Product Project Report On

Air Coolers

Prepared By

Zala Pratipalsinh

Academic Year

2006 – 2007

Class

T.Y.B.B.A.

Roll No. 41

Seat No.

Submitted To

R.P. Bhalodia CollegeSaurashtra University-Rajkot

Guided By

Ms. Rhuta

Declaration

I undersigned Zala Pratipalsinh K., the student of T.Y. B,B.A. here

by declares that this project is my own work & has been carried out under the

supervision of my guide Ms Rhuta,

The work has not been previously submitted to any other university

for any examination.

Date: - Signature:

Place: - Zala Pratipalsinh K.

Preface

As a management student of the final year of graduation, practical

knowledge about the corporate world is no more a desire or a voluntary action to

be undertaken but a simple bare necessity. Books don’t suffice the level of

knowledge a student is required to possess. A student should have a purview

about the real happenings of the corporate structure.

To suffice the above mentioned requirements BBA the course has

expanded its purview and scope to the world of practical training. Along with the

big corporate entities, a student should have knowledge about all the happenings

and functioning of the small scale industries, in order to be competent managers

or entrepreneurs.

As a student of BBA, one should have sufficient and basic knowledge

regarding how to start a small business, how to management it, how to make a

financial estimates and manage funds and the most important of all how to make

a product project report on the basis of which they can apply for a loan from

bank.

Thus, product project report at this stage makes many things clear in mind

of student which helps lot in future therefore it ensures practical exposure in the

world of business and entrepreneurship and inculcates necessary skills which

are indispensable for any venturous entrepreneur.

Acknowledgement

Successful accomplishment of any work requires co-operation, help and

guidance from many people. I had a wonderful opportunity to make a product

project report on Air Coolers as a part of my practical training in T.Y. B.B.A.

This report would not have been possible without the help of many people

whom I would like to acknowledge and thank for their kind co-operation.

First of all I thank R.P. Bhalodia College – Rajkot, for giving me

opportunity of doing product project report.

I specially thank Ms. Rhuta for giving me important guidance for making

the project informative and well –constructed. She had spent her precious time

for my product project report. It would be impossible for me to complete this

project without her important instruction and supervision.

I thank All My Friends and Classmates for giving me their important

guidance, which was very helpful for me to complete my project in perfect time

duration.

At last, but not least, I thank MY PARENTS & MY FAMILY

MEMBERS to give me every kind of support, and almighty the GOD for helping

me out whenever I viewed an obstacles, as they have left no stone unturned and

betterment.

Date: - Signature:-

Place: - Rajkot

Index

[1] Introduction

[2] Project at Glance

[3] Management Set – Up

[4] About the Partners

[5] Proposed Location Justification

[6] Location

[7] Market Potential

[8] Raw – Materials

[9] Names & Address of Suppliers

[10] Manufacturing Process

[11] Basis & Presumption

[12] Implementation Schedule

[13] Total Fixed Capital

- Land & Building

- Machinery & Equipments

- Pre – Operative Expenses

[14] Total Working Capital

- Personnel

- Raw Materials

- Utilities

- Other Contingencies Expenses

[15] Total Investments

[16] Cost of Production

[17] Net Profit per Year

[18] Net Profit Ratio

[19] Rate of Return

[20] Break Even Point

Introduction

As a part of practical training, I have selected to prepare a product project

report on Air Coolers. There are mainly two types of coolers;

1. Room Coolers.

2. Desert Coolers.

Evaporative type Air Coolers are used in peak summer season for cooling

of rooms, offices, hotels etc. In general Air Coolers are used for cooling similar

areas and desert coolers are used for larger area. Air Coolers basically consist of

body, fan, water pump and control switch etc.

An electric fan generally of exhaust fan type is mounted inside a louvered

housing and three vertical sides of the housing are fitted with filtered pads which

are kept wet with help of water pump. Rotation of fan mounted inside the body

draws air from all the three sides through wet pads. Thus, air gets cooled by

evaporation of water and which is blown into the room.

But this benefits are not enough reasons to pursue an entire project in

order to commence such a business, a business person has to check the

financial viability of the project also certain questions to be answered like,

How much capital is more required?

From where this capital will be procured?

What will be the cost of production?

What will break even point be reached?

What would be the profits and return on investments?

And the list is endless …………..!!!!

A genuine attempt has been made to answer all these questions with

almost justification possible in the following pages…….

Project at Glance

Name of the Unit: Gaytri Air Coolers

Address For: “Gayatri Air Coolers”

Plus Point – 09

Opp. Haribhai Hall,

Dr. Yagnik Road,

Rajkot – 360001.

Size of Unit: Small Scale Industry

Form of Organisation: Partenership Firm

Name of Partners: Miss Pooja J. Vyas

Mr. Prakash P. Pathak

Name of the Product: Air Coolers

SSI Registration No: Applied For

Location of the Unit: “Gayatri Air Coolers”

Shapar Industrial Zone,

Gondal Road,

National High-Way,

Village: Shapar,

Dis.:- Rajkot.

Management Set – Up

Both the partners of the firm, viz,

Miss Pooja J. Vyas

Mr. Prakash P. Pathak

They will be the working partners of the firm whose capital contribution

and profit sharing ration will be as per the partnership deed.

While, Mr. Prakash P. Pathak on the basis of his business experience and

expertise will look after the factory work as well as some of the major

office work, Miss Pooja J. Vyas will take care of official work.

All stage and policy decisions shall be taken by the consent of all the

parties concerned.

About the Partners

(1) About Mr. Abhijitsinh H. Jadeja …

Name: Mr. Abhijitsinh H. Jadeja

Address: ‘Osho’ app.

4, Vidhyanagar,

Vidhyanagar main road,

Rajkot – 360002.

Age: 35 Years

Qualification: Master in Science

Experience: 10 Years Experience in Similar

Business

Responsibility: Factory Work Supervision and

Major Official Work.

(2) About Mr. Zala Pratipalsinh K.

Name: Mr. Zala Pratipalsinh K.

Address: “Ashutosh”,

1, Brahamkunj Soci,

B/H Chandrapark,

150 ft Ring Road,

Rajkot- 360005

Age: 23 Years

Qualification: Master in Business

Administration

Experience: Fresh

Responsibility: Official Work.

PROPOSED LOCATION JUSTIFICATION

Factory Location is the decision regarding geographical situation of the

plant. This decision is a very crucial one because it is not easily alterable and

involves a considerably huge amount of investment. The location of the factory

plays a very vital role in success of failure of the business. But this decision is

affected by many factors, which are to be kept in mind while selecting the

location.

The following site has been selected for work premises:-

“Gayatri Air Coolers”

Shapar Industrial Zone,

Gondal Road,

National High-Way,

Village: Shapar,

Dis.:- Rajkot.

The correctness of this decision can be justified on the full basis:

1. Industry Choice:

Many other industries are situated in this locality, and hence

it is a common choice of all the entrepreneurs in this business.

2. Nearness to the Registered Office:

As the registered office located at Dr. Yagnik Road, the

location of the factory is near to the administrative office and the

computer room which is useful in faster communication.

3. Market Proximity:

The location also provides proximity to the market in the

sense that a direct sale from factory is also possible.

4. Transportation Cost:

As the materials is loaded from railway boggy and it is

sprightly carried to factory such not transportation cost is incurred

and so far as finished goods are to be dispatched, Factory owns a

delivery van.

5. Rapid Sales:

As the factory location is nearer to industrial area of shaper

as well as registered office locations are situated in the heart of the

city, sales are bound to increase at unimaginable rates.

Locations

Registered Office:

“Gaytri Air Coolers”

Plus Point – 09

Opp. Haribhai Hall,

Dr. Yagnik Road,

Rajkot – 360001.

Factory Office:

“Gaytri Air Coolers”

Nr. K. K. Chemicals,

Shaper.

MARKET POTENTIAL

As the construction of residential accommodation, office complex and the

standard of living is increasing day by day, demand for this item is also

increasing specially in the sections of society who are not able to afford air

conditioned. It is understood that during the period of last 10 years there is a rise

in demand for the item @ 60 % p.a. and this trend is likely to continue.

Raw Materials

The main raw materials required for manufacturing Air Cooler are as

follows:

1. GI Sheet

2. Cooler Motor

3. Pump Vertical

4. Wire Net

5. Filter Pad

6. Switches

7. Cable ( 3 core )

8. Hardware Items

9. Consumable Stores

Names and Addresses of Suppliers

[1] M/S. Amar Sons,57, Rani Jhansi Road,New Delhi.

[2] M/S. Prem Engineering Works,Okhala Industrial Estate,New Delhi.

[3] M/S. K. G. Khosla & Co.1, Deshbandhu Gupta Road,New Delhi.

[4] M/S. Jaymes Engg. Co. Pvt. Ltd.M-block,Connaught Place,New Delhi.

[5] M/S. Toshniwal Brothers Pvt. Ltd.3E/8, Jhandewalan Extension, New Delhi.

[6] M/S. Philips India Ltd.,68, Najafgarh Road,New Delhi.

[7] M/S. Balak Ram Banarasi Das & Sons,37/19, The Mall,Kanpur – 208001.

[8] M/S. Bazari Trading Co.,129, Moti Street,Fort,Bombay – 400001

[9] M/S. Maruti Electricals,123/286 A, Gaddarian Purwa,Fazalganj, Kanpur.

Manufacturing Process

[1] GI sheets are purchased from the local market and cut to size, louvers

made and bent for making the vertical sides, top cover and water pump.

Filter pads are fitted in the 3 vertical sides and electric fan and vertical

pump are mounted. On the grill is fixed through which cooled air is brown

out. Switches are provided in the front panel, vertical sides, top cover are

assembled together with screws/ nut and both assembled cooler is then

painted.

[2] Assembled cooler is tested as per the requirement of ISO: 2000. The

basic requirements of the tests are as follows:

a) Insulation Resistance Test :-

The insulation resistance between all electrical circuits when

measures at normal room temperature with measure of 500 V DC

should be not less then 1 Mega Ohm.

b) High Voltage Test :-

The electrical insulation all electric circuits shall be able to

withstand high voltage tests of 1000 V rms for single phase motors

applied for not less then 2 seconds.

c) Production Efficientcy Test :-

Cooling efficiency and air delivery for various capacities of air

coolers shall bee within the limits prescribed in relevant ISS.

[3] Production Capacity:-

(a) Quantity 2500 nos. Air Coolers p.a.

(b) Value Rs. 1,00,00,000

[4] Approximate Motive Power Requirement:-

5KW

[5] Pollution Control Requirement:-

No Pollution control certificate is required for registration of the

units for manufacture of this item.

[6] Energy Conservation Need:-

The design of the fan and electric pump should ensure minimum

iron losses and the cooler should be able to withstand cooling efficient and

air delivery tests as per ISO: 2000

Basis and Presumption

1. The basis for calculation of production capacity is on single

shift basis, working of 25 days per month on 75% efficiency. Time

required for achieving visualized capacity utilisation is assumed as one

year.

2. BEP for the scheme has been calculated on full capacity

utilisation

3. Rate of interest has been taken as 18% on an average. This

however, is likely to vary depending upon the financial outlay and the

location of unit.

4. Labour wages have been taken on the basis of minimum

applicable. These are likely to change depending upon the location of the

unit.

5. Rental Charges of Rs. 100/- per sq. meter per month has

been taken on an average. This figure is likely to vary depending upon

the location of the unit.

6. Margin money requirement differs from project to project to

project and type of entrepreneurs such women, SC/ST, physically

handicapped etc. and the minimum margin money usually asked for by the

financial institutions and banks is 15%. Margin money upto 25% in some

cases is also asked for. The entrepreneur may check up the margin

money requirement form financial institutions for the project.

7. Terms of loan differ from one financial institution to another

and in generals minimum growth period is normally 6 months and it could

be 2 years. Maximum period for repayment of loan is 7 years including

growth period. The exact terms and conditions may be found by the

entrepreneurs from the concerned financial institutions.

8. The costs of machinery and equipment as indicated in the

scheme are approximate to those ruling at the time of preparation of the

scheme. The entrepreneur may check up the exact price for specific

make and model of the machine selected.

9. Non-refundable deposits, cost of preparation of project report

etc. may be considered under pre-operative expenses.

10. The provisions made in other respects viz; raw materials,

utilities, overheads etc. Are drawn on the basis of standard variations and

output. The costs indicated against each are approximate based on local

market conditions and observation. The entrepreneur may find out the

exact cost from the concerned sources.

11. The operative period of this project is estimated to be about 10

years considering technology obsolescence.

Implementaion Schedule

The period required from the time of provisional registration with the

concerned District Industries Centre to commercial production is 6 months to 2

years. This includes clearance from concerned agencies including financial

institutions etc.

Land & Building

Particulars Amt Rs.

Land & Building 30,00,000

Construction 45,00,000

75,00,000

Machinery & Equipments

Particulars Amt Rs.

Guillotine Shearing Machines 7,50,000

Power Press 20 tons capacity 9,00,000

Screw type break press 4,50,000

Air Compressor complete with motor spray 3,00,000

Gas welding set 3,00,000

Portable electric drill 90,000

Portable flexible shaft grinder 90,000

Double ended grinder 1,20,000

Merger 3,00,000

High voltage test set 3 KV 1,65,000

Control panel for measuring power input consisting

of ammeter, voltmeter, wattmeter etc. 1,80,000

Multimeter 60,000

Air flow & temperature measuring apparatus 1,50,000

Anemometer 1,50,000

40,05,000

Pre – Operative Expenses

Particulars Amt Rs.

Fees for preparation of project report, Deposit to

electricity boarded etc. 1,00,000

Total Pre – Operative Expenses 1,00,000

Total Fixed Capital

Particulars Amt Rs.

Land & Building 75,00,000

Machinery and Equipment 40,05,000

Pre – Operative Expenses 1,00,000

1,16,05,000

Personnel

Designation No. Salary Total

Works Manager 1 15,000 15,000

Accountant 1 10,000 10,000

Skilled fitter 3 2,500 7,500

Unskilled fitter 5 1500 7,500

Store keeper 2 1500 3000

Peon-cum-Watch man 3 1000 3000

Mechanic 3 5000 3000

Skilled fitter 2 5000 10000

56,000

Perquisites @ 20% of salary 11,200

Total Personnel 67,200

Raw Materials

Particulars Qty Rate Amount Rs.

GI sheet 3 tons 20,000 60,000

Cooler Motor 100 800 80,000

Pump Vertical 100 200 20,000

Wire Net L.S. - 17,000

Filter Pad 200 kg 16/kg 3,200

Switches 200 kg 10/kg 2,000

Cable(3 core) 250 mtr 10/mtr 2,500

Hardware Items L.S. 500

Consumable Stores L.S. 3,000

1,88,200

UtilitiesParticulars Amt Rs.

Power (6000 Units) 75,000

Water 25,000

Total Utilities 1,00,000

Other Contingent Expenses

Particulars Amt Rs.

Postage & Stationary 10,000

Telephone 15,000

Consumable stores 12,000

Repairs & maintenance 4,500

Transport Charges 5,000

Advertising and publicity 2,000

Miscellaneous expenses 4,500

Total Contingencies 53,000

Total Working CapitalParticulars Amt Rs.

PARTICULARS AMOUNT

Personnel 67,000

Raw Materials 1,88,200

Utilities 1,00,000

Other Contingencies Expenses 43,000

TOTAL RECURRING EXPENSES 3,58,400

TOTAL WORKING CAPITAL :-

= 3,58,400 * 3

=10,75,200 /-

TOTAL INVESTMENTS

FIXED CAPITAL 80,00,500

WORKING CAPITAL 10,75,200

TOTAL CAPITAL INVESTMENT 90,75,700

COST OF PRODUCTION

PARTICULARS AMOUNT

Total recurring cost pre unit 43,00,800

Depreciation on building @ 10 % 7,50,000

Depreciation on machinery and equipment @ 15 % 60,075

Interest on total capital investment @ 23 % 17,49,265

TOTAL COST OF PRODUCTION 68,60,140

TURNOVER

PARTICULARS QTY. RATE AMOUNT

Desert Coolers Of 2,000 5,000 1,00,00,000Assorted Capacity

NET PROFIT PER YEAR :-

= Turnover – cost of production

= 1,00,00,000 – 68,60,140

= 31,39,860

NET PROFIT RATIO :-

= Net Profit Per Year x 100

Turnover Per Year

= 31,39,860 x 100 ------------------------ 1,00,00,000

NET PROFIT PER YEAR = Rs.31,39,860 /-

= 31.40 %

NET PROFIT RATIO - 31.40 %

RATE OF RETURN :-

= Net Profit Per Year x 100 Total Investments

= 31,39,860 x 100 90,75,700

= 34.60%

RATE OF RETURN – 34.60%

BREAK EVEN POINT

FIXED COST :-

[a] Depreciation on Building 7,50,000[b] Depreciation on Machinery 60,075[c] Interest on Total Investments 17,49,265[d] 40 % Salary on Wages 3,22,560[e] 40 % Other Contingency Expenses 2,06,400

TOTAL FIXED COST 30,88,300

NET PROFIT PER YEAR :-

B.E.P. = Total Fixed Cost x 100 Total Fixed Cost + profit

= 30,88,300 x 100 . 30,88,300 + 31,39,860

= 30,88,30,000 62,28,160

= 49.58 %

BREAK EVEN POINT - 49.58 %