business proposal

1. 1
DECLARATION
I, the undersigned Navnit A Dhorajiya as student of M.B.A. Hereby
declare that the Business plan presented in this report is my own work and has
been carried out under the supervision of Dr.Rajesh Patel, Director of
NRVIBMS Junagadh. This work has not been submitted to any other university
for any other examination.
Date:
Place: Junagadh Signature

2. 2
PREFACE
In India the growth of small sale industries is much more important than
in other countries because in the present situation there is an urgent need to
raise the employment. To cope up with the preset requirement of any
employment the government has given many facilities to the small-scale
industries in India. To contribute in the industrial growth of the country the
government makes more and more efforts for the growth of small-scale units.
I am very glad to submit this Business Plan which is in the syllabus of
GTU under entrepreneurship program. The subject, who includes the
preparation of this type of product report, is very good to guide the students in
management in real situation.
This report is completely imaginary. I am having practical experience of
it but the figures and facilities information is somewhat imaginary.

3. 3
ACKNOWLEDGEMENT
I am very happy to present the product project report. I accept my
deep gratitude towards the principal and staff of college for encouraging
me. I am thankful to Dr. Rajesh Patel and all those friends who helped me
in preparing my product project report.
Lastly, I am also thankful to my family members who always
encouraged me and co-operated for the successful completion of the project
report. In short, I am very much thankful to all those who helped me in my
project report.
Index

4. 4
Index
Sr. No. Particulars
1. Introduction
2. Project at Glance
3. Promoters Background
4. Justification of Location
5. About Wire Enamels
6. Production Process
7. Implementation Schedule
8. Fixed Assets and Variable cost
9. Working Capital
10. Cost of Project
11. Sources of Capital
12. Fixed Cost
13. Cost of Production
14. Cost per unit
15. Projected cost of production statement
16. Sales price of Wire Enamels
17. Expected Sales
18. Profit Calculation
19. Return on Investment
20. Cost of Capital
21. Cost Sheet
22. Operating Statement
23. Manufacturing Account
24. Profit and Loss Account
25. Profit and Loss Appropriation Account
26. Balance sheet
27. Ratio Analysis
28. Future Plans

5. 5
INTRODUCTION
India is on the movement of its liberalization and open economic
policy has shown results. New avenues have opened up for business
activities, these is an aroma of all round professionalism in the air. In
this progressive economic scenario, one sector that has emerged as the
most happening is small-scale industrial sector.
The small-scale sector, the world over, is playing a vital role in
the growth has been rightly considered as the engine of growth in most
counties. They enhance balanced regional industrial development, and
they act as a nursery for entrepreneurship. The development of SSI is
an affirming and assures policy of the government. The common men
are the sectors most glorious corporate names have had humble SSI
beginning.
Small-scale unit is the pillar of the Indian economy. Most of the
businesses carried out in India are small-scale units.

6. 6
Project at Glance
Name of Unit : MBA Wire Enamels
Registered Office Address : MBA Wire Enamels,
GIDC Metoda,
Gate no. 3,
Rajkot.
Factory Address : GIDC Metoda,
Gate no. 3
Rajkot.
Form of Organization : Partnership Firm
Partner’s name : Chauhan Niraj M.
Navnit Dhorajiya A.
Barmeda Sandip V.
Product : Wire Enamels
Size of Unit : Small Scale unit
Cost of Capital : 11.52%
Return on Investment : 19.63%
Bankers : GSFC, ICICI Bank, SBI.

7. 7
Promoters Background
Partner 1.
Name of Promoter : Chauhan Niraj M.
Educational Qualification : BBA (Sp.Marketing )
Role in Unit : Marketing and Personnel
Financial Contribution : 50%
Experience : Fresher
Partner 2.
Name of Promoter : Navnit Dhorajiya
Educational Qualification : MBA (Finance)
Role in Unit : Finance and Accounting
Financial Contribution : 50%
Experience : Fresher.
Partner 3.
Name of Promoter : Bermuda Sandip
Educational Qualification : BE. & MBA (Systems)
Role in Unit : Production & Technical
Financial Contribution : 50%
Experience : 1 year in TATA chemicals

8. 8
Justification of Location
Location of any industry plays a dominant role in the success or
failure of the company. It has been rightly said that the mistake of
selecting the wrong site can’t be corrected without heavy losses.
Selecting a proper site for establishing small-scale industry thus
increases, as finance is a major constraint for a SSI unit.
The proposed location for the establishment of manufacturing
facilities for my unit is GIDC Metoda, Kalavad Road, Rajkot-360 001.
Government has declared this area as an industrial area in the Very
past. Due to government incentives, this area has developed very well
with easy availability of infrastructure facilities.
The unit enjoys the following benefits of location:
1) Raw Materials:
Raw materials are the basic constraint for all industries
regular supply of raw material is very crucial to maintain flow of
production. The major raw materials required for manufacturing wire
enamels are DMT, MEG, CIX Xylene, Phenol, Glycerol and Butyl
Titanate, which are easily available in this area.
2) Labor Force:

9. 9
Cheap and skilledunskilled labour is easily available to the
unit as it is located in an industrial belt. Concentration on small-scale
units in the area makes the availability of labour force easy.
3) Transportation:
Transport facilities are mainly required for distribution of
finished products to the retailers and whole sellers. The transportation
cost is comparatively less as the market place is away at a distance of
only 13 skims. And also within the industrial area.
4) Power:
Power is the main source in order to run an industry. If
power is not available at the industrial place in a proper time and in the
proper quantity than industrial work cannot be carried out. But here
this problem is not seemed to be arising, as power is available from
GEB at subsidized rates, since the unit is located in an industrial area.

10. 10
About Wire Enamels
Introduction:
Wire enamels are the kinds of enamels, which are specially
prepared for the coatings of the wires, used in transformers, motors, fan
choke and other allied electrical machinery in order to prevent them
from being rusted.
These enamels should have maximum flexibility; mar resistance,
hardness and abrasion resistance as the wires are wound after coating.
Wire enamel is a type of insulating varnish and as the name implies is
used in electrical industry for insulating purpose. These enamels
provide protection from current leakage as well as provide safety from
atmospheric and environmental detriments to electrical equipments and
accessories. High dielectric strength, poor surface conductivity and
insulation resistance are the major requirements of these enamels.
They should have good resistance to water, oils, solvents, acids, alkalis
etc. The film of the enamels on wire should dry uniformly and should
be unaffected at elevated temperatures. Their thermal expansion and
contraction should be the same as those of conductors on which they
are used and they should not be flammable.
Market Potential:
The use of wire enamel has already been mentioned in
introduction. Wire enamels has purchased by the manufacturers of
enameled wire, which are used in the transformers, motors, fan, choke
and other allied electrical machinery.

11. 11
Production Process
These enamels are normally based on oleo resinous base. The
phenolic resin and D.C.O. stand oil are heated and cooked at 260
degree Celsius in the varnish kettle to get the desired viscosity. The
varnish kettle to get the desired viscosity. The varnish so cooked is
cooled is cooled to 15 degree Celsius and then solvents are mixed to
get the final desired viscosity of the enamel. Finally driers and silicon
resin are added and after testing for its desired quality laid down in I.S.
specification, the enamels are packed in drums of 20 lts. Or 5 lts.
Capacities. Compositions may vary application-wise. To suit the
climatic conditions compositions are designed.
Process Chart:
Heating of D.C.O. stand Oil Cooling of Varnish
Addition of Driers Mixing of Solvents
Addition of Silicon Final Product
Quality Test

12. 12
Implementation Schedule
I take maximum one and half year to implement this project the
time required for completing each activity of the project till
commercial production is as follows:
Sr. No. Activity Time required
1. Preparation of project 1 Month
2. Selection of a site 1 month
3. Registration of SSI 1 month
4. Availability of Finances 3 months
5. Machinery procurement 2 months
6. Construction of factory 5 months
7. Erection and commissioning 15 days
8. Trial run 15 days
9. Recruitment of Labour 2 months

13. 13
Fixed Assets
Fixed Assets
1) Land & Building:
Particulars Area Rate Amount(Rs.)
Land 2500 sq. yards 800 20,00,000
Building 4000 sq. feet 250 10,00,000
Total 30,00,000
2) Plant and Machinery:
No. Particulars Units Rate Amt.(Rs.)
1. Varnish Kettle 500 lts. Cap. 2 80,000
2. Storage Vessels 1000 lts. Cap. 2 30,000
3. Furnaces (coal/wood fired) 2 12,000
4. Weighting Scale 100kg cap. 1 15,000
5. Thermometers, sealing machine - 13,000
Total 15,00,000
3) Other Fixed Assets:

14. 14
No. Particulars Units Rate Amt. (Rs.)
1. Delivery Van 2 2,50,00 5,00,000
0
2. Computers 4 25,000 1,00,000
3. Furniture - - 2,00,000
Total 8,00,000
4) Preliminary and Pre-operating exp.:
Particulars Amt. (Rs.)
Preliminary exp. 60,000
Pre-operating exp. 40,000
Total 1,00,000
Total Fixed Assets
No. Particulars Amt. (Rs.)
1. Land and Building 30,00,000
2. Plant and Machinery 15,00,000
3. Other Fixed Assets 8,00,000
4. Preliminary exp. 1,00,000
Total 54,00,000

15. 15
4. Skilled workers 2 5,000 10,000
(100% Variable)
5. Unskilled workers 4 4,000 16,000
(100% Variable)
6. Watch man 1 1,000 1,000
7. Sales Executives 5 3,000 15,000
Total 67,000
Working Capital
1) Raw Materials:
(Per month)
No. Name Quantit Rate Amt. (Rs.)
y
1. Oil Soluble Pure 1700 lts. 70/lts. 1,19,000
2. D.C.O. stand Oil 3000 lts. 40/lts. 1,20,000
3. Mineral Turpentine oil 7000 lts. 15/lts. 1,05,000
4. Butyl Alcohol 550 kgs. 40/kgs. 22,000
5. Silicone Resin 80 kgs. 5/kgs. 400
6. Driers No. of
190 kgs. 90/kgs. Amt.(Rs.)
17,100
No. Type of Staff Rate
7. Packaging Material Persons
- 30,000
Total 4,13,500
1. Manager 2 7,000 14,000
2. Manager-cum-chemist 1 8,000 8,000
3. Clerk 1 3,000 3,000
3. Peon 3 1,000 3,000
2) Salary and Wages:
(Per month)

16. 16
3) Utilities:
(Per month)
No. Particulars Amt. (Rs.)
1. Power/Electricity 12,000
2. Fuel (coal/wood) 7,000
3. Water 1,000
Total 20,000
Fixed 40% 8,000
Variable 60% 12,000
4) Other Expenses:
(Per month)
No. Particulars Amt. (Rs.)
1. Postage and Telegram 1,000
2. Telephone 2,000
3. Rent 5,000
4. Advertisement 12,000
5. Repairs and Maintenance 10,500
6. Transport charges 8,000
7. Insurance 8,000
8. Miscellaneous exp. 3,000
9. Contingency exp. 7,000
10. Stationery exp. 6,000
Total 62,500
Total Working Capital Per Month
No. Particulars Amt. (Rs.)
1. Raw Materials 4,13,500
2. Salary and Wages 67,000
3. Utilities 12,000
4. Other expenses 37,500

17. 17
Total Working Capital 5,30,000
Total Working Capital for 3 Months and 1 Year
1 Month 3 Months 1 Year
5,30,000 15,90,000 63,60,000
Total Projected Fund

18. 18
No. Particulars Amt. (Rs.)
1. Fixed Capital 54,00,000
2. Working Capital (3 months) 15,90,000
Total 69,90,000
Sources of Capital
Capital Required = 69,90,000

19. 19
60% Owned Capital = 41,94,000
40% Borrowed Capital = 27,96,000
1) Owned Capital:
Partner’s Name Investment Rate Interest
Chauhan Niraj M. 13,98,000 8% 1,11,840
Navnit Dhorajiya 13,98,000 8% 1,11,840
Barmeda Sandip V. 13,98,000 8% 1,11,840
Total 41,94,000 - 3,35,520
2) Borrowed Capital:
Capital Interest
Banks Rate
Borrowed Amt.
GSFC 22,60,000 13% 2,93,800
ICICI 5,36,000 15% 80,400
Total 27,96,000 - 3,74,200
3) Loan Repayment Schedule:
a) Loan of GSFC to be repaid within 5 years:
Opening Closing
Years Installment Interest
Balance Balance
1st Year 22,60,000 4,52,000 2,93,800 18,08,000
2nd Year 18,08,000 4,52,000 2,35,040 13,56,000
3rd Year 13,56,000 4,52,000 1,76,280 9,04,000

20. 20
4th Year 9,04,000 4,52,000 1,17,520 4,52,000
5th Year 4,52,000 4,52,000 58,760 -
Total 8,81,400
b) Loan of ICICI to be paid within 2 years:
Opening Closing
Years Installment Interest
Balance Balance
1st Year 5,36,000 2,68,000 80,400 2,68,000
2nd Year 2,68,000 2,68,000 40,200 -
Total 1, 20,600
Fixed Cost
A) Interest of Capital:
(Per Year)
No. Type of Capital Interest

21. 21
Amt. (Rs.)
1) Ownership Capital 3,35,520
2) Borrowed Capital 3,74,200
Total 7,09,720
B) Depreciation:
(Per Year)
Amt.
No. Particulars Rate Depreciation
(Rs.)
1. Land & Building 30,00,000 10% 3,00,000
2. Machinery 15,00,000 25% 3,75,000
3. Computer 1,00,000 60% 60,000
4. Furniture 2,00,000 15% 30,000
5. Delivery Van 5,00,000 40% 2,00,000
Total 9,65,000
C) Maintenance and Repairs:
(Per Year)
No. Particulars Value Rate Amt.
1. Building 10,00,00 5% 50,000
0
2. Machinery 15,00,00 5% 75,000
0
3. Other Fixed Assets 8,00,000 5% 40,000
Total 1,65,000

22. 22
D) Other Fixed Cost:
(Per Year)
No. Particulars Amt.
1. Utilities 96,000
2. Salary 4,92,000
3. Other expenses (40%) 3,00,000
Total 8,88,000
Total Fixed Cost
No. Particulars Amt.
1. Interest on Capital 7,09,720
2. Depreciation 9,65,000
3. Repairs and Maintenance 1,65,000
4. Other Fixed Cost 8,88,000
Total Fixed Cost per year 27,27,720
Cost of Production
Interest
No. Type of Capital
Amt. (Rs.)

23. 23
1) Total Fixed Cost 27,27,720
2) Working Capital (1 year) 63,60,000
Total 90,87,720
Cost Per Unit
Cost Per unit = Cost of Production
Production P.A. in lts.
= 90,87,720

24. 24
1,50,000
= 60Rs.
Cost Per Pack
Cost Per
No. Particulars
Unit
1. 20 lts. Wire enamels packing 1200.00 Rs.
2. 10 lts. Wire enamels packing 600.00 Rs,
3. 5 lts. Wire enamels packing 300.00 Rs.
4. 1 lts. Wire enamels packing 60.00 Rs.
Projected Cost of Production
Statement
Cost of Production for 3 years

25. 25
Particulars 1st Year 2nd Year 3rd Year
Installed Capacity of Wire
2,14,280 2,14,280 2,14,280
Enamels ( in lts.)
Capacity Utilization 70% 80% 90%
Produced Capacity 1,50,000 1,71,420 1,92,850
Variable Expenses:
Raw Materials 49,62,000 54,58,200 59,54,400
Wages (variable) 3,12,000 3,43,200 3,77,520
Utilities 1,44,000 1,58,400 1,72,800
Other expenses 4,50,000 5,00,000 5,50,000
A) Total Variable Cost 58,68,000 64,59,800 70,54,720
Variable Cost Per Unit 39 37 35
Fixed Expenses:
Depreciation 9,65,000 7,20,750 5,57,215
Maintenance and repairs 1,65,000 1,65,000 1,65,000
Other fixed Cost 8,88,000 8,88,000 8,88,000
Interest:
# Bank loan 3,74,200 2,75,240 1,76,280
# Ownership Capital 3,35,520 3,35,520 3,35,520
Salary 4,92,000 4,92,000 5,10,000
B) Total Fixed Cost 32,19,720 28,76,510 26,32,015
Total Cost of Production 90,87,720 93,36,310 96,86,735
(A+B)

26. 26
Total Cost Per lts. 60.00 55.00 50.00
Sales Price of Wire Enamels
Cost Sales Price
No. Particulars
Per unit Per unit
1 10 lts. Enamel 600.00 690.00

27. 27
2. 5 lts. Enamel 300.00 345.00
3. 1 lts. Enamel 60.00 69.00
Expected Sales
Expected Sales of MBA Enamels for the year

28. 28
Sales Per Amt.
No. Particulars
Month (units) (Rs.)
1. 10 lts. Enamel 1,000 6,90,000
2. 5 lts. Enamel 550 1,89,750
3. 1 lts. Enamel 450 31,050
Total 9,10,800
 Sales Per Year :
9, 10, 800 × 12 = 1, 09, 29, 600
Profit Calculation
Calculation of Profit of MBA Enamels
Particulars Amt.(Rs.)

29. 29
Sales 1,09,29,600
Less: Variable Cost 58,68,000
Contribution 50,61,600
Less: Fixed Cost 32,19,720
Profit Before Tax 18,41,880
Less: 35% Tax 6,44,660
Profit After Tax 11,97,220
Return on Investment
Return on Investment :
= Profit after Tax × 100
Cost of Project

30. 30
= 11, 97, 220 × 100
69, 90, 000
= 17.12
Cost of Capital
Cost of Capital:

31. 31
= Total Interest × 100
Total Capital Employed
= 7, 09, 720 × 100
69,90,000
= 10.15
Cost Sheet
Cost Sheet of MBA Enamels
Amt. Amt.
Particulars Amt. (Rs.)
(Rs.) (Rs.)

32. 32
Raw Materials Consumed:
Opening Stock of Raw materials - -
+ Purchases - 49,62,000
- Closing Stock - 10,52,000
Total Raw Materials Consumed 39,10,000
Direct Wages: Skilled (5000×2) 10,000
Unskilled (4000×4) 16,000 3,12,000
Utilities 20,000 2,40,000 5,52,000
Prime Cost 44,62,000
Factory Overheads:
Salary: Manager (1) 8,000
Watchman (1) 1,000 1,08,000
Insurance of Machinery 96,000
Repairs and Maintenance 1,26,000
Depreciation: Machinery 3,75,000
Building 3,00,000 6,75,000 10,05,000
Factory Cost 54,67,000
Administrative expenses:
# Salary: Manager (1) 7,000 84,000
Clerk (1) 3,000 36,000
Peon (3) 1,000 36,000
Stationary 6,000 72,000
Rent 5,000 60,000
Postage & Telegram 1,000 12,000
Miscellaneous expenses 3,000 36,000
Contingency expenses 7,000 84,000
Telephone Charges 2,000 24,000
Depreciation: Furniture 30,000
Computer 60,000 90,000

33. 33
Interest on owned capital 3,35,520 8,69,520
Cost of Production 63,36,520
+ Opening stock of finished goods
- Closing stock of finished goods 1,33,000 1,33,000
Cost of goods Sold 64,69,520
# Salary: Manager (1) 7,000 84,000
Sales Executives (5) 3,000 15,000
Advertisement expenses 12,000 1,44,000
Transport Charges 8,000 96,000
Depreciation: Delivery Van 2,00,000 5,39,000
Cost of Production 70,08,520
Total Sales 1,09,29,600
Profit 39,21,080
Operating Statement
Projected Operating Statement
Particulars 1st Year 2nd Year 3rd Year
Sales Per Year 1,09,29,60 1,22,60,00 1,28,48,000

34. 34
0 0
Factory expenses:
Raw Materials 63,60,000 64,60,000 64,80,000
Utility 1,44,000 1,44,000 1,44,000
Salary 1,08,000 1,08,000 1,16000
Wages 3,12,000 3,50,000 3,92,000
Insurance of Machinery 96,000 96,000 96,000
Repairs and Maintenance 1,26,000 1,36,000 1,46,000
+Opening Stock of Raw materials - 10,52,000 11,42,000
-Closing Stock of Raw materials 10,52,000 11,42,000 12,53,000
+Opening stock of finished goods - 1,33,000 1,83,000
-Closing Stock of finished goods 1,33,000 1,83,000 2,20,000
Cost of Operations 59,61,000 71,54,000 72,26,000
Gross Profit 49,68,600 51,06,000 55,22,000
Indirect Expenses:
Preliminary expenses 25,000 25,000 25,000
Salary 3,84,000 3,84,000 3,84,000
Other expenses 4,50,000 4,75,000 5,00,000
Fixed Cost 8,59,000 8,84,000 9,09,000
Less: Depreciation 9,65,000 7,20,750 5,57,215
EBIT 31,44,600 35,01,250 40,55,785
Less: Interest on loan 3,74,200 2,75,240 1,76,280
EBT 27,70,400 32,26,010 38,79,505
Less: 35% Tax 9,69,640 11,29,100 13,57,830
EAT 18,00,760 20,96,910 25,21,675
Add back: Depreciation 9,65,000 7,20,750 5,57,215
Preliminary expenses 25,000 25,000 25,000
Net Cash Accrual 27,90,760 28,42,660 31,21,890

35. 35
Manufacturing Account
Manufacturing account of the MBA Enamels
Dr.
Cr.
Particulars Amt. (Rs.) Particulars Amt.(Rs.)
To, By,
Purchase of Raw 49,62,000
Sales 1,09,29,600
Materials
Wages and Salary 4,20,000

36. 36
Utilities 1,44,000 Closing Stock:
Repairs 1,26,000 Raw Materials 10,52,000
Depreciation 9,65,000 Finished Goods 1,33,000
Insurance 96,000
Gross Profit 54,01,600
1,21,14,60 1,21,14,600
0
Profit and Loss Account
Profit and Loss Account of MBA Enamels
For the year ending 2009-10
Particulars Amt. (Rs.) Particulars Amt.(Rs.)
To, By,
Salary 3,96,000
Stationary 72,000 Gross Profit 54,01,600

37. 37
Post and Telegram 12,000
Miscellaneous exp. 36,000
Contingency 84,000
expense
Repairs 1,26,000
Depreciation:
Furniture 30,000
Computer 60,000
Delivery Van 2,00,000
Telephone 24,000
Advertisement 1,44,000
Rent 60,000
Transport 96,000
Interest on Capital 7,09,720
Net Profit 33,51,880
54,01,600 54,01,600
Profit and Loss
Appropriation Account
Profit and Loss Appropriation Account
Of MBA Enamels for the year 09-10

38. 38
Particulars Amt. (Rs.) Particulars Amt.(Rs.)
To, By,
Tax paid 35% 9,69,640 Net Profit 33,51,880
General Reserve 2,85,900
Divisible Profit 20,96,340
33,51,880 33,51,880
Balance Sheet
Balance Sheet of MBA Enamels
for the year ending 09-10
Particulars Amt. (Rs.) Amt. (Rs.) Amt. (Rs.)
Capital & Liabilities:
Owners capital:
a) Chauhan Niraj M. 13,98,000

39. 39
+Profit 6,98,780 20,96,780
b) Pabari Brijesh 13,98,000
+Profit 6,98,780 20,96,780
c) Barmeda Sandip V. 13,98,000
+Profit 6,98,780 20,96,780
+Interest on Capital 3,35,520
66,25,860
Bank Loan 27,96,000
+Interest on Loan 7,09,720 35,05,720
Creditors 22,92,860
General Reserve 2,85,900 2,85,900
Total Liabilities 1,27,10,340
Assets:
Gross Block 53,00,000
Depreciation 9,65,000 43,35,000
Sundry Debtors 62,90,340
Cash and Bank 9,00,000
Total Closing stock 11,85,000
Total Assets 1,27,10,340
Ratio Analysis
Profit Value Ratio:
= Contribution × 100
Sales
= 50,61,600 × 100
1,09,29,600

40. 40
= 46.31%
B.E.P = Fixed Cost × 100
Contribution
= 27,27,720 × 100
1,09,29,600
= 24.95%
Net Profit Ratio: = Profit after tax × 100
Sales
= 11,97,220 × 100 = 10.95%
1,09,29,600
Future Plans
The future plans of the MBA Enamels will be after success
of the wire enamels to be launched in the market. The company also
has some plans and the market potentialities to get into another market
of the oil paints and various other ranges of enamel products.
We would also like to cover other bigger regions of India
starting from Mumbai, Delhi as we would get a larger market. Lastly

41. 41
we would like to increase the demand and if necessary production
capacity also in order to get into the wider and wider market and if
successful we will move towards the international market also.