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