Detailed Project Report
Lead Pencil Manufacturing
—
Prepared on: 13 November 2026 · Prepared with Building Business DPR (buildingbusiness.in)
01 Project at a glance
- Total project cost
- ₹20.53 L
- Term loan from bank
- ₹13.35 L
- Promoter’s contribution
- ₹2.05 L
- Subsidy
- ₹5.13 L
- Sales · Year 3
- ₹0.00 L
- Profit after tax · Year 3
- ₹-6.64 L
- Average DSCR
- -1.28
- Break-even (% of capacity used)
- —
02 Promoter and unit
| Promoter name | — |
|---|---|
| Business / firm name | — |
| Legal form | Proprietorship |
| Address of the unit | — |
| Applicant category | General · Rural |
03 The project
Make graphite-clay leads, glue them into grooved wooden slats, shape, lacquer and stamp the pencils.
| Main product or service | Lead Pencil Manufacturing |
|---|---|
| Installed capacity per year (at 100%) | 10,000 units |
04 Market
- School children and college students
- Artists, engineers and architects
- Offices
- Stationery wholesalers
- School and office supply contracts
- Retail stationery shops
05 Plant and machinery
| Item | Qty | ₹ | Total ₹ |
|---|---|---|---|
| Ball mill, 200 kg capacity | 1 | 1,20,000 | 1,20,000 |
| Filter press, 18 plates and frames | 1 | 60,000 | 60,000 |
| Diaphragm pump | 1 | 30,000 | 30,000 |
| Kneading machine | 1 | 35,000 | 35,000 |
| Press for billet making with motor | 1 | 90,000 | 90,000 |
| Electric baking oven, up to 250 °C | 1 | 35,000 | 35,000 |
| Extruding machine, hand-operated | 1 | 2,00,000 | 2,00,000 |
| Coal-fired self-draught furnace with chimney | 1 | 2,10,000 | 2,10,000 |
| Automatic shaping and grooving machine | 1 | 1,14,000 | 1,14,000 |
| Gluing machine for slats | 1 | 1,58,000 | 1,58,000 |
| End cutting machine | 1 | 38,500 | 38,500 |
| Painting machine | 1 | 50,000 | 50,000 |
| Embossing machine | 1 | 65,000 | 65,000 |
| Dies, tools, cutters and other equipment (× 1 lot) | 1 | 50,000 | 50,000 |
| Ball mill, filter press and kneading machine (KVIC set) (× 1 lot) | 1 | 7,00,000 | 7,00,000 |
| Total | 19,55,500 |
Pre-filled from: PMEGP sample project report — Lead Pencil (prepared by Udyami/Samadhan); KVIC Project Profile — Lead Pencils (PMEGP). Prices in older reports will have gone up — enter today’s quotations.
06 Raw materials
- Wooden slats (6-ply) — ₹3 each, 40,800 in the Samadhan working-capital table
- Graphite — ₹45 a kg, 24 tonnes in the Samadhan table
- Ball clay, glue, paint, varnish, lacquer, binders, pigments, sandpaper, stamping paper, boxes — ₹1,00,000 lump sum in the Samadhan table
- Ferrules and eraser tips — for eraser-tipped pencils
07 Cost of project
| ₹ in lakh | |
|---|---|
| Plant and machinery | 19.56 |
| Contingency | 0.98 |
| Total fixed capital | 20.53 |
| Working capital margin | 0.00 |
| Total project cost | 20.53 |
08 Means of finance
| ₹ in lakh | % | |
|---|---|---|
| Promoter’s contribution | 2.05 | 10.0 |
| Subsidy | 5.13 | 25.0 |
| Term loan from bank | 13.35 | 65.0 |
| Total | 20.53 | 100.0 |
| Working capital loan (outside project cost) | 0.00 |
09 Key assumptions
| Selling price | ₹0 per units |
|---|---|
| Raw material & packing cost | ₹0 per units |
| Capacity used each year | 60% · 70% · 80% · 80% · 80% · 80% · 80% |
| Term loan interest rate (% a year) | 11% · 84 months (Moratorium 6) |
| Working capital method | Turnover method (RBI) · Working capital interest (% a year) 11% |
| Income tax rate | 25% |
| Yearly price and cost rise | 0% |
10 Production and sales
| Year → (₹ in lakh) | 1 | 2 | 3 | 4 | 5 | 6 | 7 |
|---|---|---|---|---|---|---|---|
| Capacity used | 60% | 70% | 80% | 80% | 80% | 80% | 80% |
| Production (units) | 6,000 | 7,000 | 8,000 | 8,000 | 8,000 | 8,000 | 8,000 |
| Sales | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
11 Projected profitability
| Year → (₹ in lakh) | 1 | 2 | 3 | 4 | 5 | 6 | 7 |
|---|---|---|---|---|---|---|---|
| Sales | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Raw material and packing | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Power and fuel | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Salaries and wages | 2.88 | 2.88 | 2.88 | 2.88 | 2.88 | 2.88 | 2.88 |
| Rent | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Administration | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Selling and distribution | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Repairs and maintenance | 0.41 | 0.41 | 0.41 | 0.41 | 0.41 | 0.41 | 0.41 |
| Insurance | 0.10 | 0.10 | 0.10 | 0.10 | 0.10 | 0.10 | 0.10 |
| Total cost of operations | 3.39 | 3.39 | 3.39 | 3.39 | 3.39 | 3.39 | 3.39 |
| Operating profit (EBITDA) | -3.39 | -3.39 | -3.39 | -3.39 | -3.39 | -3.39 | -3.39 |
| Depreciation | 3.08 | 2.62 | 2.23 | 1.89 | 1.61 | 1.37 | 1.16 |
| Preliminary expenses written off | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Interest on term loan | 1.44 | 1.25 | 1.03 | 0.80 | 0.57 | 0.35 | 0.12 |
| Interest on working capital | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Profit before tax | -7.92 | -7.26 | -6.64 | -6.08 | -5.58 | -5.11 | -4.68 |
| Income tax | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Profit after tax | -7.92 | -7.26 | -6.64 | -6.08 | -5.58 | -5.11 | -4.68 |
12 Cash flow
| Year → (₹ in lakh) | 1 | 2 | 3 | 4 | 5 | 6 | 7 |
|---|---|---|---|---|---|---|---|
| Profit after tax | -7.92 | -7.26 | -6.64 | -6.08 | -5.58 | -5.11 | -4.68 |
| Depreciation | 3.08 | 2.62 | 2.23 | 1.89 | 1.61 | 1.37 | 1.16 |
| Cash accruals (PAT + depreciation) | -4.84 | -4.64 | -4.42 | -4.19 | -3.97 | -3.74 | -3.52 |
| Term loan repaid | 1.03 | 2.05 | 2.05 | 2.05 | 2.05 | 2.05 | 2.05 |
| Owner’s drawings | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Surplus after repayment | -5.86 | -6.70 | -6.47 | -6.25 | -6.02 | -5.79 | -5.57 |
| Cash and bank | -5.86 | -12.56 | -19.04 | -25.28 | -31.30 | -37.10 | -42.67 |
13 Projected balance sheet
| Year → (₹ in lakh) | 1 | 2 | 3 | 4 | 5 | 6 | 7 |
|---|---|---|---|---|---|---|---|
| Capital (own + subsidy) | 7.19 | 7.19 | 7.19 | 7.19 | 7.19 | 7.19 | 7.19 |
| Reserves and surplus | -7.92 | -15.18 | -21.83 | -27.91 | -33.48 | -38.59 | -43.27 |
| Term loan outstanding | 12.32 | 10.27 | 8.21 | 6.16 | 4.11 | 2.05 | 0.00 |
| Working capital loan | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Total liabilities | 11.59 | 2.27 | -6.43 | -14.56 | -22.19 | -29.35 | -36.08 |
| Net fixed assets | 17.45 | 14.83 | 12.61 | 10.72 | 9.11 | 7.74 | 6.58 |
| Preliminary expenses not written off | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Current assets (stock and debtors) | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Cash and bank | -5.86 | -12.56 | -19.04 | -25.28 | -31.30 | -37.10 | -42.67 |
| Total assets | 11.59 | 2.27 | -6.43 | -14.56 | -22.19 | -29.35 | -36.08 |
14 Ratios and break-even
| Year | 1 | 2 | 3 | 4 | 5 | 6 | 7 |
|---|---|---|---|---|---|---|---|
| Debt service coverage ratio (DSCR) | -1.37 | -1.03 | -1.10 | -1.19 | -1.29 | -1.41 | -1.56 |
| Break-even (% of capacity used) | — | — | — | — | — | — | — |
| Cash break-even | — | — | — | — | — | — | — |
| Average DSCR | -1.28 |
|---|---|
| Lowest DSCR | -1.56 |
| Payback period | — |
15 Depreciation
| Year → (₹ in lakh) | 1 | 2 | 3 | 4 | 5 | 6 | 7 |
|---|---|---|---|---|---|---|---|
| Depreciation | 3.08 | 2.62 | 2.23 | 1.89 | 1.61 | 1.37 | 1.16 |
Written-down value method at Income-tax Rules block rates (building 10%, plant & machinery 15%, furniture 10%, computers 40%). Change them if your CA uses other rates.
16 Term loan repayment
| Year | Opening | Interest | Term loan repaid | Closing |
|---|---|---|---|---|
| 1 | 13.35 | 1.44 | 1.03 | 12.32 |
| 2 | 12.32 | 1.25 | 2.05 | 10.27 |
| 3 | 10.27 | 1.03 | 2.05 | 8.21 |
| 4 | 8.21 | 0.80 | 2.05 | 6.16 |
| 5 | 6.16 | 0.57 | 2.05 | 4.11 |
| 6 | 4.11 | 0.35 | 2.05 | 2.05 |
| 7 | 2.05 | 0.12 | 2.05 | 0.00 |
17 Licences and registrations
- Udyam registration
- GST
- Trade licence from the municipal body
- NOC from the State Pollution Control Board
- Company or firm registration if not a proprietorship
18 Government schemes that may apply
- Prime Minister's Employment Generation Programme (PMEGP)
- Pradhan Mantri MUDRA Yojana (PMMY) – Shishu, Kishor, Tarun, Tarun Plus
- Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE)
- Stand-Up India
19 Sources
- PMEGP sample project report — Lead Pencil (prepared by Udyami/Samadhan) — https://pmegp.msme.gov.in/Home/DownloadDocument?fileName=Documents/ProjectSampleReport/Lead_Pencil_%28_Samadhan_Projects_%29.pdf
- KVIC Project Profile — Lead Pencils (PMEGP) — https://pmegp.msme.gov.in/Home/DownloadDocument?fileName=Documents/ProjectSampleReport/LEAD_PENCILS_%28_MINERAL_BASED_INDUSTRY_%29.pdf
- DGFT – ITC(HS) classification of export and import items — https://www.dgft.gov.in/CP/?opt=itchs-import-export
This report is a projection from the figures entered by the promoter. It is not a bank appraisal or a guarantee of a loan or subsidy. Check every figure with current quotations and your chartered accountant before submitting it.