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Gas
PREPARED BY:
DECLARATION
I, AKASH A. VARIA a student of T.Y.B.B.A. of Shri D. D. Nagda B.B.A Collage, here by declare that this project report has been carried out successfully under the guidance of Prof. K. J. Thankachan and staff member. The product project report is based on the GAS situated at Mumbai. I am further declaring that this Project Report is not previously submitted to any collage.
PREFACE
In todays world ,the managerial ability is so demand in the company for doing the better managerial work ,the person must have the knowledge of the management this knowledge is not only based on theoretical but also on practical aspect .in short ,for being a good manager a person must have both the knowledge theoretical as well as practical . I am extremely happy to submit this product project report on small scale unit as per the syllabus of T.Y.B.B.A of Saurastra University of particularly introducing the subject Entrepreneurship and Management of Small Business. The main objective of this project report is to make student learn about various factors that should be taken into consideration before setting up an industry. In other words it is purely Entrepreneurship Development and Training for the establishment of Small Scale Industry.
ACKNOWLEDGEMENT
It is really a matter of great pleasure for me to present this creative and practical work at this stage, project report is an important part of learning and every entrepreneur prepares it before starting of actual production. I have taken this opportunity to express my sincere thanks to all these who helps me in the preparation of this report.
CONTENTS SR.N O
1 2 3 4 5 6 7 8 9 10 11 12
Project at a glance Name and address of promoter Proposed location and justification Market analysis Manufacturing process Financial details of the project Financial provision and sources of finance Break even analysis Ratio analysis Conclusion Appendix Bibliography
PARTICULARS
PAGE. NO
06 08 11 16 18 21 25 34 35 37 38 39
PROJECT AT GLANCE
Units Name Address for communication GLOBAL GAS
A 72, Midc Phase- 2, Mumbai
Type Of The Unit Nature of the industry Size of the unit S.S.I. Registration No. Subsidy Registration No. Installed Capacity Utilized Capacity Utilized Capacity in percentage Power requirement Man power required
Partnership Firm
To Manufacture Gas
Applied for Reg. 115440 units (p.a.) 237120 unit (p.a) 48.68% 45 horse power Prod. Supervisor Skilled workers Sales man 05 10 03
Peon
01
Total investment Working capital Prod. Cost per unit Sales value per unit Gross profit Net profit Gross profit ratio Net profit ratio Return on Investment
Rs. 32,16300 Rs.6,50,000 Rs. 122.89 Rs. 141 Rs. 20,90,328 Rs.13,58,714 12.84% 8.35% 42.24%
DETAILS OF PROMOTERS
The main promoters of the project are combination of both young and experienced businessman. The promoters are form various business
Partner 1
Name Address
AKASH A. VARIA SWAYAM Sad guru colony, Swastik society, Jamnagar -361008
Partner 2
Name Address
MAULIK VARIA SWAYAM Sadguru colony, Swastik society Jamnagar-361008
B.Com
production & purchase
5 years
Partnership Deed
The format of the partnership of global gas is as follows
Partnership Deed
We both are partners of GLOBAL GAS Mr. Akash varia & Mr. Maulik varia Here by declare that this is the partnership firm at will subjected to the following terms and conditions.
Conditions
The name of the firm till exists is GLOBAL GAS It will commence its production immediately on receiving license. The Investment in firm is as follows Mr. Akash Varia Mr. Maulik Varia Mr. Akash Varia Mr. Maulik Varia 50% 50% 50% 50%
Both partner act as Active Partner in the unit No other new partner can be entered without the consent of both the partners Above all, the firm is bound to follow the rules and regulations of the Partnership Act, 1932
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Infrastructure Facilities
1) Availability of raw material
Raw materials are basic requirement of any type of industries. The basic raw materials required by this unit are pphenylenediamine or popularly known as PPD, isopropyl alchol, Resorcinol & coloring agents. Which is supplied by the suppliers of the Mumbai. The problem of shortage of raw material hardly arise as they are acquired from nearby. Although inventory of raw material is kept aside.
2) Water facilities
The unit has installed jet pumps, an owned borewell from where adequate water is available to fulfill the water requirement of the unit.
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4) Available of labour
The skilled, semi-skilled and unskilled work force are easily available at at reasonable rates
5) Transportation
Alike other facilities transport facilities are well managed. This unit is well blessed with well developed roads that link to major area of city.
6) Communication
There is a dedicated electronic telephone exchange set up by MTNL in the MIDC Industrial area. There is optional services if ISND and also services of internet are easily provided to the unit.
7) Government Policy
The unit gets many incentives and benefits from the government, some are listed below. Electricity duty exemption Stamp duty exemption exemption to all units of MIDC Registration changes exemption - 100% exemption to all units of MIDC Special capital incentives (SCI) - To all small scall industries of MIDC - To all units in MIDC - 100% stamp duty
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8) Supporting Facilities
Banking: there are branches of many major banks in MIDC to cater the needs of industries Post office: There is post office in the industrial Area, Pin code 4000093 Police station: There is MIDC police station near by the unit. Hospital: There are several hospital in the MIDC, ESIS hospital being one of them
9) Proximity to market:
The product i.e. gases generally consumed highly in metro cities. Hence Mumbai can be considering as best location for this type of industrial activity.
Source: www.midcindia.org
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Market Analysis
The demand for oxygen gas in metro cities is more. The major oxygen consumer industries and business such as fabrication of steel, Barge, Manufacturing and repairing, ship breaking and other steel fabrication are more in Jamnagar The preset demand for Oxygen cylinders in metro cities is more the 1000 cylinders per day and as against that there is only one plan with capacity to produce 300 cylinders per day. Thus there is a demand supply gap of at least 700 cylinders per day. The present gap is met by outside suppliers, which is costly. The two Indian Corporate giant plans located near the gas plan will approximately require at leas 2500 to 3000 cylinders of Oxygen per day during the period of their plants. It is estimated that more the 300 down stream projects will be set up near by areas which is also increase the demand Oxygen gas and thus the market for Oxygen gas will be never ending. The promoters are engaged in different business and one of them is also a ship breaking line, which will help in marketing the gas
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The promoters have before deciding to set up Oxygen plants, personally conducted the market survey and revealed that they will be able to catch the market for their product easily. The promoters have decided to keep selling compared to others. The averages market price for Oxygen gas per cub meter is Rs.15.00 as against that projected selling price is Rs, 14.00 per cub meter. This is a price strategy to capture initial market. Considering the industrial development taking place in Mumbai , increasing demand for the product, comparative lower selling price of the products the promoters will easily get their share in market very rapidly and comfortably.
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MANUFACTURING PROCESS
The Oxygen producing is simple process of separating various gasses natural air. The plant will separate Oxygen gas from air. The main steps in manufacturing process are as under. Collection of air with filtration. Compressing the air to working pressure Cooling, clearing, making moisture free and purifying the air. Further cooling of air in first exchanger Further cooling air is 2nd exchanger i.e. liquidating of air. Separation of Oxygen and Nitrogen Expansion of both liquid gases Boiling crude from gases Separation of both gases at the different boiling points. Cooling, compressing and collecting separate gases by separate pipelines at filling manifold. Filling the gases into cylinders If nitrogen not required, letting out in the atmosphere as waste
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PRODUCTION SCHEDULE
Sr.no
1. Particulars Production per day (26working 2. 3. days) Production per month Production per 9620 1,15,440 141 141 13,56,420 1,62,77,040
Production Units
370
Rate/ unit
141
Total value
52170
Production Capacity
SR.NO. PARTICULARS Production units
1. Production per day 2. (26working days) Production per month
19
rates
141
Total value
1,07,160
760
19,760
141
27,86,160
3.
Production per
2,37,120
141
3,34,33,920
Utilized Capacity
Particulars Production Rate SR.NO.
1. Production per day (26 working 2. 3. days) Production per month Production 9620 3001,15,440 149 149 14,33,380 1,72,00,560
Total value
55,130
units
370 149
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Land:
Location of the land Plot no. A-77 Mahakali Caves road, MIDC Andheri (east) MUMBAI-93 Permission Letter No. 054/ANE/MAH/135/209
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Building :
The details related to the building construction acquired by this unit is as under Sr. no. Particulars Area (sq. 1. Factory shed 2. Godown 3. Office room 4. Store room 5. Water & toilet 6. Compound & wall Total cost of building Table 5 Building mtr) 800 500 150 100 50 150 Rate (Rs.) 200 150 350 200 200 100 Total value (Rs) 240000 75000 52500 20000 10000 15000 412500
DETAILS OF MACHINERY
Sr. no
1. 2.
Name of machine
Generator Oxygen plant
No. of machine
1 1
22
Amount(Rs)
11,37,500 4,12500 7,53000 30000 23,33000
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Sr.no Particular
1 2 3 4 5 Stock of raw material Work-in-progress Finished goods Bills receivables Current expenses Total Working capital Table: 8 working capital
Duration
26 days 15 days 07 days 26 days 26 days
Amt
2,80,000 50,000 78,600 1,89,400 52,000 6,50,000
1 Total fixed cost 2 Total working capital Total Table: 9 Total cost of capital
Owned capital
Subsidy
1 Land 11,37,500 ----2 Building 4,12,500 2,60,000 3 Machinery 7,53,000 3,80,000 4 Contingency 2,33,300 1,30,000 5 Preliminary expenses 30000 ----6 Working capital 6,50000 2,10,000 Total 32,16,300 9,80,000 Table: 10 financial provision and source of finance
------23000 ---------23000
Details
Bank loan Contribution Subsidy
Interest
14% -------
Loan Amount
9,80,000 15,35,800 23000 25,38,800
Interest
1,37,200 1,37,200
DETAILS OF SALES
Sr.no
1 2 3
Particular
AMT. (Rs)
20,00,000 6,00,000 1,75,000 27,75,000
Oxygen Asceteline M22 gas Total annual sale Table: 12 Sales details
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Details
Production supervisor Skilled workers Unskilled workers Sales man Clerk-cumaccountant
Numbers Salary
2 3 3 4 2 6000 4500 4000 4000 4200
Amount (yearly)
1,44,000 1,62,000 1,44,000 1,92,000 1,00,800
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6. 7.
2200 ----
ELECTRICITY CONSUMPTION
The electricity consumption of the unit is of Rs 22000 per month. The annual electricity consumption is 22000*12=Rs 2,64,000
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INTEREST
Sr.No
1. 2. TOTAL Table: 14 Details about interest
Details
GSFC Bank loan
Rate of intrest
18% 14%
Loan Amount
6,77,500 9,80,000
Interest
1,21,950 1,37,200
16,57,500 2,59,150
DEPRECIATION
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Sr.No Details
1 2
Amount
Rate
10% 15%
Total
41250 1,12,950 1,54,200
ADMINISTRATION EXPENSES
Sr.n o
1 2 3 4 Accounts Printing & stationary Postage Others Total Table: 16 Administration expenses 1,000 7,000 19,000 2,000 12,000 84,000 2,28,000 24,000 3,48,000
Details
Monthly
Yearly
Amount
2,88,000 3,80,000
Per unit
Profitability statement
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Total sales (141 x 115440) Less : Cost Of Production Raw materials (9,11,000 x 12monthd Salaries and wages Electricity Rent taxes and ins. Intrest on loans Depreciation Admin. Exp. Partners remuneration (15000 x 12 x 2 ) Total overhead expense Gross profit Less : tax @ 35% Net profit
141.00
1,62,77,040
1,09,32,000 8,17,200 2,64,000 1,47,162 3,48,000 8,24,000 122.89 3,60,000 _______ _ 18.11 ____________ _ 1,41,86,712____ 20,90,328 7,31,614_______ 13,58,714
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RATIO ANALYSIS
1 Gross profit ratio=
gross profit X 100 Sales = 20,90,328 X 100 1,62,77,040 = 12.84%
8.35%
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3 Return On Investment =
42.24%
Particulars
Total sales Less : cost of production Raw material including packaging Salary and wages Electricity consumption Administration expenses Sales and distribution expenses CONTRIBUTION FIXED COSTS : Rent Taxes and Insurance Salary & Wages (60%) Repairs and maintenance Intrest Depreciation Electricity (40%) Selling and Distribution expense Partners Remuneration TOTAL FIXED COST
Amount
1,09,32,000
Amount
1,62,77040
3,26,880 1,58,400 3,48,000 3,29,600 1,20,94,880 41,82,160 1,47,162 4,90,320 81,000 2,59,150 1,54,200 1,05,600 4,94,400 3,60,000 20,91,832
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Annual Production = = Contribution per unit unit = = BEP UNITS = = = BEP in Rupees = = = 141-104.77 36.23 Fixed Cost Contribution per unit 20,91,832 36.23 57740 units BEP in units x Sales value per unit 57740 x 141 81,41,340 = 1,20,94,880 1,15,440 104.77 Sales Value - Variable Cost Per
BEP in percentage
= =
50.01%`
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CONCLUSION
The promoters are educates young and experienced having sound financial background and having experience in different business The demand for product i.e. Oxygen gas is increasing day by day and there is shortage of supply. The cost of product to the
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promoters will be lower and supply will be immediate. The market is sure and certain The financial working i.e. cost of product, profitability are satisfactory and encouraging. The break-even point is lower ; cash flow is adequate to pay back term finance within time schedule. Fully automatic plant and machinery, no raw material cost, these are all factors/indicators of a sound and successful project. The market is increasing and the industrial developmenttaking place in nearby areas will increase market tremendously. There is one competitor in the area The timely decision to start the project by promoters will be an additional benefit to the promoters. Considering the above points and parameters of a sound project. The project seems to be financially viable
APPENDIX
List of table Table. no
1 2 Production schedule Installed capacity 19 19
Particulars
Page. no
37
3 4 5 6 7 8 9 10 12 13 14 15 16 17 18
Utilized capacity Details about land Details about building Details about machinery Finance provision and fixed cost of capital Working capital Total cost of capital Financial provision and source of finance Details of source of finance Detail of sales Details about wages salary Details about of intrest Administration expenses Sales and distribution expenses Details about break even analysis
20 21 22 22 23 24 24 25 25 26 27 29 30 30 34
BIBLIOGRAPHY
BOOK
Vasant deasai MAGAZINE Material provided by INDEXT B industrial extension Web site http://science.howstuffworks.com/hair-coloring.htm http://www.manufacturers.com Bureau
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