A Product Project Report ON

PREPARED BY
PRAJESH R. SISOTIA

STUDENT OF
T.Y.B.B.A.

FROM
SHRI R.P. BHALODIYA COLLEGE

ROLL NO

52
SEAT NO ACADEMIC YEAR
2007-08

GUIDANCE BY
MR. JAY PATEL

SUBMITTED TO
SAURASHTRA UNIVERSITY
1

INDEX
Sr. No. (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) Particulars Acknowledgement Promoters background Project at a glance Significance of location Product and production process Pricing structure Financial Details of the unit Financial provisions Profitability of the project Summary Break-even point statement Estimation for next 5 years Future Prospects Bibliography Page No. 03 05 07 08 09 15 16 21 22 26 27 29 33 34

ACKNOWLEDGEMENT
This is the outcome of product project report (P.P.R.) prepared by me. As per the rules & regulations of the Saurashtra University, we are supposed to prepare a product project report in the subject named E.M.S.B. [Entrepreneurship and Management of small scale Business]. Product project report is important & useful for getting loans from G.S.F.C. Commercial banks, scheduled banks or from any other financial institutions. This report clears the idea that how small scale industries being established and how it can working and developed. I also got an opportunity to produce and know practical things of P.P.R., which will be useful to me in my future. I am heartily thankful to the concerned prof. Mr. JAY PATEL for guiding me in preparation of this report. I also thanks all of them who were guiding me and helps to prepare this particular project. I have tried my level best to perform my duty and trace out maximum efforts for the preparation of this report. The product, which I had selected, is Ice-cream. So, I also thanks to the local retailer of Ice cream for providing me the basic necessary information.

Prajesh Sisotia T.Y.B.B.A

DECLARATION
I the under signed Mr. Prajesh R. Sisotia student of T.Y.B.B.A. studying in Sri R.P. Bhalodiya, here by declare that the project work presented in this report is my own work and has been carried out under the supervision and guidance of Mr. Jay Patel in charge of B.B.A. department of the college. This project work has not been previously submitted to any other university for any examination. Date: Place: Prajesh Sisotia

PROMOTERS BACKGROUND
(1)
Name : Prajesh R. Sisotia ANAND Chandresh Nagar Main Road Rajkot. 360 004. Age Educational Qualification Experience Nature of work Contribution to the Unit Details of the property held (2) Name : : : : : : : 21 Years. Bachelor in Business Administration. 6 months Marketing Executive Rs. 8,25,000 One bungalow and a farmhouse at Rajkot. Hardik D. Goswami. BALVI NIVAS, Patel Colony, Jamnagar. Age Educational Qualification Experience Nature of work Contribution to the unit Details of the property held : : : : : : 21 years Bachelor in computer Application. 6 months Personnel department & Other legal matters. Rs. 6,75,000 One flat and Ice-cream parlour at Jamnagar.

(3)

Name

Kalpesh D. Parmar OM SHIV Gulab Vihar Society, Kalawad Road, Rajkot. 360 005.

Age Educational Qualification Experience Nature of work Contribution to the unit Details of property held

: : : : : :

22 years B.E. (Mech.) One year Production department, Machine handling etc. 7,00,000 one bunglow at Rajkot and factory at Metoda.

PROJECT AT A GLANCE
(1) (2) Name of the unit Address of unit : : ROYAL Fresh Ice-Cream 2245/2250 G.I.D.C. Metoda, Near Ramakrishna way Bridge, Dist. Rajkot. (3) (4) (5) (6) Address C/o Size of the unit Line of activity SSI Regd No : : : : As Above. Small Scale Industry. Ice-Cream producing unit. Application is made G.I.D.C. for registration.

PROPOSED LOCATION JUSTIFICATION

Generally the word location is always followed by availabilities of infrastructural facilities such as power, raw materials, transportation, water, government regulations, marketing etc. After a careful watch and proper consideration of all these factors, the promoters have decided to set-up the plant at G.I.D.C., Metoda, which is rapidly growing in the field of industrialization. There fore the unit is having the following advantages(1) (2) Easy and quicker transportation is possible. Though, Rajkot is well connected by road, rail and air transport. Rajkot is having most of the regional offices, banks, insurance and other government institutions, which are beneficial for the easy availability of finance though; finance is a life-blood for and business. (3) (4) The area is fully excepted from tax which is an added benefit. Since Metoda is an industrial region the availability of man-power (labour) is made very easy. Without much effort. Laborers are living in near by village of Lodhika, etc. (5) Other facilities like-electricity, water is easily available.

INFORMATION REGARDING PRODUCT AND PRODUCTION

(A) INFRODUCTION
Ice-cream is Consumed by all the human being on earth. It doesnt matter that they falls into which age group. From a small child to the teenagers, adults, mature persons, or even old peoples tend to eat Ice cream. There is an unbelievable craze of Ice-cream from U.S.A. to Japan, Europe to Asia, Africa to India. Every country, every person are habituated to have Ice cream. Somebody have it in the form of sweet dish, some in the form of fashion, some in the status and some have no reasons. Because Ice cream creates a magic in the minds of everybody. From a lower class people to the higher class, Ice cream remains its position and also becomes a product to be stored by households. Ice-cream is consumed world wide at the rate of approx. 15 kgs. Per capita. While in India, it is near about 0-30 kgs. And Ice-cream consumption in the country is expected to increase from the present 20 lacs tones per annum to 30 lacs tones per annum by 2005. The milk producing countries like New Zealand, Denmark, India etc. are expected to give further boost to the Ice-cream industries processes in India and particularly in Gujarat. So, the facts, figures are clearly defines that Ice cream is not just a product, but it is also become a part of our life. That day is not so far when Ice cream is declared as a basic necessity.

(B)

MARKET STATUS
The demand for Ice cream is increasing day by day. The life-style and living

standards are changing. Our country is furnished with high society culture. The fact thing is that, today, in this fact generation, many of the changes takes place. Especially in the field of Ice-cream, though it was not a new product for people. But it has an important characteristic that it may never losses its market, because the word Ice-cream itself is having a deep-rooted meaning that no consumer can fed up from eating Ice-cream. Ice cream is highly consumed in the season of summer, but today, people have it in any season whole the year. Eating Ice-cream in winter is considered as a fashion and it becomes a trend in India. As taking into consideration the competitors, there is only one industry producing. Ice-cream in Saurashtra,. However, the present demand of Saurashtra region is not fully satisfied by this industry, but the retailers are tend to have the stock of the producers of mumbai and Ahemdabad that helps to meet the demand of Saurashtra and Kutch. So, there is a very wide market scope. The main competitors of Ice-cream at Gujarat level are Amul, Vadilal, Hovmour etc. Our industry is facing the problem of existence with this big gigantic and also it will face the competition with the other local producers. Therefore, our efforts are made to achieve desired goal, which is to capture the Saurashtra region.

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(C)

RAW MATERIALS AND ITS SUPPLIERS

The basic raw materials for the making of Ice-cream are as follows Milk and Cream Backing power Essense and flavoured colours Sugar and other items

SUPPLIERS
The raw materials is supplied by the following (1) Gopal Dairy (R.D.C.M.P.U.L.) Doodh Sagar Marg. Rajkot 360 001. (2) Ramakrishna Dairy 7, Bajaj estate, Silver avenue Road, Rajkot 360 001. (3) Baroda Dairy Baroda 394 004.

[D]

PRODUCTION PROCESS
The steps involved in the production of Ice-cream are as follows-

(1)

Reciept of raw materials

The raw materials received from the supplier are stored in the

respective containers which has highly advanced technical technical inputs for the proper maintenance of milk though it is a perishiable product. Then after the other raw materials are taken to the assembly along with the milk and then production process starts.

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(2)

Mixing
Here all the raw materials are mixed together and freeze at 0 c.

afterwards, again this mixture is exposure to the normal room temperature and send to the respective department where different flavours are added. Milk is first heated and then cooled.

(3)

Blending
The mixture is well-blended in this department. And when it becomes

soft different flovoures are added. For this purpose, variouse kinds of essense and backing powder is used. Then the flavoured colour is added.

(4)

Cooling
Now, the flavoured Ice-cream is transferred to the cooling tower where

the colling process is done.

(5)

Freezing
Here, the Ice-cream is freezed at minimum temperature and dispatched

after 24 hors of freeze.

(6)

Dispatched:
The ready made Ice-cream is dispatched as per the order given. For

this, we have a cold storage vans and trucks. The Ice-cream is packed in the boxes, cups and other packs as per the requirement. Connes and Candies are also been made. Thus, these are the step0s involving in the production of Ice-cream. One thing that we care of , is to whole production process by machines only. The production process is fully exempt from the human touch. So, we are considered the quality which is the first requirement of consumers.

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(E)

PRODUCTION CAPACITY
Installed Capacity

Sr. NO. Name of the Product (1) (2) Vanila (100 ml) cups (500 ml) packs Butter scotch (50 ml) small cups (100 ml) large cups Cones (50 ml) packs Strawberry (100 ml) cups (500 ml) packs Black current Rajbhog Total Production

Daily Units 0.09 0.09 0.45 0.45 0.45 0.45 0.45 0.45 0.90 2.25 6.03

Monthly units 2.25 2.25 1.125 1.125 1.125 1.125 1.125 1.125 2.0 2.20 15.45

Annual units 18.0 18.0 13.5 13.5 13.5 13.5 18.0 18.0 20.0 20.5 166.5

(3) (4) (5)

Other sizes and products of the above given can also be produced in the unit according to the quantity of orders, taking into consideration the choice and taste of the consumers.

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PRODUCTION CAPACITY Installed Capacity

Sr. NO. Name of the Product (1) (2) Vanila (100 ml) cups (500 ml) packs Butter scotch (50 ml) small cups (100 ml) large cups Cones (50 ml) packs Strawberry (100 ml) cups (500 ml) packs Black current Rajbhog Total utilised production Daily Units Monthly units 0.54 0.54 0.027 0.027 0.027 0.027 0.027 0.027 0.054 2.75 4.046 1.35 1.35 1.125 0.675 0.675 0.675 0.675 0.675 2.25 2.35 11.35 Annual units 16.2 16.2 13.5 8.1 8.1 8.1 8.1 8.1 10.1 11 102.1

(3) (4) (5)

So, the utilised capacity of plant is near about 60%

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PRICING STRUCTURE
Pricing structure of our industry is flexible. It may vary accordingly. But mostly, price is determined on the basis of raw material consumed. Some of the price of our products are : For small cups For large cups Family Pac Party Pac Candy Cannesfrom Rs. 5 to 7 per unit from Rs. 8 to 12 per unit from Rs. 35 to 60 per unit from Rs. 80 to 120 per unit from Rs. 8 to 10 per unit from Rs. 8 to 10 per unit

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FINANCIAL DETAIALS OF THE UNIT

(1)

LAND
Area Location : : 52 m 52 mg sq. G.I.D.C., Metoda, Rajkot District not yet received

Non-Agricultural permission number : Details of land Open land 52 m m : Meters 2704 Rs. Sq.m

Sr. NO. (1)

Rate 300 sq.m.

Total value per Rs. 8,1,200

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(2)
Sr. No. (1) (2) (3) (4) (5)

BUILDING AND PREMISES

Details Factory shed Godown Office Room Compound wall R.C.C. Foundation for For machineries Total cost of construction Type of Area ft. 60 60 = 2400 30 30 = 450 15 30 = 450 15 30 = 450 15 30 = 450 sq. Area sq. ft. 225 450 525 338 375 Rate 5,40,000 4,50,000 2,36,250 1.51.875 1,68,750 15,01,875

construction Only cement Levelling R.C.C. R.C.C. R.C.C. Only cement Leveling

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(3)
Sr. No. (1) (2) (3) (4) (5) (6)

MACHINARIES
Name of Machine cooling tower Air compressor Cold storage container High Tech Blenders Refrigerator Contingencies electron charges (at 10%) Total cost of plant & 24,15,00 machinery 0 Qty. No. 1 1 2 2 2 & Value (Rs.) 1,50,000 75,000 18,00,000 1,25,000 40,000 2,25,000 Suppliers coroseal ind. Plot 78/c. sector 25 Mumbai 400 002. Alight Industries New chamber 6 Ahmedabad 2-B, M.G.Road, Mumbai 400 003. Accurated Pvt. Ltd., 225, Bandar Hill, Mumbai 400 053. Holypack Idustries Capital comm. Center Abad 380 009. -

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(4)
Sr. No. (1) (2) (3) (4) (5)

FIXED CAPITAL COST OF THE PROJECT

Particulars Land Building Machineries Contingencies (10%) Preliminary expenses : furniture Others Total Fixed capital cost Amount (Rs.) 8,11,200 15,01,875 24,15,000 2,25,000 60,000 15,000 51,03,075

(5)
Sr. No. (1) (2) (3) (4) (5)

WORKING CAPITAL REQUIREMENT

Details Raw material Work-in-progress Finished goods bills receivable Current expenses Electricity bill Salary Water Repairs & maintenance Transportation Total Working capital Period 25 days 2 days 10 days 30 days 2 months 1 months 1 months 5 days 10 days Amount (Rs.) 7,70,000 1,50,000 4,50,000 3,75,000 7,500 42,000 3,000 3,000 19,500 18,00,000

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(6)
Sr. No. (1) (2)

TOTAL CAPITAL COST OF THE PROJECT

Details Fixed capital cost Working capital cost Total capital cost of the project Amounts (Rs.) 51,03,075 18,00,000 69,03,075

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FINANCIAL PROVISIONS
(i) SOURCE OF FINANCE
For fixed capital, the finance is obtained mainly from G.S.F.C. in the form of loans. Other sources are subsidy and contribution by partners. The related details of sources of finance is as under: Sr. No. (1) (2) (3) (4) (5) (6) (7) Details Land Building Machinary Contingency Preliminary expenses working capital Other expenses Total cost Loan from Subsidy G.S.F.C. 1,80,075 2,97,675 11,02,500 15,80,250 77,175 1,82,250 6,75,000 9,34,425 Own contribution 1,10,250 1,27,575 4,72,500 2,25,000 75,000 18,00,000 75,000 28,85,325 Total amount 3,67,500 6,07,500 22,50,000 2,25,000 75,000 18,00,000 75,000 54,00,000

(II)
Sr. No. (1) (2) (3) (4)

MEANS OF FINANCE
Details G.S.F.C. Loan Bank Subsidy Own contribution Total cost of the project Amount (Rs.) 18,80,250 9,34,425 28,85,325 54,00,000

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PROFITABILITY OF THE PROJECT

(1) Sr. No. (1) (2) DETAILS OF THE SALES AND PRODUCTION:(Estimated Sales) Details Vanila (100 ml) cups (500 ml) packs Butter scotch (50 ml) small cups (100 ml) large cups Cones (50 ml) packs Strawberry (100 ml) cups (500 ml) packs Black current Rajbhog Total Sales Rate 3,22,500 1,06,050 85,500 2,58,000 3,42,150 1,71,450 2,56,500 3,42,000 1,73,138 85,500 Qty. (Tonnes) 5.25 5.25 2.625 2.625 2.625 2.625 2.625 2.625 2.625 2.625 Amount Rs. 11,28,750 5,56,763 2,24,438 6,77,250 8,98,144 4,50,056 7,73,313 8,97,750 4,54,488 2,24,438 61,85,390

(3) (4) (5)

(2)
Sr. No. (1) (2) (3) (4)

RAW MATERIALS
Details Milk & Cream Backing power Essense & colours Sugar Total raw material cost Rate 77,500 30,000 13,333 5,000 Qty. (Tonnes) 20 15 15 10 30 Amount Rs. 15,50,000 4,50,000 2,00,000 50,000 22,50,000

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(3)
Sr.No. (1) (2) (3) (4) (5) (6)

SALARY AND WAGES

Factory Staff
Designation Production Manager Engineer Supervisor Skilled workers Unskilled workers Guard Total Add: 20% Bonus Total cost of factory staff Total No. 1 1 1 4 6 1 Monthly salary 4,500 3,750 2,700 1,800 900 1,050 Total Yearly Amount (Rs.) 54,000 45,000 32,400 86,400 64,800 12,600 2,95,200 59,040 3,54,240

Office Staff
Sr. No. (1) (2) (3) (4) (5) (6) Designation Managing Director Marketing Manager Personnel Manager Accountant Clerk & Typist Peon Total Add:20% Bonus Total Salary of office staff Total No. 1 1 1 1 1 1 Monthly salary 4,500 3,750 3,750 2,250 2,250 750 Total Yearly Amount Rs. 54,000 45,000 45,000 27,000 27,000 9,000 2,07,000 41,400 2,48,400

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(4)

ELECTRICITY CONSUMED
Electricity consumed = H.P. 0.75 Working Hours per day Total no. of days Percentage in a year utilised capacity = = 60 0.75 8 300 60 6,48,000

So, the total cost of electricity consumed is 2,50,000

(5)
Sr. No. (1) (2)

REPAIRS AND MAINTANANCE

Details Repairs Maintanance Total cost of repairs & maintanance Monthly 1,500 1,500 Yearly 18,000 18,000

(6)

INTEREST
Loan from G.S.F.C. is Rs. 15,80,250 and interest on loan is at 18% and the

amount is Rs. 2,84,445.

(7)

DEPRECIATION ON ASSETS
Depreciation on fixed assets is charged by straight line method. The details are

as under : Sr. No. (1) (2) (3) Details Building Machinaries Furnitures Total depreciation Asset value 6,00,000 22,50,000 60,000 Rate of Amount of Depreciation 16% 10% 125% Depreciation 96,000 2,25,000 750 3,21,750

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(8)
Sr. No. (1) (2) (3)

ADMINISTRATION EXPENSES
Details Postage & Stationary Telephone bill Miscellaneous expenses Total administration expenses Monthly 375 450 75 Yearly 4,500 5,400 900 10,800

(9)
Sr. No. (1) (2) (3)

SALES EXPENSES
Details Commission on sales Salesmans salary (yearly) Advertising expenses Total sales expenses Amount Rs. 90,000 13,500 9,000 1,12,500

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SUMMARY
Sr. No. (1) (2) (3) (4) (5) (6) (7) (8) Details Raw material Salary & wages Electricity Repairs & maintanance Depreciation Interest on G.S.F.C. loan Administration Expenses Sales Expenses Total cost of production Profit = = = Sales 61,85,390 23,17,255 Amount (Rs.) 22,50,000 6,02,640 2,50,000 36,000 3,21,750 2,84,445 10,800 1,12,500 38,68,135 Total cost of production 38,68,135

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BREAK EVEN POINT STATEMENT

Particular Sales Less : Variable cost Raw material Electricity Sales expenses Total variable cost Contribution Less : Fixed cost Salry & wages Repairs & maintanance Depreciation Interest on G.S.F.C. loan Administration expenses Total fixed cost Total cost Profit Amount (Rs.) 61,85,390 22,50,000 2,50,000 1,12,5000

26,12,500 35,72,890 26,12,500 6,02,640 36,000 3,21,750 2,84,445 10,800 13,56,865 49,29,755 12,55,635

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 P.V. Ratio

Contribution ---------------Sales

26,12,500 -----------61,85,390

0.42 Fixed cost -----------P.V. Ratio

B.E.P.

13,56,865 -----------0.42

32,30,630

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ESTIMATION FOR NEXT 5 YEARS

SALES PROJETION
Sr. No. / Year (1) (2) (3) (4) (5) Capacity Utilisation 60% 65% 70% 75% 80% Yearly sales (in Ammount Rs. Tonnes 21 22.75 24.50 26.50 28 61,85,390 64,94,660 68,03,930 71,13,200 74,22,470

VARIABLE COST PROJECTION (1) RAW MATERIAL

Capacity Utilisation 60% 65% 70% 75% 80% Raw material 26 28.17 30.33 32.50 34.67 Cost of Raw material 13,00,000 14,08,335 15,16,670 16,25,000 17,33,335 Sr. No./ Year (1) (2) (3) (4) (5)

29

(2)

ELECTRICITY
Capacity Utilisation 60% 65% 70% 75% 80% Cost of Electricity 2,50,000 2,70,000 2,91,000 3,12,500 3,33,335

Sr. No. / Year (1) (2) (3) (4) (5)

(3)

SALES EXPENSES
Capacity Utilisation 60% 65% 70% 75% 80% Sales Expenses 75,000 81,250 87,500 93,750 1,00,000

Sr. No. / Years (1) (2) (3) (4) (5)

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CIRCULATION OF B.E.P. FOR FIRST 5 YEARS

Particulars Sales Less : Variable cost Raw material Electricity Sales exp. Total Variable cost Contribution Less : Fixed cost Sales & Wages Repairs & Maintanance Depreciation Interest Admn. Exp. Total fixed Cost Total cost Profit Year 1 60% 61,85,390 Year 2 65% 64,94,660 Year 3 70% 68,03,93 0 22,50,000 2,50,000 1,12,500 26,12,500 35,72,890 23,62,500 0 2,62,000 1,18,125 27,43,125 37,51,535 24,75,00 0 2,75,000 1,23,750 28,91,87 5 39,12,05 5 6,02,640 36,000 3,21,750 2,84,445 10,800 12,55,635 38,68,135 32,17,255 6,02,640 36,000 3,21,750 2,84,445 10,800 12,55,635 39,98,760 24,95,900 6,02,640 36,000 3,21,750 2,84,445 10,800 12,55,63 5 41,47,51 0 36,56,42 0 6,02,640 36,000 3,21,750 2,84,445 10,800 12,55,635 42,60,010 28,53,190 6,02,640 36,000 3,21,750 2,84,445 10,800 12,55,635 43,90,635 30,31,835 25,87,500 2,87,000 1,29,375 30,04,375 41,08,825 27,00,000 3,00,000 1,35,000 31,35,000 42,87,470 Year 4 75% 71,13,200 Year 5 80% 74,22,470

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Particulars P.V.Ratio = Contribution Sales B.E.P. = B.E.P. Sales 100 M.O.S. = Profit P.V.Ratio

Year 1 0.58 35% 39,95,267

Year 2 0.58 33.33% 43,03,275

Year 3 0.57 32.37% 46,60,386

Year 4 0.58 30.43% 49,19,293

Year 5 0.58 29.16% 52,27,300

P.V. Ratio above 0.55 indicates a very good profitability. Also B.E.P. at sales, i.e., the position at which firm would be able to break even is much lower than the expected sales. This claim is further supported by break even ratio. Thus, the break even margin is quite good and margin of safety is considerably large.

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FUTURE PROSPECTUS
Today, Ice-cream proved its significance that it is a part of our diet. As there is only one unit in Saurashtra producing Ice-cream, we have a wider scope. Very first, our main aim is to take over the market of Saurashtra. The unit within 2 years will have an upper hand over the competitors due to better marketing, personnel, finance and production. We utilize maximum of we have, our plan is to increase the capacity upto 90%. And also we are changes the flavours of the Ice cream that people wants. We introduce some new flavours within the end of next year. Very Due to high profit volume Ratio, we are able to repay the loan of G.S.F.C. without any problem.

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BIBLOGRAPHY

Marketing ManagementProject Management-

Philip Kotler Vasant Desai

34

PREFACE
Small is beautiful, so also small scale industry, it is significant segment of the Indian economy & the objectives underlying its development are increase in the supply of manufactured goods. The promotion of capital formation, the development of indigenous entrepreneurial talents and skills and the creation of employment opportunities. Students with initiative, creativity and Indian orientation have wonderful opportunities of becoming successful entrepreneurs of small scale business unit which have attained a lot of protection and encouragement from govt. The subject entrepreneurship & management of small scale business. Adds. Further to the vocational guidance through the course of bachelor of business administration (B.B.A.). Students enrolled in the course gain momentum to start their won business concerns. After graduation and they recognize their destination and difficulties by preparing this product project report.

PRAJESH R. SISOTIA

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