M/ S Patidar Cotspin Pvt. Ltd.

SUBMITTED FOR

Partial Fulfullments of the Requirements of the Three Years Fulltime Bachelor of Business Administration.

SUBMITTED BY

Hitesh B. Patel Exam No:- 297 Roll No :- 19 Academic year 2007-08 (T.Y.BBA) SUBMITTED TO

M/ S Patidar Cotspin Pvt. Ltd. M.B.A programmed is a study of management. North Gujarat university has made the summer training and preparing project report during the training, which is compulsory for each and every student of management. As the student of M.B.A. I strongly believe that this training is much essential to strengthen our practical awareness with theoretical knowledge. The student of the management have to undergone through training programme for practical training. so I have undergone through this training programme at M/S Patidar Cotspin Pvt. Ltd. and I have made project report of a company during the summer training on all the department of a company.

M/S Patidar Cotspin Pvt. Ltd. efforts in the right direction with the specialization of good manufacturing practices in textile industries. Company is largest Yarn manufacture in India. The companys principal business consists of manufacturing several count yarn.

The basic objective of practical training is to achieve practical knowledge as well as theoretical knowledge from the company management. And also to know how company run in the real life and what is the problem faced, How to handling a problem. As we knew the remark that PRACTICAL WITHOUT THEORY HAS NO ROOT AND THEORY WITHOUT PRACTICE HAS NO FRUIT.

I am pleased to place my report of M/S Patidar Cotspin Pvt. Ltd. Company. This training session is important because in order to develop a practical skill of M.B.A. student. And the information of this project report is collected from the company production unit & office at ahmedabad with the help and discussion with concerned officers and executives of the industrial unit.

M/ S Patidar Cotspin Pvt. Ltd.

Industrial Practical training is the one of the important part of the studies of .M.B.A. which gives us knowledge about the practical training and also encourages us to learn more as per the syllabus. We received lots of help from our professors and other persons.

I am grateful and thankful to each of them who helped me to collect the information about the industry.

I would like to express my gratitude to our to learn about industrial environment during industrial visit.

who gave me a good opportunity

The above mentioned sirs have helped us lot for getting informations regarding the industry. I am also thankful to the staff of the college from whom I got lot of co-operation.

Thank you.

Table of Contents- M/s Patidar Cots_Spin Pvt. Ltd

I. General details of the Company II. About the company and Background of the directors 1

M/ S Patidar Cotspin Pvt. Ltd. III. Project facilities IV. The 3 Ps -Product, Production and Profitability V. Market Scenario & Marketing Aspect of the company VI. Security Coverage VII. Financials Estimated profitability statement Margin Money Calculations Balance Sheet- Provisional and Projected Cashflow Statement Depreciation and Tax Calculations Breakeven Analysis Interest Calculation DSCR Calculation

M/ S Patidar Cotspin Pvt. Ltd.

Overview of textile industries :-

The textile industry is the second largest industry after agriculture in India

contributing about 20% of the total industrial output and 8% of GDP. It provides direct 1

M/ S Patidar Cotspin Pvt. Ltd. employment to about 350 Lacs people. Besides this, there are a large number of ancillary industries, which are dependent upon this sector, such as manufacturing various machines, accessories, stores, ancillary items and chemicals. Known globally for its skill and craftsmanship, the Indian textile industry is also one of the largest export earners and accounts for about 35% of the gross export earnings in trade. Trade restrictions have hitherto kept the Indian textile industry from soaring to the height it is capable of, but this is expected to change, as after January 2005 the quota and other trade restrictions are being removed. About 31.07% of the countrys export earning is contributed by textiles and clothing industry. With barely 2-3% import intensity, it is also the highest netforeign exchange earner. It also contributes significantly to the exchequer, about Rs. 6000 Crores annually. job opportunities are indirectly provided to millions in the cotton farming and processing, stores & accessories and a wide network of marketing of textile and allied products. The Indian Textile Industry has turned around since 2004 and improved since the beginning of 2005 and further expected to improve in the near and distant future by leaps and bounds. Indian textile industry to benefit from the end of MFA The multi-fibre agreement (MFA), which governed global textile trade for a number of years, ended on December 31st , 2004. One of the biggest beneficiaries of this development is the Indian textile industry, in particular the readymade garment industry. As far as India is concerned, the domestic textile industrys latent strengths, such as low labour costs, one of the least-cost producers of cotton yarn and fabrics, abundant availability of cotton and strong presence in niche short run- fashion products are likely to bolster its competitive advantage vis--vis other nations such as Pakistan, Bangladesh and Sri Lanka, who will also gain from the end of MFA. Since nearly 70 percent of Indian textile exports are cotton based, the cotton yarn segment will also benefit from greater export opportunities. On the flip side, the threat of competition exists from countries such as China, Pakistan and Bangladesh, who are equally competitive in garmenting. Indian readymade garment exports to be the major demand driver for cotton yarn. The demand for cotton yarn is expected to grow at a robust 6.8 per cent CAGR between 2004-05 and 2009-10 largely driven by the expected growth of about 15 per cent CAGR in cotton readymade garment exports (in volume terms) due to opportunities available to India in a quota-free regime. But achieving the projected growth in readymade garment exports would be contingent on Indias ability to compete effectively with rivals such as China, Bangladesh and Sri Lanka.

Introduction of Company :-

The company is a closely held private limited company incorporated at vijapur on 5th April 2006. The company plans to manufacture denim yarn, undertake processing work and reselling it. The company plans to establish itself in both domestic as well as export.

M/ S Patidar Cotspin Pvt. Ltd.

M/s Patidar Cotspin Private Limited was founded on 5th April this year under the vision of Mr. Suresh Amin, who believed in offering quality products and plans to achieve growth through empowerment, flexibility, dynamism, technology and shared competencies. Mr. Suresh Amin is the director of M/s Komal Amin Pvt. Ltd., involved in exports of cotton and related products. He is associated with number of cotton related business both in manufacturing and trading in domestic& international market. The company has been promoted by well experienced promoters who has been in this business for past number of years.

Project :-

The company proposes to set up a unit for manufacturing and processing cotton into yarn with a total capacity of 15210 kg of yarn per day. The unit under consideration is proposed in Vijapur Taluka of Mehsana. The proposed manufacturing facility is intended keeping in view the ever growing demand of cotton in local and international markets and expertise and experience of the promoters.

The company has approached the bank for funding the project having the outlay of Rs. 1585.89 Lakhs. The company plans to avail a term loan to the tune of Rs. 706.15 Lakhs and working capital cash credit limit of Rs. 250.00 Lakhs. The balance of Rs. 629.74 is to be contributed by promoters by way of equity share capital(Rs. 100.00 Lakhs) and unsecured loans ( Rs. 529.74 Lakhs)( Quasi equity).

Company Detail::M/s Patidar Cotspin Pv. Ltd.

Name

M/ S Patidar Cotspin Pvt. Ltd.

Constitution

:-

Private Limited Company

Activity

:Manufacturing , Processing and Reselling of Denim Yarn.

Date of Establishment

:-

5th April 2006

Registered Office Address

:-

M/s Patidar Cotspin Pvt. Ltd 101, Shanti Arcade, 132 Ft Ring Road, Naranpura, Ahmedabad-380 013.

Factory Address

:-

Survey No 3975/1, Ladol Road, Vizapur, Dist: Mehasana, Gujarat.

Name of the Directors

:-

1) Mr. Suresh Amin 2) Mrs. Ashaben Patel 3) Mr. Jayesh Patel

Present Directors /Shareholders/Technical Professional of the company :-

M/ S Patidar Cotspin Pvt. Ltd.

1) Mr Sureshbhai Amin, aged 37 yrs is the founder of the company. He looks

after overall operations of the company and will be involved in

routine decision making for the company like purchase, sales etc. He will look after marketing both exports and domestic. He is a regular visitor of international fair which has helped him in understanding the need of different markets of the world. He will also take care of all the major domestic procurement in consultancy with Mr. Jayesh Patel. He is the director of M/s Komal Amin Exports Pvt. Ltd. He is also proprietor of M/s. S. P Enterprise, Komal Sales Corporation. He is partners of M/s. Raj Fabrics, M/s. Rajeswari Textile Mills Activity of all these unit is mentioned separately as associate concern. He has very good experience of procurement of cotton bales from ginning mills, and have his own unit of spinning mills, weaving units etc. and also of family members. He is well versed with all the operation of spinning mill as he began his career by monitoring overall operation of a spinning unit of his close relative. His close family members are having a number of spinning unit carrying out business of manufacturing yarn on highly profitable lines. His functional responsibility in the unit is to look after marketing and sales.

2)

Mrs Ashaben Patel aged 31 years is presently looking after export documentation and correspondence of overseas buyers in M/s Komal Amin Exports Pvt. Ltd. She also takes care of administration of the company since inception of the company. She is proposed to perform the all the above functions in M/s Patidar Cot- Spin Pvt. Ltd. She along with her husband Mr. Vishnubhai Patel (C.A) will look after finance & accounts of the company as well.

M/ S Patidar Cotspin Pvt. Ltd. 3) Mr. Jayeshbhai Patel aged 41 years will look after finances of the company along with routine decision making in the company. He is actively involved in the formation of the company and is involved in routine decision making of the company. He is carrying out diversified businesses of name and style M/s Nilkanth Cold Storage, M/s Unique finance, M/s Alap Chemicals. He has experience of trading in yarn. He will assist Mr. Suresh Amin in marketing both for domestic and international markets.

4)

Mr Rohit Patel:- is one of the share holder of the company. He is associated with companies and firm of real estate development. He is keenly interested in the unit and will share functional responsibility of looking after finances of the company. He is one of the director of M/s Divyam Real Estate Pvt. Ltd. which has a deposit of over Rs. 300 lakhs with Corporation Bank, Navrangpura branch, Ahmedabad. He is director of M/s Parth Builders Pvt. Ltd and proprietor of M/s Shanti Developers. He is well versed in managing finance of the company.

5)

Mr Jitendra Borsaliya:- Mr. Jitendra Borsaliya is shareholder of the company . His functional responsibility in the firm is to look after procurement of raw material. He is director of M/s Patidar Industries Pvt. Ltd. involved in manufacturing of cotton seeds and cotton. He is director of M/s Somnath Ginning and Pressing Mill Pvt. Ltd. He has vast experience in trading and manufacturing of cotton and cotton seeds of over 10-12 years.

6)

Mr Priteshbhai Patel & Mr. Jigneshbhai Patel will monitor daily routine at factory site. They are both shareholders of the company. The company has tied up with M/s Techmex Project consultants for their expertise in textile project implementation and production. Mr. Amitav Patnaik will look after implementation of project and monitor production process of the company. He is a qualified textile engineer. Besides this the company will hire technical professionals to carry out the production process ficiently.

M/ S Patidar Cotspin Pvt. Ltd.

Shareholding pattern of the company :-

The companys proposed shareholding pattern is as under

Sr No 1 2 3 4 5 6 7

Name of the Shareholders Sureshbhai Amin Ashaben Patel Jayeshbhai Patel Jitendrabhai Borsaliya Rohitbhai Patel Jigneshbhai Patel Priteshbhai Patel Total

Share Capital 18,00,000 18,00,000 22,00,000 18,00,000 10,00,000 9,00,000 5,00,000 1,00,00,000

% of Shareholding 18% 18% 22% 18% 10% 9% 5% 100%

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Group Associates :1) M/s Komal Amin Exports Pvt Ltd :Involved in export of cotton and related product. The company has penetrated the export markets of Singapore and China within 18 months. The companys turnover as on 30th September 2006 is over 2900 Lacs and estimated turnover for the year is over 7600 Lakhs.
2) M/s Komal Sales Corporation:-

Mr Suresh Amin is the proprietor of M/s Komal Sales corporation. The company is involved in the business of trading of cotton and yarn. The turnover of the firm as on 31st March 2006 is over 158 Lakhs. 3) M/s Raj Fabrics :Manufacturing and undertaking jobwork for processing into grey cloth is carried out in this firm. Mr. Suresh Amin is the partner in this firm. Turnover as on 31st March 2006 is Rs. 89.44 Lakhs. 4) M/s Rajeshwari Fabrics:Manufacturing and undertaking jobwork for processing into grey cloth is carried out in this firm. Mr. Suresh Amin is the partner in this firm. Turnover as on 31st March 2006 is 63.55 Lakhs 5) M/s Nilkanth Cold Storage:Mr. Jayesh Patel is a partner in M/s Nilkanth Cold Storage. The firm is carrying out the business of maintaining cold storage.
6) M/s Aalap Chemicals:-

Mr Jayesh Patel is the partner in M/s Aalap Chemicals which is involved in manufacturing of dyes intermidates. 7) Mrs. Ashaben Patel is the partner in M/s P.D. Patel. M/s P.D Patel firm is into development of real estate. 8) M/s Uma Developers:M/s Uma Developers is into business of real Estate development. Mrs. Ashaben is one of the partners in the firm. 1

M/ S Patidar Cotspin Pvt. Ltd.

FUTURE PROSPECTS :The future prospects of our Company are better considering the expected industrial growth of 8% in the Textile Industry in the country due to abolition of quota system. This growth rate requires matching capacity addition in the basic raw material of textile i.e. cotton yarn for meeting the increased requirement of the textile industry domestically. Our Company has been expanding production base by undertaking periodical expansion to become a sizeable player in the cotton yarn spinning industry. Our manufacturing facilities are presently running at optimum capacity, but we are producing coarse and medium count of cotton yarns, whereas there is enough demand for special cotton yarns from our existing customers as well as in the market. This demand for special yarn has triggered the plans for setting-up of the Proposed Expansion. We believe that after the Proposed Expansion is implemented, we would be able to cater the demand special yarns in domestic market. Currently, end users of our cotton yarns are from various fields like apparels and garment industry. These customers also require cotton yarns of all counts, which they currently procure from other manufacturers. Our Company also has a competitive advantage in terms of cost and performance. cotton yarns from India are exported to around 80 countries from various textile mills of the country. Our strong long-term relationship with customers, marketing agents wholesale dealers in domestic market and positive industry outlook, places our Company in favorable position to tap market potential and enhance our business accordingly.

Risky Factors affected to company :Unless specified or quantified in the relevant risk factors below, the financial or other implications of any of the risks described in this section cannot be quantified: 1. The price of Cotton, 2. The Company has availed substantial loans and working capital facilities from banks. 3. Dependence on weather conditions 4. Company is dependent on the manufacturing facilities 5. The manufacturing activities are dependent upon availability of skilled and unskilled labour. 1

M/ S Patidar Cotspin Pvt. Ltd. 6. Risk of political instability 7. Competitive business environment 8. Dependence on prices of the raw materials 9. Change in Government Policies 10. Effect of natural disasters.

M/ S Patidar Cotspin Pvt. Ltd.

Implication on Indian Textile Industry :-

India has a very strong and diverse raw material base for manufacturing fibres/yarn from natural (i.e., cotton, wool, silk, jute) to artificial (i.e., synthetic, cellulosic and multiple blend of such fibres/yarn) raw materials. India has competitive advantage in terms of labour cost also. International Textile Manufacturers Federation (ITMF) conducted a comparative manufacturing cost study of 7 countries including India. This study has indicated that Indian industry has competitive advantage in terms of raw material cost and labour cost in manufacture of yarn and fabric. Therefore MFA phase out may not have much adverse impact on domestic textile industry. Top textile importing countries like USA and the EU are looking towards India for meeting their import requirements. India, according to several recent studies, is going to emerge as alternative source of supply to China. Indias growth in exports will be driven by value added made ups and apparel as India has comparative advantages over its competitors in relation to (i) availability of relatively inexpensive and skilled workforce; (ii) design expertise; (iii) large production base of basic raw material like home grown cotton, yarns and fabrics; and (iv) availability of wide range of textiles. According to a recent study by CRISIL (commissioned by ICMF), the Indian textiles and apparel industry can achieve a potential size of USD 85 billion by 2010, of which, the domestic market potential would be USD 45 billion and export potential would be USD 40 billion. Nearly 60% of exports would comprise garments. This would create 12 million job opportunities, comprising of 5 million direct jobs in textile industry, and 7 million jobs in allied sectors.

The textile industry is the second largest industry in India contributing about 20% of the total industrial output and 8% of GDP. About 31.07% of the countrys export earning is contributed by textiles and clothing industry. With barely 2-3% import intensity, it is also the highest net foreign exchange earner. It also contributes significantly to the exchequer, about Rs. 6000 Crores annually. The industry provides employment to about 38 million persons. In addition, job opportunities are indirectly

M/ S Patidar Cotspin Pvt. Ltd. provided to millions in the cotton farming and processing, stores & accessories and a wide network of marketing of textile and allied products.

Product, Production and Profitability :-

Product :The company proposes to produce denim yarn or Internationally accepted Cotton yarn, both combed and carded qualities from 20's to 60's counts. Contamination free cotton yarn of all counts & qualities, Organic cotton yarn for high end users. Compact yarn, fancy yarns under implementation

Production :Based on the total production capacity of 1512 rotors working for 24 hours a day and considering 300 working days in a year total installed capacity of the plant works out to be between 15210 kg of yarn per day. Total production for yarn of 10 count with rotor point production per shift per day rotor at 3.5 kg is 15210 kg of yarn per day at 92% efficiency. Taking this 92% efficiency at 100% capacity of the machine being imported various capacity production has been worked out. Capacity 80% 85% 90% Annual production of yarn in kg 3967826 4215815 4463804

M/ S Patidar Cotspin Pvt. Ltd. The quality and productivity achieved will depend on various raw material parameters like staple length, g/tx, micron ire, maturity, trash content and on departmental condition. Technical sheet for production is as per Annexure I.

Project Facilities :M/s Patidar Cotspin Pvt. Limited is set up with the primary objective of keeping in pace with the changing customer demand for quality yarn and focus its attention on select product only. With this mission the company is confident of playing a dominant role in the market. The company proposes to install 1512 rotors which can produce around 15210 kgs of denim yarn of per day. The company proposes to install an industrial shed for installing the spinning machines , a building for storage of cotton and yarn, a humidification plant and other necessary works at the site. The cost of project is Rs 1585.89 Lakhs. The company has approached the bank to avail a term loan of Rs. 706.15 Lakhs and working Capital loan of Rs 250 lakhs summing upto Rs 956.15 Lakhs and balance Rs. 629.74 Lakhs will be funded by the promoters by way of share capital and unsecured loans which will be treated as quasi equity during the tenure of the loan. Since the machinery to be installed is to be imported the company wants to avail one time Letter of Credit to the tune of Rs 635 Lakhs ( 10,92,000 Euros) which is to be utilized for balance payment of machinery cost. The company has already paid up 20% of machinery cost to the supplier as advance towards procurement of machinery. The invoice value of machinery to be installed is Rs. 1.365 million Euros. Sr. No 1. 2. 3. Particulars Land Building & Site Development Plant & Machinery Imported ( Transportation & Duties) 1

M/ S Patidar Cotspin Pvt. Ltd. Indigenious Electrification GEB Deposit Furniture & Fixture, Office Equipment Erection & Commissioning Stores & Spares Miscellaneous Asset Working Capital Gap Preliminary & Pre-operative Expenses

4. 5. 6. 7. 8. 9.

Land :The proposed unit is to be established by the company at Survey no 3975/1 at Ladol Village in Vijapur in Mehasana District of Gujrat. The total area of the land is 13760 sq. mts. The company has procured this land from Mr. Jayeshbhai Patel who is also one of the directors of the company. The total cost of procurement of land is at Rs. 5.45 Lakhs which includes stamp duty, registration charges and legal Charges of Rs. 94,504. Present marketable value of the land is around Rs. 30.00 Lakhs.

Building:The building cost is estimated at Rs. 106.00 Lakhs. The building cost involves building of industrial shed along with construction of boundary wall, necessary basic electrification points, flooring, water tank for storing water . The layout of the proposed unit is in form of 1+1 floors. The building works is to be undertaken by Mr. Umang J Patel, a very well known Structural Designer of Ahmedabad.

Electrification :Total estimated cost for electrification is Rs. 69.30 Lakhs

Other Asset :Includes compressed piping works, fire fighting equipments, Furniture & Fixtures, office furniture, weighing scale and D.G. Set of 700 KVA @ Rs. 1200 per KVA.

M/ S Patidar Cotspin Pvt. Ltd. Erection & Commissiong Cost :The erection & Commisioning cost is appraised at Rs 20.31 Lakhs. This amount of Rs 20.31 Lakhs includes Rs 16.69 Lakhs towards stores & spares which are essential to install the plant and machinery. Rs. 3.62 are charges towards implementation of project by M/s Texmech Project & Services.

Plant and Machinery :-

Imported:-

The machinery used for manufacturing or processing of yarn is imported. Details of the machinery to be installed by the company is as mentioned.

Sr No 1 2 3

Particulars Blow Room LR Complete Line M.B.O, Mono, ERM, Hopper, Scuther 6 DK 803 card and 1 DK 903 Card with chute and can accessories 4 Draw Frames 1

M/ S Patidar Cotspin Pvt. Ltd. 4 5 6 7 8 2 Schalfhorts , SE-10,240 rotors machine with feeding cans 1 Schalfhorts, SE-10,240 rotors machine 1 Schalfhorts, SE-9,240 rotors with feeding can 1 Schalfhorts, SE-10,120 rotors with feeding can 2 Schalfhorts, SE-9, 216 rotors with feeding can

The plant and machinery is to be imported and hence 5% will be paid towards customs duty to 831.79 Lakhs.

Indegenious accessories :-

List of accessories required is enclosed in quotation and will be supplied with the machine. Apart from the accessories being supplied the company has to install auto waste collection system, Autoclave, U. V. Room, D. G. Set and weighing scale from outside.

Steaming Machine:-

The cost of steaming is appraised at Rs 2.64 Lakhs. The steaming machine is used to condition the yarn before packing.

Auto waste Collection Plant:-

The cost of Autowaste collecting system is estimated at Rs. 13.25 lakhs. The proposed work is to be undertaken by M/s Cosmos Engg. & Services.

U. V. Room :-

The charges for installation of U.V. Room are at Rs.0.40. This technique is used to monitor the quality of yarn.

Humidification:-

The humidification plant is to be installed by M/s Cosmos Enng. & Servises at a total cost of Rs. 31.24 The cost includes plant cost , ducting work and required false ceiling for installation of plant. 1

M/ S Patidar Cotspin Pvt. Ltd.

Manufacturing Process :-

The company has tied up with M/s Texmech project consultant who will monitor the production process & productivity of the company. M/s Mextech will also provide assistance in monitoring the quality of yarn produced by the company. The company will also employ to required technical professionals to carryout the production process smoothly and efficiently. The flow chart of the production process in brief is as mentioned

Flow Chart
BLOW ROOM

CARDING

DRAWING

OPEN END SPINNING (AUTOCORO)

CONDITIONING (STEAMING)

U.V ROOM

M/ S Patidar Cotspin Pvt. Ltd.

( QUALITY CONTROL)

PACKING

With 1512 rotors the total proposed installed capacity of the unit will be 15210 Kgs of yarn per day. The machinery selected by the company possesses high level of process automation from bale plucking to winding of yarn along with monitoring unit to monitor the quality of the yarn. The various stages of yarn spinning are

Blow Room :Raw Material is cleaned and opened to a smaller size( Cotton Tuft) Blow Room consists of sequence of machineries .The purpose of Blow Room is to open the cotton through beaters and remove cotton seeds, leaf particles etc. Sieger Contamination Clearer installed in the Blow Room further cleans any residual contamination left by hand cleaning process.

Carding :-

These cotton tufts are transformed into long strands of fiber, where fibers are individualized. Purpose of carding is to individualize the fibers and to remove neps and seed particles. Feed: Opened Cotton in mat form.

At most mills the opening of cotton bales is fully automated. Lint from several bales is mixed and blended together to provide a uniform blend of fiber properties. To ensure that the new high-speed automated feeding equipment performs at peak efficiency and that fiber properties are consistent, computers group the bales for production/feeding according to fiber properties. The blended lint is blown by air from the feeder through chutes to cleaning and carding machines that separate and align the fibers into a thin web. Carding machines can process cotton in excess of 100 pounds per hour. The web of fibers at the front of the card is then drawn through a funnel-shaped device called a trumpet, providing a soft, rope-like strand called a sliver (pronounced SLY-ver). 1

M/ S Patidar Cotspin Pvt. Ltd. As many as eight strands of sliver are blended together in the drawing process. Drawing speeds have increased tremendously over the past few years and now can exceed 1,500 feet per minute.

Drawing :-

Short fibers are removed through and parallelization of fibres takes place in this machine. Purpose of draw frame is to make the sliver uniform with the help of auto leveler.

OPEN END SPINNING (Autocoro) :Open end spinning takes place by spinning yarn by imparting twist of required thickness to the fibres bundle. Purpose is to convert yarn in smaller package to large package also remove defects in the yarn with help of electronic yarn clearers. Roving frames draw or draft the slivers out even more thinly and add a gentle twist as the first step in ring spinning of yarn. Ring spinning machines further draw the roving and add twist making it tighter and thinner until it reaches the yarn thickness or count needed for weaving or knitting fabric. The yarns can be twisted many times per inch. Ring spinning frames continue to play a role in this country, but open-end spinning, with rotors that can spin five to six times as fast as a ring spinning machine, are becoming more widespread. In open-end spinning, yarn is produced directly from sliver. The roving process is eliminated. Other spinning systems have also eliminated the need for roving, as well as addressing the key limitation of both ring and open-end spinning, which is mechanical twisting. These systems, air jet and Vortex, use compressed air currents to stabilize the yarn. By removing the mechanical twisting methods, air jet and Vortex are faster and more productive than any other short-staple spinning system. 1

M/ S Patidar Cotspin Pvt. Ltd.

After spinning, the yarns are tightly wound around bobbins or tubes and are ready for fabric forming. Ply yarns are two or more single yarns twisted together. Cord is plied yarn twisted together. Steaming :The output of autocoro is conditioned to give smooth finish to the yarn.

U.V Room :The conditioned yarn is passed through Ultra violet room to check the quality of yarn produced and is sent for packing on paper cones.

Raw Material :Sourcing raw material for the manufacturing of the yarn is quite easy as the only raw material required for manufacturing yarn is cotton which is easily available throughout the year. The promoters of the company has very good contact with ginning mills from where cotton can be sourced. The promoters at present exporting cotton to Singapore and china on a large scale under in name and style of M/s Komal Amin Exports Pvt. Ltd. There are a number of firms/ companies who are supplying raw cotton to the promoters various firms on priority basis. List of suppliers are attached for your reference separately in Anneuure I. The average price of cotton per kg is Rs. . 1 kg of yarn requires around 1.16 kg of cotton and hence the average cost of raw material required for one kg of yarn is at Rs. 62.50. Cotton remains the most miraculous fiber under the sun, even after 8,000 years. No other fiber comes close to duplicating all of the desirable characteristics combined in cotton. The fiber of a thousand faces and almost as many uses, cotton is noted for its versatility, appearance, performance and above all, its natural comfort. From all types of apparel, including astronauts in-flight space suits, to sheets and towels, and tarpaulins and tents, cotton in todays fast-moving world is still natures wonder fiber. It provides thousands of useful products and supports millions of jobs as it moves from field to fabric. The key raw material for manufacturing Cotton Yarn is Cotton, which is procured from various cotton mandis through out Indian States namely Punjab, Maharashtra, Gujarat and Madhya Pradesh. The Company uses the services of agents and cotton selectors. They visit the mandi alongwith experienced, trained company officials to check the quality of

M/ S Patidar Cotspin Pvt. Ltd.

cotton, negotiate the prices and purchase cotton on behalf of the Company from approved ginners across the cotton belt from locations, stations and zones which are closest to the factory premises for favourable logistical cost reasons. Further, to further cut down costs and procure cleaner cotton, Company plans to source KAPAS from farmers in Mandis. Likewise, PCL will tie up the supplies for the year during the cotton season beginning 2005-06. In addition being a 100% EOU, the Company also exploits the benefit of importing best quality cotton at lowest price without having to pay import duty from any cotton producing country in the world without any restrictions whatsoever. In case non-availability of cotton in India this option can also be utilized. The Company has been in the industry for more than eight years and has ability to anticipate the price movements and hedge itself against any adverse price trends, either domestically or internationally depending on price movements in accordance with contemporary situations, as and when the same arise Our Company keeps adequate stock of cotton to cover the existing order book position, which mitigates any adverse effect due to price fluctuation.

Plant Utilities : Power :The power requirement after the proposed project implementation is estimated at 675 KVA. The company proposes to apply for the increase in the load to the maximum requirement to the government and will be easily available. Further the company has also decided to install a D.G.Set of 700 KVA as a stand by arrangement for exigencies. The D.G Set will be second hand as it will be sufficient to meet the requirements of manufacturing process in the unit. Water :The total requirement of the unit after commencement of the proposed plants operations is estimated at 8000-10000 litres for processing yarn of 15210 kg per day. Water is required for moisturizing cotton and for humidification plant, drinking and sanitation purpose. The company is able to meet its water requirement from tubewell of adjoining Industrial Plot having Survey no 3979. The company will not face any difficulty in sourcing water which could be easily availed at monthly charges of around Rs.10,000-12,000 per month from the neighbouring plot. Manpower :Manpower to be employed by the company for the production of yarn and administrative office is as per profitability statement attached in the financial calculations of project report. Waste Treatment :1

M/ S Patidar Cotspin Pvt. Ltd.

The company will install necessary waste treatment plant at the site under the guidelines of state pollution control board. The company will comply with legal and other requirement s as applicable to its activities and product. Government Approval :The company has already acquired necessary license from the government agency and the local authorities namely:i) Income tax Number ii) TD Number iii) Import Export Code

M/ S Patidar Cotspin Pvt. Ltd.

Introduction :-

Indias major markets for fabrics and cotton yarn, such as Korea, Hong Kong, and Japan are themselves expected to face stiff competition in their garments exports from India, China, Bangladesh, Sri Lanka, etc in the long term. The competitive trend in fabric exports will be visible even in Indias made-ups exports. In the domestic market, the consumption of cotton yarn is likely to rise due to the price competitiveness of cotton yarn vis--vis polyester and the overall demand for textiles and garments will grow, fuelled by greater purchasing power India to remain self sufficient in cotton. In 2003-04, Indias cotton availability exceeded the actual cotton required to produce the given demand for cotton yarn by over 7 per cent; in 2004-05, it went up to 18 per cent. Going forward, CRIS INFAC believes that India will be self sufficient in meeting cotton demand to produce the required cotton yarn, assuming normal monsoons and the historical increase in yields and acreage. Yield improvement would be the key to attaining self sufficiency. In next 5 years, CRIS INFAC expects cotton availability to exceed actual cotton required by about 5-20 percent assuming imports of certain cotton varieties, such as Egyptian cotton, which is primarily imported for the production of finer counts of yarn. Margin of cotton yarn players expected to improve in 2005-06 On the financials front, the margins of cotton yarn players are expected to improve in 2005-06 due to greater demand for cotton yarn, better price competitiveness of cotton yarn vis--vis polyester and lower raw material costs (cotton) due to higher cotton production in 2004-05. Cotton yarn expected to be price competitive versus polyester until 2005-06 Cotton yarn is expected to be price competitive in 2005-06 due to low cotton costs (on accounts of higher cotton production in the 2004-05 cotton season) and high prices of polyester (the closest competitor, due to shortage of feedstock supply). Polyester prices are expected to remain high until 2005-06, as the tight supply situation of polyester feedstock (PTA & MEG) - mainly on account of rapid growth in Chinas polyester capacities, which has outpaced the growth of global feedstock capacities - is expected to ease only by the end of 2006. Raw material (cotton) costs of spinning companies are expected to soften in 2005-06 Cotton prices of a particular cotton season impact the raw material costs of spinning companies in the subsequent financial year. Raw material costs of spinning companies are

M/ S Patidar Cotspin Pvt. Ltd.

expected to ease in 2005-06 as cotton production is expected to be 20 per cent higher in the 2004-05 season. Medium to long term outlook on profitability The profitability of cotton yarn players is largely influenced by the price competitiveness of cotton yarn, which is, in turn determined primarily by the pricing flexibility of polyester, and cotton costs. However, the prices of polyester feedstock (raw material for making polyester) are largely influenced by crude oil prices. Given the volatility in crude prices, CRIS INFAC examined two scenarios to study their impact on the margins and credit profile of cotton yarn players - One, a scenario when crude prices to continue to rise from present levels, and two, when crude prices soften from current levels.

Industry & Marketing :The spinning and textile industry in India is an important sector which contributes significantly to industrial production , employment generation and foreign exchange earnings. Currently it adds about 14% to industrial production and 4% to GDP. It provides direct employment to about 35 million people and is second largest in providing employment after agriculture. The industry is extremely complex and varied with hand spun and hand woven sector at one end and capital intensive sophisticated mills at other end. Cotton is one of the key raw material for this sector. The main cotton producing states are Maharastra, Gujrat, Madhya Pradesh and Punjab. India also has a competitive advantage in terms of labour cost. The demand for yarn is expected to grow by around 4 per cent in 2006-07. Cotton yarn exports are expected to grow even higher rate of 6% driven by strong off take by China and other non quota markets which imports yarn and re exports other value added fabrics and garments.

Marketing :M/s Patidar Cot- Spin Pvt. Ltd wants to establish itself as a high quality and processing unit. The company plans to sell its produce to regions of Gujrat, Maharastra in the initial stage of its production. Mr. Suresh Amin has been in trading and manufacturing business of textile and hence has a very good contacts in the market. He has traveled different places across the world and is well aware of both domestic and international trading business. The company has also planned to appoint professional marketing personnel for the marketing of companys product. Negotiations are going for appointment of selling agents both in Gujrat and Maharastra. The companys promoters has very good contacts in textile processing mills which uses cotton yarn as input for their finished products as well as in the market. The company plans to export 1

M/ S Patidar Cotspin Pvt. Ltd. its produce to the existing customers of the group company and also tap new markets of different countries abroad. Special care will be taken by the company for both domestic as well as international customers. The company will focus on changing customer need. Cost effective measures in various areas of operation will be adopted by the company to face the competition. The upgradation required will be done from time to time to suit to changing requirement and trend from time to time by the company.

Demand Outlook :-

The Indian cotton yarn industry is expected to capitalize on the opportunities arising in the global textile market. The Indian cotton yarn industry will also gain higher demand for textiles and garments in the domestic market. Between 2004-05 and 2009-10, the overall demand for cotton yarn is expected grow at a CAGR of 6.8 per cent, mainly driven by a CAGR of 10.2 per cent in the same period in derived export demand for cotton yarn (which mainly consists of exports of readymade garments, fabrics and made-ups). Among derived demand drivers, the growth is expected to be the highest in readymade garments (RMG) - CAGR of 15 percent between 2004-05 and 2009-10. Share of end products in total production (2,271 million kg) of cotton yarn in 2004-05. Domestic demand :Domestic consumption of cotton yarns to grow at 6 per cent CAGR CRIS INFAC believes that the domestic demand for cotton yarn will grow at a CAGR of 6 per cent between 2004-05 and 2009-10, as the increased purchasing power of consumers will result in greater purchases of garments. Consequently, demand for cotton textiles and garments will also go up. Growing proportion of middle class to aid long term growth in garment demand. The demand for garments in the domestic market is expected to rise in the long term due to increase in the middle class population and higher disposable income. The rise in youth population and their share in total population will boost the demand for garments. This is likely to help lift the demand for cotton yarn, as the demand for cotton garments is expected rise, along with the spurt in overall demand for garments. Indian spinning industry comparable with Chinese counterparts China has the largest spindle age in the world, with 67 million spindles, around 51.5 per cent of the spindles have been installed in the last 10 years. In comparison, India has about 35.7 million spindles, far lower than China, and the percentage of new spindles added in the last 10 years has been low at 23 per cent. However, the Indian spinning industry is comparable with its Chinese counterparts, as 1

M/ S Patidar Cotspin Pvt. Ltd. China has added capacities only recently and , until, now, India had a fairly modernized spinning industry. Besides, there is no difference in the quality of yarn produced by India and China.

Competition :Company are mainly concerned with seasonality business. So, company has to required a Dull business (marketing) is experienced every year during July/August and December/January months. There is no dependence on any single supplier/customer. The company has to developed a marketing strategy for sales promotion. Because, Number of Spinning Units are producing yarn similar to the yarn manufactured by the patidar Company and at the same time due to globalisation there is also competition from international yarn manufacturers. With technological upgradation and captive power generation, Yarn manufactured by the Companys Textile Division has found increasing number of quality-conscious buyers in many overseas markets and the exports have recorded substantial growth over the last few years. Our Company is manufacturer of cotton yarns, which is an organized segment of Indian Textile Industry. Textile being a global industry, we face competition from various domestic and international manufacturers of cotton yarns. we have edge over other small & medium size manufacturers in the country. Globally, we face stiff competition from large size manufacturers in Indonesia, Korea, Pakistan, Bangladesh etc. However, due to our quality commitment and timely delivery, we are in the market for more than a decade and have grown in spite of strong competition. Approach To Marketing & Proposed Marketing Setup We have set-up a separate full-fledged marketing department to procure orders and contracts. The export marketing department is headed by komal amin export pvt. Ltd. Our marketing strategy is based on the products type and the end user segment. We adopt hybrid marketing module comprising of direct customers approach and existing agents network. We have appointed various agents in domestic as well as international market to obtain regular orders. Our Company is also in regular interaction with garment and apparels manufacturers for their requirement of fabrics for domestic and international markets.

M/ S Patidar Cotspin Pvt. Ltd.

Business Strategy :-

In last two decades, the Multi Fibre Agreement (MFA) governed international trade in textile in clothing. Post January 2005, the Agreement on Textiles and Clothing to abolish MFA quotas marked a significant turn around in textile trade. In this backdrop, Indian Textile companies have a place to occupy in the global trade. The removal of quota has opened up 91 new avenues and opportunities for further growth. Our Company proposes the following strategies for future growth. Continue to build-up a professional organization, We have a team of professionals and technocrats to look after various stages of production, commercial and marketing divisions of our Company. We believe in transparency, flow of information, and commitment to the work among our work force and with our valuable customers, suppliers, investors, government authorities, banks, financial institutions etc. Over a period of time, we have been able to build an image that can be matched with our peers. The philosophy of professionalism is foundation stone of our business strategy and we wish to make it more sound and strong in times to come. Enhancing Customer Base Our Company intends to grow business continuously by adding new customers both in existing as well as in the new countries. We aim to do this by effective leveraging of our marketing skills & relationship and further enhancing customer satisfaction. Improving Product Portfolio and Addition of New Products Our Company intends to extend existing range of yarn to include a wider range of products by manufacturing finer count yarns and compact yarn. The customers will be benefited by procuring various products from one supplier and our Company will be able to sell variety of products to our valued 1

M/ S Patidar Cotspin Pvt. Ltd. customers. Our multiproduct portfolio also allows us to sustain the cost of high level of services we aim to give to our customers.

Quality Products :-

Our Company intends to produce among the best quality yarn which are acceptable by customer. For that, our Company shall be deploying better technologies in Production as well as R&D Departments. The Company strives always to create quality value for our Customers and therefore is becoming exceedingly driven with the Customer as the focal point. Every kilogram of cotton is hand opened and contamination is removed before it is fed into Unifloc and again to double check the cotton passes through sieger contamination removal system installed in the Blow Room. Patidar Cotspin has permanently posted its experienced staff for selection and procurement of best cotton from cotton growing areas and onward dispatch of the selected cotton to the mill. Patidar Cotspin has come up with a Fully Automatic and Computerized Spinning Plant run with an alert modern management. Centralized Humidification and fully automotive control systems. The hi-tech machines installed by Patidar Cotspin produce a wide variety of top quality knotless cotton yarn to meet Standards having better regularity and superior cleanliness.

M/ S Patidar Cotspin Pvt. Ltd.

M/ S Patidar Cotspin Pvt. Ltd.

Introduction :Company are required a efficient financial capability for smooth running company activities, and it is also depends on government policy which are provided to textile industries. The government announcement in the union budget 2005-06 are favoring to textile business development. The define as under Initiatives in the Recent Past to Grant Impetus to the Textile Industry :A. To strengthen domestic textile industry for meeting the growing global competition, the following important announcements have been made in the Union Budget 2005-06 : 1. The allocation to TUFS has been enhanced to Rs. 43500 Lacs, along with an additional capital subsidy of 10% for the processing sector; 30 items of textiles products and hosiery have been identified for dereservation from items reserved for Small Scale Industry. 2. Creation of a Special Purpose Vehicle (SPV) for improving infrastructure in manufacturing with an investment of Rs. 10,000 Crores; Excise Duty on Polyester Filament Yarn (PFY) and Polyester Texturised Yarn (PTY) reduced from 24% to 16%. 3. Duties on specified textile machinery items, raw materials and spare parts for manufacture of such machinery brought down from 20% to 10%. The existing concessional duty of 5% on some other machinery is being continued.
B. Announcement of National Textile Policy :-

One of the main objectives of the National Textile Policy announced in November 2000 is to facilitate the textile industry to attain and sustain a preeminent global standing in the manufacture and export of clothing. The policy endeavors to 1

M/ S Patidar Cotspin Pvt. Ltd. achieve the target of textile and apparel exports from the present level to USD 50 billion by 2010 of which the share of garments will be USD 25 billion.
C. Technology Up gradation Fund Scheme :-

In view of the urgent need for stepping up the process of modernization and technology upgradation of the textile industry in India, Ministry of Textiles launched a Technology Upgradation Fund Scheme (TUFS) for the textile and jute industry for a five-year time frame from 01.04.1999 to 31.03.2004. The scheme has since been extended till 31.03.2007. The scheme provides 5% interest reimbursement in respect of loans availed there under from the concerned financial institutions for investments in benchmarked technology for the sectors of the Indian textile industry specified there under. Promoters Contribution :The promoters contribution includes share capital to the tune of Rs. 100.00 Lakhs and unsecured loans raised from the directors and their relatives to the tune of Rs. 519.94 Lakhs. Aggregating to Rs. 619.94 lakhs towards the financing the unit. Term Loan :The company plans to avail a term loan of Rs.706.15 Lakhs for financing of plant and machinery and other cost of project which is estimated at Rs. 1113.53 Lakhs. The balance of Rs. 407.38 Lakhs will be contributed by the promoters by way of share capital and unsecured loans from promoters and their relatives. The company will repay the term loan in seven years i.e 84 equated monthly installment with 9 months moratorium from the date of disbursement of term Loan. The company will commence commercial production from 1st April 2007 and will start repaying the term loan from Oct07. The finance sought for various components of term loan is as under :The company wants to avail letter of credit to the tune of Rs. 635 Lakes for days required for import of machinery. Margin required for availing the non fund based limit will be put in separately by the company. The company also seeks forward sale contract to the tune of Letter of credit. The company seeks finance of 65% from the bank for plant and machinery since though the machine is second hand it is in excellent working condition with a residual life of over 15 years. Chartered engineers certificate from 1

M/ S Patidar Cotspin Pvt. Ltd. both Pakistan & India is attached for your kind perusal certifying the present condition of machine and its residual life span.

Working Capital :-

The working capital requirement for the company is Rs. 472.36 Lakhs which is the working capital gap for the year 2007-08 i.e for first full year of its operation. The company wants to avail cash credit working capital loan of Rs. 250.00 Lakhs. Balance of Rs.222.36 Lakhs will be brought in by the promoters.

Schedule of Implementation :-

The company proposes to commence construction of civil works by February 2006. Order for machinery has been placed which is to be imported . The expected dates of completion of projects are as under :Sr. No 1. 2. 3. 4. Activity Expected date of completion

Land Site Development Construction of industrial shed Plant & Machinery Placement of Order Arrival of Machines Installation Trial Run Commercial Production

Will be acquired by 1st Week of December 2006 Development work started February 2007 Order has been Placed. 10% of the machinery cost with total value of Rs. 1.365 euros has been paid as advance by the company . 1st week of March 2007 2nd week of March 2007 15th March onwards April 2007

5. 6. 7. 8.

M/ S Patidar Cotspin Pvt. Ltd.

Security Coverage:
The company is providing security in from of Prime Security and Collateral Security. Prime Security :The prime security offered by the company is hypothecation of book debts and stock of cotton and yarn in addition to factory land, building and plant & machinery of the company. Collateral Security :The collateral security offered is as under Name of the holder Address Present Marketable Value 25.32 Lakhs

1)

Mrs. Ashaben Patel

Office no 103,104, Shanti Arcade, 132 ft Ring Road, Naranpura, Ahmedabad. 9, Uma Bunglows, Near R. C. Technical, Sola Road, Ahmedabad.

2)

Mr. Bhanuben Borasiya

31.66 Lakhs

Total amount of collateral offered is Rs 56.98 Lakhs as valued by Shri M.M. Patel, Panel valuer for Corporation Bank, as on 8th November 2006. 1

M/ S Patidar Cotspin Pvt. Ltd.

Profitability :The profitability projections covering the period of term loan repayments is satisfactory. The debt-equity and current ratio are quite satisfactory. Average DSCR of the company works out to be 1.80 indicating comfortable debt- servicing capability.

Guarantor :1) Personal Guarantee of all the directors. 2) In addition to personal guarantee the company is offering guarantee of i) Mr. Rohitbhai Patel with estimated net worth of Rs. 93.20 Lakhs Proprietor: M/s Shanti Developers Director : M/s Divyam Real Estate Developers ( Fixed deposit with Navrangpura branch to the tune of Rs 300.00 Lakhs) Director : M/s Parth Developers Pvt. Ltd. ii) Mr. Priteshbhai Patel with estimated net worth of Rs 27.88 Lakhs iii) Mr. Jigneshbhai Patel with estimated networth of Rs.13.37 lakhs Director of M/s Patidar Industries Pvt. Ltd. iv)Mr. Jitendrabhai Borasiya with estimated networth of Rs.28.27 Lakhs Director of M/s Patidar Industires Pvt. Ltd. v) Mrs. Bhanuben Borasiya with estimated net worth of Rs. 31.66 Lakhs.

3) The company will offer corporate guarantee of M/s Komal Amin Exports Pvt.

Ltd and M/s Divyam Real Estate Pvt. Ltd.

Rate of Interest & Processing Fees :The Company has sought waiver of processing charges of the bank loan and has 1

M/ S Patidar Cotspin Pvt. Ltd. requested rate of interest at 10.50%.

COST OF PROJECT :(RS in lakhs)

SR.NO A B C D E F G H I J K L M N

Particular Land Building Plant & machinery Duty & transportation cost Steaming machines Electrification Indigenious machines GEB Deposit Furniture & fixture Office Equipment Erection & commissioning Strores & spares Miscellaneous assets,weighing scale etc Prellminary & pre-operative Exp Working capital Gap TOTAL

Cost 5.45 106.00 791.70 40.09 2.64 43.75 50.41 25.55 0.81 1.62 3.65 16.69 8.75 16.46 472.36 1585.89

Margin 50% 30% 35% 30% 50% 30% 30% 100% 40% 40% 50% 30% 50% 100%

Finance Sought 2.72 74.20 514.61 28.06 1.32 35.29 30.63 0.00 0.49 0.97 1.81 11.68 4.38 0.00 250.00 956.15

MEANS OF FINANCE:-

M/ S Patidar Cotspin Pvt. Ltd. SR.NO A B C D PARTICULAR Share Capital Unsecured loan Term loan Working capital loan TOTAL AMOUNT 100.00 529.74 706.15 250.00 1585.89

ESTIMATED PROFITABILITY STATEMENT:( Rs in lakhs) (Projected)

PARTICULAR (A) Sales value Less: excise duty (B) Cost of production 1. Raw material consumsion Opening Stock Add: Purchase Less: Closing Stock 2. Wages 3. Power & Fuel 4. Repairs& Maintaneance 5. Stories & Spares 6. Other manu. Expenses 7. Admi. & Sales Expenses 8. Director Remuneration 9. Preliminary Expenses TOTAL Increase & Decrease In Stock (C) Operating Profit (D) Interest (E) Gross Profit (F) Non Operating Income

2007-08 2955.77 0.00 2955.77 0.00 2337.24 269.69 2077.55 25.34 210.29 39.68 62.35 39.68 96.07 0.00 3.29 2557.22 57.34 455.89 159.83 296.06 0.00

2008-09 3140.51 0.00 3140.51 259.69 2223.63 275.92 2207.40 26.86 221.20 42.16 65.32 41.31 102.00 0.00 3.29 2709.55 8.81 439.77 151.13 288.64 0.00

2009-10 3325.24 0.00 3325.24 275.92 2353.47 292.16 2337.24 29.55 236.58 44.64 67.93 44.64 109.33 30.00 3.29 2903.21 1.67 423.71 139.53 284.18 0.00

2010-11 3325.24 0.00 3325.24 292.16 2337.24 292.16 2337.24 32.51 236.58 44.64 67.93 44.64 111.83 40.00 3.29 2918.66 0.07 406.66 127.93 287.73 0.00

2011-12 3325.24 0.00 3325.24 292.16 2337.24 292.16 2337.24 35.11 236.58 49.10 69.89 44.64 114.88 40.00 3.29 2930.74 0.00 394.51 116.33 287.18 0.00

2012-13 3325.24 0.00 3325.24 292.16 2337.24 292.16 2337.24 38.62 236.58 51.33 70.54 44.64 119.01 40.00 0.00 2937.96 0.00 387.28 104.73 282.55 0.00

2013-14 3325.24 0.00 3325.24 292.16 2337.24 292.16 2337.24 42.48 236.58 55.80 70.54 44.64 123.54 40.00 0.00 2950.96 0.00 374.42 93.12 281.29 0.00

2014-15 3325.24 0.00 3325.24 292.16 2337.24 292.16 2337.24 44.60 236.58 55.80 70.54 44.64 126.04 40.00 0.00 2955.44 0.00 369.80 84.42 285.38 0.00

M/ S Patidar Cotspin Pvt. Ltd.

(G) Depreciation (H) Profit before tax (I) Provision for tax (J) Profit after tax (K) Withdrawals (L) Retained Profit 141.64 154.42 51.98 102.44 0.00 102.44 123.73 164.91 55.51 109.40 0.00 109.40 108.19 175.98 59.23 116.75 0.00 116.75 99.02 179.71 59.49 120.22 0.00 120.22 96.15 182.03 61.27 120.76 0.00 120.76 93.08 189.47 63.78 125.69 0.00 125.69 85.30 195.99 65.97 130.02 0.00 130.02 86.16 199.22 67.06 132.16 0.00 132.16

Profit & Sales Graph :2007-08 2955.77 102.44 2008-09 3140.51 109.40 2009-10 3325.24 116.75 2010-11 3325.24 120.22 2011-12 3325.24 120.76 (projected) 2012-13 2013-14 3325.24 125.69 3325.24 130.02 2014-15 3325.24 132.16

PARTICULAR SALES PROFIT (PAT)

Sales :-

Profit :-

M/ S Patidar Cotspin Pvt. Ltd.

BALANCE SHEET :-

M/ S Patidar Cotspin Pvt. Ltd.

PARTICULAR (1) SHAREHOLDERS FUNDS (A) SHARE CAPITAL (B) RESERVE & SURPLUS SUB TOTAL A+B (2)BORROWED FUNDS (A) TERN LOAN (B) WORKING CAPITAL SUB TOTAL A+B (3) UNSECURED LOAN GRAND TOTAL (1)FIXED ASSET (A) GROSS BLOCK (B)DEPRICIATION NET BLOCK (2) INVESTMENTS GEB DEPOSIT (3) CURRENT ASSETS (A)INVENTORIES (B)BOOK DEBTS (C) LOAN & ADVANCES (D) MISC. ASSETS (E) CASH&BANK BALANCE TOTAL CURRENT ASSETS (4)CURRENT LIABILITIES (A) CREDITORS FOR GOOD (B)CREDITORS FOR EXP. TOTALCURRENTLIABILITE NET CURRENT ASSET(3)-(4) (5) PROFIT&LOSS A/C (6) PRELIMINARY EXPS. TOTAL ASSETS

2007-08 100.00 102.31 202.31 655.71 250.00 905.71 527.74 1637.76

2008-09 100.00 211.58 311.58 554.83 250.00 804.83 527.74 1646.15

2009-10 100.00 328.19 428.19 453.95 250.00 703.95 527.74 1661.88

2010-11 100.00 448.28 548.28 353.07 250.00 603.07 527.74 1681.09

2011-12 100.00 568.90 668.90 252.20 250.00 502.20 527.74 1700.84

2012-13 100.00 694.46 794.46 151.32 250.00 401.32 527.74 1725.52

2013-14 100.00 824.46 924.35 50.44 250.00 300.44 527.74 1754.53

2014-15 100.00 956.38 1056.38 0.00 250.00 250.00 527.74 1838.12

1071.52 141.64 929.88 150.00 25.55 322.48 241.38 10.00 2.00 48.60 624.46

1106.02 256.37 840.65 200.00 25.55 347.62 256.46 10..00 2.00 65.69 681.77

1115.02 373.57 741.46 200.00 25.55 365.64 407.32 10.00 2.00 21.78 806.73

1179.52 472.59 706.94 250.00 25.55 365.70 407.32 10.00 2.00 29.14 814.17

1269.52 568.74 700.79 250.00 25.55 365.87 407.32 10.00 2.00 58.77 843.95

1354.02 661.82 692.21 300.00 25.55 365.92 407.32 10.00 2.00 42.69 827.93

1436.52 747.12 689.40 300.00 25.55 365.92 407.32 10.00 2.00 75.26 860.50

1581.52 833.28 748.25 300.00 25.55 365.92 407.32 10.00 2.00 98.43 883.67

86.56 18.73 105.30 519.16 0.00 13.16 1637.76 0.00

91.97 19.72 111.70 570.08 0.00 9.87 1646.15 0.00

97.39 21.05 118.44 688.30 0.00 6.58 1661.88 0.00

97.39 21.47 118.85 695.32 0.00 3.29 1681.09 0.00

97.39 22.06 119.44 724.51 0.00 0.00 1700.84 0.00

97.39 22.77 120.16 707.77 0.00 0.00 1725.52 0.00

97.39 23.53 120.91 739.59 0.00 0.00 1754.53 0.00

97.39 23.95 121.33 762.34 0.00 0.00 1836.12 0.00

M/ S Patidar Cotspin Pvt. Ltd.

PARTICULAR 2007-08 (1) SHAREHOLDERS FUNDS (A) SHARE CAPITAL (B) RESERVE & SURPLUS SUB TOTAL A+B (2)BORROWED FUNDS (A) TERN LOAN (B) WORKING CAPITAL SUB TOTAL A+B (3) UNSECURED LOAN GRAND TOTAL (1)FIXED ASSET (A) GROSS BLOCK (B)DEPRICIATION NET BLOCK (2) INVESTMENTS GEB DEPOSIT (3) CURRENT ASSETS (A)INVENTORIES (B) DEBTORS (C) LOAN & ADVANCES (D) MISC. ASSETS (E) CASH&BANK BALANCE TOTAL CURRENT ASSETS (4)CURRENT LIABILITIES (A) CREDITORS FOR GOOD (B)CREDITORS FOR EXP. (c) 0THER LIAB. & PROVI. TOTALCURRENTLIABILITE NET CURRENT ASSET(3)-(4) (5) PROFIT&LOSS A/C (6) PRELIMINARY EXPS. TOTAL ASSETS

BUDGETED 2008-09 100.00 102.31 202.31 655.71 250.00 905.71 527.74 1637.76 100.00 211.58 311.58 554.83 250.00 804.83 527.74 1646.15

ACTUAL 31/03/2007 31/03/2008 100000 0 100000 62170707 0 62170707 48977981 111248688 100000 48380000 48390000 90450383 0 90450383 37076124 176006507

1071.52 141.64 929.88 150.00 25.55 322.48 241.38 10.00 2.00 48.60 624.46

1106.02 256.37 840.65 200.00 25.55 347.62 256.46 10..00 2.00 65.69 681.77

104279474 0 104297474 2315000

151134888 0 151134888 4286559

0 0 1653809 0 20814363 22468172

31079980 10360714 5998363 0 1421464 48860521

86.56 18.73 105.30 519.16 0.00 13.16 1637.76 0.00

91.97 19.72 111.70 570.08 0.00 9.87 1646.15 0.00

2393219 0 15432208 17825427 4642745 11470 111248688

23918397 3972697 395837 28286931 20573591 11470 176006507

(PROJECTED)

BALANCE SHEET :-

M/ S Patidar Cotspin Pvt. Ltd.

CASH IN FLOW STATEMENT:(Rs in lahk) (Projected) PARTICULAR (A) CASH ACCRUAL (B) INCREAS IN CAPITAL (C) INCREAS IN TERN LOAN (D)INCREAS IN STATE SUBSIDY (E) INCREAS IN WORKING CAPITAL (F) DECREASE IN INVESTMENT (G) INCREASE IN UNSECURED LOAN (H) DECREASE IN INTANIBLE ASSETS TOTAL IN FLOW 2007-08 296.06 100.00 706.15 0.00 250.00 0.00 527.74 -13.16 1866.78 2008-09 288.64 0.00 0.00 0.00 0.00 0.00 0.00 3.29 291.93 2009-10 284.17 0.00 0.00 0.00 0.00 0.00 0.00 3.29 287.47 2010-11 278.73 0.00 0.00 0.00 0.00 0.00 0.00 3.29 282.02 2011-12 278.18 0.00 0.00 0.00 0.00 0.00 0.00 3.29 281.47 2012-13 282.55 0.00 0.00 0.00 0.00 0.00 0.00 0.00 282.55 2013-14 281.29 0.00 0.00 0.00 0.00 0.00 0.00 0.00 281.29 2014-15 285.38 0.00 0.00 0.00 0.00 0.00 0.00 0.00 285.38

CASH OUT FLOW STATEMENT :(Rs in lack ) (projected) PARTICULAR (A)ADDITIONAL TO FIXED ASSETS (B) INCREASE IN NET CURRENT ASSETS (C) DECREASE IN TERM LOAN (D) DECREASE IN UNSECURED LOAN (E) DECREASE IN WORKING CAPITAL (F)INCREASE IN INVESTMENTS (G) PROVISION FOR TAX (H) WITHDRAWALS (I) PRELIMINARY EXPENSE TOTAL OUT FLOW 2007-08 1071.52 470.56 50.44 0.00 0.00 175.55 51.98 0.00 0.00 1820.05 2008-09 34.50 33.83 100.88 0.00 0.00 50.0 55.51 0.00 0.00 274.72 2009-10 9.00 162.13 100.88 0.00 0.00 0.00 59.23 0.00 0.00 331.24 2010-11 64.50 -0.35 100.88 0.00 0.00 50.00 59.49 0.00 0.00 274.52 2011-12 90.00 -0.43 100.88 0.00 0.00 0.00 61.27 0.00 0.00 251.72 2012-13 84.50 -0.66 100.88 0.00 0.00 50.00 63.78 0.00 0.00 298.49 2013-14 82.50 -0.76 100.88 0.00 0.00 0.00 65.97 0.00 0.00 248.59 2014-15 145.00 -0.42 50.44 0.00 0.00 0.00 67.06 0.00 0.00 262.08

M/ S Patidar Cotspin Pvt. Ltd.

OPENING CASH& BANK BALANCE CLOSING CASH & BANK BALANCE 0.00 46.73 46.73 63.95 63.95 20.17 20.17 27.67 27.67 57.43 57.43 41.48 41.48 74.19 74.19 97.49

ANALYSIS OF PROJECT : The cost of project of M/S Patidar cotspin pvt ltd is RS 1585.8 Laks . The detail of projects is as under:SR.N0 1 2 3 4 5 6 7 8 9 10 PARTICULAR Land Building & site development Plant & machinery Imported Indigenious Electrification GEB Deposit Furniture & fixture, office equipment Erectification & commissioning Stores & spares Miscellaneous assets Working capital gap Preliminary & preoperative expense TOTAL ( Rs in lakhs) AMOUNT 5.45 106.00 831.79 53.05 43.75 25.55 2.43 3.62 16.69 8.75 472.36 16.46 1585.89

M/S Patidar Cotspin Pvt ltd financing its project through following means of finance. SR.NO. 1 2 3 4 PARTICULAR Share capital Unsecured loans Term loan Working capital loan TOTAL AMOUNT 100.00 529.74 706.15 250.00 1585.89

M/ S Patidar Cotspin Pvt. Ltd.

To judge worth whileness of this project, There are various investment criteria with the help of which we can see the picture of this project.

Investment criteria ________________________________________________ Discounting criteria Non discounting criteria _____________________________ ________________ Net present Profitability Internal Pay Back Accounting Value Index Rate Of Return Period Rate of Return

M/S patedar cotspin pvt ltd has following cost for financing its project. These costs are referred to as cost of capital of project. It is the minimum required rate of return on fund committed to the project (A) Cost of Share Capital : M/S Patidar finance its project through share capital of Rs 100 lacks. It is equity finance. Its cost of equity can be calculated as follows: M/S Patidar is not paying dividend to their shareholder. So there is dividend payout ratio is Nil. M/S Patidar has kept 100% of earning as retained profit But there is growth (g) in the company which can be seen each year. This growth (g) can be calculated as follows. Companys PAT is increasing year by year. Thus,we can find. There is average growth is 4.14% Cost of Equity :Ke = = Div + g Po 0 / 100 + 4.14 %

M/ S Patidar Cotspin Pvt. Ltd.

Ke = (B) Cost of Unsecured Loan : M/S patidar also uses unsecured loan to make finance its project M/S patidar takes unsecured loan of Rs 529.74 lacks with interest rate of 10% So, cost of unsecured loan is 10% (C) Cost of Term Loan : M/S patidar takes term loan to support their project for financing plant & machinery This term loan of Rs 706 Which is carrying interest rate 11.50% cost of term loan is 11.50% 4.14 %

(D) Cost of Working Capital Loan : M/S patidar finance its working capital requirement through cash credit. M/S patidar avail cash credit working capital loan of Rs 250 lacks which has interest rate Of 11.50% Thus, The companys cost of working capital is 11.50%

Thus, M/S Patidar overall cost of capital is equal to weighted average cost of capital. SOURCES Share capital Unsecured loan Term loan Working capital loan TOTAL AMOUNT PROPORTION (LAKHS) (%) 100.00 6.30% 529.74 33.40% 706.15 44.52% 250.00 15.76% 1585 .89 % COST WEIGHTED (%) COST (%) 4.14% 0.26% 10.00% 3.34% 11.50% 5.12% 11.50% 1.81% 10.53

THUS, COMPANYS COST OF CAPITAL WILL BE 10.53%.

M/ S Patidar Cotspin Pvt. Ltd.

NET PRESENT VALUE :-

Under this method, the present value of investment outlay is compare with the present value of the expected cash flow of the project. Under the Net Present Value Method, on the other hand, present value of investment is deducted from the present value of the expected cash inflow of the project. NPV = CFAT C Where, CFAT = Present Value of the Cash Flow after Taxes C = Present Value of Investment NPV = Net Present Value Net present value is one of most important investment criteria. Net present value of project is the sum of the present value of all cashflows that are expected to occur Over life of the project NPV of project:Ct . _ Initial Investment (1+r) M/S patidars project NPV (Net present value) will be as NPV=

followes.

projects cost of capital is 10.53% projects life is 7 years. projects cashflow will be as under.

M/ S Patidar Cotspin Pvt. Ltd.

CASHFLOW :PBDT 296.06 288.64 284.18 278.73 278.18 282.55 281.29 DEP. 141.64 123.73 108.19 99.02 96.15 93.08 85.30 PBT 154.42 164.91 175.98 179.71 182.03 189.47 195.99 TAX 51.98 55.51 59.23 59.49 61.27 63.78 65.97 ( Rs in lakhs ) PAT CASHFLOW 102.44 244.08 109.40 233.13 116.75 224.94 120.22 219.24 120.76 216.91 125.69 218.77 130.02 215.32

YEAR 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14

CALCULATION OF NPV:(Rs in lakhs) PRESENT VALUE 220.89 190.93 166.68 146.89 131.45 119.89 106.80 234.29 1317.82

YEAR 1 2 3 4 5 6 7 7 (Recover of W.C )

CASHFLOW PVIF(10.53%) 244.08 233.13 224.94 219.24 216.91 218.77 215.32 472.36 0.905 0.819 0.741 0.670 0.548 0.496 0.496

NPV = EPV Initial Investment = 1317.82 -1585.89 = - 268.07 Conclusion :M/S patidar cotspin pvt ltd has negative net present value (NPV). This project is not acceptable.The companys return is lower than its cost.

M/ S Patidar Cotspin Pvt. Ltd.

PROFITABILITY OF INDEX METHOD :This method is based on flow. It gives a proportion of inflow and present value of sometimes known as Benefit numerator shows the benefit shows the cost of the project. present value of cash present value of cash cash outflow. It is Cost Ratio, as the and the denominator

If the index is greater than 1, the project becomes acceptable, as it indicates that the present value of cash inflow is more. The difference between NPV and PI method is that in case of former method, the present value of investment is deducted from the present value of cash inflow, while in case of profitability index, the present value of investment becomes the devisor.

PI = PRESENT VALUE OF BENEFITS INVESTMENT

= 1317.82 1585.85 = 0.83

Conclusion : Profitability Index or Benefit cost Ratio of M/S patidar has also lower than 1. So, This project is not acceptable.

M/ S Patidar Cotspin Pvt. Ltd.

PAYBACK PERIOD METHOD :-

This is one of the most popular and simplest methods of evaluating investment proposals. It takes into account the time period required to recover the original cash outlay invested in the projects. In the words of Bierman, Pay-Back Period is defined as the length of time require for the stream of cash proceeds produced by investment to equal the original cash outlay require by the investment. Generally, the management calculates the pay-back period in advanced and this period is known as the cut-off period. If the pay-back period of a project is longer than fixed by the management, it will be rejected. Payback period is the length of time required to recover the initial cash outlay on the project. YEAR 1 2 3 4 5 6 7 W.C )7 CASH FLOW 244.08 233.13 224.94 219.24 216.91 218.77 215.32 472.36

As we can see M/S patidar has recovered its investment

amount amount of Rs 1585.89 in 7 years So, M/S patidars payback period is 7 years

M/ S Patidar Cotspin Pvt. Ltd.

ACCOUNTING RATE OF RETURN :Under this method, average income is divided by average investment. Average income is obtained from the profit shown in the profit and loss account. In other words, rate of return is assessed on the basis of accounting profit and not cash flow. The depreciation charge and taxes are deducted from profit, which than is divided by the no.of years to get average income per year. This average annual income is divided by average investment outlay. The scrap value of the assets is assumed to be zero. It scrap value is positive, it is added to total investment outlay. Average Rate of Return = Average Annual Profit After Tax Average Investment ( Rs in lakhs) TAX PAT 51.98 102.44 55.51 109.40 59.23 116.75 59.49 120.22 61.27 120.76 63.78 125.69 65.97 130.02

YEAR 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14

PBDT 296.06 288.64 284.18 278.73 278.18 282.55 281.29

DEP 141.64 123.73 108.19 99.02 96.15 93.08 85.30

PBT 154.42 164.91 175.98 179.71 182.03 189.47 195.99

AVG. PROFIT = _ PBT____ YEARS = = AVG. INVESTMENT = 825 7 117.89 Lacks PBDT.. 2

= 1585.89 2

M/ S Patidar Cotspin Pvt. Ltd. = 792.945 ARR = AVERAGE PROFIT AVG. INVESTMENT = 117.89 792.945 = 0.1487 OR 14.87%

M/S patidar has not greater or higher accounting rate of return but M/S patidar can take decision out this project with their out off rate of return.

M/ S Patidar Cotspin Pvt. Ltd.

In this project M/S Patidar Cotspin Pvt. Ltd. Does not distribute profit to owners. Here all profit is plough back in the company. It is kept as retained earning.
1. 2. The company uses their profit to pay term loan and not distributing to its shareholders.

3. 4.

The company has retained its all profit as retaining earning.

This projects profit after tax has increased about 29% from 200708 to 2014-15.

The companys cash inflow is 1317.82 lakhs which is lower than companys initial investment of 1585.82 lakhs. So, this project is not profitable.
5.

6. The companys profitability index is also lower than 1 that is 0.83. so, from this criteria, the project is not acceptable.

The projects of cash outflow has been very high length it means the project recovery its investment in 7 years. So, it may not be favorable for
7. company.

M/ S Patidar Cotspin Pvt. Ltd.

Financial Analysis is a very important part of the any company. The whole performance of the company is depend on the how well the company manage the cash or finance, how well the company utilizes the finance for the purpose of the company. From my survey I have found that overall company manages the finance very well by efficient management of company. The company utilize the finance very efficiently. But there is also chance of improvement in the finance management. Company should try to reduce the amount of inventory or stock and also company should improve the efficiency of collection department and as company has enough amount of current assets so company can utilize it for the payment of sundry creditors and cash can take advantage of the cash.

Overall the management of M/S Patidar Cotspin Pvt. Ltd. is very good but with some improvement they can manage it more efficiently.

M/ S Patidar Cotspin Pvt. Ltd.

Books & Reports :

Annual report of M/S Patidar Cotspin Pvt. Ltd. Khan & Jain , Financial Management. Production management, K. ashwatapha.

WEBSITES :

www.google.Com www.patidar cotspin.com