PROJECT REPORT ON

MUSHROOM PRODUCTION
UNIT

SUBMITTED BY

Mrs. RITU AWASTHI

C-27, Sector-1, Shankar Nagar, Raipur
Mobile No.: 9752447730

GUIDED BY
Dr. REKHA SINGH
KVK, Raipur

SUBMITTED UNDER

Agri Clinics & Agri Business Center Scheme

KVK, Raipur
Sponsored by-
Ministry of Agriculture & Farmers Welfare, Government of India
National Institute of Agricultural Extension Management
(MANAGE), Hyderabad & NABARD
www.agriclinics.net

2019 - 2020
Project Report on Mushroom Production Unit by Mrs. Ritu Awasthi under 'Agri Clinics & Agri Business Centers (MANAGE)' Page 2 of 18

CONTENTS

CHAPTER NO. PARTICULARS PAGE NO.

I. HIGHLIGHTS OF THE PROJECT REPORT

A. About the Promoter 3

B. Firm Profile

C. Project Profile 4

II. PROJECT DESCRIPTION 5

III. MARKET POTENTIAL 6

IV. EXTENSION ACTIVITIES 7

V. SWOT ANALYSIS 8

VI. ECONOMICS OF THE PROJECT

A. Basis & Presumptions 9

B. Total Cost of Project 10

C. Means of Finance 11

D. Working Capital 12

E. Projected Profitability 13

Income Expenditure Statement 14

F. Financial Analysis 15

G. Cash Flow 16

H. Balance Sheet 17
I. Term Loan Repayment 18
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CHAPTER - I

HIGHLIGHTS OF THE PROJECT REPORT

A. ABOUT THE PROMOTER

PARTICULARS ABOUT THE PROMOTER

1. Name : Mrs. Ritu Awasthi

2. Address : C-27, Sector-1, Shankar Nagar, Raipur (C.G.)

3. Contact Number : +91 9752447730

4. Date of Birth : 30-08-1971

5. Educational Qualification : M. Sc. Zoology

6. Experience : 2 years

B. COMPANY PROFILE

PARTICULARS ABOUT THE COMPANY

1. Name of the Firm : Ritual Green Foundation

2. Address : Raipur

3. Constitution : Director
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C. PROJECT PROFILE (FINANCIAL)

PARAMETERS VALUES
Packaged Oyster Mushroom,
1. Product Button Mushroom &
Mushroom Home Box

2. Cost of the Project 1,936,858

3. Bank Loan 1,452,643

4. Margin Money 484,214

5. Financial Indicators

BCR at 15% DF 1.18:1

NPW 15% DF(Rs.) 4,601,285

IRR (%) 58.00

DSCR 3.03

6. Interest Rate (% per annum) 12

7. Repayment 5 years
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CHAPTER - II

PROJECT DESCRIPTION

Introduction
Indian agriculture will continue to be a main strength of Indian economy. With the variety of agricultural crops grown
today, we have achieved food security by producing over 200 million tons of food grain. However, our struggle to
achieve nutritional security is still on. Though we have significant achievements in milk, vegetables and fruit production
still we have to do more. In future, the eyer-increasing population" depleting agricultural land, changes in environment,
water shortage and need for quality food products at competitive rates are going to be important issues. To meet these
challenges and to provide food and nutritional security to our people,i t is important to diversifr the agricultural activities
in areas like horticuhure. Diversification in any farming system imparts sustainability. Mushrooms are one such
component that not only impart diversification but also help in addressing the problems of qualrty food, health and
environment related issues. One of the major areas that can confiibute towards goal of conservationo f naturalr esourcesa
s well as increasedp roductivity is recycling of agro-wastes including agro-industrial waste. Utilizing these wastes for
growing mushrooms can enhance income and impart higher level of sustainability. Commercial production of edible
mushrooms bio converts the agricultural, industrial, forestry and household wastes into nutritious food (mushrooms).
Indoor cuhivation of mushrooms utilizes the vertical space and is regarded as the highest protein producer per unit area
and timealmost 100 times more than the conventional agriculture and animal husbandry. This hi-tech
horticulturp venture has a promising scope to meet the food shortages without undue pressure on
land. Mushroom farming today is being practiced in more than 100 countries and its production is increasing at an annual
rate of 6-70/o. In some developed countries of Europe and Americ4 mushroom farming has attained the stdus of a high-
iech industry with very high levels of mechanization and automation. Present world production of mushrooms is around
3.5 million tones as per FAO Stat and is over 25 million tonnes (estimated) as per claims of Chinese Association
ofEdible Fungi. The wide variation in world production data in FAO Stat and CAEF is partly due to the fact that in FAO
Stat, mushroom means button mushroom (Agaricus spp.) along with the boletes, morels and tuber, whereas CAEF data
covers all types of mushrooms. China alone is reported to grow more than 20 different tlpes of mushroom at commercial
scale and mushroom cultivation has become China's sixth largest industry. Presently, three geographical regions- Europe,
America and East Asia contribute to about 960lo of world mushroom production. With the rise in the income level, the
demand for mushrooms is bound to increase in other parts of the world as well. China has been producing mushrooms at
very low costs with the help of seasonal growing, state subsidies and capturing the potential markets in the world with
processed mushrooms at costs not remunerative to the growers in other mushroom producing countries.
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CHAPTER - III

MARKET

POTENTIAL

The Indian agriculture industry is facing challenges to improve productivity to cater to the food as well as the energy
requirements of the ever-increasing population. This coupled with higher agro-commodity prices, is likely to maintain a healthy
demand for agriculture inputs in the coming years.

Consumption of agriculture inputs is steadily growing and they continue to grow creating lots of opportunities for the marketers.
India is the fourth-largest producer of agrochemicals in the world after the United States, Japan, and China.

The market size of Indian agro- chemicals industry is expected to more than double to Rs. 250 billion by 2017 on rising agri
production and increasing awareness among farmers. Currently, the market size of the sector is at Rs.10 billion. In the wake of
increasing agricultural production and awareness among farmers about the use of insecticides and pesticides, the demand is
bound to grow.

Per capita pesticide consumption of less than 500 gm of per hectare is far below the world average of about 3 kg per hectare.
Because of low level of consummation, the usage is going to increase dramatically. Huge demand is there in the Indian market.
With increased awareness, the use of agrochemicals will also increase.

Government is also playing a very active role in the evolution, marketing and development of agriculture input industry in India.

With increasing focus on scaling up of productivity and preventing crop losses to feed a billion plus population with limited land
resources, the reliance on agriculture inputs are only going to rise.
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CHAPTER - IV

EXTENSION

ACTIVITIES

I. Productivity of farmers will be increased by supplying affordable, good quality inputs in an efficient manner

II. The consumption patterns of agriculture inputs have direct relevance to output pattern of crops. Hence farmers will be
educated on balanced and efficient use of inputs.

III. Free advisory services ranging from sowing to harvesting of crops as well as farm credit & crop loan will be provided.

IV. Tools of information technology will be used to provide latest information to farmers

V. Farmers will be promoted to utilize Government information technology networks like Kisan Call Centres.

VI. Interface meets between Government agencies, Agribusiness campiness & farmers will be arranged

VII. Farmer meetings will be organized on regular basis aiming at training them about the right use of agrochemicals in terms of
quantity to be used.

VIII. Trained human resources in agriculture and allied sciences is going to take on agricultural extension system due to
limitations of the present government agricultural extension staff as consulting services.
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CHAPTER - V

SWOT ANALYSIS

Strengths:

• Agricultural inputs are most essential for farmers and hence not much of marketing effort is require.

• Shift from sustenance farming to commercialization of farming increases requirements of agricultural inputs.

• Agricultural educational background of entrepreneur helps to get confidence of farmers on the services offered.

• Providing advisory services to farmers on new technologies helps to retain the clients base.

Opportunities:

• Usage of agrochemicals is increasing.

• Farmers incomes are rising.

• Consumption of fertilizers is increased due to government subsidy.

• Economic liberalization has major positive impact.

• New and effective products are reaching Indian markets

• Irrigated area is rising

Weakness

• Farmers dependent on monsoons, limits possibilities of high growth.

• Fertilizer is one of the most capital intensive industries, its marketing ecosystem is most complex in Indian context

• Prices, subsidies, distribution restrictions, imports, choice of technology, stocks are controlled and regulated by the
Government

• Low profit margins

• Inadequate distribution network

• Lack of sufficient irrigation infrastructure

• Unavailability of raw materials

• Farmers low education level

• Lack of availability of easy finance

Threats

• Natural calamities

• Unpredictable demand

• Changes in Government policies

• Weak inspection and enforcement of standards

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CHAPTER - VI

ECONOMICS OF THE PROJECT

A. BASICS AND PRESUMPTIONS

PARTICULARS UNIT QUANTITY

1. Rate of interst for bank loan % 12

2. Own contribution(margin money) % 25

3. No of semiskilled worker employed No. 2

4. Repayment period Years 5

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B. TOTAL COST OF THE PROJECT

PARTICULAR UNIT UNIT RATE QUANTITY AMOUNT

Rs. Rs.

I. Capital Cost

1. Building

Deposit for Office & Godown(rented) Ls. 100,000

2. Misc.Fixed Assets

Office furniture(tables,chairs,recks) Ls. 300,000

Office electrification Ls. 10,000

Computer with printer Nos. 1 35,000 35,000

Name board Nos. 1 5,000 5,000

Telephone Nos. 1 5,000 5,000

355,000

3. Contengencies % 5 22,750

4. Prelimanary & Pre-operative Expenses

Market survey & project report preparation 5,000

License fee 10,000

Travelling Expenses 5,000

Advertisement and publicity 10,000

Total Capital Cost 507,750

II. Working Capital (25% of first year requirement) 1,429,108

TOTAL COST OF THE PROJECT 1,936,858

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C. MEANS OF FINANCE

PARTICULARS UNIT UNIT RATE AMOUNT Rs.

Term loan % 75 1,452,643

Own contribution % 25 484,214

TOTAL 1,936,857

3. Subsidy entitlement @36% from NABARD under AC & ABC Scheme 697,269
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D. WORKING CAPITAL
REQUIREMENTS

(Value in Rs.)

PARTICULAR UNIT UNIT RATE QUANTITY I YEAR II YEAR III YEAR IVYEAR V YEAR

Cost of Raw Materials

Seeds Ls. 1,292,308 1,507,692 1,723,077 1,938,462 2,153,846

Fertilizers Ls. 1,615,385 1,884,615 2,153,846 2,423,077 2,692,308

Insectisides & Pestisides Ls. 1,615,385 1,884,615 2,153,846 2,423,077 2,692,308

Agricultural Equipements Ls. 646,154 753,846 861,538 969,231 1,076,923

Cost of Consumbles

Stationary and Other /month 5,000 12 60,000 66,000 72,600 79,860 87,846

Cost of Utilities

Electricity & Telephone /month 5,000 12 60,000 66,000 72,600 79,860 87,846

Cost of Manpower

Semiskilled worker /annum 60,000 2 120,000 132,000 145,200 159,720 175,692

Overhead Expenses

Rent of Shop /annum 20,000 12 240,000 264,000 290,400 319,440 351,384

Marketing Expenses@1% of Sale /annum 67,200 78,400 89,600 100,800 112,000

TOTAL 5,716,431 6,637,169 7,562,708 8,493,526 9,430,153

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E. PROJECTED PROFITABILITY

I. PROJECTION OF INCOME
(Value in Rs.)

PARTICULAR UNIT I YEAR II YEAR III YEAR IV YEAR V YEAR

Capacity Utilized % 60 70 80 90 100

Sale of Seeds Ls 1,680,000 1,960,000 2,240,000 2,520,000 2,800,000

Sale of Fertilisers Ls. 2,100,000 2,450,000 2,800,000 3,150,000 3,500,000

Sale of Insecticides & Pesticides Ls. 2,100,000 2,450,000 2,800,000 3,150,000 3,500,000

Agricultural equipments & implements Ls 840,000 980,000 1,120,000 1,260,000 1,400,000

e. Interest on Subsidy @ 6% Ls. 41,836 41,836 41,836 41,836 0

f. Subsidy Ls. 0 0 0 0 697,269

TOTAL 6,761,836 7,881,836 9,001,836 10,121,836 11,897,269

Sundry Debtors (Credit period allowed 30 days) 540,947 630,547 720,147 809,747 951,781

Collection from Debtors 6,220,889 7,792,236 8,912,236 10,032,236 11,755,234

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II. INCOME EXPENDITURE STATEMENT

(Value in Rs.)

PARTICULAR I YEAR II YEAR III YEAR IV YEAR V YEAR

1. Income 6,761,836 7,881,836 9,001,836 10,121,836 11,897,269

2. Operational Cost 5,716,431 6,637,169 7,562,708 8,493,526 9,430,153

3. Gross Operating Cost 1,045,405 1,244,667 1,439,128 1,628,310 2,467,116

4. Less Interest on Term Loan 174,317 139,454 104,590 69,727 34,863

Depreciation for Misc. Fixed Assets @ 15% 53,250 45,263 38,473 32,702 27,797

Amortisation of preliminary and preoperative expenses 6,000 6,000 6,000 6,000 6,000

5. Profit before Tax 811,838 1,053,951 1,290,065 1,519,881 2,398,456

6. Tax at 30% 243,551 316,185 387,019 455,964 719,537

7. Profit after Tax 568,287 737,765 903,045 1,063,917 1,678,919

8. Net income available(7+4) 801,854 928,482 1,052,109 1,172,346 1,747,579

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F. FINANCIAL ANALYSIS

(Value in Rs.)

PARTICULAR I Year II Year III Year IV Year V Year TOTAL

Capital Costs 507,750

Recurring Costs 5,716,431 6,637,169 7,562,708 8,493,526 9,430,153

TOTAL COST 6,224,181 6,637,169 7,562,708 8,493,526 9,430,153

Benefit 6,761,836 7,881,836 9,001,836 10,121,836 11,897,269

Depreciated Value of Misc. Fixed

152,118
Assets@15%

TOTAL BENEFIT 6,761,836 7,881,836 9,001,836 10,121,836 12,049,386

NET BENEFIT 537,655 1,244,667 1,439,128 1,628,310 2,619,233

Discounting Factor@15% 0.87 0.76 0.66 0.57 0.5

NPV Cost at 15% DF 5,415,037 5,044,249 4,991,387 4,841,310 4,715,076 25,007,059

NPV Benefits at 15% DF 5,882,797 5,990,195 5,941,212 5,769,447 6,024,693 29,608,344

NPW at 15% DF 4,601,285

BCR at 15% DF 1.18:1

IRR% 58.00
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G. CASH FLOW STATEMENT

(Value in Rs.)

PARTICULAR I Year II Year III Year IV Year V Year

A. CASH INFLOW

Collection from Debtors 6,220,889 7,792,236 8,912,236 10,032,236 11,755,234

Term Loan 1,452,643

Own Contribution 484,214

TOTAL(A) 8,157,746 7,792,236 8,912,236 10,032,236 11,755,234

B. CASH OUTFLOW

Capital Costs 507,750

Recurring Costs 5,716,431 6,637,169 7,562,708 8,493,526 9,430,153

Interest on Bank Loan 174,317 139,454 104,590 69,727 34,863

Income Tax 243,551 316,185 387,019 455,964 719,537

Term Loan Repayment 290,529 290,529 290,529 290,529 290,529

TOTAL(B) 6,932,578 7,383,337 8,344,846 9,309,746 10,475,081

SUMMERY

Op. Cash & Bank Balance. 0 1,225,168 1,634,067 2,201,457 2,923,948

Add : Surplus / (Deficit) 1,225,168 408,899 567,390 722,490 1,280,153

Closing Cash & Bank Balance 1,225,168 1,634,067 2,201,457 2,923,948 4,204,100
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H. BALANCE SHEET
(Value in Rs.)

PARTICULAR I Year II Year III Year IV Year V Year

A. ASSETS

1. Fixed Assets 301,750 256,488 218,014 185,312 157,515

2. Current Assets

Cash and bank Balance 1,225,168 1,634,067 2,201,457 2,923,948 4,204,100

Sundry Debtors 540,947 630,547 720,147 809,747 951,781

Preliminary and Preoperative exp 24,000 18,000 12,000 6,000 0

Deposit for building 100,000 100,000 100,000 100,000 100,000

Contingency 22,750 22,750 22,750 22,750 22,750

TOTAL (A) 2,214,615 2,661,852 3,274,369 4,047,757 5,436,147

B. LIABILITIES

1. Capital Balance 0 1,052,501 1,790,266 2,693,312 3,757,228

Additions 484,214

Net Profit for the year 568,287 737,765 903,045 1,063,917 1,678,919

Closing Balance 1,052,501 1,790,266 2,693,312 3,757,228 5,436,147

2. Secured Loans 1,162,115 871,586 581,057 290,529 0

TOTAL (B) 2,214,615 2,661,852 3,274,369 4,047,757 5,436,147

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I. TERM LOAN REPAYMENT

Rate of interst - % per annum : 12

Opening balance of term loan : 1,452,643

(Value in Rs.)

Loan Gross Total

Year Principal Interest Net Surplus DSCR
Outstanding Surplus Repayment
1 1,452,643 801,854 290,529 174,317 464,846 337,008 1.72

2 1,162,115 928,482 290,529 139,454 429,982 498,500 2.16

3 871,586 1,052,109 290,529 104,590 395,119 656,990 2.66

4 581,057 1,172,346 290,529 69,727 360,256 812,090 3.25

5 290,529 1,747,579 290,529 34,863 325,392 1,422,187 5.37

Average DSCR 3.03