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Ppr mba wheel cap

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Business Proposal

Business Proposal

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  • 1. BUSINESS PLAN PREPARED BY PANDYA RAKESH D. MBA 3rd SEM Roll No:- 56 ACADEMIC YEAR - 2 0 1 0 - 1 1 COLLEGE SHREE N.R. VEKARIYA INSTITUTE OF, BUSINESS MANAGEMENT STUDIES M.B.A. COLLEGE, JUNAGADH Prepared By:- Pandya Rakesh D. 1
  • 2. DECLARATION I undersigned PANDYA RAKESH D., a student of MBA 3rd SEM hereby declare that the project work presented in this report is my own work and has been carried out under the supervision of Dr. RAJESH PATEL director of college. This work has not been previously submitted to any other industries or university for examination. Date:- Place: - Junagadh (Pandya Rakesh D.) Prepared By:- Pandya Rakesh D. 2
  • 3. PREFACE The course of M.B.A. is designed in a special way through which young entrepreneurs are generated. In the third year of this course, the subject “entrepreneurship and innovation” is included with a view to creating and developing good entrepreneur skills and attitudes among students in a practical and professional way. Today in the growth rate of the Indian economy, contribution of small scale industry is highly important. The S.S.I. plays a vital role by contributing 40% to the total national income. Therefore it is management and working of SSI as a student of management. As such, I have great pleasure in the presentation of the report on “Wheel Caps” which is the practical study in MBA of Gujarat Technology University. The report prepared is completely imaginary with fictitious information and imaginary figures to acquire practical knowledge. Prepared By:- Pandya Rakesh D. 3
  • 4. ACKNOWLEDGEMENT In accomplishing any task a person is aided by many people who through their little or more contribution help in his/her success. I take this opportunity to express my sincere thanks to all those who have helped me in the preparation of this report. Also I would thank my parents and friends and Dr. Rajesh Patel for constant support and encouragement due to which the work is accomplished. Date :– Place :– (Pandya Rakesh D.) Prepared By:- Pandya Rakesh D. 4
  • 5. INDEX Sr. No. Particulars Page No. 1 Introduction 2 Project at Glance 3 Promoter Background 4 Organizational Structure 5 Justification of Location 6 Product Details 7 Market Potential 8 Raw Materials 9 Machines 10 Manufacturing Process 11 Production Capacity Schedule 12 Staff and Labour Details 13 Financial Details Total Fixed Asset Cost of Production 14 Total Working Capital Requirement 15 Total Capital Investment 16 Source of Finance 17 Interest of Capital 18 Depreciation 19 Annual Cost of Production 20 Break Even Analysis 21 Cost of Capital 22 Return on Investment Prepared By:- Pandya Rakesh D. 5
  • 6. 23 Profitability Analysis 24 Projected Operating Statement 25 Projected Cost Sheet 26 Projected Balance Sheet 27 Projected Profit & loss Account 28 Projected Balance Sheet 29 Risk Factors 30 Name & Address of Raw Material Suppliers 31 Name & Address of Machineries Suppliers 32 Disclosure of Significant Accounting Policy 33 Conclusion Prepared By:- Pandya Rakesh D. 6
  • 7. I N T R O D U C T I O N Small scale industry is the pillar of Indian economy. Most of the business carried out in India is from small scale units. Small scale units provide raw materials to large scale units. The number of small scale units, the volume and range of products manufactured, the employment provision and value of exports by these industries have grown substantially during the last few decades. In this fast moving world vehicles play a vital role in itself. Without the help of vehicles, no matter whether private or transport vehicles a task could not be completed independently. As per the current market trend everyone likes changes and not rigidity. Many a time we get bored by seeing same things again and again. Wheels are the main part of the car and are used the most than any other part in the car. It is not possible every time to change the whole wheel to change its show, so here I came with a solution by manufacturing the wheel caps, the whole view of your wheels gets changed just by changing its caps. Prepared By:- Pandya Rakesh D. 7
  • 8. P R O J E C T A T G L A N C E Name of Unit - Torque Wheel caps Pvt. Ltd. Registered Office - Aji G.I.D.C. Industrial Area, Plot No. B/3/97 - Rajkot Gujarat – India. Factory Location - Aji G.I.D.C. Industrial Area, Plot No. B/3/97 - Rajkot Gujarat – India. Form of Organization - Sole Proprietorship Name of Promoter - Rakesh D. Pandya Name of Product - Wheel Caps Size of Unit - Small Scale Industries S.S.I. Registration No. - Applied For Mean of Finance - Owners Capital 50% Rs. lakhs Borrowed Capital 50% Rs. lakhs Cost of Project - Rs. 1, 50, 00, 000 Prepared By:- Pandya Rakesh D. 8
  • 9. P R O M O T E R B A C K G R O U N D Name - Rakesh D. Pandya Age - 22 years Office Address - Torque Wheel caps Pvt. Ltd. Plot No. B/3/97, Aji G.I.D.C. Industrial Area Rajkot. Qualification - M.B.A. [HR] Role in Unit - Administration & Marketing Financial Contribution - 50% of Total Capital Prepared By:- Pandya Rakesh D. 9
  • 10. O R G A N I Z A T I O N A L S T R U C T R E Chairman Finance Marketing Production Supervisor Accountant Salesman Skilled Worker Peon / Clerk Watchman Semi Skilled Worker Unskilled Worker Prepared By:- Pandya Rakesh D. 10
  • 11. J U S T I F I C A T I O N O F L O C A T I O N One of the most important issues that need to be taken into consideration before establishing a new unit is the location of the proposed project. We have to take into consideration many points. It involves cost which affect to the profitability of the business. Moreover there are other environmental condition and infrastructure facilities too. This unit is to be located at Rajkot in Aji G.I.D.C. which is an industrial area. Here there are many benefits for setting up the unit. Following are the advantages which justify the location of Aji area – • Easy availability of the raw materials • Nearness to target market • Availability of good infrastructure facilities • Easy availability of labour and at cheaper rate Prepared By:- Pandya Rakesh D. 11
  • 12. P R O D U C T D E T A I L A product is anything that can be offered to market for satisfying the consumers needs and wants. This product is mainly used in the replacement market and rarely used for the OE [Original Equipment] customers. Product Features: There are many features of wheel caps and they are as follows: • Wheel caps are of many different designs, shapes and sizes. So the customers have wide choice for selection. • Wheel caps can be fit in all the four or more wheel vehicles, no matter whether small cars or large trailers. • One gets 100% consumption from this product as there is no wastage of product. • Price of the product is economical as compared to other competitors so even the small class people can afford to buy it. USES: Wheel caps are used to cover the rims of the tyres. It is available in many different sizes, colours, shapes, designs, etc. BRAND NAME: Brand represents the company in the mind of the customers. Brand also plays an important role in marketing. Good brand creates goodwill of the firm in the market. Once the brand occupies its space in the market, company would have to face less competition in this competitive market. Prepared By:- Pandya Rakesh D. 12
  • 13. Company ‘ s LOGO: Prepared By:- Pandya Rakesh D. 13
  • 14. M A R K E T P O T E N T I A L Market oriented thinking is necessary in today’s competitive world. Now a day’s most of the companies are competing to enlarge their share in the existing market. As a result there are winners and losers. The Losers are those who bring nothing special in the market and the winners are those who carefully analyze the market need, identify opportunities and create value added offer for target customers group that matches the needs. Now a day the main aim of business is creation of customers as marketing is more important than production. Customer oriented marketing is a theme of modern marketing management. Today to stand in the competition and capture more market, to attract the customer by providing effective and attractive sales, promotional schemes and advertising is done and the most important is by providing qualitative goods with innovation. There is a vast market available for wheel caps and considering the population of our country, there is a great scope for growth of this industry. It has also enormous demand as these wheel caps help in improving the looks of the vehicles. We too know now a day the accessories market is flourishing day by day and touching the heights which were never touched before. This itself shows there is unlimited demand for these kinds of products. Here the thing matters is not “How would you sell?” but “How much can you manufacture?” Prepared By:- Pandya Rakesh D. 14
  • 15. R A W M A T E R I A L S T h e m a i n r a w m a t e r i a l u s e d f o r m a n u f a c t u r i n g w h e e l c a p s i s H I P G r a d e P l a s t i c G r a n e a u l s . P l a s t i c a r e a v a i l a b l e o f m a n y d i f f e r e n t g r a d e s , b u t f o r h i g h e r d u r a b i l i t y i t i s p r e f e r r e d t o u s e H I P G r a d e p l a s t i c w h i c h i s s u i t a b l e f o r w h e e l c a p s . T h e r e a r e m a n y c o m p a n i e s i n I n d i a w h i c h m a n u f a c t u r e s t h i s g r a d e o f p l a s t i c . F o r m a n u f a c t u r i n g w h e e l c a p s e x a c t p l a s t i c s h e e t s a r e n o t u s e d b u t i n s t e a d p l a s t i c g r e n e a u l s a r e u s e d . Prepared By:- Pandya Rakesh D. 15
  • 16. M A C H I N E S Machines play a very important role in any manufacturing unit. Machines make the work easy, simpler, accurate and qualitative. The same standard of quality can be achieved in the product through the use of machines. Machines give lot of work if not handled properly. Basically machines require regular and proper maintenance and at time servicing is also required. If this is done then machines will last for a longer durations. Machines make the work of the workers easier and even with the help of the machines we get faster work done. The unit to be set up need the following machines for producing the wheel caps – 1)Cooling tower :- This machine helps to cool down the hot plastic wheel plate after grinding. 2)Injection moulding [horizontal] :- This machine moulds or in other words gives the hot plastic its desired shape based on the die used. This machine pushes the plastic from left and leaves the plastic to dense itself on the right hand side in the die. 3)Injection moulding [vertical] :- The only difference between the working of horizontal and vertical moulding machine is that one works on horizontal way and the other on vertical basis. Rest all the functions remains the same. 4)Injection moulding [manual] :- Manual moulding machine is operated fully by the labors whereas horizontal and vertical moulding machines are fully automatic. Prepared By:- Pandya Rakesh D. 16
  • 17. 5)Grinding machine :- This machine gives the wheel caps its proper shape after moulding is done. As caps are automobile component, its all dimensions are of great importance to be checked. 6)Mixer drum :- Mixer drum heats and melts the plastic greneaules to turn them to liquid state. This liquid form of plastic is then further used to make wheel caps. 7)Sticker machine :- Sticker machine is used at the time of packing. Sticker here does not only refer to MRP sticker but also the batch no., serial no., etc. 8)Stamping machine :- Stamping machine refers to the machine which marks the brand name and the company name on the caps as they are manufactured. 9) Stripping:- Stripping machine refers to that machine which at last stripes the corrugated cartons on the basis of orders and dispatches. Prepared By:- Pandya Rakesh D. 17
  • 18. M A N U F A C T U R I N G P R O C E S S Raw material comes in the form of greneauls having round and rectangular shape and transparent or opaque color. Readily colored materials are also available. Than put that ready colored greneauls in the hopper of the moulding machine. Than with the help of “screw barrel” [the gap between barrel and screw thread consist of the material], this material than passes, pushed by the machine pressure and heaters. Heaters are connected from outside of screw barrel into the mould of the article. The mould is of two parts, “punch & cavity” [the gap between these two forms the article] both these parts are connected with the continous supply of chilled water from outer side which help mould to keep cool and give shape to the article from the hot material injected. Water supply is cycled by, “cooling tower” which absorbs the heat of the water and supplies the cold water. The scrap of the moulding is recycled and used again. After the product is out of the machine, finishing work is done via small blade and than it is sent to the packing department. Prepared By:- Pandya Rakesh D. 18
  • 19. P R O D U C T I O N C A P A C I T Y S C H E D U L E Prepared By:- Pandya Rakesh D. 19 Installed Capacity 1604285 pieces p.a. Number of working days in a month 25 days Number of shifts per day 1 Number of hours per shift 8 hours Production capacity 70% 1123000 pieces p.a.
  • 20. S T A F F A N D L A B O U R D E T A I L S Prepared By:- Pandya Rakesh D. 20 Mgt. representative General manager Production manager Purchase manager Personnel manager Finance manager Marketing manager Technical supervisor Sales manager Accountant Salesman Peon Watchman 1 1 1 1 1 1 1 1 1 4 4 2 1 Skilled worker Semi skilled worker Unskilled worker 8 8 5
  • 21. FINANCIAL DETAILS Prepared By:- Pandya Rakesh D. 21
  • 22. TOTAL FIXED ASSET LAND BUILDING Prepared By:- Pandya Rakesh D. 22 Particular Sq. feet Rate (Rs.) Total Cost Land 8000 500 40,00,000 Particular Sq. feet Rate (Rs.) Total Cost Building 6750 300 20,25,000
  • 23. PLANT & MACHINERY Name Qty. Rate (Rs.) Total Cost Cooling tower 1 90,000 90,000 Grinding Machine 2 40,000 80,000 Injection moulding horizontal 2 5,00,000 10,00,000 Injection moulding vertical 2 2,50,000 5,00,000 Manual moulding 1 2,00,000 2,00,000 Mixer drum 2 15,000 30,000 Stripping machine 1 40,000 40,000 Sticker and stamping Machine 1 1,00,000 1,00,000 Dial gauge 1 40,000 40,000 Die measuring instrument 1 50,000 50,000 Prepared By:- Pandya Rakesh D. 23
  • 24. FURNITURE & FIXTURES Particulars Rate Amount Factory furniture 3,00,000 3,00,000 Office furniture 3,00,000 3,00,000 OTHER ASSETS Particular Qty. Rate (Rs.) Total Cost Electrification Installation Charges - 600,000 600,000 Computers 4 30,000 1,20,000 Telephone 4 3,000 12,000 Fire equipment - 1,00,000 1,00,000 Production dies 5 1,00,000 5,00,000 Trolley & other Handling Equipments - 3,30,000 3,30,000 Pre-operative expenses - 5,00,000 5,00,000 TOTAL 21,62,000 Prepared By:- Pandya Rakesh D. 24
  • 25. TOTAL FIXED ASSETS No. Particulars Amount 1. Land 40,00,000 2. Building 20,25,000 3. Plant & Machinery 21,30,000 4. Furniture & Fixture 6,00,000 5. Electrification & Installation Charges 6,00,000 6. Computers, Telephones & Trolley 4,62,000 7. Fire equipment & Production dies 6,00,000 8. Pre-operative expenses 5,00,000 Total fixed assets 1,09,17,000 RAW MATERIALS Prepared By:- Pandya Rakesh D. 25
  • 26. Working capital Prepared By:- Pandya Rakesh D. 26 Particular Rate (Rs.) Per Day Per Year Qty. Amt. Qty. Amt. Greneauls Total 72 per kg. 1921.3 1,38,334 1,38,334 576293 4,14,93,108 4,14,93,108
  • 27. STAFF & LABOUR Particulars No. of person Salary Per Month Per Year Manager 1 7,000 7,000 84,000 General manager 1 10,000 10,000 1,20,000 Production manager 1 6,300 6,300 75,600 Purchase manager 1 6,300 6,300 75,600 Personnel manager 1 6,300 6,300 75,600 Financial manager 1 6,300 6,300 75,600 Technical supervisor 1 6,300 6,300 75,600 Marketing manager 1 6,300 6,300 75,600 Sales manager 1 5,800 5,800 69,600 Accountant 4 5,500 22,000 2,64,000 Skilled Worker 8 4,000 32,000 3,84,000 Semi Skilled Worker 8 3,000 24,000 2,88,000 Unskilled Worker 5 2,000 10,000 1,20,000 Salesman 4 4,000 16,000 1,92,000 Peon 2 2,300 4,600 55,200 Watchman 1 1,700 1,700 20,400 Total 1,70,900 20,50,800 Prepared By:- Pandya Rakesh D. 27
  • 28. OTHER EXPENSES &UTILITIES Sr. No. Particulars Amount 1. Machinery parts & Repairs 1,30,000 2. Postage & Telegram 20,400 3. Telephone Expenses 1,20,000 4. Transportation 1,50,000 5. Miscellaneous Expenses 24,000 6. Advertisement 3,00,000 7. Insurance 1,20,000 8. Medical Expenses 60,000 9. Freight inward 1,20,000 10. Legal Expenses 60,000 11. Audit Fees 60,000 12. Traveling Expenses 2,40,000 13. Electricity expenses[3 Phase] 13,00,000 14. Fuel 2,97,000 15. Water 1,50,000 Prepared By:- Pandya Rakesh D. 28
  • 29. 16. Electricity expenses[office] 1,38,000 17. Packing expenses 16,83,000 18. Other selling expenses 2,40,000 19. Internet expenses 12,000 20. Stationery expenses 25,000 21. Conveyance expenses 68,000 Total 53,17,400 TOTAL WORKING CAPITAL REQUIREMENT Sr. No. Particular Amount 1. Raw Material 4,14,93,108 2. Staff & Labour 20,50,800 4. Other Expenses 53,17,400 Total 4,88,61,308 TOTAL CAPITAL INVESTMENT Sr. No. Particular Amount 1. Fixed Cost 1,09,17,000 2. Working Capital (1 month) 40,71,775 3. Cash in Hand 11,225 Total 1,50,00,000 Prepared By:- Pandya Rakesh D. 29
  • 30. S O U R C E S O F F I N A N C E Sr. No. Particular Amount 1. Owners Capital (50%) 75,00,000 2. Borrowed Capital (50%) 75,00,000 Total 1,50,00,000 I N T E R E S T O N C A P I T A L Particular Loan Amount Interest Rate Interest Amount Owner Capital 75,00,000 8% 6,00,000 Borrowed Capital 75,00,000 12% 9,00,000 Total 1,50,00,000 15,00,000 D E P R E C I A T I O N Particular Value Rate of Depreciation Depreciation Building 20,25,000 10% 2,02,500 Machinery 20,40,000 15% 3,06,000 Furniture & fixtures 6,00,000 10% 60,000 Prepared By:- Pandya Rakesh D. 30
  • 31. Measuring instrument & gauge 90,000 15% 13,500 Other Fixed Asset 15,42,000 15% 2,31,300 Computers 1,20,000 60% 72,000 Electrification 6,00,000 10% 60,000 Telephone 12,000 10% 1,200 Trolley & other equipments 8,30,000 10% 83,000 Total 10,29,500 ANNUAL COST OF PRODUCTION Sr. No. Particular Amount 1. Raw Material 4,14,93,108 2. Salaries 20,50,800 3. Other Expenses & utilities 53,17,400 4. Interest on Capital 15,00,000 5. Depreciation 10,29,500 Total 5,13,90,808 FIXED COST Sr. No. Particular Amount 1. Depreciation 10,29,500 2. Interest on Capital 15,00,000 3. Salary (50%) 10,25,400 4. Other Expenses (30%) 15,95,220 Total 51,50,120 Fixed Cost per unit = Total Fixed Cost No. of Units Prepared By:- Pandya Rakesh D. 31
  • 32. = 51, 50,120 11, 23,000 = Rs. 4.58 VARIABLE COST Sr. No. Particular Amount 1. Raw Material 4,14,93,108 2. Salary (50%) 10,25,400 3. Other Expenses (70%) 37,22,180 Total 4,62,40,688 Variable Cost per unit = Total Variable Cost No. of Units = 4,62,40,688 11,23,000 = Rs. 41.17 TOTAL COST PER UNIT = Fixed cost per unit + variable cost per unit = 4.58 + 41.17 = 45.75 Prepared By:- Pandya Rakesh D. 32
  • 33. BREAK EVEN ANALYSIS Break-even point is that point of achieving, where total revenue and total expenses are equal. It is that point of zero profit. If sales exceed BEP, the business will earn profit and if it decreases from BEP, the business will incur loss. Thus, BEP may take, as the minimum level of production and sales and company must attain in order to be economically viable. • Contribution/unit = Selling price/unit – Variable cost/unit = Rs. 49 – Rs. 41.17 = Rs. 7.83 • BEP ( in % ) = [Fixed Cost ÷ {Fixed Cost + Profit}] × Capacity Utilization = [51,50,120 ÷ {51, 50, 120 + 30,71,983}] × 70 = [51,50,120 ÷82,22,103] × 70 = 43.8% • BEP (units) = Fixed Cost ÷ Contribution per unit = 51, 50, 120 ÷ 7.83 = 6,57,742 units Prepared By:- Pandya Rakesh D. 33
  • 34. • BEP (Rs.) = BEP (units) × Selling price p. u. = 6,57,742 × 49 = Rs. 3,22,29,359 LOAN REPAYMENT SCHEDULE Sr. No. Opening Balance Installment Closing Balance Interest 1. 75,00,000 7,50,000 67,50,000 9,00,000 2. 67,50,000 7,50,000 60,00,000 8,10,000 3. 60,00,000 7,50,000 52,50,000 7,20,000 4. 52,50,000 7,50,000 45,00,000 6,30,000 5. 45,00,000 7,50,000 37,50,000 5,40,000 6. 37,50,000 7,50,000 30,00,000 4,50,000 7. 30,00,000 7,50,000 22,50,000 3,60,000 8. 22,50,000 7,50,000 15,00,000 2,70,000 9. 15,00,000 7,50,000 7,50,000 1,80,000 10. 7,50,000 7,50,000 - 90,000 AVERAGE COST OF CAPITAL Particular Capital Rate Interest Owned Capital 75,00,000 8% 6,00,000 Borrowed Capital 75,00,000 12% 9,00,000 Total 15,00,000 Prepared By:- Pandya Rakesh D. 34
  • 35. Avg. Cost of Capital = R.O.I. own capital + R.O.I of borrowed capital 2 = 8% + 12% 2 = 10% RETURN ON INVESTMENT R.O.I. = [EAT ÷Total Capital Invested] × 100 = [30,71,983÷1,50,00,000] × 100 = 20.48 % P R O F I T A B I L I T Y A N D P R O F I T A B I L I T Y A N A L Y S I S Particulars Amount Sales 5,43,90,000 Less : Cost of Production 4,88,59,335 EBIT 55,30,665 Less : Interest 9,00,000 EBT 46,30,665 Less : Tax 15 58 682 EAT 30,71,983  Gross Profit Ratio : GPR = Gross Profit ÷ Sales × 100 = 1,00,82,865 ÷ 5, 43, 90, 000 × 100 = 18.5 %  Net Profit Ratio : NPR = Net Profit (EAT) ÷ Sales × 100 Prepared By:- Pandya Rakesh D. 35
  • 36. = 30,71,983 ÷ 5, 43, 90, 000 × 100 = 5.60% PROJECTED COST SHEET Particular Year 1 Year 2 Year 3 Raw Material Consumed Purchases Add: Direct Wages Utilities 4,14,93,108 7,92,000 14,50,000 4,14,93,108 7,92,000 14,50,000 4,14,93,108 7,92,000 14,50,000 PRIME COST (A) 4,37,35,108 4,37,35,108 4,37,35,108 Add: Repairs Manager’s Salary Supervisor’s Salary Watchman’s Wage Fuel Dep. on Machine Dep. on Building 1,30,000 84,000 75,600 20,400 2,97,000 3,06,000 2,02,500 1,30,000 84,000 75,600 20,400 2,97,000 2,60,100 1,82,250 1,30,000 84,000 75,600 20,400 2,97,000 2,21,085 1,64,025 TOTAL FACTORY OVERHEAD (B) 11,15,500 10,49,350 9,92,110 Administrative Overheads Prepared By:- Pandya Rakesh D. 36
  • 37. Add: General Mag. Salary Personnel Mag. Salary Accountant Salary Finance Mag. Salary Clerk’s Salary Post & Tele. Exp. Telephone Exp. Misc. Exp. Insurance Exp. Medical Exp. Legal Exp. Audit Fees Dep. on Computer Dep. on other F. A. Int. on Own Capital 1,20,000 75,600 2,64,000 75600 55,200 20,400 1,20,000 24,000 1,20,000 60,000 60,000 60,000 72,000 4,35,500 6,00,000 1,20,000 75,600 2,64,000 75,600 55,200 20,400 1,20,000 24,000 1,20,000 60,000 60,000 60,000 28,800 3,80,385 6,00,000 1,20,000 75,600 2,64,000 75,600 55,200 20,400 1,20,000 24,000 1,20,000 60,000 60,000 60,000 11,520 3,32,516 6,00,000 TOTAL ADMINISTRATIVE OVERHEAD (C) 22,34,300 21,35,985 20,70,836 COST OF PRODUCTION (A+B+C) 4,70,84,908 4,69,20,443 4,67,98,054 Add: Op. Stock of Finished goods Less: Cl. Stock of Finished goods - 5,45,060 5,45,060 10,86,315 10,86,315 1,47,520 COST OF PRODUCTION OF GOODS SOLD 4,65,39,848 4,63,79,188 4,77,36,849 Selling & Distribution Overhead Add: Salesman Salary Marketing Mag. Salary Purchase Mag. Salary Sales Mag. Salary Transportation Exp. Advertising Exp. Traveling Exp. Packing Exp. Conveyance Exp. 1,92,000 75,600 75,600 69,600 3,00,000 3,00,000 2,40,000 16,83,000 68,000 1,92,000 75,600 75,600 69,600 3,00,000 3,00,000 2,40,000 16,83,000 68,000 1,92,000 75,600 75,600 69,600 3,00,000 3,00,000 2,40,000 16,83,000 68,000 Prepared By:- Pandya Rakesh D. 37
  • 38. COST OF SALES 4,95,43,648 4,93,82,988 5,07,40,649 SALES 5,43,90,000 5,43,90,000 5,61,27,540 PROFIT (Sales–COS) 48,46,352 50,07,012 53,86,891 Operating Statement PARTICULARARS YEAR 1 YEAR 2 YEAR 3 A. SALES [A] 5,43,90,000 5,43,90,000 5,61,27,540 B. Direct expense 4,48,52,195 4,48,52,195 4,48,52,195 COST OF OPERATION 4,48,52,195 4,48,52,195 4,48,52,195 Add: Opening stock - 5,45,060 10,86,315 Less: closing stock 5,45,060 10,86,315 1,47,047 B. TOTAL [B] 4,43,07,135 4,43,10,940 4,57,91,463 GROSS PROFIT[A-B] 1,00,82,865 1,00,79,060 1,03,36,077 Less: Indirect expense 45,52,200 43,74,235 36,54,146 EBIT 55,30,665 57,04,825 66,81,931 Less: Interest 9,00,000 8,10,000 7,20,000 EBT 46,30,665 48,94,825 59,61,931 Less: Tax @ 33.66 % 15 58 682 16,47,598 20,06,786 EAT 30,71,983 32,47,227 39,55,145 Prepared By:- Pandya Rakesh D. 38
  • 39. PROJECTED TRADING AND PROFIT & LOSS ACCOUNT Prepared By:- Pandya Rakesh D. 39
  • 40. Prepared By:- Pandya Rakesh D. 40 PARTICULARS 1 5t year 2nd year 3 rd year Sales 5,43,90,000 5,43,90,000 5,61,27,540 NET SALES/INCOME 5,43,90,000 5,43,90,000 5,61,27,540 - OPENING STOCK NIL 5,45,060 10,86,315 +CLOSING STOCK 5,45,060 10,86,315 1,47,047 Total (A) 5,49,35,060 5,49,31,2555,51,88,272 Manufacturing Expenses Raw materials 4,14,93,108 4,14,93,108 4,14,93,108 Labor 7,92,000 7,92,000 7,92,000 Utilities 13,00,000 13,00,000 13,00,000 Factory expenses 6,76,587 6,76,587 6,76,587 Maintenance & Repairs 23,500 23,500 23,500 Fuel 2,97,000 2,97,000 2,97,000 Water 1,50,000 1,50,000 1,50,000 Freight inward 1,20,000 1,20,000 1,20,000 TOTAL MANU. EXP. (B) 4,48,52,195 4,48,52,195 4,48,52,195 GROSS PROFIT (A-B) (C) 1,00,82,865 1,00,79,060 1,03,36,077 Adm. & Selling Expenses Stamp & Postage duty 20,400 20,400 13,000 Telephone 1,20,000 1,20,000 1,20,000 Interest on Borrowed Capital 9,00,000 8,10,000 7,20,000 Traveling expenses 2,40,000 2,40,000 25,000 Advg. & Mktg. 3,00,000 3,00,000 5,25,000 Misc. expenses 24,000 24,000 24,000 Selling expenses 2,40,000 2,40,000 3,00,000 Packing expenses 1,92,000 1,92,000 2,70,000 Medical expenses 60,000 60,000 75,000 Salaries 12,58,800 12,58,800 5,50,000 Depreciation 10,29,500 8,51,535 7,29,146 Maintenance & Repairs 1,06,500 1,06,500 20,000 Electricity 1,38,000 1,38,000 1,38,000 Other selling expense 2,40,000 2,40,000 2,40,000 Internet expense 12,000 12,000 12,000 Stationery & printing 25,000 25,000 25,000 Conveyance expense 68,000 68,000 68,000 Audit fees 60,000 60,000 60,000 Legal expense 60,000 60,000 60,000 Transportation 3,00,000 3,00,000 3,00,000 Tax @ 33.66 % 15 58 682 16,47,598 20,06,786 W/o pre-operative expo 1,00,000 1,42,000 1,00,000 Insurance 48,000 48,000 48,000 Interest 9,00,000 8,10,000 7,20,000
  • 41. NET PROFIT(C-D) 30,71,983 32,47,227 39,55,145 P R O J E C T E D B A L A N C E S H E E T Liabilities Year 1 Year 2 Year 3 CAPITAL Owned Capital 75,00,000 75,00,000 75,00,000 Prepared By:- Pandya Rakesh D. 41
  • 42. SECURED LOAN Bank Loan CREDITORS NET PROFIT 67,50,000 12,55,630 30,71,983 60,00,000 14,32,940 32,47,227 52,50,000 17,54,667 39,55,145 1,85,77,613 1,81,80,167 1,84,59,812 Asset Year 1 Year 2 Year 3 Land Building Machinery Furniture & Fixture Electric Installation Telephone Computer Trolley & other equipments DEBTORS Cash in Hand Closing Stock 40,00,000 18,22,500 15,30,000 5,40,000 5,40,000 10,800 48,000 7,47,000 88,43,028 11,225 5,45,060 40,00,000 16,40,250 13,00,500 4,86,000 4,86,000 9,720 19,200 6,72,300 90,39,812 1,12,370 10,86,315 40,00,000 14,76,225 11,05,425 4,37,400 4,37,400 8,748 7,680 6,05,070 93,70,380 8,64,437 1,47,047 1,85,77,613 1,81,80,167 1,84,59,812 R I S K F A C T O R Every new business needs to determine its risk factors that the business will face. If risk factors are carefully determined then the entrepreneur can take better measures to see that they have limited effect on the business following are some of the risks that the new business will face:- Prepared By:- Pandya Rakesh D. 42
  • 43. • The unit will operate in highly competitive market where already other wheel caps manufacturing units have gained important position. • The risk of failure of the position.. • It may take time to beat the competitor’s product. • Due to heavy advertising, it might prove to be expensive and might not give desired results. • Initially, the production would be low but cost of production may be higher. • The business would take a longer period to reach breakeven point. • Initially, the required amount of sales will not be achievable and will result in loss. • Non-acceptance from the customer’s side. N a m e & a d d r e s s o f r a w m a t e r i a l s u p p l i e r  J . K I n d u s t r i e s P v t . L t d . W e s t e r n h i g h w a y , G . I . D . C P u n e . Prepared By:- Pandya Rakesh D. 43
  • 44. N A M E & A D D R E S S O F M A C H I N E R Y S U P P L I E R • M/S RIAT MACHINE TOOLS P.L. G.T. Road, Miller Gunj, Ludhiana – 141 003. Prepared By:- Pandya Rakesh D. 44
  • 45. • M/S SK MACHINES TOOLS National highway G.I.D.C Gondal (Guj) India. • M/S J.K. MACHINE TOOLS Gokuldham Main Road, Rajkot. • M/S TURN-O-TECH ENGINEERS C/1/276, G.I.D.C., Phase II, Road – R, Baroda. • M/S RAVI Industries Udhyognagar, G.I.D.C., Delhi. D I S C L O S U R E O F S I G N I F I C A N T A C C O U N T I N G P O L I C I E S Prepared By:- Pandya Rakesh D. 45
  • 46. The accounting policies used in this report is Double Entry System and all the effect of income and expenditure is given according to Double Entry System. The Depreciation is being calculated according to Reducing Balance Method. In this method, the depreciation changes according to the value of the asset remain in the last year. The asset is totally written off slowly and gradually. C O N C L U S I O N Prepared By:- Pandya Rakesh D. 46
  • 47. In the product project report on Torque Industries, I have discussed all financial data and other relevant information. The market of Osim Industries is expanding its demand for the product day by day. The return in this business is also satisfactory. At last, it can be said that, the future of this product is very bright. With the expectation of high profitability and good market, it is assumed that it would be the perfect product to be manufactured in today’s environment. Prepared By:- Pandya Rakesh D. 47