Question Prepare a projected profitability estimates for the first five years (details are given below) CKC Pharmaceuticals Ltd is embarking upon a bulk drugs project Following information and assumptions are provided The installed capcity of the project works out to be 8500 KG P A The expected capacity utilization will be 70 in the first year, 80 in the second year, and 90 in the third year and beyond After taking into account the inventory of stock in process and finished goods, the quantity to be sold works out to 56,200 KG in the first year, 67500 KG in the second year, 76000 KG in the third year, 76500 KG in the fourth year onward Closing and operating inventory will be the same in the 4th year and afterwards The sales realization will be 3585 per KG The cost of Raw material will be 2340 per KG of sales The cost of power will be 50 Lakhs at 70 capacity utilization Wages and factory salaries are expected to be 92 45 lakh for the first operating year, therafter, they would rise at the rate of 10 per year Factory overhead expenses will 29 35 lakh in the first year Thereafter they would rise at the rate of 5 per year Administration expenses including salaries will be 120 Lakh for the first year at increase 10 is expected thereafter every year Selling expenses will be 12 of sales SLM depreciation as per company law will amount to 17 12 lakh PA Preliminary expenses of 18 Lakh have to be written off over 5 year equally Interest on term loan will be 20 Lakh in the first year 18 Lakh in the second year, 16 lakh in the third year, 14 lakh in the fourth year and 12 Lakh in fifth year Interest on bank finance for working capital works out to 24 50 lakh in the first year, 28 50 lakh in second year, 31 50 Lakh in third year, 31 65 lakh for fourth year, 31 90 lakh in the fifth year WDV depreciation as per income tax for the first 5 years will amount to 53 71 lakh, 45 90 Lakh, 39 24 lakh, 33 55 lakh, 28 70 lakh respectively Income tax has to be provided for 30 , ignoring surcharge and MAT Dividend has to be provided for second year onward 15 (including surcharge on a share capital of 400 Lakh divided into 40 lakh shares of 10 rs face value)

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Question: Prepare a projected profitability estimates for the first five years (details are given below) CKC Pharmaceuticals Ltd is embarking upon a bulk drugs project.

Question: Prepare a projected profitability estimates for the first five years (details are given below)

CKC Pharmaceuticals Ltd is embarking upon a bulk drugs project. Following information and assumptions are provided:

The installed capcity of the project works out to be 8500 KG P.A The expected capacity utilization will be 70% in the first year, 80% in the second year, and 90% in the third year and beyond. After taking into account the inventory of stock-in-process and finished goods, the quantity to be sold works out to 56,200 KG in the first year, 67500 KG in the second year, 76000 KG in the third year, 76500 KG in the fourth year onward. Closing and operating inventory will be the same in the 4th year and afterwards.
The sales realization will be 3585 per KG
The cost of Raw material will be 2340 per KG of sales
The cost of power will be 50 Lakhs at 70 % capacity utilization
Wages and factory salaries are expected to be 92.45 lakh for the first operating year, therafter, they would rise at the rate of 10% per year
Factory overhead expenses will 29.35 lakh in the first year. Thereafter they would rise at the rate of 5% per year
Administration expenses including salaries will be 120 Lakh for the first year at increase 10% is expected thereafter every year
Selling expenses will be 12% of sales
SLM depreciation as per company law will amount to 17.12 lakh PA
Preliminary expenses of 18 Lakh have to be written off over 5 year equally
Interest on term loan will be 20 Lakh in the first year. 18 Lakh in the second year, 16 lakh in the third year, 14 lakh in the fourth year and 12 Lakh in fifth year
Interest on bank finance for working capital works out to 24.50 lakh in the first year, 28.50 lakh in second year, 31.50 Lakh in third year, 31.65 lakh for fourth year, 31.90 lakh in the fifth year
WDV depreciation as per income tax for the first 5 years will amount to 53.71 lakh, 45.90 Lakh, 39.24 lakh, 33.55 lakh, 28.70 lakh respectively
Income tax has to be provided for @30%, ignoring surcharge and MAT
Dividend has to be provided for second year onward @ 15% (including surcharge on a share capital of 400 Lakh divided into 40 lakh shares of 10 rs. face value)