Project Appraisal and Financing

Project on Financial Appraisal

COTTON YARN

DETAILS OF THE PROPOSAL PROJECT

Company will be indulged in high quality supplies of Superior quality cotton yarns. Our
product contains knitting yarn, cotton yarn, combed knitting yarn, organic cotton yarn.
These products have domestic as well as international marketplace. Neat spinning,
durability, color fastness, requisite elasticity, etc., are some of the features that will be
offered by us to the consumers. Meeting the stringent application requirements of varied
industries, these combed knitting yarns comply with the requisite industrial standards.
Our products will be available in multiple packaging options to cater specific needs of
textile, garment, weaving and many other industries.
All Counts of Yarn are available ranging from 20/1, 24/1, 30/1, 40/1 and other counts.

COST OF PROJECT

The following table shows the break- up of the cost of the project

ITEM AMOUNT (Rs. In Lacs)

Land and site development 10.08

Building 52.16

Plant and Machinery 308.63

Miscellaneous Fixed Assets 25.00

Preliminary and Public Issue Expenses 30.00

Pre-operative expenses 15.58

Contingency margin 11.10

Working Capital Margin 35.48

TOTAL 488.75

Land & Site Development Rs 10.08 lacs.

The project is going to be set up at plot no 10, Katla Market , Gurgaon. The land has
been bought at the price of 10.08 lakh by Haryana Urban Development Authority.

Building Rs 52.16 lacs

The construction cost for building 1000 square meter office at a rate of 5216 per sq
meter .Outlays on buildings to be constructed are considered reasonable

Plant and Machinery Rs 308.63 lacs

All the items of the plant and machinery are proposed to be procured indigenously .All
the costs related to plant and machinery are considered reasonable.

Miscellaneous Fixed Assets Rs 25.00 lacs

Miscellaneous Fixed Assets consist of furniture 5 lacs, computers 5 lacs vehicle 10

lacs and other items 5 lacs.

Preliminary and Public Issue Expenses Rs 30.00 lacs

Preliminary and capital issue expenses consist of underwriting and brokerage fee – Rs 15
lacs , Adverting fees – 5 lacs , Issue Management fees – 5 lacs and expenses on prining ,
registrar , banker and postage – Rs 5 lacs. All the expenses are considered adequate and
reasonable.

Pre-operative expenses Rs 15.58 lacs

Pre operative expenses consist of mainly of establishment expenses and travelling
expenses- Rs 5 lacs, interest during construction – 5.58 lacs and appraisal fee – Rs 5
lacs. All the expenses are considered reasonable

Contingency margin Rs 11.10lacs

 Provision for contingencies arising out of physical contingencies and delays have been
provided for 11.10 lacs and is considered adequate.

Margin Money for Working Capital Rs 35.48 lacs

Item (in lacs) 1 2 3

Raw Material 69.78 79.09 88.39
Stock in Progress 2.53 2.86 3.20
Finished Goods 17.71 20.04 22.38
Book Debts 51.89 59.99 67.07
Total Current Assets 141.91 161.98 181.03
(-) Margin Money 35.48 40.49 45.26
CA-Margin 106.43 121.48 135.77
Bank Finance 106.43 121.48 135.77
Increase in Bank Finance 106.43 15.05 14.29

MEANS OF FINANCE
The total project cost of Rs. 488.75 lacs is proposed to be financed as under:

SOURCE AMOUNT (IN RS Lacs)

Promoter’s contribution- Share capital 338.75

Term Loans-SFC 150.00

TOTAL
488.75

Promoter’s Contribution Rs 338.75 Lacs

Out of total of proposed promoter’s contribution of Rs 338.75 lacs , Rs 100 lacs has
already been brought in as share application money. All of the promoter’s contribtion
would be brought in as equity capital with a face value of Rs 10/- per share at par

Term Loans – SFC Rs 150 Lacs

Company proposes to raise an amount of Rs 150 lacs as term loans from commercial
bank for the project. For the calculation purposes, the loan is assumed to be at an interest
rate 12%, payable in 14 half yearly equal installment. Initial moratorium is one and half
years.