1. BUSINESS PLAN
ON
CRANK SHAFT
PREPARED BY
MIHIR H. POPAT
ACADEMIC YEAR
2009-11
ROLL NO.
64
MBA III SEM.
COLLEGE
N.R.VEKARIYA INSTITUTE OF
BUSINESS MANAGEMENT STUDIES,
JUNAGADH
SUBMITTED TO
GUJARAT THECHNOLOGICAL
UNIVERSITY, AHMEDABAD
GUIDED BY
DR.RAJESH PATEL

2. DECLARATION
I, POPAT MIHIR H., a student of MBA hereby declare
that the project work report presented in this report is my own
work and has been carried out under the supervision of DR.
RAJESH PATEL of N.R. VEKARIYA INSTITUTE OF
BUSINESS MANAGEMENT STUDIES, JUNAGADH.
This work has not been previously submitted to any other
industries or university for examination.
Date:-
Place: - JUNAGADH
(POPAT MIHIR H.)

3. PREFACE
The course of MBA is designed in a special way through
which young entrepreneurs are generated. In the third sem of
this course, the subject “entrepreneurship and Management of
Small Scale Business” 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 “CRANK SHAFT” which is the practical study in
MBA..
The report prepared is completely imaginary with fictitious
information and imaginary figures to acquire practical
knowledge.

4. ACKNOWLEDGEMENT
In accomplishing any task a person is aided by many
people who through their little or more contribution help one are
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 :– Junagadh
(POPAT MIHIR H.)

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

6. 19 Annual Cost of Production
20 Sales Forecast
21 Break Even Analysis
22 Cost of Capital
23 Return on Investment
24 Profitability Analysis
25 Projected Operating Statement
26 Projected Cost Sheet
27 Projected Balance Sheet
28 Particulars of Raw Material
Consumed
29 Particulars of Finished Goods
30 Projected Trading Account
31 Projected Profit & loss Account
32 Projected Balance Sheet
33 Schedule of Fixed Assets
34 Schedule of Factory Overhead
35 Schedule of Selling & Administrative
Overhead
36 Risk Factors
37 Name & Address of Raw Material
Suppliers
38 Name & Address of Machineries
Suppliers
39 Disclosure of Significant Accounting
Policy

7. 40 Conclusion
I N T R O D UC T I O N
The project work presented in this report refers to setting
up of a manufacturing unit engaged in the crankshaft especially
petter type in the future, so it is necessary to know more detailed
information about it.
In India, there many company’s producing and dealing in
the Iron and Steel. Even the iron and steel are exported to the
foreign country from here. In India, there are many units or
company who are using Iron and Steel as the main raw material.
The main reasons for choosing the crankshaft is that the
product is widely used in the diesels engines for which the
Rajkot city famous for it in whole India and also in whole
world.
Earlier there were many producers of crankshaft. But now
few producers are engaged in the crankshaft, so the competition
is less in market and even prices are charged high. So it is
feasible to set the unit.

8. P R O J E C T A T G L AN C E
Name of Unit - Mihir Spares
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 - Partnership Firm
Name of Promoter - Puzhakkal Varun S.
Name of Product - Petter Crankshaft
Size of Unit - Small Scale Industries
S.S.I. Registration No. - Applied For
Mean of Finance - Owners Capital 65%
Borrowed Capital 35%
Cost of Capital - 9.11%
Return on Investment - 13.67%
Cost of Project - Rs. 2, 10, 00, 000
Since, Return on Investment is greater then Cost of
Capital, the project is viable.

9. P R O M O T ER B A C K GR O U N D
Name - POPAT MIHIR H.,.
Age - 21 years
Residential Address - ‘Jalaram Sociaty,
Indraprasth Appt.,
Block no-A-1/602
Junagadh – 362001.
Office Address - Mihir Spares
Plot No. B/3/97,
Aji G.I.D.C.Industrial Area
Rajkot.
Qualification - Under Graduate B.B.A.
Role in Unit - Chairman

10. O R G A N I ZA T I O N A L S T R U C TR E
Chairman
Manager
Supervisor Accountant
Skilled Worker Peon / Clerk
Semi Skilled Worker
Unskilled Worker

11. J U S T I F IC A T I O N O F
L O C A T I ON
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

12. PRODUCT Detail
In the market, there are two type of crankshaft available –
Lister and Petter. But our product is petter crankshaft. The
crankshaft is the most basic product for the diesel engines
without it, it cannot run.
The crankshaft is manufactured by special steel such as
MS and En-9. Our unit manufactured crankshaft of kind AV and
TV. It is manufactured according to order given.
Name of Product - Petter Crankshaft Av-1 En-9
Usage of Product - In Diesel Engines

13. M A R K E T P O T E N T IA L
The popularity of crankshaft is very much because
crankshaft is used widely in different engines like diesel engine,
motorcycle, etc. which is used for revolving the wheel. There
are many companies which are manufacturing crankshaft but
they are costly and even the quality are accurate.
There are many industries which are engaged in producing
crankshaft. Among this popular industries are Swastik
Engineers, Adico Spares, India Crank, etc.
It shows that the crankshaft have a great market potential.
So it will be beneficiary to enter into the market.

14. M A C H I N ES
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 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
crankshaft –
1) Lathe Machine :-
This machine is used for turning the crankshaft
which is not accurate in size when it comes from forging.
This machine is also used in turning ghuti, lagya size, 5 pillar
turning, etc.
2) Small Lathe Machine :-
This machine is small in size and used for key
way cutting of the crankshaft.
3) Grinding Machine :-
This machine is used for grinding the ghuti and
the bearing and wheel size of the crankshaft so that rough
turning of upper surface can be made properly polished.
4) Drill Machines :-

15. This machine is used for drilling sides of the
crankshaft and for other work for the drilling.
5) Height Gauge :-
This equipment is used measuring the height of
the crankshaft which can be fitted in the machine.
6) Milling Machine :-
This machine is used for key way cutting of the
crankshaft by which it can be fitted in the engine.
7) Hardness Testner :-
This equipment is used for testing the hardness
the crankshaft by which the defective piece can be rejected.
8) Surface Plate Machine :-
This machine is used for cutting the surface
plate of the crankshaft.
9) There are other machines or equipments are used
for checking the accuracy and quality of the crankshaft and
these machines are micro meter, onerier, bore gauge etc.

16. M A N U F A CT U R I N G P R O C E S S
The main process used for manufacturing the crankshaft is
as follow:-
Marking & Drilling :
When the forged material comes in the unit, the
crankshaft is being marked. After marking, the drilling is
made on the crankshaft.
Rough Work :
The first and foremost step for the manufacturing of
the crankshaft is the forging material of crankshaft is
purchased from outside. The forging material is being
done the rough work.
Lagya Size :
After the rough work, the crankshaft is brought for
the lagya size process. Here, the crankshaft is process
lagya size which can be fit in the machine.
Turning Ghuti :
The rough work of ghuti is done in this process. The
ghuti is the middle part of the crankshaft.
Drilling and Hardening :
After the above process, drilling is made again on the
specific point. This process must require for this
crankshaft.
Then, the hardening of the crankshaft is measured.
This process is must required and without this the
crankshaft cannot be passed further.

17. Grinding Ghuti :
Now the ghuti will be polished according to the
machine size. The grinding of ghuti must require for fitting
into the machine.
5 Pillar Turning :
After above process, the ends of the crankshaft are
send for the 5 pillar turning. Here, the 5 pillar is size of the
crankshaft for which it is being process for this size.
Key-way Cutting :
This is the most important process of the crankshaft.
Here the crankshaft is send for the key-way cutting on the
machine. Here the proper size is to be maintained.
Grinding Bearing & Wheel size :
At last, the crankshaft ends is being send for
grinding. Here the grinding is done for the wheel size of
the diesel engine. If the size is not proper then wheel of
engine cannot be fitted.
Oiling & Packing :
At the last, after all the process the crankshaft is
being oiled by which it cannot be rusted. And then, the
crankshaft is being packed in the box.

18. P R O D U C TI O N C A PA C I T Y
Installed Capacity 100%
Installed Capacity per Month. 7000 Units
Utilized Capacity. 50%
Utilized Capacity per Month 3500 Units
Number of working days in a Month 25 days
Number of shifts per day 1
Number of hours per shift 8 hours
S C H E D U LE

19. S T A F F AN D L A B OU R d e t ai l
Administrative Staff Manager 1
Supervisor 1
Clerk 1
Accountant 1
Watchman 1
Factory Staff Skilled worker 7
Semi skilled worker 6
Unskilled worker 7

20. F I N A N C IA L D E T AI L S
TOTAL FIXED ASSET
LAND
Particular Yards. Rate (Rs.) Total Cost
Land 2000 2500 50,00,000
BUILDING
Particular Sq. feet Rate (Rs.) Total Cost
Building 15,000 500 75,00,000
PLANT & MACHINERY
Name Qty. Rate (Rs.) Total Cost
Lathe Machine 5 1,00,000 5,00,000
Small Lathe Machine 1 25,000 25,000
Grinding Machine 2 3,00,000 6,00,000
Drill Machine 5 14,000 70,000
Height Guage 1 15,000 15,000
Milling Machine 1 50,000 50,000
Hardness Testner 1 20,000 20,000
Surface Plate Machine 1 10,000 10,000
Micro meter, Onerier, 25 2,000 50,000
Boreguage
TOTAL 13,40,000

21. OTHER ASSETS
Particular Qty. Rate (Rs.) Total Cost
Furniture & Fixture - 2,00,000 2,00,000
Electrification Installation - 5,00,000 5,00,000
Charges
Computers 2 30,000 60,000
Telephone 2 5,000 10,000
Trolley & other Handling - 15,000 15,000
Equipments
TOTAL 7,85,000
TOTAL FIXED ASSETS
No. Particulars Amount
1. Land 50,00,000
2. Building 75,00,000
3. Plant & Machinery 13,40,000
4. Furniture & Fixture 2,00,000
5. Electrification & Installation Charges 5,00,000
6. Computers, Telephones & Trolley 85,000
Total 1,46,25,000

22. COST OF PRODUCTION
RAW MATERIALS
Particular Per Per Day Per Month Per Year
Unit Qty. Amt. Qty. Amt. Qty. Amt.
(Rs.)
Forged 450 140 63,000 3500 15,75,000 42,000 1,89,00,000
Crankshaft
Box for 20 140 2,800 3500 70,000 42,000 84,000
Packing
Total 65,800 16,45,000 1,97,40,000
STAFF & LABOUR
Particulars No. of Salary Per Per Year
person Month
Manager 1 7500 7500 90,000
Supervisor 1 6,000 6,000 72,000
Accountant 1 6000 6000 72,000
Skilled Worker 7 4,500 31,500 3,78,000
Semi Skilled 6 3,000 18,000 2,16,000
Worker
Unskilled Worker 7 2,400 16,800 2,01,600
Clerk 1 3,200 3,200 38,400
Watchman 1 2,000 2,000 24,000
Total 91,000 10,92,000

23. UTILITIES
Particulars Per Year (Rs.)
Water 33,000
Electricity 2,25,000
Total 2,58,000
OTHER EXPENSES
Sr. Particulars Amount
No.
1. Repairs & Maintenance 80,000
2. Postage & Telegram 22,000
3. Telephone Expenses 32,000
4. Transportation 63,200
5. Miscellaneous Expenses 44,000
6. Advertisement 62,000
7. Insurance 90,000
8. Medical Expenses 46,500
9. Professional Tax 1,800
10. Legal Expenses 24,000
11. Audit Fees 35,500
12. Traveling Expenses 63,000
13. Electricity 36,000
14. Fuel 36,000
Total 6,36,000

24. T O T A L WO R K I N G C A P I T A L
R E Q U I R EM E N T
Sr. No. Particular Amount
1. Raw Material 49,35,000
2. Staff & Labour 2,73,000
3. Utilities 64,500
4. Other Expenses 1,59,000
Total 54,31,500
T O T A L CA P I T A L I N V E S T ME N T
Sr. No. Particular Amount
1. Fixed Capital 1,46,25,000
2. Working Capital (3 months) 54,31,500
3. Cash in Hand 4,43,500
4. Banks 5,00,000
Total 2,10,00,000

25. S O U R C E S O F F I NA N C E
Sr. No. Particular Amount
1. Owners Capital (65%) 1,36,50,000
2. Borrowed Capital (35%) 73,50,000
@ 13%
Total 2,10,00,000
I N T E R E ST o f C AP I T A L
Particular Loan Interest Interest
Amount Rate Amount
Owner Capital 1,36,50,000 7% 9,55,500
Borrowed Capital 73,50,000 13% 9,55,500
Total 2,10,00,000 19,11,000

26. D E P R E C IA T I O N
Particular Value Rate of Depreciation
Depreciation
Building 75,00,000 10% 7,50,000
Machinery 13,40,000 15% 11,39,500
Furniture 2,00,000 10% 20,000
Electrification & 5,00,000 10% 50,000
Installation.
Telephone 10,000 10% 1,000
Trolley & Other 15,000 10% 1,500
equipments
Computers 60,000 60% 36,000
Total 10,59,500
ANNUAL COST OF
P R O D U C TI O N
Sr. No. Particular Amount
1. Raw Material 1,97,40,000
2. Utility 2,58,000
3. Salaries 10,92,000
4. Other Expenses 6,36,000
5. Interest on Capital 19,11,000
6. Depreciation 10,59,500
Total 2,46,96,500

27. SALES FORECAST
Year. Units Per Rate Per Sales (Rs.)
Annum Unit
1. 39,500 675 2,66,62,500
2. 41,475 675 2,79,95,625
3. 43,549 675 2,93,95,575
4. 45727 675 3,08,65,725
5. 48,013 675 3,23,08,775
FIXED COST
Sr. No. Particular Amount
1. Depreciation 10,59,500
2. Interest on Capital 19,11,000
3. Salary 2,96,400
4. Other Expenses (50%) 3,18,000
Total 35,84,900
Fixed Cost per unit = Total Fixed Cost
No. of Units
= 35,84,900
42,000
= Rs. 85.34

28. VARIABLE COST
Sr. No. Particular Amount
1. Raw Material 1,97,40,000
2. Salary 7,95,600
3. Other Expenses (50%) 3,18,000
4. Utilities 2,58,000
Total 2,11,11,600
Variable Cost per unit = Total Variable Cost
No. of Units
= 2, 11,11,600
42,000
= Rs. 502.66

29. B R E A K EV E N A N AL Y S I S
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. 675 – Rs. 502.66
= Rs. 172.34
BEP ( in % )
= [Fixed Cost ÷ {Fixed Cost + Profit}] × Capacity Utilization
= [35,84,900 ÷ {35,84,900 + 28,70,681}] × 50
= [35,84,900 ÷ 64,85,581] × 50
= 27.77 %
BEP (units)
= Fixed Cost ÷ Contribution per unit
= 35,84,900 ÷ 172.34
= 20,801 units
BEP (Rs.)
= BEP (units) × Selling price p. u.
= 20,801 × 675
= Rs. 1, 40,40,675

30. LOAN REPAYMENT SCHEDULE
Sr. Opening Installment Closing Interest
No. Balance Balance
1. 73,50,000 10,50,000 63,00,000 9,55,500
2. 63,00,000 10,50,000 52,50,000 8,19,000
3. 52,50,000 10,50,000 42,00,000 6,82,000
4. 42,00,000 10,50,000 31,50,000 5,46,000
5. 31,50,000 10,50,000 21,00,000 4,09,000
6. 21,00,000 10,50,000 10,50,000 2,73,000
7. 10,50,000 10,50,000 - 1,36,500
A V E R A G E C O S T OF C A P I TA L
Particular Capital Rate Interest
Owned Capital 60,00,000 10% 6,00,000
Borrowed Capital 40,00,000 11% 4,40,000
Total 10,40,000
Avg. Cost of Capital = [Total Interest ÷ Total Capital] × 100
= [19,11,000 ÷ 2, 10, 00, 000] × 100
= 9.11 %

31. R E T U R N O N I N V ES T M E N T
R.O.I. = [EAT ÷ Cost of Capital] × 100
= [28,70,681 ÷ 2, 10, 00, 000] × 100
= 13.67 %
P R O F I T AB I L I T Y A N D
P R O F I T AB I L I T Y A N A L Y S IS
Particulars Amount
Sales 2,66,62,500
Less : Cost of Production 2,13,79,775
EBIT 52,82,725
Less : Interest 9,55,500
EBT 43,27,225
Less : Tax 14,56,554
EAT 28,70,681
 Gross Profit Ratio :
GPR = Gross Profit ÷ Sales × 100
= 71, 43, 625 ÷ 2,66,62,500× 100
= 26.79%
 Net Profit Ratio :
NPR = Net Profit (EAT) ÷ Sales × 100
= 28,70,681÷ 2,66,62,500× 100
= 10.77%
 Fixed Asset Turnover Ratio :
FATR = Total Fixed Asset ÷ Sales × 100
= 1,46,25,000 ÷ 2,66,62,500× 100
= 54.85%

32. PROJECTED OPERATING
STATEMENT
Particular Year 1 Year 2 Year 3
Sales (A) 2,66,62,500 2,79,95,625 2,93,95,575
COST OF
OPERATION:
Raw Material 1,97,40,000 1,97,40,000 1,97,40,000
Utilities 2,58,000 2,58,000 2,58,000
Labour 7,95,600 7,95,600 7,95,600
Other Expenses 1,31,000 1,31,000 1,31,000
Add: Op. Stock of - - -
Raw Material
Less: Cl. Stock of - - -
Raw Material
Add: Op. Stock of - 14,05,725 16,88,948
Finished goods
Less: Cl. Stock of 14,05,725 16,88,948 8,20,302
Finished goods
Total Cost of 1,95,18,875 2,06,41,377 2,17,93,246
Operation ( B )
Gross Profit 71,43,625 73,54,248 76,02,329
( A-B = C )
INDIRECT
EXPENSES:
Administration & 18,60,900 17,26,900 16,18,608
Selling Expenses
Total Indirect 18,60,900 17,26,900 16,18,608
Expenses (D)
EBIT ( C-D ) 52,82,725 56,27,348 59,83,721
Less: Int. on 9,55,500 8,19,000 6,82,500
Borrowed loan
EBT 43,27,225 40,08,348 53,01,221
Less: Tax 14,56,544 16,18,490 17,84,391
EAT 28,70,681 31,89,858 35,16,830

33. P R O J E C TE D C O S T S H E E T
Particular Year 1 Year 2 Year 3
Raw Material
Consumed
Purchases 1,97,40,000 1,97,40,000 1,97,40,000
Less: Closing stock - - -
Add: Direct Wages 7,95,600 7,95,600 7,95,600
Utilities 2,58,000 2,58,000 2,58,000
PRIME COST (A) 2,07,93,600 2,07,93,600 2,07,93,600
Factory Overhead
Add: Repairs 80,000 80,000 80,000
Insurance 15,000 15,000 15,000
Depreciation 9,51,000 8,45,850 7,52,723
Fuel 36,000 36,000 36,000
TOTAL FACTORY 10,82,000 9,76,850 8,83,723
OVERHEAD (B)
Administrative
Overheads
Add: Salaries 2,96,400 2,96,400 2,96,400
Post & Tele. Exp. 22,000 22,000 22,000
Telephone Exp. 32,000 32,000 32,000
Misc. Exp. 44,000 44,000 44,000
Electricity 36,000 36,000 36,000
Insurance Exp. 75,000 75,000 75,000
Medical Exp. 46,500 46,500
Professional Exp. 1,800 1,800 46,500
Legal Exp. 24,000 24,000 1,800
Audit Fees 35,500 35,500 24,000
Depreciation 1,08,500 79,650 35,500
Int. on Own 9,55,500 9,55,500 64,485
Capital 9,55,500
TOTAL
ADMINISTRATIVE 16,77,200 16,48,350 16,33,185
OVERHEAD (C)

34. COST OF
PRODUCTION 2,36,16,000 2,34,50,000 2,33,41,708
(A+B+C)
Add: Op. Stock of
Finished goods - 14,05,725 16,88,948
Less: Cl. Stock of
Finished goods 14,05,725 16,88,948 8,20,302
COST OF
PRODUCTION OF 2,22,10,275 2,31,66,777 2,42,10,354
GOODS SOLD
Selling & Distribution
Overhead
Add: Advertising Exp. 62,000 62,000 62,000
Traveling Exp. 63,000 63,000 63,000
COST OF SALES 2,23,35,275 2,32,91,777 2,43,35,354
SALES 2,66,62,500 2,79,95,625 2,93,95,575
PROFIT (Sales–COS) 43,27,225 40,08,348 53,01,221

35. P A R T I C UL A R O F R A W
M A T E R I AL C O N S UM E D
Particular Year 1 Year 2 Year 3
Qty. Amt. Qty. Amt. Qty. Amt.
Opening
Stock - - - - - -
Add:
Purchase 84,000 1,97,40,000 84,000 1,97,40,000 84,000 1,97,40,000
Less: Cl.
Stock - - - - - -
P A R T I C UL A R O F F I N I S H ED
GOODS
Particular Year 1 Year 2 Year 3
Qty. Amt. Qty. Amt. Qty. Amt.
Op.
balance - - 2,500 14,05,725 6,704 16,88,948
Add:
Goods
manuf. 42,000 2,36,16,000 42,000 2,34,50,000 42,000 2,33,41,708
Less:
Sales 39,500 2,22,10,275 41,475 2,31,66,777 43,549 2,42,10,354
Total 2,500 14,05,725 6,704 16,88,948 1,476 8,20,302

36. P R O J E C T E D T R A DI N G
ACCOUNT
Year 1
Particular Amount Particular Amount
To Opening Stock - By Sales 2,66,62,500
To Purchases 1,97,40,000 By Closing
To Direct Wages 7,95,600 Stock 14,05,725
To Utilities 2,58,000
To Insurance 15,000
To Fuel 36,000
To Repairs 80,000
To Gross Profit 71,43,625
2,80,68,225 2,80,68,225
Year 2
Particular Amount Particular Amount
To Opening Stock 14,05,725 By Sales 2,79,95,625
To Purchases 1,97,40,000 By Closing
To Direct Wages 7,95,600 Stock 16,88,948
To Utilities 2,58,000
To Insurance 15,000
To Fuel 36,000
To Repairs 80000
To Gross Profit 73,54,248
2,96,84,573 2,96,84,573

37. Year 3
Particular Amount Particular Amount
To Opening Stock 16,88,948 By Sales 2,93,95,575
To Purchases 1,97,40,000 By Closing
To Direct Wages 7,95,600 Stock 8,20,302
To Utilities 2,58,000
To Insurance 15,000
To Fuel 36,000
To Repairs 80000
To Gross Profit 76,02,329
3,02,15,877 3,02,15,877

38. P R O J E C TE D P R O FI T A N D
L O S S A CC O U N T
Year 1
Particular Amount Particular Amount
To Postage & 22,000 By Gross
Telegram Exp. Profit 71,43,625
To Telephone Exp. 32,000
To Transportation 63,200
To Misc. Exp. 44,000
To Advertising Exp. 62,000
To Insurance 75,000
To Medical Exp. 46,500
To Professional Tax 1,800
To Legal Exp. 24,000
To Audit Fees 35,500
To Traveling Exp. 63,000
To Salaries to
employees 2,96,400
To Depreciation 10,59,500
To Int. on Borrowed
loan 9,55,500
To Electricity 36,000
To Income Tax 14,56,554
To Net Profit 28,70,681
71,43,625 71,43,625

39. Year 2
Particular Amount Particular Amount
To Postage & 22,000 By Gross
Telegram Exp. Profit 73,54,248
To Telephone Exp. 32,000
To Transportation 63,200
To Misc. Exp. 44,000
To Advertising Exp. 62,000
To Insurance 75,000
To Medical Exp. 46,500
To Professional Tax 1,800
To Legal Exp. 24,000
To Audit Fees 35,500
To Traveling Exp. 63,000
To Salaries to
employees 2,96,400
To Depreciation 9,25,500
To Int. on Borrowed
loan 8,19,000
To Electricity 36,000
To Income Tax 16,18,490
To Net Profit 31,89,858
73,54,248 73,54,248

40. Year 3
Particular Amount Particular Amount
To Postage & 22,000 By Gross
Telegram Exp. Profit 76,02,329
To Telephone Exp. 32,000
To Transportation 63,200
To Misc. Exp. 44,000
To Advertising Exp. 62,000
To Insurance 75,000
To Medical Exp. 46,500
To Professional Tax 1,800
To Legal Exp. 24,000
To Audit Fees 35,500
To Traveling Exp. 63,000
To Salaries to
employees 2,96,400
To Depreciation 8,17,208
To Int. on Borrowed
loan 6,82,500
To Electricity 36,000
To Income Tax 17,84,391
To Net Profit 35,16,830
76,02,329 76,02,329

41. P R O J E C TE D B A L AN C E S H EE T
Liabilities Year 1 Year 2 Year 3
CAPITAL
Owned Capital 1,36,50,000 1,36,50,000 1,36,50,000
SECURED LOAN 63,00,000 52,50,000 42,00,000
NET PROFIT 28,70,681 31,89,858 35,16,830
2,28,20,681 2,20,89,858 2,13,66,830
Asset Year 1 Year 2 Year 3
Land 50,00,000 50,00,000 50,00,000
Building 67,50,000 60,75,000 54,67,500
Machinery 11,39,000 9,68,150 8,22,927
Furniture & Fixture 1,80,000 1,62,000 1,45,800
Electric Installation 4,50,000 4,05,000 3,64,500
Telephone 9,000 8,100 7,290
Computer 24,000 9,600 3,840
Trolley & other
equipments 13,500 12,150 10,935
DEBTORS 26,58,676 30,18,500 32,45,695
Cash at Bank 25,95,390 24,84,800 29,98,846
Cash in Hand 19,65,890 22,57,610 30,79,195
Closing Stock 14,05,725 16,88,948 8,20,302
2,28,20,681 2,20,89,858 2,13,66,830

42. S C H E D U LE F O R WR I T T E N
D O W N V AL U E O F F I X E D
ASSETS
Particular Rate Net Block
Year 1 Year 2 Year 3
Land - 50,00,000 50,00,000 50,00,000
Building 10% 67,50,000 60,75,000 54,67,500
Machinery 15% 11,39,000 9,68,150 8,22,927
Furniture & Fixture 10% 1,80,000 1,62,000 1,45,800
Electrification
Installation Charges 10% 4,50,000 4,05,000 3,64,500
Telephone 10% 9,000 8,100 7,290
Computer 60% 24,000 9,600 3,840
Trolley & other 10% 13,500 12,150 10,935
equipments
S C H E D U LE F O R FA C T O R Y
O V E R H E AD S
Particular Year 1 Year 2 Year 3
Repairs 80,000 80,000 80,000
Wages 7,95,600 7,95,600 7,95,600
Depreciation on 2,01,000 1,70,850 1,45,223
Machinery
Depreciation on 7,50,000 6,75,000 6,07,500
Building
Insurance 15,000 15,000 15,000
Fuel 36,000 36,000 36,000
Total 18,77,000 17,72,450 16,79,323

43. S C H E D U LE F O R
A D M I N I ST R A T I V E O V E R H EA D S
Particular Year 1 Year 2 Year 3
Salary 2,96,300 2,96,300 2,96,300
Postage &
Telegram 22,000 22,000 22,000
Telephone 32,000 32,000 32,000
Miscellaneous Exp. 44,000 44,000 44,000
Insurance Expenses 75,000 75,000 75,000
Medical Expenses 46,500 46,500 46,500
Professional Tax 1,800 1,800 1,800
Legal Expenses 24,000 24,000 24,000
Audit Fees 35,500 35,500 35,500
Depreciation 1,08,500 79,650 64,485
Interest on Owned
Capital 9,55,500 9,55,500 9,55,500
Electricity 36,000 36,000 36,000
Total 17,40,400 17,11,550 16,96,385

44. S C H E D U LE F O R SE L L I N G
O V E R H E AD S
Particular Year 1 Year 2 Year 3
Advertising Exp. 62,000 62,000 62,000
Traveling Exp. 63,000 63,000 63,000
Total 1,25,000 1,25,000 1,25,000
R I S K F AC 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:-
The unit will operate in highly competitive market
where already other crankshaft manufacturing units
have gained important position.
The risk of failure of the position.
Due to fluctuation of prices in the iron and steel, the
price of the product may not remain stable in the
market, so unit have to quote the price accordingly.
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.

45. Name & address of raw
m a t e r i al s u p p li e r
M/S FORGE & FORGE P.L.
Ahmedabad Road,
Rajkot – 3.
M/S MICRO FORGE (I) L.
8-B National Highway,
Village: Shapar, Rajkot – 2.
M/S SHRADHA FORGE P.L.
G-508, GIDC Lodhika, Kalawad Road,
Dist.: Rajkot, Metoda – 364 485.

46. NAME & ADDRESS OF
M A C H I N ER Y S U P PL I E R
M/S RIAT MACHINE TOOLS P.L.
G.T. Road, Miller Gunj,
Ludhiana – 141 003.
M/S GAJJAR MACHINES TOOLS
Udhyognagar,
Gondal (Guj) India.
M/S J.K. MACHINE TOOLS
Gokuldham Main Road,
Rajkot.
M/S TURN-O-TECH ENGINEERS
C/1/276, Aji G.I.D.C.,
Phase II, Road – R,
Rajkot.
M/S RAVI METAL
Udhyognagar, Bhaktinagar G.I.D.C.,
Rajkot.

47. D I S C L O SU R E O F
S I G N I F IC A N T A CC O U N T I NG
P O L I C I ES
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.

48. C O N C L U SI O N
In the product project report on Varun Spares, I have
discussed all financial data and other relevant information.
The market of Varun Spares 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.

49. LOGO