day.
In start we hired 13employees for our company. Four for animals at farm, two farmers for green
fodder growing, one driver, one Halwaai and five employees for shop. We all are educated
enough to deal with marketing, finance and HR issues of our company. Thats why we didnt hire
any manager for our company. Mr. Ali Raza will deal with finance, Mr. tasleem will make
Marketing strategies and Mr. Faisal will deal with HR and Admin issues.
Business Nature
The nature of business is partnership. We all have unlimited liability. When business will be
dissolve the expenses paid also from personal property in case when assets and cash not enough.

Management plan:

Investors and Management Team

The investors in the business are three fresh graduates (MPA) from Quaid-i-Azam School of
Management Sciences, Quaid-i-Azam University, Islamabad having specializations in the fields
of Marketing, Finance and Human Resource Management. These three partners are in the
management team of the business. As the type of business is partnership, all the members have
made equal investment so all the members have equal shares in the business and are responsible
for their activities they are performing in organization. There is equal sharing of profits & losses
where awards will be given on the basis of the achievement in the respective area of
responsibility.
Roles and Responsibilities of Members
The major business activities will be performed by these individuals to make the operations
smooth in order to achieve targets effectively.
1. Muhammad Faisal
HEAD OF PRDUCTION AND OPERATIONS
MPA from QASMS, QAU, Islamabad.
Major in HRM.
Good management skills
Having knowledge of dairy farming.
He will be responsible to run dairy farm operations and management of dairy farm.
Ensuring that the assets are in proper and efficient condition.
Major task is decision making.
Resolving conflicts among all the managerial activities.
2. TASLEEM AHMED
HEAD OF MARKETING
MPA from QASMS, QAU, Islamabad.
Major in marketing
Good market knowledge and professional skills
Having knowledge of dairy farming.
To handle sales, forecast sales, promotions and handle the service area of company

The responsibility of outlet management and demand creation will be at the part of

Tasleem Ahmed.
Building good relations with customers.
3. MUHAMMAD ALI RAZA
HEAD OF FINANCE AND SUPPLY CHAIN CONTROL
MPA from QASMS, QAU, Islamabad.
Major in Finance
Good financial management skills
Local market knowledge and personal relations.
He would be responsible to manage supply chain of company in effective and efficient

manner.
Review of operating and capital budget
Record keeping, feeding, milking at dairy farm
Dealing with all activities related to finance.

HUMAN RESOURCES MANAGEMENT:

According to nature of business no specific recruitment and training process will be followed
whereas care will be taken while hiring employees. Experienced and skilled employees will be
selected according to the nature of job. Employees will be provided free treatment and
employees will be given bonus on special days like Eid. Only one day leave will be allowed in a
month.
At the starting level of business we need 13 employees for our business of which 5 employees
would work on the farm each employee will handle 22 animals. We need 1 driver and 1 helper
for our vehicle for bringing the feeding material and to supply Milk to our customers.6 including
Halwaai will be on the shop for making Maavaan and to provide service to customers.
MARKETING PLAN
Marketing Mix
Product:
8

Our primary product is highest quality fresh milk and our innovative product is best tasting and
pure Maava. The service of delivery will be provided to customers.
Competitive edge:
Our most important competitive edge is that we are supplying quality, fresh milk to our
customers at reasonable prices. As our competitors are unable to provide required quantity of
milk and they are charging more prices but we are meeting their demands at reasonable prices.

Packaging:
We deliver milk to households in packets. The cost of 1kg packet is Rs.1 2kg is Rs.2 and packet
of 5kg is Rs.5. We contracted with local publishing company they will provide us these packets
daily on these rates.
Price:
We are following competitive pricing. Per kg price will be Rs.80 for households and Rs.75 for
cafes, restaurant and sweet shops. Our promotion is also based upon our price strategy and
quality. We have decided to compete by our low price, quality and best taste. It will increase our
sale and ultimately increase our revenues.
Place:
The place of farm is at main Farooqa road near Government girls degree college sahiwal. It is
convenient for suppliers to supply feed ( khl, choker, wanda etc) except grass. It is also
convenient us to supply milk to our customers and our shop.

Promotion:
To aware the customers about our products we will organize inaugural ceremony. In ceremony
we will distribute special halwa (maava) made from pure milk. This ceremony is organized for
sharing information about PURE MILK with our potential customers. We are also giving
chillers free chillers to our main customers like cafes and restaurants and sweet shops. It is our
goal to spread information that qualitative, hygienic and fresh milk is for healthy Life in depth
of customers mind. And we will use different methods which are:

Banners
About twenty banners of (5*2 feet size) will be used for the information about PURE
MILK and these banners will be placed at main locations of city.

News papers
We use local news paper SAIFE-e-Haq for (4*5 inch size ) advertisement.

Local cable network

Radio

Public Relations (Words of Mouth)

Customer profile:
Customer

Households, restaurants, sweets shops

City

Sargodha

Social class

All classes

Gender

Male, female

Age

All ages
10

Market Segmentation:

1. Market Area
The market has sound potential due to its surroundings. This whole market is comprised of
shopping, food, and residential areas. And it is even growing day bay day in terms of
becoming larger food market and household consumption.

2. Main Customers

TajMahal Sweets
Ambalah Sweet Baker
Shaheen Sweets and Bakers and other Cafes and restaurants.
Households

Total Supply:

Total supply of milk is 1100 kg. 400 kg for households, 4O0 kg for cafes, sweets shop and 300
kg for Halwa.

Market Analysis:

11

The milk producers in the market are at small scale and at prices Rs. 90/kg. The total supply of
milk in that market is low then the market demand of milk. Customers demand is not fulfilled.
Competitors:

The main competitors are Amjad cheema dairy farming, Rana Bilal dairy farm.

Comparison of Competitors Selling Prices:

Our competitors are selling at price of Rs.90 where as we have set price Rs.75 for cafes and
restaurants and Rs.80 for households.
Location
The place of farm is at main Farooqa road near Government girls degree college sahiwal. It is
convenient for suppliers to supply feed ( khl, choker, wanda etc) except grass. It is also
convenient us to supply milk to our customers and to our shop.
We will open our sweet shop at 47 pull Kainchi mor Sargodha.
Marketing Strategy
Our competitors are following conventional ways of doing business means just making sells and
dont bother about customer services and their convenience for customer satisfaction.
Whereas our set marketing objectives are:

Customer value and satisfaction through pure quality.

To increase market share through reasonable prices

Marketing Budget:
12

The yearly marketing budget planned is approximately Rs. 50,000 for inauguration ceremony
(7,000), local cable network (36,000), radio (1,800), banners 5*2 feet size twenty banners
(3,200) and newspaper adds 4*6 inch size four ads (2,000).

Credit Policy:

We provide milk to households and cafes, restaurants and sweets shops on monthly credit basis,
whereas special halwa on cash basis.
OPERATION PLAN:
FARM INPUTS
Land Requirement
One of our partners already has 1 acre of land and about 4 acres of land will
be purchased for building a dairy farm project of animals starting from 110
animals and at a target of 300 animals in a period of 5 years. Land cost per
acre in Sahiwal Tehsil is approximately 1 million out of which 50 thousand is
used for legal (registration) requirement. We use 2.5 acres of land for
growing green fodder (maize etc) for which 2 employees will be hired to grow
grass. Almost 2.5 acres of land would be used for building sheds for the
animals to protect them from severity of the weather. Fodder will be
purchased in abundance at low price and then stored.

13

Animal Housing
Sheds of the animals would be well-ventilated with protection of the animals
from extreme temperatures and strong winds. The animal housing will be
facilitated with drinking water for animals. There is proper drainage system
to keep hygiene at the farm. It consists of a built up animal shed, one room
for milk storage, one room for storing farm equipment and one for compound
feed storage.

Uses of milk machines:

We import milk machines from China. We have account with UBL. We use our
bank for opening LC in China. We use Western Union for payment. We import
15 sets of machine each one was for Rs.150000. Its pulsating frequency is 70
times/min. Original price of machine is Rs.2, 250,000. We also pay Rs773,
680 something as duty. Overall import duty is almost 33.333%. These
machines help us to reduce labor work and cost. These machines are also
helpful in maintaining the cleanness of work. It will increases the efficiency of
work and reduces time.
Farm Machinery
Only few farm equipment like fodder chopper, water pumps, milk utensils
will be purchased.
14

Explanation

Total Cost
Rs.
450,000
3,023,680
615000
500,000
350,000
600,000
300,000
150,000
800,000
6,788,680

Maize Cutter
Milking machine (milking parlor)
Milk Cooling Unit - 2000 Ltr
Generator (25 KVA)
Pump
Tractor
Heavy Duty Ventilation Fans
Trolly
Chiller(4)
Total Cost (Rs)

Animal Markets
Animal markets (mandies), Government and private livestock farms are the
main resource for acquisition of milk animals. There are different agents
available in the markets that help locating the proper animals. These agents
work on commission basis and the commission rate charged may vary from
1-2% of the animal price. We will purchase cows from district Sahiwal at Rs.
80,000 including 5,000 used as transport charges.
Feed
Portion for Dairy Animals the portion is allowance of nutritionally balanced
feed in 24 hours. It includes dry matter and concentrate to increase animal
productivity. Wheat straw is also used as dry fiber along with green fodder
we use three acres of lands for cultivating green fodder ourselves. About 1
kg of Total mix portion on dry and green matter is required for the production
of 2 liters of milk. These feed ingredients when mixed according to feed
formula will provide adequate energy according to energy and protein

15

requirements of animal in production. Mineral Mixture this is used as a feed

supplement. It includes a mix of minerals (magnesium, iron, sodium and
salts). Mineral mixtures are good source of energy and increase the animal
productivity to give milk. Per animal feed cost will be almost Rs.200.
Daily Fodder Requirement
There is no fixed fodder requirement for the animals but a rule of thumb says
that an animal needs daily fodder equal to 9%-10% of its body weight (3% of
live body weight on Dry Matter Basis). According to estimates, consumes 5055 kg fodder daily while cow consumes about 40-45 kg. Source:
www.smeda.org
Wheat Straw (Bhoosa)
Wheat straw is key, usual, and very popular dry fiber. It is always chaff, and
is the main or even only main dry fiber used on almost all the dairies.
Traditional threshing methods break the straw into short pieces called
bhoosa, and modern mechanical threshers have been designed to break the
straw. In all urban dairies visited wheat straw was bought at Rs.4 per kilo
(160 Rs per mound) or even more; in the harvest season, however, in places
where it is produced, it is from sahival available at Rs. 0.40 per kilo. We are
purchasing wheat straw (bhoosa) at Rs. 0.40 per kilo gram in abundant
quantity. Source: www.smeda.org
Vaccination & Medicine

16

Vaccination & medicine is essential to prevent any disease occurrence in the

animal herd. Each new animal will be vaccinated before entering the farm. It
will cost Rs. 1800 for each cow per year. We can also obtain these vaccines
on payment according to prescribed schedule from the Institute. Technical
guidance is also provided to the farmers. We can have their animals
vaccinated from the field Veterinary Hospitals and Centers. We will get
services from Dairy Care Pakistan
Labor Requirement
Manpower is the most important asset of any organization similarly it is of
the same value for dairy activity. In dairy man is required for performing
different animal husbandry practices at the farm e.g. feeding, watering,
milking and for taking care of animals etc. One skilled person can handle 25
milk animals easily. Four farm workers are suggested for handling 110animals. We partners ourselves are supervising all the farm activities.
Description

No

Employees for shop

Halwaai
Farmers
Workers at farm
Driver
Helper to driver
Total Labor Cost

4
1
2
4
1
1
13

Salary/month/Pers
on
10,000
20,000
7,000
7,000
7,000
7,000

FARM OUTPUT
17

Annual Salary
(Rs)
480,000
240,000
168,000
336,000
84,000
84,000
1,392,000

Lactation Period
The lactation period is the period during which the animals yield milk. These
animals are called wet animals. Generally the lactation period of cows and
buffalo is 365 days.. The average milk yield of a cow and a buffalo is
estimated at 10 x 365 = 3650 kg per lactation. Those cows and buffalos
which are not producing good quantity of milk will be replaced by the good
one.
Milk Composition
Buffalo milk contains less water, more total solids, more fat, slightly more
lactose, and more protein than cow's milk. Cow's milk contains 12-14% total
solids and the butterfat content is usually between 3% and 5%.
Phospholipids are lower but cholesterol and saturated fatty acids are lower in
cows milk. Source: www.smeda.org
Financial Plan:
When anyone starts a new business the most important thing which he need
is capital. To meet this need we made a plan. We prepare our statement of
assets from this statement we analyses that we will have to have
Rs.37,000,000. So according to instruction given by Sir Nauman we decided
to get loan from financial institution. We decided that we will contribute 75%
and debt will be 25% of total project. For this purpose we visited different
commercial banks for loan but no one give us positive response mostly
refused with this logic that we dont finance new business. Then we visited

18

SME they gave us information that we will provide Debt@15% interest rate
for 7 years. After this we visited ZTBL they offer us at 12.5% interest rate. We
decided to get loan from ZTBL because it was less expensive as compare to
SME.

Process of Obtaining Loan:

Muhammad Ali Raza is responsible for our financial matters. Thats why he
manages all the matters regarding financing. We visited ZTBL and present
our business plan. They tell us all terms and conditions. We fill loan
application form. Concerned manager and his team visited our farm and
verify whether that kind of business exists or not. After their verification they
sent our case to their loan committee. After getting verification from upper
committee they gave us loan of Rs.9250000. We kept land and other fixed
assets as collateral. This loan is for 7 years and interest rate will be fixed
throughout the period.
Project Financing
Debt
Equity
Total Project Investment
Project Economics
Viability
IRR (%)
NPV(Rs.)
Pay Back Period(year)

25%
75%
100%

9,250,000
27,750,000
37,000,000
Project
11.2%
879473.31
2 years and 7 months

19

Pay Back Period Calculation

Year
Year
Year
Year

0
1
2
3

(37,000,000)
7993260
15173321
23218948
2 years and 7 months

Dividend Policy:
We are three shareholders in this business. We all three has equal share in
business. We decided to distribute profit @30% of net income. Means every
year 30% of profit will be distributed between shareholders other will be
shifted to retained earnings. We also have plan to expand our business so
thats why we are distributing 30% other 70% will be used for expansion of
our business.

Financial Statements
Particulars
Revenues
Cost of goods sold
Gross Profit
General and Administration Expenses
Selling Expense
Misc. Expense
Advertising Expense
Salary Expense

Notes
1
2

Year1
39055000
20805000
18,250,000

Year2
44913250
23925750
20987500

Year3
51650238
27514613
24135625

3
4
5
6

1049375
1380000
57500
1642200

1206781
1587000
66125
1888530

Rent Expense
Office Expense(Stationary exp)
Professionals Fees

912500
1,200,000
50,000
1,428,00
0
180,000
50,000
200,000

207000
57500
230000

238050
66125
264500

8
20

Depreciation Expense
TotalGeneralandAdministrativeExpense
EBIT
Interest Expense
EBT
Tax

9
12

11

Net Profit

978546
(4999046)
13250954
(1,156,25
0)
14407204
(3647161
)
10760043

978546
(5602121)
15385379
(104339
7)
14341982
(3627595)

978546
(6295657)
17839968
(916436)

10714387

12521472

16923532
(4402060)

Balance Sheet: Year 0

Assets
Cuurent Assets

Amount(Rs.)

Cash
A/R
Fixed Assets
Land(5Acres)
Building/Infrastructure
Animals
FarmMachinery &
equipment
Furniture and Fixtures
Vehicle

2271,345

400,000
1,000,000

Tasleems Capital 9,250,000

Faisals Capital 9,250,000

Office Equipment

75,750

Total Owners Equity

27,750,000

Total Assets

37,000,00
0

Total Liabilities&Owners Equity

37,000,000

5,000,000
11,664,225
9,800,000
6,788,680

Balance Sheet: Year 1

21

Liabilities
Current liabilities

Long Term liabilities

Long-term Debt

Amount(Rs.)

9,250,000

Owners Equity
Alis Capital
9,250,000

Assets
Cuurent Assets

Amount(Rs.)

Cash
A/R
Fixed Assets
Land(5Acres)
Building/Infrastructur
e
Animals
FarmMachinery&
equipment
Furniture and Fixtures

7993260
1885833

5,000,000
11,081,014

9,800,000
6,517,133

380,000

Vehicle

900,000

Office Equipment

71,962

Total Assets

43629202

Liabilities
Current liabilities

Long Term liabilities

Long-term Debt

Owners Equity
Alis Capital
9,250,000
Tasleems Capital
9,250,000
Faisals Capital
9,250,000
RetainedEarning753203
0

Amount(Rs.)

11

8347172

12

Total Equity

35282030

Total
Liabilities&Owners
Equity

43629202

Balance Sheet: Year 2

Assets
Cuurent Assets

Amount(Rs.)

Cash
A/R
Fixed Assets
Land(5Acres)
Building/Infrastructure
Animals
FarmMachinery&
equipment
Furniture and Fixtures
Vehicle

15173321
2168708

Liabilities
Current liabilities

Long Term liabilities

Long-term Debt

5000000
10497803
9800000
6245586

Owners Equity
Alis Capital
9,250,000

360000
800000

Tasleems Capital 9,250,000

Faisals Capital 9,250,000
22

Amount(Rs.)

7331491

Office Equipment
Total Assets

68174

Retained Earnings 15032101

50113592

Total Owners Equity

Total Liabilities&Owners Equity

42782101
50113592

Liabilities
Current liabilities

Amount(Rs.)

Balance Sheet: Year 3

Assets
Cuurent Assets

Amount(Rs.)

Cash
A/R
Fixed Assets
Land(5Acres)
Building/Infrastructure
Animals
FarmMachinery&
equipment
Furniture and Fixtures
Vehicle

23248948
2494015

340000
700000

Tasleems Capital 9,250,000

Faisals Capital 9,250,000

Office Equipment

64386

Retained Earnings 23797131

57735980

Total Owners Equity

Total Liabilities&Owners Equity

Total Assets

Long Term liabilities

Long-term Debt

5000000
9914592
9800000
6174039

6188849

Owners Equity
Alis Capital
9,250,000

51547131
57735980

Cash Flow Statements

Particulars
Operating
Activities
Net Profit
Depreciation
A/R
CFO
Financing
Activities
Long Term Debt
Dividend
Owners Equity
CFF

Year0

Year1

Year2

Year3

10760043
978546
(1885833)
9852756

10714387
978546
(282875)
11410058

12521472
978546
(325307)
13174711

9,250,000

(902828)
(3228013)
(4130841)

(1015681)
(3214316)
(4229997)

(1142642)
(3756442)
(4899084)

27,750,000
37,000,000

23

Investing
Activities
Fixed assets
purchased
CFI
Net Cash

(35528655)

(35528655)
2271345

5721915

7180061

8075627

Notes to Financial Statements:

Note 1
Expected Revenues
1.1 400kg Milk sold to Households @ Rs.80

= Rs.32000

1.2 400kg Milk sold to Cafes @Rs.75

=Rs.30000

1.3 Special Halwa(Maava)

3kg Milk will use in 1kg Halwa
We will use 300kg Milk and make 100kg Halwa
[email protected]

=Rs.45000

Note 2
Cost of Good sold
1.1 Expense of feed Rs.200@110

=Rs.22000

1.2 Expense for Halwa @Rs.350*100kg

=Rs.35000

Note 3
Selling Expense
Rs.2500 expense of Vehicle*365

=Rs.912500

Note 4
Misc. Expense
Packing cost
1kg packet cost@ Rs.1= 100*1=Rs.100
24

2kg packet cost@ Rs.2= 100*2= Rs.200

5kg packet [email protected]=20*5=Rs.100
=Rs.400 per day
=Rs.146000 P.A
Electricity Cost

=Rs.1,054,000

Total cost

=Rs.1,200,000

Note 5
Advertising Expense
Add at Local Cable Network. We will use 6 cable networks.
[email protected]= Rs.3000 per month. 3000*12

= Rs.36000

Banners, Local Newspapers, Radio

Banners 20@160

=Rs.3200

Newspaper Add 4@500

=Rs.2000

Radio

=Rs.1800

Inaguration Cermony

=Rs.7000
Total=Rs.50000

Note 6
Salary Expense

Description

No

Employees for shop

Halwaai
Farmers
Workers at farm
Driver
Helper to driver
Total Labor Cost

4
1
2
4
1
1
13

Salary/month/Pers
on
10,000
20,000
7,000
7,000
7,000
7,000

25

Annual Salary
(Rs)
480,000
240,000
168,000
336,000
84,000
84,000
1,392,000

Note 7
Rent Expenses
Rent for shop Rs.15000 per month. 15000*12

=Rs.180,000

Note 8
Professional fees
Medication services for animals it is approximately assumed that Rs.200000 will be enough for
one year.
Note 9
Depreciation Expenses
Building/Infrastructure
FarmMachinery& equipment
Furniture and Fixtures
Vehicle

11,664,225
6,788,680
400,000
1,000,000

Office Equipment
We will depreciate our assets by using Straight Line Method

75,750

Building/Infrastructure: Useful life is 20 years

DepExp=11664225/20 = 583211
=11,664,225-583211=11081014
Farm Machinery & equipment: Useful life is 25 Years
DepExp= 6,788,680/25 = 271547
= 6,788,680-271547= 6517133
Furniture and Fixtures: Useful life is 20 Years
DepExp= 400000/20 = 20000
= 400000-20000= 380000
Vehicle: Useful life is 10 Years
DepExp = 1000000/10 = 100000
=1000000-100000= 900000
26

Office Equipment: useful life is 20 Years

DepExp= 75750/20 = 3788
= 75750-3788= 71962
Note 10
Where the taxable income exceeds
Rs.40,00,000 but does not exceed
Rs.70,00,000
Taxable Income: Rs.6645132

Rs.6,00, 000 + 27.5% of

amount exceeding the
4,000,000

14,25,000

Total Income Tax= 2645132*27.5%=727411+600000= Rs.1327411

Where the taxable income exceeds
Rs.70,00,000

Rs.14,25,000 + 30% of the

amount exceeding
Rs.7,000,000

Taxable Income: Rs.7,079,532

Total Income Tax= 79532*30% = 23860+1425000= Rs.1448860
Note 11
Loan Amortization Schedule
PMT=2059078
Years
1
2
3
4
5
6
7
Total

Loan
Balance
9250000
8347172
7331491
6188849
4903377
3457221
1830296

Installment
2059078
2059078
2059078
2059078
2059078
2059078
2059078

Interest(12.5%
)
1,156,250
1043397
916436
773606
612922
432153
228787

Principle
902828
1015681
1142642
1285472
1446156
1626925
1830296
9,250,000

End Loan
Payment
8347172
7331491
6188849
4903377
3457221
1830296
5

Note 12
Retained Earnings=Net profit- Dividends = 10760043-3228013= 7532030
Retained Earnings= Balance of RE+Net profit-Dividends = 7532030+10714387-3214316
=15032101
27

Retained Earnings= Balance of RE+Net profit-Dividends= 15032101+125214723756442=23797131

Breakeven Analysis
Fixed Cost:
Misc. Expense
Advertising Expense
Salary Expense
Rent Expense
Office Expense(Stationary exp)
Professionals Fees
Depreciation Expense
Interest Expense

4
5
6
7

1,200,000
50,000
1,428,000
180,000
50,000
200,000
978546
1,156,250

8
9

Total Fixed Cost = Rs.5242796

Variable Cost = Rs.54 per unit
Average Price = (80+75+450)/3 = Rs.201.67

B.E.

Price
PV

= 5242796/147.67 = 35503.46 units

After selling 35503.46 units annually our business will start making profit. At this point
we will earn no profit or no loss.

Accounting Information System

1. Daily Milk Production
Sr.no
a.Morning
b. Evening

No. of
Animals
60
50

Milk Prod.

Milk Sold

600
500

600
200

28

Income
From Sale
47000
15000

Remarks

300 kg milk
will used in

Mavaa

2. Detail of Purchase/Sale of product/by product( Feed and Fodder Medicine,

Ingredients, Animal etc.
Sr. no

Particulars

Quantity

Per Unit
Rate

Total Cost

Remarks

1.
2.
3.

Monthly Expense& Income Report

Sr.no

Particulars

Quantity

Rate(per unit)

Total cost

4. A/R Record
Sr. no

Customer I.D

Amount Due

Source: www.smeda.org
References
1.

www.smeda.org

29

Date

Remarks