COST AND EARNINGS OF PROCESSING INDUSTRY

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COST AND EARNINGS OF PROCESSING INDUSTRY

  1. 1. NIKHIL . P2nd SEMESTER
  2. 2. IntroductionIndia has vast potential for fisheries from both inlandand marine resources. It has a large marine product andprocessing potential with varied fish resources alongthe 8041-km long coastline, 28000 km of rivers andmillions of hectares of reservoirs & brackish water. Thewide variety of fish resources found in Indian inlandwaters, coastal areas and deep seas comprising India’sExclusive Economic Zone has a large potential ofgrowth.
  3. 3. WHAT IS PROCESSING ?Nutritionally, fish is a very important source of easily digestible, highquality protein, vitamins and fats not obtainable in such highconcentrations elsewhere. Nonetheless, fish is a highly perishable foodstuffand spoils very fast unless appropriate preservation and processingtechniques are applied for increasing shelf life of fish.
  4. 4. Global scenarioThe net earnings rose from US $ 5200 millions in 1985 toUS $ 15600 million in ’99.Thailand and Norway are the world’s major exporters of fishproducts in value terms accounting for 16% each of total worldtrade.Europe is the leading region in sea food export with 40% oftotal sea food productionTuna, cephalopods, prawns are most exported globally.
  5. 5. Indian ScenarioIndia exports today marine products worth Rs 5124.6 Cr, covering 60commodities. The share of marine products in total export earnings is around3.4%. The share of Frozen shrimp in the export earnings is very high andcontributes about 65 –70 % of the total export earningsEstablishments connected with marine products export (as registered withMPEDA, 1996), include 625 exporters (380 manufacturer-exporters and 240merchant-exporters), 376 freezing plants, 13 canning plants, 4 in the agar-agar industry, 149 ice plants, 15 fish meal plants, 903 shrimp peeling plants,451 cold storage units, and 3 chitosan/chitin plants, with 95% of the seafoodprocessing units concentrated in 20major clusters in 9 states.The total installed freezing capacity is 7 500 tons per day, and the commercialproduction is mostly export oriented.
  6. 6. Technological changes in processing units1) Developments of canning industry2) New freezing techniques (IQF)3) Changes in quality assessment & management process in quality control4) Introduction of value added marine product5) Development of subsidiary processing industries with fish by products
  7. 7. There are three types of costs in processing plant3)Cost of initial investment5)Operational cost7)Fixed cost
  8. 8. Cost Sheet : What are the production inputs? A. Initial investment Item Quantity Cost ( INR) Land Freezing plant Cold storage Canning retort Electrification Water supply channels Vehicles Other Plant & Machinery Total
  9. 9. B. Operational costItem Rate ValueRaw material costCost of iceWagesCost of packaging material1) polythene2)Straps clips3)carton4)Cost of fuel, electricity5)Cost of freon6)Inspection feeAdministrative expenses (salary)Telephone chargesselling expensesa)Flight chargesb)Advertisement chargesTotal
  10. 10. C) Fixed costItem Rate ValueDepreciation of machineryDepreciation of vehiclesCost of finance1)Interest on packing material2)Interest on bank loans3)Sales taxTotal
  11. 11. Final estimatesTOTAL INVESTMENTTOTAL FIXED COSTTOTAL VARIABLE COSTTOTAL COSTTOTAL REVENUEGROSS PROFIT[Total Revenue- Total Variable cost]NET PROFIT[Total Revenue – Total Cost]PAY BACK PERIOD[Investment / Net profit]RATE OF INVESTMENT [Net profit/Investment]BREAK EVEN SALES[Fixed cost x Sales /(Sales – Variable cost)]
  12. 12. CONCLUSIONTHE PROFITABILITY INDICATORSESTIMATED WERETotal returnsGross profitNet profitReturn to capitalInput-output ratio

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