SOAP. PRODUCTION CAPACITY : 4,76,400 Nos. Soaps of 100 grams each Value : Rs. 47,64,000/-
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1 SOAP PRODUCT CODE : 3051 QUALITY AND STANDARDS : IS: 2888:1983 PRODUCTION CAPACITY : 4,76,400 Nos. Soaps of 100 grams each Value : Rs. 47,64,000/- MONTH AND YEAR : June, 2014 OF PREPARATION PREPARED BY : Ms. Vanshi Uniyal Investigator (Chemical) 1. INTRODUCTION Chemically, soap is a salt of a fatty acid. Soaps are mainly used as surfactants for washing, bathing, and cleaning, but they are also used in textile spinning and are important components of lubricants. Soaps for cleansing are obtained by treating vegetable or animal oils and fats with a strongly alkaline solution. Fats and oils are composed of triglycerides; three molecules of fatty acids are attached to a single molecule of glycerol. The alkaline solution, which is often called lye (although the term "lye soap" refers almost exclusively to soaps made with sodium hydroxide) brings about a chemical reaction known as saponification. In this reaction, the triglyceride fats are first hydrolyzed into free fatty acids, and then these combine with the alkali to form crude soap, an amalgam of various soap salts, excess fat or alkali, water, and liberated glycerol (glycerin). The glycerin is a useful by-product, which can be left in the soap product as a softening agent, or isolated for other uses. Soap is undoubtedly the oldest product to be produced specifically as a surfactant and in its many forms continues to play a major role today. Within this highly competitive marketplace soap is presented in a multitude of forms both solid and liquid. -42-
2 2. PRODUCT & ITS USES Soap The product categories can be classified into three segments; premium (Lux, Dove), popular (Cinthol, Nirma), and economy (Nirma Bath, Lifebuoy). The price differential between the premium and economy segments is about 2X. The popular and economy segments account for about 4/5 th of the entire market for soaps. Soaps are generally opaque type to translucent. 3. MARKET POTENTIAL The market of soap is growing at 7% a year. This means that the incremental demand generation is 5% over and above the population growth. With increasing awareness of hygienic standards, the market for the soaps could grow at a rate higher than 8% annually. Interestingly, 60% of the market is now sourced from the rural sector. This means that the variance between the two segments is not very large. Since upper-end market focus is the urban areas, margins come from the urban sector. India with a huge population has a household penetration of soaps at 98%. People belonging to different income levels use different brands, which fall under different segments, but all income levels use soaps, making it the second largest category in India. Rural consumers in India constitute 70% of the population. Rural demand is growing, with more and more soap brands being launched in the discount segment targeting the lower socio-economic strata of consumers. Soap manufacturers originally targeted their products to the lowest income strata in urban as well as rural areas, positioning their brands as a way to remove dirt and clean the body. For some brands, that positioning persists even today with a focus on removal of body odor and keeping the user healthy. However, soap positioning is moving towards skin care as a value-added benefit. ( 4. MARKETING STRATEGY There are many established national as well as international brands but they have captured mainly the urban and elite markets and for a quality product, there is a vast market which can be penetrated by offering competitive prices. Apart from a growing household market, other lucrative segments are spa, hotels, restaurants, etc. Marketing would play a crucial role and placement, publicity, commission to retailers etc. are important aspects. -43-
3 Chemical Division 5. BASIS AND PRESUMPTIONS i. It is presumed that the unit will run single shift per day & 300 days in a year. ii. iii. iv. The rate of interest has been taken 14% on an average both for fixed investment and working capital. The calculations have been carried out on considering the present trend of market. After installation of the said machinery these are also helpful for other kind of similar product. v. The wastage has been considered at a rate of 2% of the total production. vi. vii. viii. ix. For raw material and machinery and equipment the local market rates has been considered. All raw material of good quality are presumed to be used. The rates of machinery and equipments and raw materials are those prevailing at the time of preparation of Project Profile. They are likely to vary from place to place and supplier to supplier and necessary changes are to be made as and when required. Owing to its nature of beautifying the skin and hair, the ph of the soap has to be maintained up to IMPLEMENTATION SCHEDULE The approximate time required for various activities is given below. However, it may vary from place to place depending upon the local circumstances and enthusiasm of the entrepreneur: S. No. Activity Period (in Months) 1. Scheme Preparation and Approval 0-1 Month 2. Provisional Registration (EM Part I) & Preparation of Project Report 1-2 Months 3. Sanction of loan 2-5 Months 4. Clearance from State Pollution Control Board 3-4 Months 5. Placement of order for machinery and delivery 4-5 Months 6. Installation of machines 6-7 Months 7. Power connection 6-7 Months 8. Trial Run 7-8 Months 9. Commercial Production 9 th Months onwards Due to overlapping of some activities, normally 6-9 months are required to implement the project. -44-
4 Soap 7. TECHNICAL CONCEPTS 7.1. Process of Manufacture Toilet soap and its method of manufacturing is more or less similar to other toilets soap. It is fancy because of its standard quality raw material and packing. To prepare this fancy soap, first of all its formulation is to be set in following way: S. No Name of raw material % Composition 1. Coconut oil Tallow Lard Caustic lye Color 8.8 Perfume mixtures for this soap Total Bergamot oil Sassafras oil Clove oil Thyme oil Oil of neroli Tincture for musk 0.3 Total This perfume mixture can be had readily prepared from the market or can also be prepared in the unit. Process: To manufacture this fancy soap two batches are made. Into first saponification is done and into second mixing of perfume is carried out. To prepare base of soap take all raw material coconut oil, tallow lard are taken into kettle and add caustic soda lye slowly when the saponification is done add perfume made as per above said formulation or can use readily prepared perfume. The mixing is carried out properly so that homogeneity may be obtained put this mixture into the moulds/frame for few hours. When the soap is set, stamping and packing is being done Quality Control & Standards In order to manufacture good quality soap, it is utmost urgent to purchase good quality of raw material from only the established and renowned suppliers. Before putting the raw material into operation all those has got to be tested for their chemical properties at the gate testing facilities and after the finished product. Quality means the producer has to satisfy the desire and urge of uses. Keeping in view the demand of people from quality point of view it is necessary to adopt better technique of manufacturing and good quality of raw material. To manufacture the fancy soap of good quality, specific BIS standard can be followed. -45-
5 Chemical Division 7.3. Production Capacity (Per Annum) Quantity : 4,76,400 Nos. Soaps of 100 grams each 7.4. Pollution Control There might be some pollution in the manufacturing of soap. However, the producer is advised to adopt and follow the prescribed norms by the pollution control board. Before switching over to manufacturing, NOC from the concerned State Authority is very much required in this case. To minimize the pollution some control measures and monitors can be installed Energy Conservation To conserve the energy required thickness of vessels should be taken. Only necessary machinery and equipment and jig jags should be purchased. Proper space is given to proper flow for manufacturing raw material and finished products. Control is maintained over consumption of electricity light and fuel so that extravagance expenditure can be checked. 8. FINANCIAL ASPECTS 8.1. Fixed Capital Land & Building Land of 200 Sq. mtr and Covered area of 100 Sq. mtr. 12,000/- per month Machinery & Equipments S.No Particulars Nos. Rate (Rs.) Value (Rs.) 1 Melting pans/kettle with agitator 100 kg capacity 01 80,000 80,000 2 Saponifying tank 100kg. capacity 01 50,000 50,000 3 Lye Storage tank with SS lining 50 lit. capacity 4 Stamping machine automatic (50 pcs. per minute) 04 8,000 32, ,000 35,000 5 Baby boiler 01 68,000 68,000 6 Cutting machine 01 12,000 12,000 7 Lab Equipments LS LS 10,000 Office Furniture Rs. 30,000 Preoperative Expenses Rs. 5,000 Total Fixed Capital Rs. 3,50,700/- Total 2,87,000 28,700 Total 3,15,
6 8.2. Working Capital (Per Month) Personnel (Salary & Wages) S. No. Designation Nos. Salary (Rs.) Total (Rs.) Soap 1. Manager 01 self Chemist 01 10,000 10, Sales Manager 01 7,000 7, Skilled workers 01 9,000 9, Unskilled worker 02 8,000 16,000 Total 42,000 15% 6,300 Total 48, Raw Material (including packing materials) S.No. Particular Qty.(kg) Rate (Rs./ kg) Value (Rs.) 1 Coconut oil ,08,750 2 Tallow ,500 3 Lard ,500 4 Caustic Soda Lye ,250 5 Color / Perfume mixture L.S. 23,000 6 Packing Rs 5/- per kg 19,850 Total 2,17, Utilities S. No. Particular Value (Rs.) 1 Rs. 7/- (60 units per day) 25 Days 10,500 2 Water 1,000 Total 11, Other Contingent Expenses S. No. Particulars Value (Rs.) 1 Rent 12,000 2 Printing & stationery 1,500 3 Telephone 1,000 4 Postage 1,000 5 Repair and maintenance 2,000 6 Consumable stores 2,000 7 Transportation charges 3,900 8 Advertisement 3,000 9 Miscellaneous 2,000 Total 28,
7 Chemical Division Working Capital/ Total Recurring Expenditure (p.m.) Working capital (per month) = (48, ,17, , ,400) Rs. 3,06,050/ Total Capital Investment Fixed Capital Rs. 3,50,700 Working Capital (for 2 months) Rs. 6,12,100 Total Rs. 9,62, FINANCIAL ANALYSIS 9.1. Cost of Production (Per Annum) Sl.No. Cost of Production (P.A.) Amount (Rs.) 1 Total recurring expenditure 36,72,600 2 Depreciation on Machinery & 10% 31,570 3 Depreciation on furniture and lab 20% 6,000 4 Interest on total 14% 1,34, Turn Over (Per Annum) Total production 3,970 Kg per month, i.e., 47,640 Kg per annum 4,76,400 nos. 100 grams each Total 38,44,962 Sale Realization Cost of each Rs.10/- Cost of 4,76,400 soaps Rs. 47,64, Net Profit (Per annum) (Before Taxation) = Rs. 47,64,000 Rs. 38,44,962 = Rs. 9,19,038/ Net Profit Ratio 9,19,038 = X ,64,000 = % 9.5. Rate of Return 9,19,038 = X 100 9,62,800 = % -48-
8 9.6. Break Even Point Fixed Cost (Per Annum) Sl. No Description Amount (Rs.) Soap 1 Depreciation on Machinery & 10% 31,570 2 Depreciation on Furniture & Lab Equipments@ 20% 6,000 3 Rent 1,44, % of other Expenses excluding Rent/Transport 60, % of Salary & Wages 2,31,840 6 Interest on Total 14% per annum 1,34,792 Total 6,08,202 B.E.P = 6,08,202 6,08, ,19,038 X 100 = 39.8 % ADDRESSES OF MACHINERY & SUPPLIERS 1 M/s. Atas Engineering Works Diwan Hall, Chandni Chowk, Delhi 2 M/s. K.S. Krishnan Associates Pvt. Ltd. 15, Community Centre, East of Kailash, New Delhi ADDRESS OF RAW MATERIAL SUPPLIERS 1 M/s. A. K. Enterprises No. 580 A, Main Road, Chirag Delhi, Near Shiv Mandir, Delhi M/s. Ram Chemicals & Co. Tilak Bazar, Delhi 06 3 M/s. Mahalaxmi Micron Runwad, Chhota Udepur, Vadodara M/s. Advance Surfactants India Limited 511/2/1, Rajokri, Near- Radisson Hotel,, New Delhi M/s. Agrawal Chemicals 95/1, GIDC Estate, Okha, P.S. Ahmedabad (Gujarat ) 6 M/s. Averest Chemicals Steel Industries 265, Samuel Street, Mumbai 7 M/s. Prakash Chemicals Pvt. Ltd. Induchacha House, Opp. Chhani Octroi Naka, Chhai, Vadodara - 02, 8 M/s. Vinod Minerals & Chemicals G-4, Avinash Mansion, 16/82, Joshi Road, Karol Bagh, New Delhi
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