Download - 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:-
Krishna Enterprises.
Prahlad Plot Main Road,
Near Patel Diary,
Rajkot.
Location of the Unit:-
Krishna Enterprises.
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
39
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:
No. Particulars Amount
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
No. Particulars Amount
(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
2. Other Expenses 1,11,600
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
3. Other Expenses 2,12,100
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