Biscuit Factory Set up

Introduction
Biscuit is an important item of bakery industry. It has now become a common item of consumption among all classes of people. With tea or coffee, biscuit makes a tasty nutritious snack. Biscuit is highly nutritious, easy to digest and can be preserved for a long time. By varying the ingredients and flavours it is possible to produce a variety of biscuits. About 50 per cent of the total biscuit production in our country is of glucose variety, thin arrow root biscuits account for 10 per cent, salted variety around 5%, and sweet assorted variety like coconut cookies, cream biscuits, etc about 25%. Govt. agencies like ITDC, Defence, Railways, Airlines, etc. are the bulk consumers of biscuits. In recent years Bangladesh made biscuits have also found ready acceptance in the export market.

Suggested Capacity
The minimum economic capacity of a unit manufacturing biscuits is 525 tons per annum based on a single shift operation of 300 days working schedule in a year.

Land and Building

The unit may require about 1,500 sq.m. land with a covered area of about 800 sq.m. for setting up this project. Although in the cost of the project below it is proposed to purchase land and construct building, the unit should preferably acquire the land and building on rental basis.

Raw Material
The annual requirement of main raw materials for the manufacture of 525 tonnes biscuits per annum at 100% capacity utilisation is estimated as follows: 1. Wheat flour 345.00 M.T. 2. Sugar 105.00 M.T. 3. Vegetable fat 62.28 M.T. 4. Liquid glucose 8.16 M.T. 5. Misc. items, milk powder, yeast, colours, flavours, coconut, fat, packaging materials, etc.

Utilities
The unit may require a total connected load of about 80 KVA and a maximum demand load of about 75 KVA. Its annual requirement of water is estimated at about 3,000 KL. Manufacturing Process The process of manufacture of biscuits is nearly the same as used for bread up to the fermentation period. In some cases such as vanilla wafers, fer-mentation is not done and therefore yeast is not required. Soda crackers are usually made by the sponge Dtugh process. The dough is then passed through biscuits moulding, stamping and cutting machines. The pieces are then baked in an oven such as reel :ven, band oven, travelling plate oven, steel mesh oven, etc.

The baking takes place at 200-260C and the time taken varies between 3-15 minutes depending an the type and thickness of the biscuit being made. The baked biscuits are cooled and sorted. The defecrve biscuits are removed and the rest wrapped in waxed papers and packed. A typical ingredient mix for plain biscuits is given below: 1. Flour 200.00 2. Fats and shortening 50.00 3. Sugar 62.00 4. Invert sugar syrup 20.00 5. Ammonium bicarbonate 1.34 6. Sodium bicarbonate 1.80 7. Non fat milk powder 11.00 8. Eggs as reqd 9. Salt 2.00 10. Yeast 2.66 11. Flavour 0.44 12. Edible colours 0.22

Plant and Machinery

The main items of equipment and machinery required for setting up this project are as follows: 1.Flour sifter 2.Sugar grinder 3.Dough mixer, 100 kg cap. 4.33" rotary moulder 5.33" automatic rotary cutting and punching machine with standard accessories 6.Dough brake with standard accessories 7.33" x 70" oil fried baking oven with standard accessories 8.Two-tier cooling conveyor with standard accessories 9.Stacking and packing table 1o.Oil spraying machine with heater 11.Dough trolley 12.Milk spray nozzles and air compressor 13.Other miscellaneous and laboratory equipment

Personnel
The unit may provide employment to about 42 persons including factory workers and staff for factory supervision, administration and sales, and watch and ward, etc.

Estimated Cost of Project

The cost of a 525 tonnes per annum capacity biscuits project is estimated at $136986.3 as follows:

1. Land and site development 2. Buildings 3. Plant and machinery 4. Technical know-how and engg. fees 5. Miscellaneous fixed assets 6. Preliminary and preoperative expenses 7. Margin money for working capital 8. Contingencies TOTAL

$4109.58 $21917.80 $60273.97 $2054.7 $8219.17 $13013.69 $13698.63 $13698.63 $136986.3

Suggested Means of Financing

1. Long term loans from financial institutions 2. State cash subsidy 3. Promoters capital TOTAL $90410.59 $16438.35 $30136.98 $136986.3

Subsidy is taken as 15% of the Fixed Capital Investment, however it varies from state to state, ranging from 10% to 25% depending upon the category of identified backward area.

CENTRAL EXCISE DUTY ON BISCUITS

While it is a matter of great satisfaction that the Government of India after 3 years, acceded to our persistent demand and granted reduction in Excise Duty (from 16% to 8%) in the Union Budget for 200304, taxation, both at the Central , State and local levels continue as major deterrent impeding the capacity utilization, which presently range between 50% to 60%. On the other hand, per capita consumption of Biscuit ( 2.25 Kg.), is very low in India, as compared to 4.25 kg in South East Asian country, 7.5 kg in Japan and 10 kg in USA, UK and Europe. The Federation of Biscuit Manufacturers of India, in its Pre-Budget Memorandum for 2004-05 has urged the Union Finance Minister to exempt biscuit from Central Excise Duty, at par with the other food products such as juices, jams, wafers, sauces, namkeens, bhujias, mixtures, dairy products, packed tea, regular coffee, etc. The text of the FBMI Pre-Budget Memorandum is given in ANNEXURE-I.

SALES TAX / VALUE ADDED TAX ON BISCUIT

While the Central and State Governments have identified Food Processing Industries, including biscuits, sun shine industries that need to be encouraged for growth and development in the coming years, however, regressive measures viz- high dozes of taxes on food processing industries, has adversely affected industries like biscuit and eroded their profitability and viability. In the case of biscuit Sales Tax is levied between 8% and 16% by various State Governments. Besides, biscuit is also subjected to other local levies i.e. Turnover Tax, Entry Tax, Octroi, etc. Biscuit manufacturers have also to pay Central Excise Duty, Sales Tax, etc. on raw materials / inputs as also packaging materials. Another adverse impact of higher rate of Sales Tax is that this would result in pushing unhygienicaly produced biscuit made by the unorganized sector into the markets. The present rate of more than 15% has considerably reduced the turnover of biscuit

manufacturers and result in widespread sickness in the industry, which already has 40% to 50% idle capacity. While the industry has generally welcomed the introduction of Value Added Tax (VAT) replacing Sales Tax in the states, the Federation is perturbed that biscuit has been included for levy of VAT @ 12.5% i.e. Revenue Neutral Rate, whereas items of mass consumption similar to biscuit such as bread, etc. are proposed to be subjected to 4% VAT, classified as items of mass consumption. Text of the FBMI representation submitted to the Member-Secretary, Empowered Committee on Sales Tax / VAT is given in ANNEXURE II, together with rates of Sales Tax on biscuit in various States. The Federation has urged the Empowered Committee on Value Added Tax (VAT) and the Chief Ministers of various State Governments to levy VAT on biscuit @ 4%.

TAXATION
A suggestion has been received that we may urge the Union Finance Minister and Chairman,CBEC, to exempt biscuits from Cenvat (which was reduced from 16 to 8% in the 2003-04 Budget), on the ground that while on the one hand excise duty, sales tax etc on important inputs like Veg.Oil ets are going up, biscuit is also subjected high rates of Sales tax(proposed to be replaced with 12.5% VAT), on the other hand, similar food products such as Bread, Jam, Sauces , namkeens etc are not only exempted from Excise duty, but also from sales tax etc.