VALUE ADDITION

RAW MATERIAL

COTTON WITH SEED COST Rs. 3200 PER QUINTAL i.e. 100 Kg

COST PER Kg Rs. 32

3 Kg COTTON WITH SEED = 1 Kg COTTON WITHOUT SEED

COST OF 1 KG GINNED COTTON = 32x3 = Rs. 96

GINNING

COST OF GINNING = Rs. 1.5 PER Kg

GINNING COST 1.5x3 = Rs. 4.5 PER Kg

COST OF COVERSION OF 1Kg OF GINNED COTTON TO 1 Kg ROVING = Rs. 30

ASSUMPTION ALL OPERATIONS CARRIED OUT IN HOUSE

NO TRANSPORTATION COST INVOLVED

COST OF CONVERSION OF 1 Kg ROVING INTO 1 Kg YARN = Rs. 60

(30 HANKS OF 30s COUNT IN 1 Kg. Rs. 2 PER HANK SPINNING WAGES)

TOTAL COST OF CONVERSION OF 1 KG YARN

COST OF GINNED COTTON + GINNING COST + ROVING CONVERSION COST + YARN CONVERSION COST

Rs. 96 + 4.5 + 30 + 60 = 190.5 i.e Rs. 190

YARN SELLING COST Rs. 240 PER Kg.

PROFIT ON 1 Kg YARN Rs. 240 – 190 = Rs. 50

THIS MEANS PROFIT ON 3 Kg UNGINNED COTTON = Rs. 50

PROFIT ON 1 Kg UNGINNED COTTON = 50/3 = Rs. 16

SALE PRICE OF UNGINNED COTTON 32 + 16 = Rs. 48

COST OF 1 QUINTAL COTTON INCREASE TO 48x100 = Rs. 4800

CONVERSION OF YARN TO GREY FABRIC

FROM 1 KG YARN IT IS POSSIBLE TO WEAVE 8 METERS OF GREY FABRIC

WEAVING CHARGES = Rs. 10 PER METER

CHARGES FOR WEAVING 8 METER FABRIC 10x8 = Rs.80

SELLING COST OF GREY FABRIC Rs. 50 PER METER

TOTAL COST OF FABRIC 8x50 = Rs 400

PROFIT ON 8 METER FABRIC

SELLING COST OF GREY FABRIC – (YARN CONVERSION COST + FABRIC CONVERSION COST) = 400 – (190+80) = Rs. 130

PROFIT ON 3 Kg UNGINNED COTTON = Rs.130

PROFIT ON 1 Kg UNGINNED COTTON = 130/3 = 43

SALE PRICE OF 1Kg COTTON AFTER CONVERSION TO GREY FABRIC 32 + 43 = 75

SALE PRICE OF 1 QUINTAL COTTON 75x100 = 7500

CONVERSION OF GREY FABRIC TO FINISHED WHITE FABRIC

COST OF DESIZING, SCOURING AND BLEACHING Rs. 5 PER METER

TOTAL PROCESSING COST 8x5 = Rs. 40

SELLING PRICE OF WHITE FINISHED FABRIC = Rs. 70 PER METER

PRICE OF 8 METERS WHITE FABRIC 70x8 = Rs. 560

PROFIT ON WHITE FABRIC 560 – 40 = Rs. 520

COST OF 3 Kg UNGINNED COTTON = Rs. 520

COST OF 1 Kg UNGINNED COTTON 520/3 = Rs. 173

SELL PRICE OF 1 Kg UNGINNED COTTON 32 + 173 = Rs. 205

SELL PRICE OF 1 QUINTAL COTTON = Rs. 20,500

CONVERSION OF WHITE FABRIC TO GARMENTS

FROM 8 METERS FABRIC ONE CAN STITCH 4 HALF SHIRTS

STITCHING CHARGES Rs. 70 PER GARMENT

STITCHING CHARGES OF 4 GARMENTS = 4x60 = Rs. 240

SELLING PRICE OF EACH GARMENT Rs. 225

TOTAL SELLING PRICE 225x4 = Rs. 900

PROFIT ON 4 GARMENTS 900 – 240 = Rs. 660

PRICE OF 3 Kg. UNGINNED COTTON INCREASED TO RS. 660

PRICE OF 1 Kg UNGINNED COTTON 660/3 = Rs. 220

SELL PRICE OF 1 Kg. COTTON BECOMES 32 + 220 = Rs. 252

SELL PRICE OF 1 QUINTAL COTTON 252x100 = Rs. 25200

PRICE APPRECIATION SUMMARY

SELLING PRICE PER QUINTAL (Rs.)

RAW COTTON 3200

YARN 4800

GREY FABRIC 7500

WHITE FABRIC 20,500

GARMENT 25,200