Table of Contents
Lapsi Enterprise pre-feasibility study
Objectives of enterprise pre-feasibility study
Introduction to Lapsi Candy Enterprise
Likhutamakoshi is a Rural municipality located in the Ramechhap District of the Bagmati Province of Nepal. The municipality spans 124.51 square kilometres (48.07 sq mi) of area, with a total population of 23,109 according to a 2011 Nepal census. There are total of 59 Community Forest covering an area of 327.23 ha.
Likhutamakoshi is divided into 7 wards, with Bijulikot declared the administrative center of the rural municipality. The Rural municipality lies 565.008 m to 2780 m above sea level. It has the confluence of arable land, dry land, meadows, forests, shrubs and bushes. And the rainfall measures up to 125cm at monsoon.
The highest number of people comprises from the Kshetri community followed by indigenous Tamang people.
Regarding the occupation and livelihood practices adopted by the people in Likhu Tamakoshi Rural municipality , 78 % of the people are engaged in Agriculture and Animal Husbandry which gives a clear idea that the dependency on forest resources from the community forestry in the area is high.
Objectives of enterprise pre-feasibility study
1. To identify the possibility of enterprise establishment in the area
2. Selection of possible CFUGs for enterprise establishment
3. Identification of possible enterprise and CFUG based on resource availability and market potential, interest and motivation of community members, transportation facilities, existing skill and knowledge on the enterprises and scale-up
Introduction to Lapsi Candy Enterprise
This Forest based enterprise will be established in Ramechhap district, Likhu Tamakoshi Rural Municipality ward no.4. It will be operated by the User Group of Bhringeshwor Community Forest (38.85ha). There is abundance of Lapsi in this community forest area as well as nearby CF. In spite of its commercial potential, some of it has been used locally only but the rest of the resources are being wasted in the forest.
1. Description of product and services
Lapsi candy will be produced in the Lapsi industry of this Bhringeshwor CF.
2. Location of enterprise
This industry will remain within the area of Bhringeshwor CF. Appropriate location will be selected based on the availability of electricity, roads and water.
3. Targeted Market
The goods produced from this industry will be within the Likhu Tamakoshi Rural Municipality and Manthali market area of Ramechhap district as the first market and the second market will be Dhulikhel market of Banepa.
4. Production Target (Monthly)
The following items will be produced monthly from this Lapsi industry:
Lapsi candy; 5000 packets; 1 kg per packet
5. Production process
The production process of this Lapsi industry will be as follows.
Collection of lapsi from forest and storage of lapsi
Boiling in hot water and throwing bark and seed stone
Processing in the machine
Storage of packaging and finished goods
6. Details of Fixed Capital
This Lapsi industry requires the following fixed assets.
S.N. | Description | Unit | Total | Depreciation (10%) |
1 | Land | Ropani | 50,000 |
|
2 | Building | 2 | 3,00,000 | 30,000 |
3 | Machine, Tools, Utensils, Furniture, Etc |
| 2,00,000 | 20,000 |
| Total |
| 5,50,000 | 50,000 |
7. Required raw materials and costing
S.N. | Details of raw materials | Quantity | Rate | Total |
1 | Oil | 250 l | 250 | 62500 |
2 | Salt | 50 kg | 20 | 10000 |
3 | Sugar | 50 kg | 80 | 40000 |
4 | Chilies, Spices | 20 Kg | 50 | 10000 |
5 | Firewood | 500 kg | 5 | 2500 |
6 | Plastic | 2500 | 6 | 150000 |
7 | Plastic Can | 2500 | 10 | 50000 |
8 | Lapsi | 5000 kg | 40 | 200000 |
9 |
|
|
|
|
| Total monthly cost |
|
| 390000 |
8. Manpower and wage
S.N. | Description | Employee count | Monthly wage | Total wage 3 months |
1 | Manager | 1 | 15000 | 180000 |
2 | Skilled Manpower | 3 | 45000 | 405000 |
| Total |
| 60000 | 585000 |
9. Overhead costs
Description | Monthly cost | Annual cost |
Electricity | 1500 | 18000 |
Maintenance cost | 2000 | 24000 |
Transport cost | 1000 | 12000 |
Tea and snacks | 500 | 6000 |
Total | 5000 | 60000 |
10. Per Unit production costs
S.N. | Description | Amount |
1 | 1-month raw material cost | 390000 |
2 |
1-month labor wage | 60000 |
3 | 1-month overhead cost | 5000 |
4 | 1-month Total cost | 455000 |
5 | 1-month Production amount | 5000 packets |
6 | Per kg production cost | 91 |
11. Fixed capital (Land, Building, Machine and Tools) = 550000 Cost before production = 10000
12. Working capital Total raw materials stock (1 month) = 390000 Stock of produced goods (½ month) = 212500 Unpaid goods total valuation (½ month) = 212500 Labor wage and overhead cost (1 month) = 65000 Total Working Capital = 880000
Total capital required = 11 + 12 = 1440000
13. Annual Depreciation = 50000 Total annual production amount = 15000 packets Final cost = 91 + 3.33 = 94.333 (95) Profit = 110 % Selling cost per kg = 200
14. Profit and Loss i. Income from Total annual sales Monthly (5000 kg) * 3 months * Rs.200 selling price = 3000000 ii. Annual cost Raw materials Monthly (390500) * 3 months = 1170000 Labor wage monthly = 60000 * 3 months = 180000 Overhead cost monthly (5000) * 12 = 60000 Annual Depreciation = 50000
Annual profit = Annual Income – Annual cost = 1540000
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|
15.
Fixed cost: Indirect labor wage, Interest, Depreciation and Overhead cost
Movable expenses: Raw materials and Indirect labor
Break even point = Annual Fixed cost * 100
Annual sales- Annual movable expenses
= 290000 * 100
3000000- 1170000
= 15.84 %
16.ROI
Net profit * 100
Total Investment
= 1540000 * 100
1440000
= 106.94 %
SWOT analysis
Strengths
a) Adequate raw materials availability
b) Human resource easily available
c) No cost of raw materials and land
d) Market demand good
e) Employment opportunities to local and unskilled manpower
f) Utilization of otherwise wasted resources
g) Good Income
h) Good livelihood opportunity for local people
i) Unskilled and semi-skilled manpower can operate
j) Participation and inclusivity of local people
Weakness
a) Poor road condition to market
b) Unreliable power supply
c) Limitation in marketing of products
d) Management may not go well in long run
e) Seasonal nature of raw materials
Opportunities
a) Growing demand of local products by consumers
b) Local people actively looking for opportunities in their own community
c) High potential of income and employment
Threats
a) Coordination with local government may not go as expected
b) Sustainability of enterprise
c) Management of enterprise in long run
Conclusions and Way forward
Analyzing the economic and technical aspects of the proposed Lapsi candy industry, we have come to the conclusion that it is profitable to operate this industry. Rs. 14,40,000 is required to start this industry, which is received in grants. This amount can be easily obtained from the profit of the first year. The return on investment of this industry is 107%.
The selected enterprise type and CFUG for forest-based enterprise establishment in this study seems to be profitable as the preliminary assessment shows sufficiently high economic value. The implementation and establishment of this enterprise will contribute to local community for the local economic development. Therefore, we conclude to implement it as quickly as possible.
