Feasibility Study

on Establishment Of
A Boondi Manufacturing
Plant

G.K.M.Rajapaksha
AS2012715

Content
Introduction
Market feasibility
Technical feasibility
Production feasibility
Financial feasibility
Environmental feasibility
Socio- economic feasibility
Conclusion
References

Introductio
n

A business feasibility study is an analysis of

the viability of an business idea
Which will be conducted before proceeding with
the development of a business
This feasibility study was conducted to assess
potential, and to predict the likelihood of
success or failure on establishment of a new
Boondi manufacturing plant

Market
Feasibility

Product Identification &

Selection
Product

: Boondi

Main Ingredients : Gram flour, Rice Flour, Sugar,

Palm oil
Packaging Material : printed double laminated
pouch
Shelf life: 6 month
Quantity in one packet : 250g (Price Rs.92)
Storage Conditions: Store under Normal Room
Temperature.

Why Select Boondi

All stages of Sri Lankan people prefer to eat
Boondi.
Sri Lankan people habitually eat lot of sugar.
Because of traditional festivals, Sri Lankan
people are familiar with the oily sweet flavor
& taste.
Its easy to manufacture (easy technology).
Readily available raw materials.
Low labor cost & problems (automated).

Market Competitiveness
Porters five forces

Threat of New
Entrants
Low
Bargaining
Power of
Customers

Intensity of
Competitive
Rivalry

High

Boondi

High

Low
Bargaining
Power of
Suppliers

High
Threat of
Substitute

Purchaesing station

Market survey
15%
40%

20%

Level of preference on boondi

25%

8% 3% 10%
13%

68%

Extremely
high
High
Moderate
Low

Street
vendors
Retailers
Super
markets
Other

Purchase pattern

Daily
20%
5%
75%

Weekly
Monthly
When ever
you needed

Most preferable sizes

8%
18%

23%

200g
250g

Most preferable color

Red
Yellow
Green
Orange

10%
3%
15%

300g
53%

Most preferable package

15% 5%

Polythene bag
with paper
label

43%
38%

73%

350g

Most convenience price

10%
20%

40%

Polythene bag
with print
Shrink wrap
bag with print

30%

Rs. 90
Rs.
100
Rs.
110

Market Segmentation & Target

Market
Geographic
segmentation

Urban area
Semi urban area

Demographic
segmentation

Children, Teenagers & young population below

40 years old.

Psychographic
segmentation
Behavioral
segmentation

People with attitudes towards the high

Quality products
Middle to upper social class

People who like oily sweet products.

Target Area - Western Province

Marketing Mix
Product

Price

Place

Promoti
on

Boondi.
Available in 250g packets.
Use gram flour, Rice flour, sugar &
palm oil as main raw materials.
Double laminated packaging
Retail price = Rs.92
10%
profit margin
to retailers.
Coverage
:Colombo,
Gampaha,
Kalutara
Street vendors, Whole sales,
retail shops, super markets,
Restaurants, government
institutions. :Posters, Banners
Advertising
& leaflets.
Sales promotions : Discount for
government institutions

SWOT analysis

STRENGTHS
Low cost
High quality product
Easily available in
urban and sub urban
areas
OPPORTUNUTIES
Higher demand for
Boondi
Consumers
preference on oily
sweet foods
Increasing
consumption of
confectionary

WEAKNESSES
Limited distribution
Limited production
Lack of advertising
Lack of quality
certifications
THREATS
High amount of
competitors
Unawareness of brand
name among
customers
Price variations of
raw material used

Sales Forecast
Year

Annual sales Unit price

(No. of units)
Rs.

Year 1

25,000x12

83.31

Year 2

26,500x12

83.31

Year 3

28090x12

83.31

Annual
sales
revenue Rs.
24,992,39
9.20
26,491,94
3.15
28,081459
.74

Technical
feasibility

site selection
Factors determine the Site
Economic factors.
Non-economic factors.

Location
Proximity to raw materials & supplies.
Location of markets.
Labor climate.
Taxes & incentives.
Proximity to other company Facilities.
Water supply & drainage facilities.
Source of power, banking & credit facilities.
Location : Horana
Political & cultural factors.

Factory layout
1) Raw materials
store.
2) Packing materials
store.
3) Finish products
store.
4) Manufacturing area.
5) Packing area.
6) QA & RD
department.
7) Wash room.
8) Cleaning &
changing room.
9) Waste accumulating
& segregation area.
10) Lunch room.
11) Security room.
12) Sales room.

Smooth Floor
Expanding Facilities
Ample area for Loading &
Unloading

Building Design
The factory will be designed in accordance with
guidelines in building food processing factories
Floors
Smooth
Drainage gradient
Easy to clean

Doors
Smooth
Easy to clean
Non absorbant
Self closing

Walls & partitions

Impervious material
Ceiling
Minimize build up of particles

Machinery &
Equipment

Fryer
Mixer

Packing Machine
Molder

Conveyor

Cost of Machineries & Equipments

Quantit
y

Capacity

Unit Cost
(Rs.)

Total cost
(Rs.)

Mixing machine

40kg/hr

90,000

90000

molder

40kg/hr

70,000

70000

Deep fryer
Cooling
conveyors
Packaging
machine
Lab
equipment's
Miscellaneous

40kg/hr

120,000

120000

40kg/hr

83,000

83000

200
packets/hr

284,000

284000

350,000

350,000

20,000

20,000

Machinery

Total Cost (LKR)

1,017,000

Production
feasibility

Raw material & Packing

Material
Raw Materials
All Ingredients are purchased from the local market.
Purchased from a Quality Wholesale supplier
Purchasing is done twice a month

Packing material
Purchase from a Quality Wholesale supplier
Purchasing is done for once a month

process flowchart

Raw Materials
Mixing
Molding
Deep Frying
Dipping in
sugar syrup
Cooling
Packing
Storage
Dispatching

Human Resource
Management
General
Manager

Production
Executive

QA & RD
Executive

Marketing &
Finance
Executive

Sales rep
Security
guard

4 Workers
Driver

Financial feasibility

cost structure
Description
Raw material cost

Cost (LKR)
31.47

Packing material cost

2.65

Labor cost

2.88

Utilities & overheads

Depreciation cost

11.72
1.58

Total cost

50.31

Profit margin (44%)

Price without tax
Tax (15%)
Price to retailer
Retailer margin (10%)
Consume price

22.14
72.44
10.87
83.31
8.33
91.64

Net Present Value

(NPV)
Year

Year 0
Year 1

Net cash
flow

DF @
10%

Present
Values

NPV

(18,000,000.0
0)

(18,000,000.0
1 (18,000,000.00)
0)

7,159,140.09

0.8929

(11,607,603.8
6,392,396.19
1)

Year 2

7,867,637.99

0.7972

(5,335,522.80
6,272,081.01
)

Year 3

8,618,645.77

0.7118

6,134,752.06 799,229.25

NPV = LKR 799,229.25

Within 3 years, NPV > 0

Accept the

Internal Rate of Return (IRR)

Discount Factor

NPV

12%

799,229.25

10%

1,508,941.34

IRR = A + { (B A) (a / a b)}

A Cost of capital 1 (12%)

B Cost of capital 2 (10%)
a NPV 1
b NPV 2

IRR = 14%
IRR > Cost of capital Project should be
accepted

Return On Investment
(ROI)
ROI = (Net profit before depreciation/Total
Investment)*100
Year

Net profit

Total
investment

ROI %

Year 1

6,885,315

18000000

38.25

Year 2

7,593,813

18000000

42.19

Year 3

8,344,821

18000000

46.36

Pay Back Period

(PBP)
Year

Net cash flow

Cumulative net
cash flow

Year 0

(18,000,000)

(18,000,000)

Year 1

7,159,140

(10,840,860)

Year 2

7,867,638

(2,973,222)

Year 3

8,618,646

5,645,424

Pay back period = Total capital investment

Periodic cash flow
Pay back period = 2 years + 2,973,222
8,618,646
= 2.34 years

= 2 years & 4 months

Break even
Analysis

7000000
6000000

BEP

5000000

(Break Even
Point)

4000000
3000000
2000000
1000000
0
0

15000

30000

45000

60000

Units
Total cost

Revenue

Breakeven analysis
Breakeven point = (Fixed cost) / Contribution per unit
Contribution per unit
per unit

= (Selling price Variable cost)

Breakeven point = 1,337,825 / (72.44 / 45.85)

=

50,305 Packets

75000

90000

Environmental
feasibility

Environmental considerations

Because of a medium scale company should be consider

about the effects on environment due to the process of
the business.
Reduces the Bad effects to the environment.
Energy :- Use Solar power to the entire production & other
energy

purpose .

Waste management
Solid

waste.
Over fried or bad quality Animal feed.
Market returns & raw material waste Produce
compost.
Packages Properly dispose.

Waste water :- Properly dispose in to drainage system.

Socio- economic feasibility

Towards consumers Give quality

products.
Toward environment conserving energy.
Towards employees safety.
Towards society Cooperate Social
Responsibilities.

Conclusion
Boondi manufacturing is a commercially
feasible business in many aspects
Marketing, Technical, Production, Financial, Environmental & Socio
economic aspects.

Reference
www.iit.edu/cac/faculty_resources/feasibility_study.shtml
http://www.alibaba.com
http://dir.indiamart.com
http://www.fssai.gov.in

Thank You