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DECLARATION
Undersigned Mr.Viren Kanani a student of T.Y B.B.A., here by declares that this is my own work.
I declare that this project has not been submitted to any other college previously.
Place: Jamnagar Yours Sincerely,Date:
(Mr. Viren Kanani)
1
ACKNOWLEDGEMENTIt is really a matter of great pleasure for me to present this creative and
practical work. At this stage, project report is an important part of learning & every
entrepreneur prepares it before starting of actual production.
I have taken this opportunity to express my sincere thanks to all those who
helped me in the preparation of this report.
First of all I would like to thank my parents who have encouraged me for
preparing such a perfect product project report, then Prof. Gaurav Mehta for his
guidance.
I am also thankful to my senior friends who had helped me in preparing this
product project report.
I am very glad to submit the report before the Saurashtra University. I have
tried my level best to present the available information in the best possible manner.
2
INDEXSr. No. Particular Page No.
1. Project At Glance 6
General Information 7
2. Introduction 8
3. BIS Specification 9
4. Management Set up 10
5. Size of Unit 11
6. Forms of Organization 12
7. Plant Location Factors 13-14
8. Information about the product 15
Production Department 16-19
9. Manufacturing Process 17
10. Aspects of machineries 18
11. Raw Material 19
Marketing Department 20-23
12. Introduction 21
13. Market Potential 22
14. Channels of Distribution 23
Financial Details 24-40
15. Project mgmt. & Construction Schedule 25-26
16. Production capacity 27
17. Fixed Assets 28-30
18. Working Capital Requirement 31-34
19. Financial statement 35
20. Cost of Production 36
21. Profit Analysis 38
22. Balance Sheet 39
23. Break Even Point 40
24. Ratio Analysis 41
Conclusion 42
Appendix 43-44
Bibliography 45
3
PROJECT AT GLANCE
Name of the unit KANANI INDUSTRIES
Product BLADES
Address G.I.D.C. phase-II, Jamnagar
Form of Organization Proprietorship
SSI Registration Number Application is made
Location Unit G.I.D.C. phase-II, Jamnagar
Owner’s Name VIREN KANANI
Total Investment Rs.1,41,98,500
Total Production Capacity Type-1 Blade : 4, 50,000 Packs.
Type-1 Blade: 4, 80,000 Packs.
4
5
GENERAL GENERAL INFORMATIONINFORMATION
INTRODUCTION
The industrial structure of India can be classified into three main groups; they are
large scale, medium scale & small-scale sectors. The small-scale industry plays an
important role in Indian economy. The small-scale industries can be further sub divided into
village or cottage industry & modern small-scale industry.
Today, SSIs are ensuring more equitable distribution of the national income & they
facilitate an effective mobilization of resources. Small firms are found co-existing with the
large firms in the business world. The main reason behind this is the low cost strategy
adopted by SSI with mixture of both the production techniques, i.e., Capital Intensive
Techniques as well as Labour Intensive Techniques.
This project report is related to a SSI of Steel Products industry namely, LION
Industries located in Jamnagar, producing Blade. Here is the detail of the whole project
related to the production, finance, etc.
6
BIS SPECIFICATION
Razor blades are subjected to quality inspection before they are packed. Most of
the blade manufacturing units in the country employ visual inspection methods. There is a
need for mechanical quality control of the blades for which the quality testing apparatus will
have to be imported. Bureau of Indian Standard have been developed following
specification regarding this product.
IS: 7370-1974 Razors, safety (with Amendments No. 1 to 3 Reaffirmed
1987)
IS: 10198-1982 Carbon steel, safety razor blades.
IS: 9476-1980 Codl-rolled steel strips for carbon steel razor
Blades.
IS: 7371-1982 Stainless steel safety razor blades (second revision).
IS: 9294-1979 Cold-rolled stainless steel strips for razor blades
(Reaffirmed 1987).
7
MANAGEMENT SET-UP
Proprietor Profile:-
Name Mr. VIREN KANANI
Address (Resi.) 58, Digvijay Plot,
Udhyognagar Road,
C/o. Natraj Laundry,
Jamnagar 361005.
Address (Office) KANANI Industry,
Udhyognagar road,
G.I.D.C. Face – 2
Jamnagar – 361005.
Age 25 years
Qualification M.B.A.
Financial Contribution 100%
Nature of Work Overall Management
8
SIZE OF UNITA company can be classified on the basis of size. There are three types of
industries on the bases of size in an economy. They can be named as under.
1. Large Scale Industries
2. Medium Scale Industries and
3. Small – scale Industries
Generally, Small Scale industries can be classified as the company having
capital investment in its plants and machineries less than Rs. 1 Crore.
9
The project KANANI INDUSTRIES envisages manufacture of BLADE at an
estimated project cost of Rs.125.69 Lakhs only so the project comes under the small
scale industries.
PLANT LOCATION FACTORS
One of the early decisions that an entrepreneur has to make is the choice of
location of the business. The process of locate of any firm in a particular industry is
called industrial location. The entrepreneur has to locate the firm at such a place
where the cost of production is lower. The aim of any business is the maximization of
profit and maximization of cost of production. Thus, an entrepreneur must think
carefully while deciding the location of any industry.
Location means “selection of place for establishment of industry where the
cost of production is lowest ant the time of establishment.”
There are severing factors, which are taken into consideration while selection
location of an industry.
Raw Materials:
The major component or major input, which is inevitable part of any
production process, is availability of raw material. Availability of raw material at
proper time, at reasonable rate, in right quality and quantity, etc. directly affects the
price of the final product.
10
The raw materials required are not the demand site specific and hence the
project may be located near a major town or city.
Labor:
Manpower input, i.e. labour could be put at second number after raw material.
Cheaper and efficient labour availability enrich the firm and thus, it is very crucial in
nature. KANANI BLADES is located in the G.I.D.C., where availability of labour is
very easy.
Market:
The main concentration of every product is to get potential market and
proximity to the market is one of the most considerable variables.
Transportation:
Speedy transport facilities are needed for the regular and timely supply of raw
materials and finished goods. For this purpose we will use road transportation, as it
is very cheap and available very freely.
Availability of Power:
In an atomization industry, availability of power is very important for its production
function. Even a single minute stoppage of production in such industries will be resulted in
the loss of thousands of rupees. So, the availability of power is very important for
continuous production of the products. We are getting enough power supply through G.E.B.
to continue our production process.
11
GENERAL INFORMATION ABOUT THE PRODUCT
The craving for keeping one's face free from hair existed even before the dawn of
civilization. The first tool used for shaving was the knife blade with a wooden handle. The
so-called razor was invented in the latter half of the nineteenth century and it consisted of a
small sharp blade placed in a holder in such a way that only the edge could touch the skin.
Later safety razor blade was invented but king camp Gillette who established the first
factory in 1903 at Bosten, USA, The blade gained instant local popularity, but the real
impetus was received during World War I when about 4 million blades were
distributed among the American forces of war. After the expiry of Gillette’s patent right in
1921. Several other brands flooded the markets. The safety razor blade industry received
further fillip during World War II, again through the agency of forces on war. By the end of
the World War, safety razor blades had become a daily necessity.
Razor blade is highly consumable item of daily use by man for shaving purposes.
Since shaving is costlier at Saloon, 90% people use to make their shaves themselves by
using blades. The second advantages of shaving at home are saving of time and no risk of
any disease.
Because of the above factors, the demand of razor blade has been increasing day
by day and as such the population of India is also increasing every day. The razor blades
are mostly being manufactured by the foreign firms in India, although Indian firms are also
in the field but their product is not up to the mark. Therefore, high quality razor blade has
ample scope in Indian market as well as foreign market.
12
13
Production Production DepartmentDepartment
MANUFATURING PROCESS
Blades
Razor blades are periodically exposed to high levels of moisture and therefore must be made
from a special corrosion resistant steel alloy. Furthermore, the grade of steel must be hard
enough to allow the blade to hold its shape, yet malleable enough to allow it to be processed.
The preferred type of steel is called carbide steel because it is made using a tungsten-carbon
compound. One patented combination of elements used in stainless steel blade construction
includes carbon (0.45-0.55%), silicon (0.4-1%); manganese (0.5-1.0%); chromium (12-14%)
and molybdenum (1.0-1.6%); with the remainder being iron.
Plastic parts
The plastic portions of a safety razor include the handle and blade cartridge, or portions
thereof, depending on the razor design. These parts are typically molded from a number of
different plastic resins including polystyrene, polypropylene, and phenyleneoxide based
resins as well as elastomeric compounds. These resins are taken in pellet form and are melted
and molded into the razor components through a combination of extrusion and injection
molding techniques. For example, in making the handle for their advanced shaving systems,
Gillette uses a coextrusion process which simultaneously molds an elastomer molded over
polypropylene to create a surface that is easy to grip.
14
Other components
Razors may contain a variety of miscellaneous parts which help hold the blade in place,
guards which cover the blade during shipping, or springs or other release mechanisms which
facilitate changing of the blades. These pieces are molded by similar processes. The more
sophisticated brands include a lubricating strip made of polyurethane, or other similar
materials, that is impregnated with acrylic polymers. These strips are mounted on the head of
the razor, in front of the blades. The polymer film absorbs water and becomes very slippery,
thus creating a lubricating surface that helps the blade glide across the surface of the face
without snagging or cutting the skin.
Cutting blade formation
1 Blade manufacturing processes involve mixing and melting of the components in
the steel. This mixture undergoes a process known as annealing, which makes the
blades stronger. The steel is heated to temperatures of 1,967-2,048°F (1,075-
1,120°C), then quenched in water to a temperature between -76- -112° F (-60- -80° C)
to harden it. The next step is to temper the steel at a temperature of (482-752°F (250-
400°C).
2 The blades are then die stamped at a rate of 800-1,200 strokes a minute to form the
appropriate cutting edge shape. The actual cutting edge of modern cartridge style
razor blade is deceptively small. The entire cutting surface is only about 1.5 in
(3.81cm) wide by 1 mm deep. This is compared to traditional
15
The plastic portions of a safety razor include the handle and blade cartridge. These
parts are typically molded from a number of different plastic resins, including
polystyrene, polypropylene, and phenylene-oxide based resins as well as elastomeric
compounds. Razor blades are made from a special corrosion resistant blend of steel
called carbide steel because it is made using a tungsten-carbon compound.
razor blades which are almost 20 times wider and several times thicker. This design
creates efficiencies in manufacturing by allowing the creation of a durable cutting
surface using very little metal. Because the blade is so small, a special support
structure is required to hold it inside the cartridge.
Support member formation
3 At a separate work station, another sheet of metal passes through a die and cutter
device to form a series of L-shaped support members. These support members are
formed in a line with two edge runners connected to each side.
16
4 The row of supports, still connected to the edge runners is rolled onto a coil and
transported to the next station. There the support pieces are severed from the edge
runners which are collected in a waste bin. The support members are dropped into a
funnel-like device equipped with a vibrating unit which deposits individual support
members onto a conveyor belt. The belt transfers the members in a single file fashion
the third work station where they are welded onto the cutting blade. The finished
blade assembly is then ready for mounting in the cartridge. Because the entire process
is automated, waste from broken or bent cutting blades and support members is
minimized.
Plastic component molding
5 Concurrent with the blade-making operations, the plastic components are molded
and readied for assembly. The plastic resins are mixed with the plasticizers, colorants,
antioxidants, stabilizers, and fillers. The powders are mixed together and melted in a
special heated screw feeder. The resultant mixture is cut into pellets which can be
used in subsequent molding operations.
6 Plastic razor parts are typically extrusion molded. In this process, molten plastic is
shaped by being forced through the opening of a die. The parts can also be
manufactured by injection molding, where plastic resin and other additives are mixed
17
The manufacture of safety razors involves First making the blade cartridge by die
stamping the carbide steel and then welding the blades to steel support members.
Simultaneously, the plastic components are extruded or injection molded and readied
for assembly. The blade cartridge and plastic ports are automatically assembled at
workstations that use vacuum lines to orient and hold the small blade ports in place
during transport and insertion. Spring loaded arms push the blades into place and
secure them in the cartridge slots. The finished cartridge may be attached to the razor
handle during subsequent operations or they may be packaged separately.
together, melted, and injected into a two piece mold under pressure. After the plastic
has cooled, the mold is opened and the plastic parts are ejected. Major manufacturers
have extremely efficient molding operations with cycle times for molded plastic parts
18
routinely below 10 seconds. These processes are so efficient that the thermoplastic
runners and other scrap from the molding process are reground, remelted, and reused.
Assembly of components
7 The molded plastic components are fed to various work stations where the blade
assembly is inserted into the cartridge. The work surfaces in these stations are
equipped with vacuum lines to orient and hold the small blade parts in place during
transport and insertion. Spring loaded arms push the blades into place and secure them
in the cartridge slots. The finished cartridge may be attached to the razor handle
during subsequent operations or they may be packaged separately. This step may
include insertion of springs and other parts in the handle to allow ejection of the
cartridge.
Packaging
8 Razors are routinely packaged in clear plastic blister packs with a cardboard
backing sheet that allow display of the razors design. Refill blade cartridges can be
packaged in boxes, although most current designs require the cartridges to be held in a
plastic tray that helps insert them into the handle.
19
SOME BRIEF ASPECTS OF PLANT & MACHINERY
1. Fully Automatic Press for Razor Blades. In this press about 12 lacs blades can be
manufactured in 48 hours every week. This press is operated electrically and 2 H.P. motor
is sufficient. This press consists of one die which cuts the razor blades.
2. Fully Automatic Electric Hardening Machine. This is a kind of furnace provided with
electric connection and switch board. It consist of a hardening table where tempering
furnace, cooling plates and rewinding equipments are fitted along with the plates and
switch board. This furnace requires about 10 k.w. power.
3. Automatic Etching Machine. The machine is used for printing the name and brand of the
firm. It contains one infrared value by the help of which the brands are printed using acid.
This machine is operated with 1/2 H.P. motor and compressor requires 3 H.P. motor.
This machine can produce 10 lacs razor every week.
4. Varnishing Machine. In order to prevent from rust, the blades are coated with varnish.
Varnishing machine is used for this purpose. This machine coats varnish on steel strip
itself. This strip is passed through varnish bath and dried by infrared resistance. The
machine contains a gear box for controlling the speed. By this machine 10 lacs blades can
be produced in every week. 4 Kw power is required for resistance.
5. Cutting Machine. To form the blades from steel strips, cutting machine is used. In this
machine a die is fitted by help of which the blades are cut in suitable sizes. The capacity of
this machine is 10 lacs blades per week and 1/2H.P. motor is required to operate.
20
RAW MATERIAL
The main raw material for razor blade is steel strip which is imported from other
countries. In India there are dealers who import the material and sell to the consumers but
its cost is very high. If the manufacturer imports it directly, the material cost will be on the
lower side and as a result the production cost will be completely low. Steel strip is available
in different dimensions and rolled like paper.
This strip is made of two metals-carbon and chromium.
The commonly used dimensions of steel strips are as under:-
1. 0.881*0.0024" thick 0.881*0.004" thick
2. 0.881*0.0032" " 0.881*0.005" "
Raw Material Requirement:-
BASIS: 3, 40,000 lacs Nos. of Blade.
Steel strips 1.5 Metric Ton’s.
21
22
MarketingMarketingDepartmentDepartment
INTRODUCTION
In the modern age marketing management plays a dynamic and vital role for
the business enterprise. Marketing activities start and end with Marketing Research.
According to the definition of Marketing Management approved by American
Marketing Management, it is a process of planning, promotion and distribution of
ideas, goods and services to create exchange that satisfy individual and organization
goals.
This definition recognizes that Marketing Management is a process involving
analysis, planning, implementation and control that it covers goods, services and
ideas that it rests on the notion of exchange and that the goal is to produce
satisfaction to the parties involved.
So far as Lion Blade is concerned, it doesn’t have a separate marketing department
as it is done directly.
23
MARKET POTENTIAL
There are at present 9 units in the organized sector for the manufacture of
safety razor blades including double edge stainless blades and twin track shaving
systems.
A safety razor blade comes under the category of light mechanical engineering
industry. The razor blades are produced in large scale sector only. There are many types
of blades in the market e.g., Single edge, Double edge, Sand witched, and Bonded. A
safety razor blade is an item of consumption. The first unit was established in 1951. Prior to
it, demand was met by imports. By the year 1958-59, the Government put a ban on import
of razor blades and from then onwards, the demand is being met by indigenous production
only. Being a commodity of mass and daily consumption, the industry provides good scope
for investment.
The technology for the manufacture of razor blades is closely held with a few firms in
the World. M/s Wiltech India Limited and M/s. Indian Shaving Products, Limited, have
been allowed foreign collaboration with M/s. Wilkinson of U.K. and M/s. Gillette of USA
respectively. India is exporting about 100 million numbers of blades annually.
24
CHANNELS OF DISTRIBUTION
After production, the next problem faced by the producer is that of selling and
distribution. Because product is made to satisfy the needs of the consumer, so it
must reach to the consumer for whom it is made. Thus, a way through which goods
flow from the production to the consumer is called Channel of Distributions.
Channels are tools of management to place of consumption. Lion Blade has
adopted only one type of Channel of Distribution.
Company Distributors:
Lion Blade gets order from the distributors and according to the orders the products are
directly sent to them and they distribute the products, especially in bulk.
25
26
Financial Financial DetailsDetails
PROJECT MGMT. & CONSTRUCTION SCHEDULE
Project management and project planning has a direct impact on construction
schedule. The length of the gestation period destermines not only the quantum of financial
charges such as interest but also project costs. It also effects the provision for
contingencies which is linked with price movements. Since price movements has
although adopted an upward trend, the gestation period could have a very significant
bearing on the total capital cost. Any extension in time schedule may also alter the market
structure with the emergence of new competitors.
PROJECT SCHEDULING :
The management will be scheduling these activities so as to complete the job in an
acceptable time span and finally control the conduct of the scheduled work. In matters of
planning. The management will consider the requirement, availability and employment of
the necessary man power and facilities for carrying out the programmed in such a
manner that cost and time required are properly balanced and excessive demands on
key resources is avoided.
27
PROJECT CONSTRUCTION SCHEDULE:
A detailed programmed in the form of CPM network will be prepared conversing all
the key contracts. The detailed will highlight the dates for
I) Invitation of tenders,
ii) Receipt of quotations
iii) Scrutiny of bids,
iv) Receipt of materials and equipment and machinery taking into consideration the
time required for preparation of bids and delivery periods of various purchased items. A
schedule of work in will be prepared to set in detail all the units comprising the project.
A complete procurement specification will be prepared for each item of plant and
machinery and for civil and structural work.
TIME SCHEDULE:
A construction programmed has been developed to accomplish the desired
objectives within a time span which is as short as possible without being excessively
curtailed. A time span of Eight months for project completion defined by erection and
commissioning of the plant is estimated. The following table gives the time schedules for
major works carried out in the implementation of the project.
28
Production Capacity Installed Capacity: Table No.2
Product Categories Daily Production
Monthly 25 Days
Yearly 300 Days
Single Blades
Double Blade
1,000 pkt.
1,100 pkt.
25.000 pkt.
27,500 pkt.
3,00,000 pkt.
3,30,000 pkt.
Utilized Capacity at 60% For 1 st 2 years
Table No.3
Product Categories Daily Production
Monthly 25 Days
Yearly 300 Days
Single Blades
Double Blade
600pkt.
700 pkt.
15,000 pkt.
17,500 pkt.
1,80,000 pkt.
2,10,000 pkt.
Utilized Capacity at 70%
Table No.4
Product Categories Daily Production
Monthly 25 Days
Yearly 300 Days
Single Blades
Double Blade
700 pkt.
770 pkt.
17,500 pkt.
19,250 pkt.
2,10,000 pkt.
2,21,000 pkt.
29
Fixed Assets :
Land: Table No.5
Sr. No.
Particulars Square Feet
Amount Per Sq. Feet
Total (Rs.)
1 Land 2,000 1000 Rs. 20,00,000 Rs.
Building: Table No.6
Sr. No. Particulars Square Feet1
2
3
4
5
6
Manufacturing Shed
Raw Material Go Down
Maintenance Store Room
Packing Room
Finished Goods Store Room
Office
2270
370
200
160
100
100
Total Construction 3200
Total Construction Rate Per Sq. Feet Total Rs.
3200 Square Feet 325 10,40,000
30
Land & Building: Table No.7
Sr. No. Particulars Square Feet1
2
Land
Building
20,00,000
10,40,000
Total Construction 36,40,000
Plant & Machinery: Table No.8
Sr. No. Particulars Qty. Amount 1
2
3
4
5
6
7
8
Punch Machine
Fully automatic press
Automatic electric Harding machine
Cutting Machine
Grinding And polishing machine
Tool grinder
Misc. tool and accessories
Packing Machine
1
1
1
1
1
1
1
1
4,20,000
6,00,000
7,00,000
10,50,000
7,40,000
5,75,000
5,05,000
2,70,000
Total 48,60,000
31
Furniture & Office Equipments:
Table No.9
Sr. No. Particulars Amount
1
2
3
4
5
6
Furniture
Air Condition
Computer
Stationery
Fax
Printer
2,35,000
30,000
1,35,000
10,000
5,000
5,000
Total 4,20,000
Total Fixed Capital: Table No.10
Sr. No. Particulars Amount1
2
3
4
Land
Building
Plant & Machinery
Furniture & Office Equipments
20,00,000
10,40,000
48,60,000
4,20,000
Total 83,20,,000
32
Working Capital Requirement Per Month Raw Material: Table No.11
Sr. No. Particulars Amount
1
2Steel strips -1
Steel strips-2
4,70,000
3,00,000
Total 7,70,000
Personnel Salary & Wages: Table No.12
Sr. No. Particulars No. Amount Total Amount
1
2
3
4
Supervisor
Administration Staff &
Accountant
Unskilled Labors
Skilled Labors
2
4
6
6
4500
8,000
3,750
4,000
9,000
32,000
22,500
24,000
Total 38 87,500
Utilities: Table No.13
Sr. No. Particulars Amount
1
2
3
Electricity
Oil
Tools
13,000
2,500
2,500
Total 18,000
33
Depreciation: Table No.14
Sr. No.
Particulars Rate of Dep.
Actual Amount
Total Dep. Amount
1
2
3
4
Land & Building
Plant & Machinery
Furniture &
Other Office
Equipments
10%
20%
10%
25%
30,40,000
48,60,000
2,35,000
1,55,000
3,04,000
9,72,000
23,500
38,750
Total 13,38,250
Repairs & Maintenance: Table No.15
Sr. No. Particulars Amount
1
2
Repairs
Maintenance
4,000
3,000
Total 7,000
Rent & Insurance: Table No.16
Sr. No. Particulars Amount1
2
Rent
Insurance Premium
Nil
14,000
Total 14,000
34
Administrative Expenses: Table No.17
Sr. No. Particulars Amount1
2
3
4
5
Printing & Stationary
Postage & Telegram
Telephone
Bonus and Incentives
Others
2,000
1,500
3,000
7,000
1,500
Total 15,000
Selling & Distribution Expenses: Table No.18
Sr. No. Particulars Amount
1
2
3
Transportation Charges
Advertising & Sales Promotion
Other Expenses
16,000
16,000
3,000
Total 35,000
35
Total Working Capital Requirement: Table No.19
Sr. No.
Particulars Amount (Monthly)
Amount (Quarterly)
1
2
3
4
5
6
7
Raw materials
Personnel Salary
Utilities
Repairs & Maintenance
Rent & Insurance
Administration Exp.
Selling & Distribution Exp.
7,70,000
87,500
18,000
7,000
14,000
15,000
35,000
23,10,000
2,62,500
54,000
21,000
42,000
45,000
1,05,000
Total 9,46,500 28,39,500
Total Capital Investment: Table No.20
Sr. No. Particulars Amount
1
2
Total Fixed Assets
Total Working Capital Requirement
83,20,000
28,39,000
Total 1,11,59,000
36
Financial Provision & Sources of Finance Financial Provision: Table No.21
Sr. No. Particulars Bank Loan Bank C.C. Proprietor Total
1
2
3
4
5
Land
Building
Machinery
Furniture
Working Capital
....
8,00,000
12,00,000
….
….
….
….
….
28,39,500
20,00,000
2,40,000
36,60,000
4,20,000
….
20,00,000
10,40,000
48,60,000
4,20,000
28,39,500
Total 20,00,000 28,39,500 63,20,000 1,11,59,500
Sources Of Finance: Table No.22
Sr. No. Particulars Percentage Amount1 Proprietor’s Capital:
VIREN KANANI 56.63% 63,20,000
2 Borrowed Capital:
Bank Loan
Bank Cash Credit
17.93%
25.44%
20,00,000
28,39,500
Total 100.00% 1,11,59,500
37
Interest On Capital: Table No.23
Sr. No. Particulars Rate Of Interest
Amount Invested
Amount of Interest
1
2
3
Proprietor’s Capital
Bank Loan
Bank Cash Credit
12%
15%
15%
63,20,000
20,00,000
28,39,500
7,58,000
3,00,000
4,25,925
Total 1,11,59,500 14,84,925
Statement of Sales & Cost of Production Total Sales: Table No.24
Product Categories Quantity packs.
Avg. Price par pack
Total
Type-1
Type-2
1,70,000
2,00,000
55.00
45.00
93,50,000
90,00,000
Annul Receipts 1,83,50,000
Less.: S.T.C.S.T. – 4% 7,34,000
Total Sales 1,76,16,000
38
Total Sales: 2 nd yr Table No.24
Product Categories Quantity packs.
Avg. Price par pack
Total
Type-1
Type-2
1,80,000
2,00,000
55.00
45.00
99,00,000
90,00,000
Annul Receipts 1,89,00,000
Less.: S.T.C.S.T. – 4% 7,56,000
Total Sales 1,81,44,000
Total Sales: 3 yr
Product Categories Quantity packs.
Avg. Price par pack
Total
Type-1
Type-2
1,80,000
2,00,000
55.00
45.00
99,00,000
90,00,000
Annul Receipts 1,89,00,000
Less.: S.T.C.S.T. – 4% 7,56,000
Total Sales 1,81,44,000
39
Total Cost Of Production: Table No.25
Sr.
No.
Particulars Amount Rs. Amount Rs. Amount Rs.
(A)
1
2
3
4
5
VARIABLE COSTS:
Raw Material
Personnel Salary & Wages
Utilities
Administrative Expenses
Sales & Distribution Expenses
92,40,000
10,50,000
2,16,000
1,80,000
4,20,000
92,40,000
11,55,000
2,37,600
2,00,000
4,83,000
1,07,80,000
13,00,000
2,60,000
2,50,000
5,20,000
TOTAL VARIABLE COSTS 1,11,06,000 1,13,15,600 1,31,10,000
(B)
1
2
3
4
5
6
FIXED COSTS:
Personnel Salary & Wages (20%)
Salary To Proprietor
Insurance Premium
Repairs & Maintenance
Interest on Capital Invested
Depreciation
2,10,000
1,44,000
1,68,000
84,000
14,84,325
13,38,250
2,50,000
1,60,000
1,68,000
1,00,000
14,84,325
13,38,250
2,80,000
1,80,000
1,68,000
1,20,000
14,84,325
13,38,250
TOTAL FIXED COST 34,28,575 35,00,575 35,70,575
TOTAL COST OF PRODUCTION 1,45,34,575 1,48,16,175 1,66,80,575
40
Profit Analysis
Table No.26
Particulars Total Rs.
Annual Receipts 1,76,16,000 1,81,44,000 1,81,44,000
Less Total Cost 1,45,34,575 1,48,16,175 1,66,80,575
Profit Before Tax 30,81,425 33,27,825 14,63,425
Less Income tax @ 35% 10,78,500 11,64,740 5,12,200
Add Surcharge @ 2.5% 26,960 2,91,120 36,585
Tax & Surcharge 11,05,460 14,55,860 5,48,785
Add Education cess @ 2% 22,110 29,120 10,975
Total Tax Liability 11,27,570 14,84,980 5,59,760
Profit Before Tax 30,81,425 33,27,825 14,63,425
Less Total Tax Liability 11,27,570 14,84,980 5,59,760
Net Profit 19,53,855 18,42,845 9,03,665
41
Balance Sheet (At the end of 1 st year) Table No.27
Liabilities Amount Assets Amount
Proprietor’s Fund:
viren : 63,20,000
Less
Drawing 3,20,000
Bank Loan
Bank Cash Credit
Net Profit
60,00,000
20,00,000
28,39,500
19,53,855
1,27,93,355
Land & Building:
30,40,000
Less: Dep.: 3,04,000
Plant & Machinery:
48,60,000
Less: Dep.: 9,72,000
Furniture & Equipment:
4,20,000
Less: Dep.: 62,250
Debtors
Cash in Hand
Cash in Bank
Cash in Stock
27,36,000
38,88,000
3,57,750
5,11,000
3,00,605
10,00,000
30,00,000
1,27,93,355
42
Break Even Analysis
Break Even Analysis is very useful is any business to know the break even
point that is the point at which the firm has neither loss nor profit. It is the main
objective of any business to achieve the break even point and then try to achieve
more profit by increasing the sales of the products. It can be achieved by applying
the formula given below.
BEP = Fixed Cost x Sales
Sales - Variable Cost
Where as,
Fixed Cost : 34, 28,575 Rs.
Sales : 1, 76, 16,000 Rs.
Variable Cost: 1, 11, 06000 Rs.
BEP = 34, 28,575 X 1, 76, 16,000
1, 76, 16,000 - 1, 11, 06000
BEP = 92, 77,690 Rs.
Thus, the BEP is Rs. 92, 77,690 If the estimated sale is achieved then BEP
points will be achieved in the very short period of time of less than one year.
43
Ratio Analysis Net Profit Ratio:
Net Profit X 100
Net Sales
19,53,885 X 100
1, 76, 16,000
11.09%
Return on Investment:
Net Profit X 100
Total Investment
19, 53,885 X 100
1, 11, 59,500
17.51%
44
Conclusion
The promoters are educates young and experienced having sound financial
background and having experience in different business.
The demand for product i.e. razor blade increasing day-by-day and there is a
shortage of supply. The cost of product to the promoters will be lower and supply will be
immediate. The market is sure and certain.
The financial working i.e. cost of product, profitability are satisfactory and
encouraging. The break-even point is lower; cash flow is adequate to pay back term
finance within time schedule. Fully automatic plant and machinery, no raw material cost,
these are all factors/indicators of a sound and successful project.
The market is increasing and the industrial development-taking place in nearby
areas will increase market tremendously. There are fewer competitors in the area. The
timely decision to start the project by promoters will be an additional benefit to the
promoters.
In nut shall considering the excellent market potentiality and good debt service
coverage ratio. Low BEP, the prospects for the project are very bright so there seems no
risk to proprietor as well as to financial institution.
45
AppendixTABLE
NO.PARTICULARS PAGE
NO.
1 Project at a glance 6
2 Installed Capacity 27
3 Utilized Capacity at 50% 27
4 Utilized Capacity at 70% 27
5 Land 28
6 Building 28
7 Land & Building 29
8 Plant & Machinery 29
9 Furniture & Office Equipments 30
10 Total Fixed Capital 30
11 Row Material 31
12 Personnel Salary & Wages 31
13 Utilities 31
14 Depreciation 32
15 Repairs & Maintenance 32
16 Rent & Insurance 32
17 Administrative Expenses 33
18 Selling & Distribution Expenses 33
19 Total Working Capital Requirement 34
20 Total Capital Investment 34
21 Financial Provision 35
46
22 Sources Of Finance 35
23 Interest On Capital 36
24 Total Sales 36
25 Total Cost Of Production 37
26 Profit Analysis 38
27 Balance Sheet 39
CHARTSCHART
NO.PARTICULARS PAGE
NO.
1 Size of the units 06.
2 Form of organization 07.
47
BIBLIOGRAPHY
● Desai Vasant, Project Management,
2nd Edition, 1999, Himalaya Publishing House.
● Sharma Ravi K. & Gupta Shashi K., Finance Management,
4th Edition 2003-04, Kalyani Publishers.
48
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