gas lighter (ppr)

“GAS LIGHTERS”

:: Prepared by ::

Dangar Shailesh L.:: College ::

R.P.Bhalodiya College

:: Academic Year ::

2007-08

:: Seat No. ::

:: Class ::

T.Y.B.B.A.

:: Submitted to ::

Saurashtra University

::Guided by ::

B.L.SHARDHARA

1

Projected

Operating Statement Of

“hardik ENTERPRISES”

For3 Years

2

I the undersigned Sweety I Shailesh , a student of

R.P.B.College, T.Y.B.B.A. hereby declare that the project report presented in this report is my own work and has been carried out under the guidance of Jay patel R,P,B.College, Rajkot.

This work has not been submitted previously to any other university for any examination.

Date:-

Place:- Rajkot

Signature.

3

There is one universal fact that “Each and Every Work has Practical aspect” this aspect can be required in education section also.

Entrepreneurship and management of Small Scale Industries with a view to create and develop such skills and attitude among the students in practical and professional education faculty. Students have to prepared the project report which is useful for getting loan from financial institute.

Today there is a growth rate in Indian economy. SSI play a vital role of 40% contribution to total national income.

Hence, university has included preparation of such project within the preview of its syllabus.

Thus, the project report presented by me helps me to develop entrepreneurship skills.

4

I feel great pleasure to present this report before you. I am thankful to all the member of university who had helped me in my guidance.

I express my deepest sense of gratitude towards our college lecturer Mr. Jay Patel who has guided me preparing project report and without whose support my report would have been very difficult to complete it. I am very thankful and heartly grateful to our college staff members and my classmates who have given me a true guidance during preparing project report. At last, I would like to thank my parents and my family members who helped me in this report.

Date :-

Place :- Rajkot

Signature.

5

Sr.

No.

Particulars Pag

e

No.

1. Introduction 8

2. Project At A Glance 9

3. Management Setup 11

4. Implementation Schedule 13

5. Organization Structure 14

6. Justification of Location 15

7. Product Details 17

8. Market Potential 19

9. Raw Material 20

10. Machineries 21

11. Basis and Presumption 22

12. Manufacturing Process 23

13. Production Capacity Schedule 27

14. Staff and Labour Details 28

15. Financial Details 30

16. Cost of Production 32

17. Total Working Capital Requirement 35

18. Total Project Cost 36

19. Sources of Finance 36

6

20. Interest on Borrowed Capital 38

21. Depreciation 39

22. Annual Cost of Production 40

23. Sales Forecast for 5 years 40

24. Cost Per Unit 41

25. BEP Analysis 43

26. Term Loan Repayment 44

27. Cost of Capital 45

28. Return on Investment (ROI) 45

29. Profitability Analysis 46

30. Risk Factor 48

31. Name & Address of RM Suppliers 49

32. Name & Address of Machinery Suppliers 50

33. Projected Operating Statement 51

34. Projected Balance Sheet 56

35. Projected Cost Sheet For 3 Years 58

36. Particulars of RM Consumed 62

37. Particulars of Finished Goods 62

38. Schedule for Fixed Assets 63

39. Schedule for Factory Overhead 64

40. Schedule for Administrative and Factory

Overhead

65

41. Disclosure of significant Accounting Policies 66

INTRODUCTION7

More recently enhancing small scale industries (SSI’S) have been viewed as

an effective way of forecasting the private sectors. Contribution to both the growth &

the equity objective of development.

SSI’S & cottage industries play a key role in the industrialization of developing

country. This is because they provides immediate large scale employment & have a

comparatively higher labor – capital ratio, they need a shorter gestation period &

relatively smaller markets to be economic, they need lower investment, offer a method

of ensuring a market equitable distribution of national income & facilitate an effective

mobilization of resources of capital & skill which might otherwise remain unutilized &

they stimulate the growth of industrial entrepreneurship & promote a more diffused

pattern of ownership & location.

A philosophy that manifests itself in many ways that what is more small scale

enterprise and the core sectors of Indian industrial culture that runs through the Indian

civilization.

When it comes to industrialization, there is bat one enterprise that inspires

confidence – SSI’S. This is attributing to the philosophy of excellence.

The meaning of small connects comparatively small in investment, cost

operation, employment, production, finance, technology, market etc. Such small

enterprises are not only beautiful but also beneficial, efficient, and reliable. The

definition of SSI varies from one country to another. Further it also changes with time.

8

POJECT AT GLANCE

Name of the Unit:-

Krishna Enterprises.

Office Address:-


Prahlad Plot Main Road,

Near Patel Diary,

Rajkot.

Location of the Unit:-


G.I.D.C. Metoda, Plot No. 2325,

Rajkot.

Type of the Unit:-

Partnership Firm

Size of the Unit:-

Small-Scale Industry

Name of the Product:-

Elegant Gas Lighters

Name of Partners:-

Dangar Shailesh L.

Godani Hardik N.

Means of Finance:-

9

Partner’s Contribution

Loan from Gondal Nagarik

Sahkari Bank

Market Area:-

Rajkot.

Total Cost of Project:-

Rs. 15, 91,950

Investment in Working Capital:-

Rs. 20, 39,400

Investment in Fixed Assets:-

Rs. 14, 22,000

Return on Investment:-

16.37%

Average Cost of Capital:-

10.98%

Working Hours Per Day:-

8 hrs.

10

MANAGEMENT SETUPPartner – 1 st

Name: - Dangar Shailesh L.

Kalavad rd. Narayan Nagar Nr.Saty

Sai Hospital

Rajkot.

Age:- 21 Years.

Educational

Qualification:- B.B.A.

Experience:- Dealing in Gas Appliances and other

related Accessories since last 30

Years.

Contribution:- 50%

Duties &

Responsibilities:- marketing and Finance.

11

Partner – 2 nd

Name:- Godani Hardik

‘Panorama-B’, Block no. 302,

Opp. Hotel King Palace,

Kanta Stree Vikas Gruh Road,

Rajkot- 360 001.

Age:- 21 Years

Educational

Qualification:- T.Y.B.B.A.

Experience:- Industrial Training

Taken Under:- (i) Kishor Die-o-Form Pvt. Ltd.

(ii) Excel Crop-Care Ltd.

(iii) HDFC Standard Life Insurance.

Contribution:- 50%

Duties and

Responsibilities:- Personnel Department.

Marketing Department.

Sr. Particulars Time

12

No. Period

1. Preparation of Project

Report

4 months

2. Selection of a Site 2 months

3. Registrations of SSI 4 months

4. Availability of Finance 2 months

5. Selection of Machinery 2 months

6. Procurement of

Machinery

2 months

7. Recruitment of Labour 15 days

8. Commencing Production 15 days

13

Chairman

Manager

Supervisor Accountant

Salesman

Skilled Workers Peon\Clerk Watchman

Unskilled Workers

14

Location of any industry is the most important thing

behind success or failure of any industry. It has to be carried

out in such a way that the manufacturing process is carried

on with minimum expenditure of time & material. Also there

must be ample scope for the addition or rearrange so that

they can be carried out without stoppage of work. There are

many factors like RM, nearness to market & power,

availability of transportation facility supply of labour,

government incentives, Quality of land etc. which affects the

location of any unit. Every entrepreneur should give fall

consideration to suitable location because location factor

are crucial for profit maximization.

The proposed location for the establishment of

manufacturing facilities for my unit as under

Krishna Trading Co.

G.I.D.C. Metoda

Plot No. 2325

Rajkot.

The unit enjoys following benefits due to location of the

site:-

15

Transport Facilities:-

As the project is located at G.I.D.C. Metoda there will

not be any problem in getting transport facilities. As the

transport facility is easily available at our location.

Market Control:-

Any entrepreneur always thinks about a market of

his product to be a wide market. Main market for our

product is near cities & near areas as new houses are

builded so the market availability is good is Rajkot,

Ahmedabad etc.

Labour Supply:-

As this area has prioximity to Rajkot city labour is

easily available & at cheaper cost.

Other Location Facilities:-

G.E.B. has a main substation at G.I.D.C metoda,

Rajkot that would make it easily to get power connection.

Metoda is only 13 Kms. Away from Rajkot city hence

units located here will avail all facilities available at Rajkot.

It has got full fledged telephone exchange making

easier to connect anywhere.

From the above mentioned reasons the location of

this plant can be easily justified. The proper selection will

surely help to contribute to the profitability & success of

the plant.

16

Product:-

The Electronic Gas lighter uses a piezo element. This

piezo element has a property to generate voltage when it

is subjected to presence. In this case when it is

mechanically deformed it generates high voltage across a

spark gas which when is in prioximity to a gas would light

it.

Gas lighter are being used to light cooking gas. It is

durable due to its performance & economical as compared

to the mechanical and electrical lighters.

These gas lighters are cheap, safe, reliable, attractive

and as they need no maintenance they have a good

chance in the market.

17

Product Use:-

With the growth the urban population and also the

gradual growth in the living standard of Indian population,

the usage of Electronic gas lighter has increased

considerably. Moreover, the change and liberalization

policy of the Indian govt. has made availability of gas

connections very easy. Also the entry of private Co’s, like

Super Gas, Gujarat Gas etc., Gas is available at low

charges & in short period of time & as consumption of

lighter depends upon the no. of gas connections there

exists a wide consumption & increasing application of

electronic gas lighters.

And as these gas lighters are cheap, safe, reliable,

attractive & as they had no maintenance they have a good

chance in the market.

18

The demand for any type of Gas, lighter is directly

related to the release of domestic gas connection by various

gas Co’s. in the country. However, users go in for various

types of gas lightering devices i.e. matches, electrical or

electronic gas lighter. The preference to use Electronic Gas

lighters is quite high because of its inherehant advantages

stated above. Even existing gas users have been increasing

by switching over to electronic gas lighters. At present there

are about 70 to 80 small or big units engaged in the

manufacturing of electronic gas lighter with an average

capacity of 20,000 to 30,000 per month.

The cost of gas lighter is very well within the reach of

users & therefore the demand is increasing day by day.

Rajkot contributes about 60% to 70% of the total all India’s

production of electronic gas lighters. Daily in Rajkot there is

about 30,000 to 40,000 units of production of electronic gas

lighters.

Through experiments we have known that

advertisement and publicity have influenced the

consumption pattern of electronic gas lighters.

19

Raw material is a basic need of each & every industrial

unit. This, it is necessary have proper availability of raw

material in proper quantity required and at proper time is an

important factor. The Electronic Gas Lighter requires

following materials:

Stainless Steel (S.S.) pipe

Piezo element

Spring

Hammer

Sparking Point

Aluminum Washer

Hammering Point

Supporting M.S. bar

M.S. Washer

Brass Washer

Other Plastic Parts.

20

Machines are one of the most important factor for any

business. Proper & right kind of machinery will surely be

helpful in increasing the profit margin of any unit. The

following machinery are appropriate for Electronic Gas

Lighter:

Lathe

Fly Press

Drilling Machine

Hand Moulding Machine

Hydrolic Moulding Machine

Testing Panel

Dyes & Jigs fixtures

Power Press Machine

21

The proposed production of 54,000 per annum of gas

lighter more than 300 working days in a year.

Shift: Single Shift

Working hours: 9:00 A.M. to 6:00 P.M.

Break 12:30 P.M. to 1:30 P.M.

The units required 2 to 3 years to achieve full capacity

utilization the first year, Co. utilized 60% Capacity.

The wages proposed in the project are as per privileged

wage practice in the area.

Land Value and construction cost has been taken on an

average basis science it varies from place to place.

The cost of machinery & equipment has been proposed

in the project after consulting the machinery supplier.

Nearly all the machines are available locally.

22

Manufacturing is the core activity. All other activities

revolve around manufacturing. The end result of

manufacturing activity is the creation of goods & Services

for the satisfaction of human wants. The production activity

is nothing but the step by step conversion of materials from

one from to another either chemically or mechanically.

The principle stages in the commercial production of

Electronic Gas Lighter are as follows:

(1) Pipe Cutting

(2) Pipe Operation

(3) Moulding of various plastic parts

(4) Development of sets

(5) Fitting material inside the pipe

(6) Upper marks & Stickers

(7) Checking

(8) Packing

23

Pipe Cutting:-

First of all various types of pipe either S.S. or M.S. are

brought from the market i.e. it is available locally & then it is

cut according to the length of the gas lighter & opening of

the gas lighter having length around 6 inches. After cutting,

the cutter or blade is used in order to avoid the rough

surface on both openings & the pipe.

Pipe Operation:-

Next with the help of dies one opening of the pipe is

given proper shape & on the other opening of the pie, die

voram is done with the help of the machines.

Then according to the pipe whether S.S. or M.S. buff or

crone is done respectively.

Moulding of Various Plastic Parts:-

Inside the gas lighter pipe, various plastic parts are

filled i.e. piezo cover two step, hathodi, spring, sparking pt,

washer etc., with the help of moulding machines various

types of dies & above mentioned parts are moulded in

various materials like P.P. nylone, P.V.C. High Density etc.

24

Development of Set:-

In this process, the set which is inside the gas lighter is

done. First of all in a piezo cover sparkling pt. will be fitted &

on it aluminium washer is fitted. Again on the washer piezo

is put, then aluminium washer & at last on it, there will be a

supporting M.S. bar. This all will be done in a plastic part.

In one step plastic part first sparking pin is put inside

it. Then the piezo cover which is ready i.e. above is inserted

on it in order to give connection which is seen on the mouth

of the gas lighter. This is one of the main procedures in the

manufacturing of E.G. lighter.

Fitting Material:-

Here, first of all the fitting sets is done & then the

“Brass” earthing is filled upon the set in order to avoid the

shock on the top part of the gas lighter. This earthing is

used to have the downward how of current & to avoid

upward flow of current in the Electronic Gas lighter. Then on

the top part Hammer is fitted and then handle is fitted.

Thus, this is the fitting procedure of E.G. lighter.

25

Upper Marks & Stickers:-

Before dispatch the gas lighter stickers & dates one

marked on either pipe or handle. The marking of dates is

important because as the Electronic Gas lighter is a

replacement item, manufacturing time is needed for

classifications in case, if needed thus, the mark of date is

marked on the pipe or handle.

Checking:-

This is also very important procedure as the Electronic

Gas lighter is a 100% replacement item. Almost all the

manufacturers give a 6 months to 2 years warranty on their

gas lighter. So there is a fear of replacement if proper

checking is not done the complete assembled. Unit is thus

listed for life cycle ignition before it is sent for packing and

dispatch.

Packing:-

After all these above process, the packing is done. It is

done in 2 ways:

(i) Box Packing.

(ii) Card Packing with the buster pack covering the card.

The card itself acts as the guarantee card here. Then

the card packed lighters are packed in Corrugated Boxes of

26

25 pieces each and master packing is finally done as per

demand order.

Year Installed

Capacity

Utilized

Capacity

Units

Produce

d

Rate

S.P.

(p.u.)

1st year 100%

(90,000)

60% 54,000 46.50

2nd year 100%

(90,000)

80% 72,000 46.50

3rd year 100%

(90,000)

100% 90,000 47.00

(1) No. of Shifts Per Day == 1 Shift of 8 hrs.

(2) No. of Working Days == 25 days

(3) No. of Working Days p.a. == 300 days

(4) General Shift == 9:00 a.m. to 5:00 p.m.

27

Top Level:-

No. Particula

rs

No. of

Person

s

Rat

e

1

mont

hs

3

mont

hs

12

mont

hs

1. Factory

Manager

1 400

0

4000 12000 48000

Total (A) 4000 12000 60000

Middle Level:-

No

.

Particula

rs

No. of

Person

s

Rat

e

1

mont

hs

3

mont

hs

12

mont

hs

1. Accountan

t

1 500

0

5000 15000 6000

0

2. Clerk 1 250

0

2500 7500 3000

0

3. Salesman 2 500

0

10000 30000 12000

0

4. Supervisor 1 350

0

3500 10500 4200

0

5. Skilled 6 300 18000 54000 2160028

Workers 0 0

Total (B) 39000 11700

0

4680

00

29

Bottom Level:-

No. Particula

rs

No. of

Person

s

Rat

e

1

mont

hs

3

mont

hs

12

mont

hs

1. Watchma

n

2 200

0

4000 12000 4800

0

2. Unskilled

Workers

3 250

0

7500 22500 9000

0

Total (C) 11500 34500 13800

0

Total Salary & Wages:-

(1) Top Level 60,000

+ (2) Middle Level 4,68,000

+ (3) Bottom Level 1,38,000

-------------

Rs. 6,66,000

30

Fixed Assets:-

Particulars Sq. mt/ Sq.

feet

Rat

e

Total

Land 500 700 3,50,00

0

Building 1000 350 3,50,00

0

Total (A) 7,00,0

00

Plant & Machinery:-

No. Particulars No. of

Perso

ns

Rate Total

1. Lathe 1

35,000

35,000

2. Fly Press 3

10,000

30,000

3. Drilling Machine 2

18,000

36,000

4. Hand Moulding Machine 3

7,000

21,000

5. Hydrolic Moulding Machine 1

31

30,000 30,000

6. Testing Panel 2

15,000

30,000

7. Dyes & Jigs Fixtures 2,50,00

0

2,50,00

0

8. Power Press Machine 1

35,000

35,000

Total (B) 4,67,0

00

32

Other Assets:-

No. Particulars Total

1. Furniture & Fixtures

85,000

2. Computer

20,000

3. Vehicle 1,50,0

00

Total (C) 2,55,0

00

Total Fixed Assets:-

A+B+C

= 70,000+4,67,000+2,55,000

= 14,22,000

33

Requirements of Raw Material:-

No

.

Particulars Rate

(p.u.

)

Required

Per day

Required

Per month

Required per

annum

Qty. Amt

.

Qty. Amt. Qty. Amt.

1. S.S. Pipes Rs.

6

per

feet

95 570

2375

1425

0

28500

171000

2. Piezo

element

3 189 566

4720

1416

0

56640

169920

3. Spring 0.4 378 151

9450

3780

11340

0

45360

4. Hammer 0.8 94 76

2360

1888

28320

22656

5. Sparking

Point

0.8 95 76

2375

1900

28500

22800

6. Aluminium

Washer

0.1 378 38

9450

945

11340

0

11340

7. Hammering

Point

0.5 189 94

4720

2360

56640

28320

8. Supporting

M.S. bar

1.5 2 3k.g.

50

75

600

900

9. M.S. Washer 0.5 377

188

9420

4710

11304

0

56520

10. Brass 0.1 183

34

Washer 0 18 4570 457 54840 5484

11. Other

Plastic Parts

1.3

0

1260 168

3

3150

0

4095

0

37800

0

491400

Total 15 324

0

341

9

8099

0

8547

5

9718

80

10257

00

35

Staff & Labour Requirements:-

Particulars No. of

Person

s

Rate Amount

(Per

month)

Amount

(Per

annum)

Accountant 1 5,00

0

5,000 60,000

Clerk 1 2,50

0

2,500 30,000

Salesman 2 5,00

0

10,000 1,20,000

Supervisor 1 3,50

0

3,500 42,000

Factory Manager 1 4,00

0

4,000 48,000

Skilled Workers 6 3,00

0

18,000 2,16,000

Unskilled Workers 3 2,50

0

7,500 90,000

Watch man 2 2,00

0

4,000 48,000

Total 54,500 6,54,000

36

Other Expenses:-

Particulars Amount

(per

month)

Amount

(per

annum)

Telephone 1,500 18,000

Insurance 300 3,000

Stationary & Postage 1,000 12,000

Advertising 5,000 60,000

Packing 2,175 26,100

Selling & Distribution 12,500 1,50,000

Repairs & Maintenance 500 6,000

Transportation Cost 1,000 12,000

Freight Expense 3,000 36,000

Total 26,975 3,23,700

Utilities:-

No

.

Particulars Amount

(per

month)

Amount

(per

annum)

1. Electricity 3,000 36,000

Total 3,000 36,000

37

Total Cost of Production:-

No

.

Particulars Monthly Yearly

1. Raw Materials 85,475

10,25,700

2. Staff & Labour 54,500

6,54,000

3. Other Expenses 26,975

3,23,700

4. Utilities 3,000

36,000

Total 1,69,950

20,39,400

No. Particulars Monthly Yearly

1. Raw Materials 85,475 10,25,700

2. Staff & Labour 54,500 6,54,000

3. Other Expenses 26,975 3,23,700

4. Utilities 3,000 36,000

Total 1,69,950 20,39,400

38

Particulars Amount (Rs.)

Fixed Capital 14,22,000

Working Capital

(1 Monthly)

1,69,950

Total 15,91,950

No. Particulars Amount

(Rs.)

1. Ownership Capital (40%) 6,36,780

2. Borrowed Capital (60%) 9,55,170

Total 15,91,950

Bank is giving loan of Rs. 95000 therefore remaining

Rs.5170 is added in ownership capital. Therefore now the

Ownership & Borrowed Capital will be as follows:


40

(Rs.)

1. Ownership Capital 6,41,950

2. Borrowed Capital 9,50,000

Total 15,91,950

(A) Ownership Capital:-

No. Particulars Amount (Rs.)

1. Indrawadan Parekh (50%) 3,20,975

2. Sweety Parekh (50%) 3,20,975

Total 6,41,950

(B) Borrowed Capital:-

No. Particulars Amount (Rs.)

1. Loan from Gondal Nagrik

Sahkari Bank

9,50,000

41

Particulars Loan

Amount

Intere

st

(Rate)

Interest

(amount)

(p.a)

Ownership Capital 6,41,95

0

8% 51,356

Particulars Loan

Amount

Intere

st

(Rate)

Interest

(amount)

(p.a)

Loan taken from

Gondal Nagrik

Sahkari Bank

9,50,00

0

13% 1,23,500

42

“Krishna Enterprises” is using Straight Line Method

for calculating the depreciation on the fixed assets of the

company.

Sr.

No.

Particulars 1st

year

2nd

year

3rd

year

1. Building

(-) Depreciation @

10% S.L.M.

3,50,0

00

35,00

0

3,15,0

00

3,15,00

0

35,000

2,80,00

0

2,80,000

35,000

2,45,000

2. Plant & Machinery

(-) Depreciation

@ 25% S.L.M.

4,67,0

00

1,16,7

50

3,50,2

50

3,50,25

0

1,16,75

0

2,33,50

0

2,33,500

1,16,750

1,16,750

3. Computers (-)

Depreciation

@ 40% S.L.M. [C]

20,000

8,000

12,000

12,00

0

8,000

4,000

4,000

---

43

4,000

4. Furniture

(-) Depreciation

@ 15% S.L.M. [D]

85,000

12,750

72,250

72,250

12,750

59,500

59,500

12,750

46,750

5. Vehicles

(-) Depreciation

@ 12% S.L.M. [E]

1,50,0

00

18,00

0

1,32,0

00

1,32,00

0

18,000

1,14,00

0

2,64,000

36,00

0

2,28,00

0


(Rs.)

1. Raw Materials 10,25,700

2. Staff and Labour 6,54,000

3. Other Expenses 3,23,700

4. Utilities 36,000

5. Depreciation 1,90,500

6. Interest on Capital:

(a) Ownership Capital 51356

(b) Borrowed Capital 123500 1,74,856

Total 24,04,756

44

Year

Units Sold

During The

Year

Rate(S.P

.)

(p.u.)

(d) Amount

(e) (Rs.)

1. 52,200 (g) 46.5 24,27,300

2. 71,400 46.5 33,20,100

3. 89,400 (m) 47.0 42,01,800

4. 89,800 (p) 48.0 43,10,400

5. 89,800 (s) 49.0 44,00,200

Cost per unit = F.C. (p.u.)

+ V.C. (p.u.)

------------------

T.C. (p.u.)

Fixed Cost:-

No

.

Particulars Amount

(Rs.)

1. Salary to Employees 3,48,000


3. Utilities 36,000

4. Depreciation 1,90,500

5. Interest on Capital 1,74,856

Total Fixed Cost 8,60,95

45

6

Fixed Cost Per Unit = TFC

Units Produced

= 8,60,956

54,000

= Rs. 15. 94 p.u.

Variable Cost:-

No

.

Particulars Amount

(Rs.)

1. Raw Materials 10,25,700

2. Salary to Employees 3,06,000


Total Variable

Cost

15,43,800

Variable Cost Per Unit = TVC

Unit Produced

= 15,43,800

54,000

46

= Rs. 28.59 p.u.

Total Cost Per Unit =

F.C. (p.u.) = 15.94

+ V.C. (p.u.) = 28.59

Rs. 44.53

Particulars Amount

(Rs.)

Sales

Variable Cost

24,27,30

0

15,43,80

0

Contribution

883500

Fixed Cost

8,60,956

(a) Profit Volume Ratio:-

= Contribution x 100

47

Sales

= 8,83,500 x 100

24,27,300

= 36.40%

(b) B.E.P. (units)

= Fixed Expenses

Contribution (p.u.)

= 8,60,956

17.91 (46.5 – 28.59)

= 48,071 units

48

(c) B.E.P. (Rs.)

= Fixed Expenses

P.V.R.

= 8,60,956

36.40%

= Rs. 23,65,264.

(d) B.E.P.(%)

= F.C. x Utilized capacity

Contribution

= 8,60,956 x 60

8,83,500

= 58.47%.

Year Opening

Balance

Installme

nt

Closing

Balance

Interes

t

1. 1,23,500 24,700 98,800 16,05

5

2. 98,800 24,700 74,100 12,84

4

3. 74,100 24,700 49,400

9,633

4. 49,400 24,700 24,700

6,422

49

5. 24,700 24,700 - -

Capital Rat

e

(%)

Interest

Amt (Rs.)

Ownership Capital

6,41,950

Borrowed Capital

9,50,000

15,91,950

8%

21

%

13

%

51,356

1,23,500

1,74,856

Average Cost of Capital:

= 1,74,856 x 100

15,91,950

= 10.98%.

R.O.I. = EBIT x 100

50

Cost of Project

= 2,60,572 x 100

15,91,950

= 16.37%.

1

Particulars Amt.

(Rs.)

Amt.

(Rs.)

Sales 24,27,30

0

(-) Cost of production

Raw Material

Staff & Labour

Other Expenses

Utilities

Depreciation

(+) Closing Stock

EBIT

(-) Interest on

Capital:

Ownership Capital

Borrowed Capital

EBT

102570

0

654000

323700

36000

190500

2229900

197400

63172

260572

51

(-) Tax 35%

EAT 51536

123500 174856

85716

30000.6

55715

52

Gross Profit Ratio:

G.P.R. = Gross Profit x 100

Sales

= 1086772 x 100

2427300

= 44.77%.

Net Profit Ratio:

N.P.R. = PAT x 100

Sales

= 56864 x 100

2427300

= 2.34%.

Fixed Assets Turnover Ratio:

Sales x 100

Fixed Assets

= 2427300 x 100

1422000

= 1.71%.

53

In each & every business activity, there are some

hindrances risk, uncertainties etc. which the Co. has to face

and overcome them. Risk factor means those factors which

created hindrances in the growth of the Co. and also its

development. These factors act as challenges or threats to

the Co. for its product. Thus, maximum care must be taken

into consideration by promoting the Co.

At present there is a high competition in the market.

Many national & multinational Co.’s enjoy a good market

share in the urban areas & rural areas. Some of the risk

factors of our unit are as follows:

(1) As our product is under the list of electronic items so if

license is not provided & also the govt. authority within

specific time, it is difficult to start the production.

(2) There is also possibility that the loan amount necessary

is not obtained from bank.

54

(3) In near by future there will be cut-throat competition in

the market and it may be difficult to continue the

business.

(4) It can be possible that all the factors may be suitable

for production & finance but the marketing of our

products may not be enough so there is every

possibility of failure or close of unit.

(5) As the product is mainly marketed at the rural and semi

urban areas (Saurashtra & Kutch) there is a chance of

lack of awareness in case of illiterate people who

cannot read the advertisement boards along the roads

& so on.

55

For S.S. pipe:-

‘Chetan’ Hardware, Rajkot.

Other Materials:-

Lalji Mohan, Ghikata Road, Rajkot.

All the material are available locally.

All the machines for my factory are easily available at

‘MODERN MACHINE TOOLS.’

56

Projected Operating Cost of

“KRISHNA ENTERPRIES.”

Particulars Amoun

t (Rs.)

Amou

nt (Rs.)

Sales [A]

(-) Cost of operation:

Raw-Material

Direct Wages To Workers:

Skilled

Unskilled

Utilities:

Electricity

Direct Expense Relating To

R.M.:

Freight & Octroi

(+) Opening Stock Of Raw Material

(-) Closing Stock Of Raw Material

(+) Opening Stock of Finished

Goods

(-) Closing Stock of Finished Goods

TOTAL COST OF OPERATION [B]

Gross Profit (A-B)

Indirect Expenses:

Total Factory Cost

(+) Total Office Cost

171018

0

28800

0

10800

0

4800

0

6000

0

----

----

7930

0

9198

5

42018

00

22014

95

20003

05

57

(+) Total Selling & Distribution

Cost

TOTAL INDIRECT EXPENSES

EBIT (G.P.- TOTAL INDIRECT

EXP.)

(-) Interest:

Ownership Capital

Borrowed Capital

EBT (Earning Before Tax)

(-) Tax 33.66%

220149

5

271750

21655

0

93870

0

14270

00

51356

74100

14270

00

5733

05

12545

6

4478

49

15074

6

EAT/NET PROFIT 29710

3

Trading Account of

“KRISHNA ENTERPRISES.”

Dr. Cr.

58

Particulars Amt.

(Rs.)

Particulars Amt.

(Rs.)

To Opening Stock

To Purchase A/c.

To Salary A/c .

Skilled

Unskilled

To Direct Expense:

Utilities

Freight & Octroi

To Gross Profit

79,300

17,10,18

0

2,88,000

1,08,000

48,000

60,000

20,00,3

05

By Sales

By Closing

Stock

42,01,8

00

91,98

5

42,93,7

85

42,93,

785

59

Profit & Loss A/c. of

“KRISHNA ENTERPRISES.”

Dr. Cr.

Particulars Amt.

(Rs.)

Particulars Amt.

(Rs.)

To Salary to

Employees

To Depreciation

To Repairs & -

Maintenance

To Insurance on P/M

To Stationary &

Postage - Expense

To Telephone

Expense

To Insurance on

Office -Building

To Selling &

Distribution

To Advertising Exp.

To Packing Exp.

To Transportation

Cost

To Income Tax

To Int. on Ownership -

Capital

To Int. on Borrowed -

4,80,00

0

2,04,50

0

12,000

6,000

15,000

21,600

1,200

150,000

50,000

44,700

20,000

1,50,74

6

51,356

74,100

By Gross

Profit

20,00,3

05

60

Capital

To Cash Discount

To Comm. to

Salesman

To Gift to Employes

To Net Profit

2,00,00

0

72,000

1,50,00

0

2,97,1

03

20,00,

305

20,00,

305

61

Balance Sheet Of

“HARDIK ENTERPRISES.”

Cr. Dr.

Capital + Liabilities Amt.

(Rs.)

Assets Amt.

(Rs.)

CAPITAL

ACCOUNTS:

Indravadan

Parekh

436024.5

Sweety Parekh

436024.5

8,72,049

(-)

Drawings

2,00,500

BANK LOAN:

Gondal Nagrik Sahkari

Bank

CURRENT

LIABILITIES:

6,71,54

9

6,44,10

0

1,60,00

0

1,50,74

FIXED ASSETS:

Land

350000

Building

280000

P&M

233500

Furniture

59500

Computer

4000

Vehicle

264000

-------------

Gross

11,91,000

Block of

Fixed Asset

9,86,500

62

Sundry Creditors

Provision For Income

Tax

6

16,26,3

95

(-)

Accumulated

Dep.

2,04,500

-----------

NET BLOCK OF

FIXED ASSETS

CURRENT

ASSETS:

Bank Balance

Cash on hand

Sundry

Debtors

Advance Tax

Closing Stock

1,26,9

10

1,00,0

00

2,01,0

00

1,20,00

0

91,98

5

16263

95

63

COST SHEET OF

‘KRISHNA ENTERPRISES’

Particulars Cost

Perunit

Amt.

(Rs.)

Amt

(Rs.)

MATERIAL CONSUMED

Opening Stock of Raw Material

(+) Purchase Of Raw Material

(-) Return Of Raw Material

(+) Expense Relating to Purchase of

Raw Material

Freight & Octroi

(-) Closing Stock of Raw Material

(A) COST OF MATERIAL

CONSUMED:

Direct Wages to Workers:

Skilled

Unskilled

(B) PRIME COST:

FACTORY OVERHEAD:

INDIRECT WAGES:

-----

19.00

----

0.67

-----

17101

80

----

60000

--

19.67

3.20

1.20

---

28800

0

10800

0

177018

0

39600

0

64

Supervisor Salary

Factory Manager

Electricity

Repairs & Maintenance

Insurance of Plant & Machinery

Depreciation On Plant & Machinery

Depreciation On Factory Building

(C) FACTORY COST:

(D) OFFICE COST:

Insurance on Office Building

SALARIES TO ADMINISTRATION

STAFF:

Accountant

Watchman

Clerk

Stationary & Postage

Telephone

Depreciation on Furniture

Depreciation on Computer

Interest on Ownership Capital

(E) COST OF PRODUCTION:

(+) Opening Stock Of Finished

Goods

(-) Closing Stock of Finished Goods

(F) COST OF PRODUCTION OF

GOODS SOLD:

Selling & Distribution Overhead:

24.07

3.55

27.62

48000

54000

48000

12000

6000

11675

0

3500

0

216618

0

319750

2485930

2.98

30.6

1200

66000

60000

36000

15000

21600

12750

4000

51536

79300

91985

26790

6

275383

6

65

Selling & Distribution Expenses

Salary to Salesman

Advertisement Expense

Transportation Expense

Packing Expense

Depreciation on Vehicles (2

Vehicles)

Cash Discount

Commission to Salesman

Gift to Employees

(G) COST OF SALES

(TOTAL COST)

(-) SALES OF FINISHED GOODS

NET PROFIT

(-) INTEREST ON BORROWED

CPITAL

TAX

NET PROFIT AS PER P&L A/c.

30.6

10.5

41.1

47

15000

0

21600

0

5000

0

2000

0

4470

0

3600

0

20000

0

7200

0

15000

0

7410

2741151

938700

3679851

4201800

521949

224846

29710

3

66

0

15074

6

67

Particulars

Year 1 Year 2 Year 3

Qty. Amt.

(Rs.)

Qty. Amt.

(Rs.)

Qty. Amt.

(Rs.)

Opening

Balance

(+)Purchase

(-) Closing

Stock

--

9,71,88

0

--

--

10,25,70

0

--

--

12,92,40

0

--

--

13,64,82

0

--

--

16,22,1

00

--

--

17,10,1

80

--

Particulars

Year 1 Year 2 Year 3

Qty. Amt.

(Rs.)

Qty. Amt.

(Rs.)

Qty. Amt.

(Rs.)

Opening

Balance

(+)Goods

Manufacture

(-) Sales

--

54,00

0

52,20

0

--

18,95,1

56

18,31,9

84

1,800

72,00

0

71,40

0

63,17

2

23,75,2

76

23,59,1

48

2,40

0

90,00

0

89,40

0

79,3

00

27,53,8

36

27,41,1

51

CLOSING 1,80 63,1 2,400 79,30 3,00 9,198

68

STOCK 0 72 0 0 5

Particul

ars

Gross Block Depreciation

Net

Block

S.L.M.

Openin

g

+

Addition

Total Total

Accum

ulated

Depreciati

on During

the Year

Land

Building

P&M

Furniture

Computer

Vehicle

3,50,0

00

3,50,0

00

4,67,0

00

85,000

20,00

0

1,50,0

00

3,50,00

0

3,50,00

0

4,67,00

0

85,000

20,000

1,50,00

0

--

--

--

--

--

--

--

35,000

1,16,75

0

12,750

8,000

18,000

3,50,00

0

3,15,00

0

3,50,25

0

72,250

12,000

1,32,00

0

TOTAL 14,22,0

00

14,22,

000

--

1,90,500

12,31,

69

500

70

Particulars Amt.

(Rs.)

Electricity Expenses

Supervisor Salary

Factory Manager Salary

Depreciation on Plant & Machinery

Depreciation on Factory Building

Repairs & Maintenance

Insurance of Plant & Machinery

36,000

42,000

48,000

1,16,750

35,000

6,000

3,000

TOTAL 2,86,75

0

71

Particulars Amt.

(Rs.)

Stationary & Postage Expense

Telephone

Depreciation on Furniture

Depreciation on Computer

Insurance on Office Building

Accountant Salary

Watchman Salary

Clerk Salary

Interest on Ownership Capital

Selling & Distribution Expenses

Marketing Salesman Salary

Advertising Expense

Packing Expense

Depreciation on Vehicles

Transportation Cost

12,000

18,000

12,750

8,000

600

60,000

48,000

30,000

51,356

1,50,00

0

1,20,00

0

60,000

26,100

18,000

12,000

TOTAL 6,26,8

06

72

1) ACCOUNTING POLICIES:

Basis of Accounting:

The Co. prepares its accounts on accrual

basis, except otherwise stated, in accordance with

the normally accepted accounting principles.

(2) FIXED ASSETS:

Fixed Assets are stated at cost less

accumulated depreciation.

(3) DEPRECIATION:

Depreciation on Fixed Assets is provided on

Straight Line Method at the rates specified.

Depreciation on fixed assets added/disposed

of during the year, is provided to the month of

additional/disposal.73

(4) INVENTORIES:

Closing Stock of Finished goods are valued at

the cost price.

(5) TAXATION:

Provision of tax comprises of current tax.

74

gas lighter (ppr)

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