PROJECT REPORT

Of

PET PREFORMS

PURPOSE OF THE DOCUMENT

This particular pre-feasibility is regarding PET Preforms.

The objective of the pre-feasibility report is primarily to facilitate potential entrepreneurs in project
identification for investment and in order to serve his objective; the document covers various aspects
of the project concept development, start-up, marketing, finance and management.

[We can modify the project capacity and project cost as per your requirement. We can also prepare
project report on any subject as per your requirement.]

Lucknow Office: Sidhivinayak Building ,

27/1/B, Gokhlley Marg, Lucknow-226001

Delhi Office : Multi Disciplinary Training

Centre, Gandhi Darshan Rajghat,
New Delhi 110002

Email : [email protected]
Contact : +91 7526000333, 444, 555
 PROJECT AT A GLANCE

1 Name of the Entreprenuer xxxxxxxxxx

2 Constitution (legal Status) : xxxxxxxxxx

3 Father / Spouse Name xxxxxxxxxxxx

4 Unit Address : xxxxxxxxxxxxxxxxxxxxxxx

District : xxxxxxx
Pin: xxxxxxx State: xxxxxxxxxx
Mobile xxxxxxx

5 Product and By Product : PET Preforms

6 Name of the project / business activity proposed : PET Preforms Manufacturing Unit

7 Cost of Project : Rs.46.25 Lakhs

8 Means of Finance
Term Loan Rs.36.63 Lakhs
Own Capital Rs.4.63 Lakhs
Working Capital Rs.5 Lakhs
9 Debt Service Coverage Ratio : 2.11

10 Pay Back Period : 5 Years

11 Project Implementation Period : 5-6 Months

12 Break Even Point : 39%

13 Employment : 15 Persons

14 Power Requirement : 60 HP

15 Major Raw materials : PET Resins

Estimated Annual Sales Turnover (Max Utilized

16 Capacity) : 167.84 Lakhs

17 Detailed Cost of Project & Means of Finance

COST OF PROJECT (Rs. In Lakhs)

Particulars Amount
Land Own/Rented
Building /Shed 2000 Sq ft Own/Rented
Plant & Machinery 39.70
Furniture & Fixtures 1.00
Working Capital 5.55
Total 46.25

MEANS OF FINANCE
Particulars Amount
Own Contribution 4.63
Term Loan 36.63
Working Capital 5.00
Total 46.25
 PET PREFORMS

1. INTRODUCTION

A PET preform is an intermediate product that is subsequently blown into a

polyethylene terephthalate (PET) container. Preforms vary in neck finish,
weight, colour and shape, and are specifically designed to meet the needs of
customers in different market segments. Preforms can be single-layer or
multilayer. PET Preforms are produced by using a highly-accurate injection
molding process and equipment. Preform weight depends on the end
container’s desired volume. Barrier preforms provide additional benefits
and increased beverage shelf life. PET Preforms are used to make bottles
especially convenience-sized soft drinks, juices and water. There is one
characteristic of PET preform, which is the product that made from it will be
clear and transparent. The surface is smooth and sparking, which can attract
the buyer´s attention. This makes the PET preform a delicate product. On the
other hand, although the PET preform can create a similar sensation just like
glass. It’s not fragile as glass. The wall is strong and tough, which appears on
the container.
2. MARKET POTENTIAL:

PET preforms offer reasonable packaging solution in terms of cost, which

are used in packaging of bottled water, carbonated soft drinks, edible oil, and
other special care & domestic goods. The demand for PET preforms has been
increased in the last decade due to high consumption of convenient food &
beverages products such as ready-to-drink coffee, tea, soft drinks, and juices
in both developed and developing countries. The hot filling process is
common in developed countries, which is boosting the PET preforms bottles
market as it requires low capital investments and excludes the usage of
preservers. Increasing consumption of packaged drinking water is
significantly responsible for a heightened prospect of PET preforms market.
The global PET preforms market is expected to reach USD 23.35 Billion by
2022, at a CAGR of 5.31% from 2017 to 2022. In terms of volume, the market
size is projected to reach 552.64 Billion units by 2022, at a CAGR of 4.1%
from 2017 to 2022.
3. PRODUCT DESCRIPTION

3.1 PRODUCT:
PET Preforms

3.2 RAW MATERIAL

PET Resins

3.3 MANUFACTURING PROCESS

Flow Chart
In PET Preforms the quality of PET resin is the most important
consideration. Generally, those PET resins are used in which antimony
concentration is less than 300mg. In the first step, the raw material is
procured from the local authorized vendor and stored in the inventory.
PET naturally absorbs water from its surroundings. So, it is preheated
before start manufacturing to reduce the moisture content.

PET resins are heated to a temperature of 110 – 115℃ for near about 4
hours. This heating will reduce the moisture content to less than 50 parts
per million. The moisture balance is an important step to avoid hydrolytic
reaction which reduces the PET quality by generation of acetaldehyde.

In the next step, the PET resins are poured into the injection moulding
machine manually. The profile dies of desired preform shape of preform
are mounted precisely into the machine after approval from the
production team. The profile dies have more than one cavity of preform
shape. Generally, mould dies have cavities as per the weight of preform.
For 14-gram weight preform 16 cavity dies are available.

In the next step, barrel heaters are started and brought up to the desired
melting temperature of PET. The resins from the hopper are fed into the
barrel section of the machine where the screw mounted in the machine
rotates about horizontal axis. The resins are fed into heating zone as the
screw rotates. In the heating zone, resins melts to a semi-solid state and
are ready to be injected into the die cavity by the machine.

From the extruder of the machine this molten semi-fluid plastic is

injected into the die at desired pressure and temperature. The molten
plastic will acquire the shape of the die and cooling cycle of the machine
begins. Water is used as a cooling medium which transfers heating
through a suitable cooling arrangement. The molten plastic gets solidified
and acquires the shape of the die.

After this, when the cooling cycle completes the mold gets opened and
the ejector pin will eject the preforms outside. These preforms have the
threaded portion for cap mounting.
 The non-uniform or deformed products are crushed using grinder into
small pieces. After this, the preforms are packed and dispatched as per
the requirement.

PLANT AND MACHINERY:

1. Injection Moulding Machine –

Injection molding is a method to obtain molded products by injecting

plastic materials molten by heat into a mold, and then cooling and
solidifying them. The method is suitable for the mass production of
products with complicated shapes, and takes a large part in the area of
plastic processing.

2. Grinder – This machine is used to crush the waste or non-uniform

products into small pieces.
3. Water Chiller – This is used to cool down the heated water required
during the cooling cycle of the blow moldings machine.
Equipment’s:

Profile Dies –

A die is a specialized tool used in manufacturing industries to cut or shape

material mostly using a press.

Pump –

Pumps are used to transfer the oil from crude oil tank to filter cloth.
PROJECTED BALANCE SHEET

PARTICULARS I II III IV V

SOURCES OF FUND
Capital Account
Opening Balance - 5.17 8.81 14.81 20.33
Add: Additions 4.63 - - - -
Add: Net Profit 5.54 9.65 13.99 17.53 21.08
Less: Drawings 5.00 6.00 8.00 12.00 15.00
Closing Balance 5.17 8.81 14.81 20.33 26.42
CC Limit 5.00 5.00 5.00 5.00 5.00
Term Loan 32.56 24.42 16.28 8.14 -
Sundry Creditors 0.92 1.06 1.21 1.37 1.54

TOTAL : 43.64 39.29 37.29 34.84 32.95

APPLICATION OF FUND

Fixed Assets ( Gross) 40.70 40.70 40.70 40.70 40.70

Gross Dep. 6.06 11.21 15.59 19.32 22.49
Net Fixed Assets 34.65 29.49 25.11 21.38 18.21

Current Assets
Sundry Debtors 2.34 2.74 3.11 3.50 3.92
Stock in Hand 4.51 5.00 5.62 6.29 7.00
Cash and Bank 2.15 2.05 3.45 3.67 3.82

43.64 39.29 37.29 34.84 32.95

TOTAL :

- - - - -
PROJECTED PROFITABILITY STATEMENT

PARTICULARS I II III IV V

A) SALES
Gross Sale 100.22 117.63 133.14 150.00 167.84

Total (A) 100.22 117.63 133.14 150.00 167.84

B) COST OF SALES

Raw Mateiral Consumed 55.30 63.65 72.58 82.08 92.16

Electricity Expenses 7.02 7.60 8.19 8.77 9.36
Repair & Maintenance 0.50 0.59 0.67 0.75 0.84
Labour & Wages 11.02 12.12 13.34 14.67 16.14

Depreciation 6.06 5.15 4.38 3.73 3.17

Cost of Production 79.89 89.12 99.15 110.00 121.67

Add: Opening Stock /WIP - 2.66 2.88 3.21 3.56

Less: Closing Stock /WIP 2.66 2.88 3.21 3.56 3.93

Cost of Sales (B) 77.23 88.90 98.83 109.65 121.29

C) GROSS PROFIT (A-B) 22.99 28.74 34.32 40.35 46.55

22.94% 24.43% 25.77% 26.90% 27.73%
D) Bank Interest (Term Loan ) 3.97 3.25 2.35 1.46 0.56
ii) Interest On Working Capital 0.55 0.55 0.55 0.55 0.55
E) Salary to Staff 7.92 8.71 9.58 10.54 11.60
F) Selling & Adm Expenses Exp. 5.01 5.88 6.66 7.50 8.39

TOTAL (D+E) 17.45 18.39 19.14 20.05 21.10

H) NET PROFIT 5.54 10.35 15.18 20.30 25.45

5.5% 8.8% 11.4% 13.5% 15.2%
I) Taxation - 0.70 1.18 2.77 4.37

J) PROFIT (After Tax) 5.54 9.65 13.99 17.53 21.08

PROJECTED CASH FLOW STATEMENT

PARTICULARS I II III IV V

SOURCES OF FUND

Own Contribution 4.63 -

Net Profit 5.54 10.35 15.18 20.30 25.45
Depreciation & Exp. W/off 6.06 5.15 4.38 3.73 3.17
Increase In Cash Credit 5.00
Increase In Term Loan 36.63 - - - -
Increase in Creditors 0.92 0.14 0.15 0.16 0.17
TOTAL : 58.77 15.64 19.71 24.19 28.80

APPLICATION OF FUND

Increase in Fixed Assets 40.70 - - - -

Increase in Stock 4.51 0.50 0.62 0.67 0.71
Increase in Debtors 2.34 0.41 0.36 0.39 0.42
Repayment of Term Loan 4.07 8.14 8.14 8.14 8.14
Taxation - 0.70 1.18 2.77 4.37
Drawings 5.00 6.00 8.00 12.00 15.00
TOTAL : 56.61 15.74 18.31 23.97 28.64

Opening Cash & Bank Balance - 2.15 2.05 3.45 3.67

Add : Surplus 2.15 - 0.10 1.40 0.22 0.16

Closing Cash & Bank Balance 2.15 2.05 3.45 3.67 3.82
COMPUTATION OF PET PREFORMS MANUFACTURING UNIT

Items to be Manufactured PET Preforms

Manufacturing Capacity per Day 19,200.00 pcs

No. of Working Hour 8

No of Working Days per month 25

No. of Working Day per annum 300

Total Production per Annum 5,760,000 pcs

Year Capacity
PET Preforms
Utilisation

I 60% 3,456,000
II 65% 3,744,000
III 70% 4,032,000
IV 75% 4,320,000
V 80% 4,608,000

COMPUTATION OF RAW MATERIAL

Quantity of Total CostPer

Item Name Unit Unit Rate of
Raw Material Annum (100%)
PET Resins 184,320.00 kg 50.00 9,216,000.00
Total 184,320.00 9,216,000.00

Total Raw material in Rs lacs at 100% Capacity 92.16

Average Cost per pcs (In Rs) 1.60
Raw Material Consumed Capacity Rate Amount (Rs.)
Utilisation

I 60% 1.60 55.30

II 65% 1.70 63.65
III 70% 1.80 72.58
IV 75% 1.90 82.08
V 80% 2.00 92.16
COMPUTATION OF CLOSING STOCK & WORKING CAPITAL

PARTICULARS I II III IV V

Finished Goods
(10 Days requirement) 2.66 2.88 3.21 3.56 3.93
Raw Material
(10 Days requirement) 1.84 2.12 2.42 2.74 3.07

Closing Stock 4.51 5.00 5.62 6.29 7.00

COMPUTATION OF WORKING CAPITAL REQUIREMENT

Particulars Amount Margin(10%) Net

Amount
Stock in Hand 4.51
Less:
Sundry Creditors 0.92
Paid Stock 3.58 0.36 3.23

Sundry Debtors 2.34 0.23 2.10

Working Capital Requirement 5.33

Margin 0.59

MPBF 5.33
Working Capital Demand 5.00
BREAK UP OF LABOUR

Particulars Wages No of Total

Per Month Employees Salary

Plant Operator 15,000.00 1 15,000.00

Unskilled Worker 8,500.00 6 51,000.00
Helper 5,000.00 2 10,000.00
Security Guard 7,500.00 1 7,500.00

83,500.00
Add: 10% Fringe Benefit 8,350.00
Total Labour Cost Per Month 91,850.00
Total Labour Cost for the year ( In Rs. Lakhs) 10 11.02

BREAK UP OF SALARY

Particulars Salary No of Total

Per Month Employees Salary

Accountant cum store keeper 10,000.00 1 10,000.00

Administrative Staffs 12,500.00 4 50,000.00
Total Salary Per Month 60,000.00

Add: 10% Fringe Benefit 6,000.00

Total Salary for the month 66,000.00

Total Salary for the year ( In Rs. Lakhs) 5 7.92

COMPUTATION OF DEPRECIATION
Year

Plant &
Description Land Building/shed Machinery Furniture TOTAL

Rate of Depreciation 15.00% 10.00%

Opening Balance Own/Rented - - -
Addition - 39.70 1.00 40.70
- 39.70 1.00 40.70

TOTAL - 39.70 1.00 40.70

Less : Depreciation - - 5.96 0.10 6.06
WDV at end of Ist year - - 33.75 0.90 34.65
Additions During The Year - - - - -
- - 33.75 0.90 34.65

Less : Depreciation - - 5.06 0.09 5.15

WDV at end of IInd Year - - 28.68 0.81 29.49
Additions During The Year - - - - -
- - 28.68 0.81 29.49
Less : Depreciation - - 4.30 0.08 4.38
WDV at end of IIIrd year - - 24.38 0.73 25.11
Additions During The Year - - - - -
- - 24.38 0.73 25.11
Less : Depreciation - - 3.66 0.07 3.73
WDV at end of IV year - - 20.72 0.66 21.38
Additions During The Year - - - - -
- - 20.72 0.66 21.38
Less : Depreciation - - 3.11 0.07 3.17
WDV at end of Vth year - - 17.62 0.59 18.21
 REPAYMENT SCHEDULE OF TERM LOAN 11.0%

Year Particulars Amount Addition Total Interest Repayment Cl Balance

I Opening Balance
Ist Quarter - 36.63 36.63 1.01 - 36.63
Iind Quarter 36.63 - 36.63 1.01 - 36.63
IIIrd Quarter 36.63 - 36.63 1.01 2.04 34.60
Ivth Quarter 34.60 - 34.60 0.95 2.04 32.56
3.97 4.07
II Opening Balance
Ist Quarter 32.56 - 32.56 0.90 2.04 30.53
Iind Quarter 30.53 - 30.53 0.84 2.04 28.49
IIIrd Quarter 28.49 - 28.49 0.78 2.04 26.46
Ivth Quarter 26.46 26.46 0.73 2.04 24.42
3.25 8.14
III Opening Balance

Ist Quarter 24.42 - 24.42 0.67 2.04 22.39

Iind Quarter 22.39 - 22.39 0.62 2.04 20.35
IIIrd Quarter 20.35 - 20.35 0.56 2.04 18.32
Ivth Quarter 18.32 18.32 0.50 2.04 16.28
2.35 8.14
IV Opening Balance
Ist Quarter 16.28 - 16.28 0.45 2.04 14.25
Iind Quarter 14.25 - 14.25 0.39 2.04 12.21
IIIrd Quarter 12.21 - 12.21 0.34 2.04 10.18
Ivth Quarter 10.18 10.18 0.28 2.04 8.14
1.46 8.14
V Opening Balance
Ist Quarter 8.14 - 8.14 0.22 2.04 6.11
Iind Quarter 6.11 - 6.11 0.17 2.04 4.07
IIIrd Quarter 4.07 - 4.07 0.11 2.04 2.04

Ivth Quarter 2.04 2.04 0.06 2.04 -

0.56 8.14

Door to Door Period 60 Months

Moratorium Period 6 Months
Repayment Period 54 Months
CALCULATION OF D.S.C.R

PARTICULARS I II III IV V

CASH ACCRUALS 11.60 14.80 18.37 21.26 24.26

Interest on Term Loan 3.97 3.25 2.35 1.46 0.56

Total 15.57 18.05 20.73 22.71 24.82

REPAYMENT
Repayment of Term Loan 4.07 8.14 8.14 8.14 8.14

Interest on Term Loan 3.97 3.25 2.35 1.46 0.56

Total 8.04 11.39 10.49 9.60 8.70

DEBT SERVICE COVERAGE RATIO 1.94 1.58 1.98 2.37 2.85

AVERAGE D.S.C.R. 2.11

COMPUTATION OF SALE

Particulars I II III IV V

Op Stock - 115,200.00 124,800.00 134,400.00 144,000.00

Production 3,456,000.00 3,744,000.00 4,032,000.00 4,320,000.00 4,608,000.00

3,456,000.00 3,859,200.00 4,156,800.00 4,454,400.00 4,752,000.00

Less : Closing Stock(10 Days) 115,200.00 124,800.00 134,400.00 144,000.00 153,600.00

Net Sale 3,340,800.00 3,734,400.00 4,022,400.00 4,310,400.00 4,598,400.00

Avg Sale Price per pcs 3.00 3.15 3.31 3.48 3.65

Sale (in Lacs) 100.22 117.63 133.14 150.00 167.84

COMPUTATION OF ELECTRICITY
(A) POWER CONNECTION

Total Working Hour per day Hours 8

Electric Load Required KW 60
Load Factor
Electricity Charges per unit 7.50
Total Working Days 300
Electricity Charges 10.80

Add : Minimim Charges (@ 10%)

(B) DG set
No. of Working Days 300 days
Hour per
No of Working Hours 0.5
day
Total no. of Hour 150
Diesel Consumption per Hour 8
Total Consumption of Diesel 1,200
Cost of Diesel 65.00 Rs. /Ltr
Total cost of Diesel 0.78
Add : Lube Cost @15% 0.12
Total 0.90

Total cost of Power & Fuel at 100% 11.70

Year Capacity Amount

(in Lacs)

I 60% 7.02
II 65% 7.60
III 70% 8.19
IV 75% 8.77
V 80% 9.36
 DISCLAIMER

The views expressed in this Project Report are advisory in nature. SAMADHAN
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