1. VALUE ADDITION RAW MATERIAL COTTON WITH SEED COST Rs. 3200 PER QUINTAL i.e. 100 Kg COST PER Kg Rs. 32 3 Kg COTTON WITH SEED = 1 Kg COTTON WITHOUT SEED COST OF 1 KG GINNED COTTON = 32x3 = Rs. 96 GINNING COST OF GINNING = Rs. 1.5 PER Kg GINNING COST 1.5x3 = Rs. 4.5 PER Kg COST OF COVERSION OF 1Kg OF GINNED COTTON TO 1 Kg ROVING = Rs. 30 ASSUMPTION ALL OPERATIONS CARRIED OUT IN HOUSE NO TRANSPORTATION COST INVOLVED
2. COST OF CONVERSION OF 1 Kg ROVING INTO 1 Kg YARN = Rs. 60 (30 HANKS OF 30s COUNT IN 1 Kg. Rs. 2 PER HANK SPINNING WAGES) TOTAL COST OF CONVERSION OF 1 KG YARN COST OF GINNED COTTON + GINNING COST + ROVING CONVERSION COST + YARN CONVERSION COST Rs. 96 + 4.5 + 30 + 60 = 190.5 i.e Rs. 190 YARN SELLING COST Rs. 240 PER Kg. PROFIT ON 1 Kg YARN Rs. 240 – 190 = Rs. 50 THIS MEANS PROFIT ON 3 Kg UNGINNED COTTON = Rs. 50 PROFIT ON 1 Kg UNGINNED COTTON = 50 /3 = Rs. 16 SALE PRICE OF UNGINNED COTTON 32 + 16 = Rs. 48 COST OF 1 QUINTAL COTTON INCREASE TO 48x100 = Rs. 4800
3. CONVERSION OF YARN TO GREY FABRIC FROM 1 KG YARN IT IS POSSIBLE TO WEAVE 8 METERS OF GREY FABRIC WEAVING CHARGES = Rs. 10 PER METER CHARGES FOR WEAVING 8 METER FABRIC 10x8 = Rs.80 SELLING COST OF GREY FABRIC Rs. 50 PER METER TOTAL COST OF FABRIC 8x50 = Rs 400 PROFIT ON 8 METER FABRIC SELLING COST OF GREY FABRIC – (YARN CONVERSION COST + FABRIC CONVERSION COST) = 400 – (190+80) = Rs. 130 PROFIT ON 3 Kg UNGINNED COTTON = Rs.130 PROFIT ON 1 Kg UNGINNED COTTON = 130/3 = 43 SALE PRICE OF 1Kg COTTON AFTER CONVERSION TO GREY FABRIC 32 + 43 = 75 SALE PRICE OF 1 QUINTAL COTTON 75x100 = 7500
4. CONVERSION OF GREY FABRIC TO FINISHED WHITE FABRIC COST OF DESIZING, SCOURING AND BLEACHING Rs. 5 PER METER TOTAL PROCESSING COST 8x5 = Rs. 40 SELLING PRICE OF WHITE FINISHED FABRIC = Rs. 70 PER METER PRICE OF 8 METERS WHITE FABRIC 70x8 = Rs. 560 PROFIT ON WHITE FABRIC 560 – 40 = Rs. 520 COST OF 3 Kg UNGINNED COTTON = Rs. 520 COST OF 1 Kg UNGINNED COTTON 520/3 = Rs. 173 SELL PRICE OF 1 Kg UNGINNED COTTON 32 + 173 = Rs. 205 SELL PRICE OF 1 QUINTAL COTTON = Rs. 20,500
5. CONVERSION OF WHITE FABRIC TO GARMENTS FROM 8 METERS FABRIC ONE CAN STITCH 4 HALF SHIRTS STITCHING CHARGES Rs. 70 PER GARMENT STITCHING CHARGES OF 4 GARMENTS = 4x60 = Rs. 240 SELLING PRICE OF EACH GARMENT Rs. 225 TOTAL SELLING PRICE 225x4 = Rs. 900 PROFIT ON 4 GARMENTS 900 – 240 = Rs. 660 PRICE OF 3 Kg. UNGINNED COTTON INCREASED TO RS. 660 PRICE OF 1 Kg UNGINNED COTTON 660/3 = Rs. 220 SELL PRICE OF 1 Kg. COTTON BECOMES 32 + 220 = Rs. 252 SELL PRICE OF 1 QUINTAL COTTON 252x100 = Rs. 25200
6. PRICE APPRECIATION SUMMARY SELLING PRICE PER QUINTAL (Rs.) RAW COTTON 3200 YARN 4800 GREY FABRIC 7500 WHITE FABRIC 20,500 GARMENT 25,200
