“Analysis of capital budgeting practices in

start-ups and SMEs in hosiery industry of

Ludhiana”

Project Proposal

Submitted by-
Group No. -6
Members -
Sandeep Sahu (M-09-28)
Saurabh Sharma (M-09-29)
Saurav Kumar (M-09-30)
 Sreelala M.S. (M-09-31)

Project Proposal

TITLE OF STUDY:

A project on “Analysis of capital budgeting practices in start-ups and SMEs in

hosiery industry of Ludhiana”

PROJECT OBJECTIVES:

The major objectives of this project are –

• To analyse the use and understanding of the capital budgeting practices

carried out by the owners or top management of the start-ups in hosiery
industry of Ludhiana.
• To estimate the cost of capital of such SMEs in hosiery industry in
Ludhiana.
• To evaluate the corporate financial decisions taken by such hosiery units
using discounted cash flow techniques like NPV, IRR and PI by estimating
the cash flows for a period of five to ten years.
Scope of the Project:

The scope of this project will not only be limited to understanding the
financial capital budgeting practices employed in small scale hosiery units
of Ludhiana, but it will also analyze the financial decisions taken by these
units using standard capital budgeting practices thereby analyzing the
viability of various projects undertaken by such firms in recent past.
About the Industry:

Ludhiana is a leading industrial town of the north Indian State of Punjab. It is an

important centre of textile and allied Industry. Ludhiana is a leading producer of
woollen and acrylic knitwear, although extensively cotton and other blended
fibres to produce a wide range of fabrics, hosiery, knitwear and ready –made
garments. Almost 99 % of the ready-made garments, textiles and hosiery
industry in Ludhiana are small or medium scale.

Project Methodology:

In this study, two standard modes of data collection will be applied:

Primary Data: This will include interaction with the employees of the finance
and accounting department of some SMEs.
Secondary Data: This will include collection data from various sources like the
Annual reports of the companies and the Ministry of Textiles of India; using the
information available on the Internet and company’s websites.

The project typically would cover the following topics (additions would be made
to the topics during the duration of the project as and when they are found to be
appropriate for ensuring completeness of the project)

1. Overview of the Industry

2. Brief Introduction of Capital Budgeting
3. Research Design
4. Analysis of the Calculation of the weighted average cost of capital, NPV,
IRR and PI for some projects undertaken by select hosiery units in
Ludhiana.
5. Conclusion
6. Bibliography

How is this project useful?

1- This project will help in understanding the capital budgeting practices

used in the small scale Industries.
2- It will help in understanding the use of standard capital budgeting
methods in taking the financial decisions in a company.
3- By this project, we appreciate the importance of capital budgeting
methods.