DECLARATION

I, the undersigned NIRAJ M. CHAUHAN as

student of T.Y. BBA. Hereby declare that the project
work presented in this report is my own work and has
been carried out under the supervision of Dr. Swati
Doshi Christ College, Rajkot. I submit the report to
Saurashtra University, Rajkot. This work has not been
submitted to any other university for any other
examination.

Date: Signature

Place:
 PREFACE

In India the growth of small sale industries is much

more important than in other countries because in the
present situation there is an urgent need to raise the
employment. To cope up with the preset requirement of
any employment the government has given many facilities
to the small-scale industries in India. To contribute in the
industrial growth of the country the government makes
more and more efforts for the growth of small-scale units.

I am very glad to submit this report on SSI, which is

in the syllabus of Saurashtra University under
entrepreneurship program. The subject, which includes the
preparation of this type of product report, is very good to
guide the students in management in real situation.

This report is completely imaginary. I am having

practical experience of it but the figures and facilities
information is somewhat imaginary.
 ACKNOWLEDGEMENT

I am very happy to present the product project

report. I accept my deep gratitude towards the principal
and staff of college for encouraging me. I am thankful
to Dr. Swati Doshi and all those friends who helped me
in preparing my product project report.

Lastly, I am also thankful to my family members

who always encouraged me and co-operated for the
successful completion of the project report. In short, I
am very much thankful to all those who helped me in
my project report.
 Index
Sr. No. Particulars

1. Introduction
2. Project at Glance
3. Promoters Background
4. Justification of Location
5. About Wire Enamels
6. Production Process
7. Implementation Schedule
8. Fixed Assets and Variable cost
9. Working Capital
10. Cost of Project
11. Sources of Capital
12. Fixed Cost
13. Cost of Production
14. Cost per unit
15. Projected cost of production statement
16. Sales price of Wire Enamels
17. Expected Sales
18. Profit Calculation
19. Return on Investment
20. Cost of Capital
21. Cost Sheet
22. Operating Statement
23. Manufacturing Account
24. Profit and Loss Account
25. Profit and Loss Appropriation Account
26. Balance sheet
27. Ratio Analysis
28. Future Plans
 INTRODUCTION

India is on the movement of its liberalization and open economic

policy has shown results. New avenues have opened up for business
activities, these is an aroma of all round professionalism in the air. In
this progressive economic scenario, one sector that has emerged as the
most happening is small-scale industrial sector.

The small-scale sector, the world over, is playing a vital role in the
growth has been rightly considered as the engine of growth in most
counties. They enhance balanced regional industrial development, and
they act as a nursery for entrepreneurship. The development of SSI is an
affirming and assures policy of the government. The common men are
the sectors most glorious corporate names have had humble SSI
beginning.

Small-scale unit is the pillar of the Indian economy. Most of the

businesses carried out in India are small-scale units.
 Project at Glance

Name of Unit : NBS Wire Enamels

Registered Office Address : NBS Wire Enamels,

GIDC Metoda,
Gate no. 3,
Rajkot.

Factory Address : GIDC Metoda,

Gate no. 3
Rajkot.

Form of Organization : Partnership Firm

Partners name : Chauhan Niraj M.

Pabari Brijesh
Barmeda Sandip V.

Product : Wire Enamels

Size of Unit : Small Scale unit

Cost of Capital : 11.52%

Return on Investment : 19.63%

 Bankers : GSFC, ICICI Bank, SBI.

Promoters Background

Partner 1.
Name of Promoter : Chauhan Niraj M.
Educational Qualification : BBA (Sp.Marketing )
Role in Unit : Marketing and Personnel
Financial Contribution : 50%
Experience : Fresher

Partner 2.

Name of Promoter : Pabari Brijesh

Educational Qualification : MBA (Finance)
Role in Unit : Finance and Accounting
Financial Contribution : 50%
Experience : 3 yrs.in Finance Depart.

Partner 3.
Name of Promoter
Educational Qualification
Role in Unit
Financial Contribution
: Bermuda Sandip
: BE. & MBA (Systems)
: Production & Technical
: 50%
 Experience : 1 year in TATA chemicals

Justification of Location

Location of any industry plays a dominant role in the success or

failure of the company. It has been rightly said that the mistake of
selecting the wrong site cant be corrected without heavy losses.
Selecting a proper site for establishing small-scale industry thus
increases, as finance is a major constraint for a SSI unit.

The proposed location for the establishment of manufacturing

facilities for my unit is GIDC Metoda, Kalavad Road, Rajkot-360 001.
Government has declared this area as an industrial area in the Very past.
Due to government incentives, this area has developed very well with
easy availability of infrastructure facilities.

The unit enjoys the following benefits of location:

1) Raw Materials:

Raw materials are the basic constraint for all industries

regular supply of raw material is very crucial to maintain flow of
production. The major raw materials required for manufacturing wire
enamels are DMT, MEG, CIX Xylene, Phenol, Glycerol and Butyl
Titanate, which are easily available in this area.
2) Labor Force:
Cheap and skilled\unskilled labour is easily available to the
unit as it is located in an industrial belt. Concentration on small-scale
units in the area makes the availability of labour force easy.

3) Transportation:
Transport facilities are mainly required for distribution of
finished products to the retailers and whole sellers. The transportation
cost is comparatively less as the market place is away at a distance of
only 13 skims. And also within the industrial area.

4) Power:

Power is the main source in order to run an industry. If

power is not available at the industrial place in a proper time and in the
proper quantity than industrial work cannot be carried out. But here this
problem is not seemed to be arising, as power is available from GEB at
subsidized rates, since the unit is located in an industrial area.
 About Wire Enamels

Introduction:

Wire enamels are the kinds of enamels, which are specially

prepared for the coatings of the wires, used in transformers, motors, fan
choke and other allied electrical machinery in order to prevent them from
being rusted.

These enamels should have maximum flexibility; mar resistance,

hardness and abrasion resistance as the wires are wound after coating.
Wire enamel is a type of insulating varnish and as the name implies is
used in electrical industry for insulating purpose. These enamels provide
protection from current leakage as well as provide safety from
atmospheric and environmental detriments to electrical equipments and
accessories. High dielectric strength, poor surface conductivity and
insulation resistance are the major requirements of these enamels. They
should have good resistance to water, oils, solvents, acids, alkalis etc.
The film of the enamels on wire should dry uniformly and should be
unaffected at elevated temperatures. Their thermal expansion and
contraction should be the same as those of conductors on which they are
used and they should not be flammable.

Market Potential:
The use of wire enamel has already been mentioned in
introduction. Wire enamels has purchased by the manufacturers of
enameled wire, which are used in the transformers, motors, fan, choke
and other allied electrical machinery.

Production Process

These enamels are normally based on oleo resinous base. The

phenolic resin and D.C.O. stand oil are heated and cooked at 260 degree
Celsius in the varnish kettle to get the desired viscosity. The varnish
kettle to get the desired viscosity. The varnish so cooked is cooled is
cooled to 15 degree Celsius and then solvents are mixed to get the final
desired viscosity of the enamel. Finally driers and silicon resin are
added and after testing for its desired quality laid down in I.S.
specification, the enamels are packed in drums of 20 lts. Or 5 lts.
Capacities. Compositions may vary application-wise. To suit the
climatic conditions compositions are designed.

Process Chart:

Heating of D.C.O. stand Oil Cooling of Varnish

Addition of Driers Mixing of Solvents

Addition of Silicon Final Product

 Quality Test

Implementation Schedule

I take maximum one and half year to implement this project the
time required for completing each activity of the project till commercial
production is as follows:

Sr. No. Activity Time required

1. Preparation of project 1 Month

2. Selection of a site 1 month

3. Registration of SSI 1 month

4. Availability of Finances 3 months

5. Machinery procurement 2 months

6. Construction of factory 5 months

7. Erection and commissioning 15 days

8. Trial run 15 days

 9. Recruitment of Labour 2 months

Fixed Assets

Fixed Assets

1) Land & Building:

Particulars Area Rate Amount(Rs.)

Land 2500 sq. yards 800 20,00,000

Building 4000 sq. feet 250 10,00,000
Total 30,00,000

2) Plant and Machinery:

No. Particulars Units Rate Amt.(Rs.)

1. Varnish Kettle 500 lts. Cap. 2 80,000

2. Storage Vessels 1000 lts. Cap. 2 30,000
3. Furnaces (coal/wood fired) 2 12,000
4. Weighting Scale 100kg cap. 1 15,000
5. Thermometers, sealing machine - 13,000
Total 15,00,000
3) Other Fixed Assets:

No. Particulars Units Rate Amt. (Rs.)

1. Delivery Van 2 2,50,000 5,00,000

2. Computers 4 25,000 1,00,000
3. Furniture - - 2,00,000
Total 8,00,000

4) Preliminary and Pre-operating exp.:

Particulars Amt. (Rs.)

Preliminary exp. 60,000

Pre-operating exp. 40,000
Total 1,00,000

Total Fixed Assets

No. Particulars Amt. (Rs.)

1. Land and Building 30,00,000

2. Plant and Machinery 15,00,000
3. Other Fixed Assets 8,00,000
4. Preliminary exp. 1,00,000
Total 54,00,000
 Working Capital

1) Raw Materials:
(Per month)
No. Name Quantity Rate Amt. (Rs.)

1. Oil Soluble Pure 1700 lts. 70/lts. 1,19,000

2. D.C.O. stand Oil 3000 lts. 40/lts. 1,20,000
3. Mineral Turpentine oil 7000 lts. 15/lts. 1,05,000
4. Butyl Alcohol 550 kgs. 40/kgs. 22,000
5. Silicone Resin 80 kgs. 5/kgs. 400
6. Driers 190 kgs. 90/kgs. 17,100
7. Packaging Material - 30,000
Total 4,13,500

2) Salary and Wages:

(Per month)
 4. Skilled workers No.2 of 5,000 10,000
No. (100%
Type of Staff
Variable) Rate Amt.(Rs.)
Persons
5. Unskilled workers 4 4,000 16,000
1. (100%
ManagerVariable) 2 7,000 14,000
6.
2. Watch man
Manager-cum-chemist 11 1,000
8,000 1,000
8,000
7.
3. Sales
Clerk Executives 15 3,000
3,000 15,000
3,000
3. Peon Total 3 1,000 67,000
3,000

3) Utilities:
(Per month)
No. Particulars Amt. (Rs.)

1. Power/Electricity 12,000
2. Fuel (coal/wood) 7,000
3. Water 1,000
Total 20,000
Fixed 40% 8,000
Variable 60% 12,000

4) Other Expenses:
(Per month)
No. Particulars Amt. (Rs.)

1. Postage and Telegram 1,000

2. Telephone 2,000
3. Rent 5,000
4. Advertisement 12,000
5. Repairs and Maintenance 10,500
6. Transport charges 8,000
7. Insurance 8,000
8. Miscellaneous exp. 3,000
 9. Contingency exp. 7,000
10. Stationery exp. 6,000
Total 62,500

Total Working Capital Per Month

No. Particulars Amt. (Rs.)

1. Raw Materials 4,13,500

2. Salary and Wages 67,000
3. Utilities 12,000
4. Other expenses 37,500
Total Working Capital 5,30,000

Total Working Capital for 3 Months and 1 Year

1 Month 3 Months 1 Year

5,30,000 15,90,000 63,60,000
 Total Projected Fund

No. Particulars Amt. (Rs.)

1. Fixed Capital 54,00,000

2. Working Capital (3 months) 15,90,000

Total 69,90,000
 Sources of Capital

Capital Required = 69,90,000

60% Owned Capital = 41,94,000
40% Borrowed Capital = 27,96,000

1) Owned Capital:

Partners Name Investment Rate Interest

Chauhan Niraj M. 13,98,000 8% 1,11,840

Pabari Brijesh 13,98,000 8% 1,11,840
Barmeda Sandip V. 13,98,000 8% 1,11,840
Total 41,94,000 - 3,35,520
2) Borrowed Capital:

Capital Interest
Banks Rate
Borrowed Amt.

GSFC 22,60,000 13% 2,93,800

ICICI 5,36,000 15% 80,400
Total 27,96,000 - 3,74,200
3) Loan Repayment Schedule:
a) Loan of GSFC to be repaid within 5 years:

Opening Closing
Years Installment Interest
Balance Balance

1st Year 22,60,000 4,52,000 2,93,800 18,08,000

2nd Year 18,08,000 4,52,000 2,35,040 13,56,000
3rd Year 13,56,000 4,52,000 1,76,280 9,04,000
4th Year 9,04,000 4,52,000 1,17,520 4,52,000
5th Year 4,52,000 4,52,000 58,760 -
Total 8,81,400

b) Loan of ICICI to be paid within 2 years:

Opening Closing
Years Installment Interest
Balance Balance

1st Year 5,36,000 2,68,000 80,400 2,68,000

2nd Year 2,68,000 2,68,000 40,200 -
Total 1, 20,600
 Fixed Cost

A) Interest of Capital:
(Per Year)
Interest
No. Type of Capital
Amt. (Rs.)

1) Ownership Capital 3,35,520

2) Borrowed Capital 3,74,200
Total 7,09,720

B) Depreciation:
(Per Year)
Amt.
No. Particulars Rate Depreciation
(Rs.)

1. Land & Building 30,00,000 10% 3,00,000

2. Machinery 15,00,000 25% 3,75,000
3. Computer 1,00,000 60% 60,000
4. Furniture 2,00,000 15% 30,000
5. Delivery Van 5,00,000 40% 2,00,000
Total 9,65,000

C) Maintenance and Repairs:

 (Per Year)
No. Particulars Value Rate Amt.

1. Building 10,00,000 5% 50,000

2. Machinery 15,00,000 5% 75,000
3. Other Fixed Assets 8,00,000 5% 40,000

Total 1,65,000

D) Other Fixed Cost:

(Per Year)
No. Particulars Amt.

1. Utilities 96,000
2. Salary 4,92,000
3. Other expenses (40%) 3,00,000
Total 8,88,000

Total Fixed Cost

No. Particulars Amt.

1. Interest on Capital 7,09,720

2. Depreciation 9,65,000
3. Repairs and Maintenance 1,65,000
4. Other Fixed Cost 8,88,000
Total Fixed Cost per year 27,27,720
 Cost of Production

Interest
No. Type of Capital
Amt. (Rs.)

1) Total Fixed Cost 27,27,720

2) Working Capital (1 year) 63,60,000
Total 90,87,720
 Cost Per Unit

Cost Per unit = Cost of Production

Production P.A. in lts.

= 90,87,720
1,50,000

= 60Rs.

Cost Per Pack

Cost Per
No. Particulars
Unit

1. 20 lts. Wire enamels packing 1200.00 Rs.

2. 10 lts. Wire enamels packing 600.00 Rs,
3. 5 lts. Wire enamels packing 300.00 Rs.
4. 1 lts. Wire enamels packing 60.00 Rs.
 Projected Cost of Production
Statement

Cost of Production for 3 years

Particulars 1st Year 2nd Year 3rd Year

Installed Capacity of Wire

2,14,280 2,14,280 2,14,280
Enamels ( in lts.)
Capacity Utilization 70% 80% 90%
Produced Capacity 1,50,000 1,71,420 1,92,850
Variable Expenses:
Raw Materials 49,62,000 54,58,200 59,54,400
Wages (variable) 3,12,000 3,43,200 3,77,520
Utilities 1,44,000 1,58,400 1,72,800
Other expenses 4,50,000 5,00,000 5,50,000

A) Total Variable Cost 58,68,000 64,59,800 70,54,720

Variable Cost Per Unit 39 37 35
Fixed Expenses:
Depreciation 9,65,000 7,20,750 5,57,215
Maintenance and repairs 1,65,000 1,65,000 1,65,000
Other fixed Cost 8,88,000 8,88,000 8,88,000
Interest:
# Bank loan 3,74,200 2,75,240 1,76,280
# Ownership Capital 3,35,520 3,35,520 3,35,520
Salary 4,92,000 4,92,000 5,10,000

B) Total Fixed Cost 32,19,720 28,76,510 26,32,015

Total Cost of Production 90,87,720 93,36,310 96,86,735

(A+B)

Total Cost Per lts. 60.00 55.00 50.00

 Sales Price of Wire Enamels

Cost Sales Price

No. Particulars
Per unit Per unit

1 10 lts. Enamel 600.00 690.00

2. 5 lts. Enamel 300.00 345.00
3. 1 lts. Enamel 60.00 69.00
 Expected Sales

Expected Sales of NBS Enamels for the year

Sales Per Amt.

No. Particulars
Month (units) (Rs.)

1. 10 lts. Enamel 1,000 6,90,000

2. 5 lts. Enamel 550 1,89,750
3. 1 lts. Enamel 450 31,050
Total 9,10,800

Sales Per Year :

9, 10, 800 12 = 1, 09, 29, 600
 Profit Calculation

Calculation of Profit of NBS Enamels

Particulars Amt.(Rs.)

Sales 1,09,29,600
Less: Variable Cost 58,68,000
Contribution 50,61,600
Less: Fixed Cost 32,19,720
Profit Before Tax 18,41,880
Less: 35% Tax 6,44,660

Profit After Tax 11,97,220

 Return on Investment

Return on Investment :

= Profit after Tax 100

Cost of Project

= 11, 97, 220 100

69, 90, 000

= 17.12
 Cost of Capital

Cost of Capital:

= Total Interest 100

Total Capital Employed

= 7, 09, 720 100

69,90,000

= 10.15
 Cost Sheet

Cost Sheet of NBS Enamels

Amt. Amt.
Particulars Amt. (Rs.)
(Rs.) (Rs.)

Raw Materials Consumed:

Opening Stock of Raw materials - -
+ Purchases - 49,62,000
- Closing Stock - 10,52,000
Total Raw Materials Consumed 39,10,000
Direct Wages: Skilled (50002) 10,000
Unskilled (40004) 16,000 3,12,000
Utilities 20,000 2,40,000 5,52,000
Prime Cost 44,62,000

Factory Overheads:
Salary: Manager (1) 8,000
Watchman (1) 1,000 1,08,000
Insurance of Machinery 96,000
Repairs and Maintenance 1,26,000
Depreciation: Machinery 3,75,000
Building 3,00,000 6,75,000 10,05,000
Factory Cost 54,67,000

Administrative expenses:
# Salary: Manager (1) 7,000 84,000
Clerk (1) 3,000 36,000
Peon (3) 1,000 36,000
Stationary 6,000 72,000
Rent 5,000 60,000
Postage & Telegram 1,000 12,000
Miscellaneous expenses 3,000 36,000
Contingency expenses 7,000 84,000
Telephone Charges 2,000 24,000

Depreciation: Furniture 30,000

Computer 60,000 90,000
Interest on owned capital 3,35,520 8,69,520
Cost of Production 63,36,520

+ Opening stock of finished goods

- Closing stock of finished goods 1,33,000 1,33,000
Cost of goods Sold 64,69,520

# Salary: Manager (1) 7,000 84,000

Sales Executives (5) 3,000 15,000
Advertisement expenses 12,000 1,44,000
Transport Charges 8,000 96,000
Depreciation: Delivery Van 2,00,000 5,39,000
Cost of Production 70,08,520

Total Sales 1,09,29,600

Profit 39,21,080

Operating Statement
 Projected Operating Statement

Particulars 1st Year 2nd Year 3rd Year

Sales Per Year 1,09,29,600 1,22,60,000 1,28,48,000

Factory expenses:
Raw Materials 63,60,000 64,60,000 64,80,000
Utility 1,44,000 1,44,000 1,44,000
Salary 1,08,000 1,08,000 1,16000
Wages 3,12,000 3,50,000 3,92,000
Insurance of Machinery 96,000 96,000 96,000
Repairs and Maintenance 1,26,000 1,36,000 1,46,000
+Opening Stock of Raw materials - 10,52,000 11,42,000
-Closing Stock of Raw materials 10,52,000 11,42,000 12,53,000
+Opening stock of finished goods - 1,33,000 1,83,000
-Closing Stock of finished goods 1,33,000 1,83,000 2,20,000

Cost of Operations 59,61,000 71,54,000 72,26,000

Gross Profit 49,68,600 51,06,000 55,22,000

Indirect Expenses:
Preliminary expenses 25,000 25,000 25,000
Salary 3,84,000 3,84,000 3,84,000
Other expenses 4,50,000 4,75,000 5,00,000
Fixed Cost 8,59,000 8,84,000 9,09,000
Less: Depreciation 9,65,000 7,20,750 5,57,215
EBIT 31,44,600 35,01,250 40,55,785
Less: Interest on loan 3,74,200 2,75,240 1,76,280
EBT 27,70,400 32,26,010 38,79,505
Less: 35% Tax 9,69,640 11,29,100 13,57,830
EAT 18,00,760 20,96,910 25,21,675
Add back: Depreciation 9,65,000 7,20,750 5,57,215
Preliminary expenses 25,000 25,000 25,000

Net Cash Accrual 27,90,760 28,42,660 31,21,890

Manufacturing Account
 Manufacturing account of the NBS Enamels
Dr. Cr.
Particulars Amt. (Rs.) Particulars Amt.(Rs.)

To, By,
Purchase of Raw 49,62,000
Sales 1,09,29,600
Materials
Wages and Salary 4,20,000
Utilities 1,44,000 Closing Stock:
Repairs 1,26,000 Raw Materials 10,52,000
Depreciation 9,65,000 Finished Goods 1,33,000
Insurance 96,000

Gross Profit 54,01,600

1,21,14,600 1,21,14,600

Profit and Loss Account

 Profit and Loss Account of NBS Enamels
For the year ending 2006-07

Particulars Amt. (Rs.) Particulars Amt.(Rs.)

To, By,
Salary 3,96,000
Stationary 72,000 Gross Profit 54,01,600
Post and Telegram 12,000
Miscellaneous exp. 36,000
Contingency expense 84,000
Repairs 1,26,000
Depreciation:
Furniture 30,000
Computer 60,000
Delivery Van 2,00,000
Telephone 24,000
Advertisement 1,44,000
Rent 60,000
Transport 96,000
Interest on Capital 7,09,720

Net Profit 33,51,880

54,01,600 54,01,600
 Profit and Loss
Appropriation Account

Profit and Loss Appropriation Account

Of NBS Enamels for the year 06-07

Particulars Amt. (Rs.) Particulars Amt.(Rs.)

To, By,
Tax paid 35% 9,69,640 Net Profit 33,51,880
General Reserve 2,85,900

Divisible Profit 20,96,340

33,51,880 33,51,880
 Balance Sheet

Balance Sheet of NBS Enamels

for the year ending 06-07

Particulars Amt. (Rs.) Amt. (Rs.) Amt. (Rs.)

Capital & Liabilities:

Owners capital:
a) Chauhan Niraj M. 13,98,000
+Profit 6,98,780 20,96,780
b) Pabari Brijesh 13,98,000
+Profit 6,98,780 20,96,780
c) Barmeda Sandip V. 13,98,000
+Profit 6,98,780 20,96,780

+Interest on Capital 3,35,520

66,25,860
Bank Loan 27,96,000
+Interest on Loan 7,09,720 35,05,720
Creditors 22,92,860
General Reserve 2,85,900 2,85,900

Total Liabilities 1,27,10,340

Assets:
Gross Block 53,00,000
Depreciation 9,65,000 43,35,000
Sundry Debtors 62,90,340
Cash and Bank 9,00,000
Total Closing stock 11,85,000

Total Assets 1,27,10,340

 Ratio Analysis

Profit Value Ratio:

= Contribution 100
Sales

= 50,61,600 100
1,09,29,600

= 46.31%

B.E.P = Fixed Cost 100

Contribution

= 27,27,720 100
1,09,29,600

= 24.95%

Net Profit Ratio: = Profit after tax 100

Sales

= 11,97,220 100 = 10.95%

1,09,29,600
 Future Plans

The future plans of the NBS Enamels will be after success of

the wire enamels to be launched in the market. The company also has
some plans and the market potentialities to get into another market of the
oil paints and various other ranges of enamel products.

We would also like to cover other bigger regions of India

starting from Mumbai, Delhi as we would get a larger market. Lastly we
would like to increase the demand and if necessary production capacity
also in order to get into the wider and wider market and if successful we
will move towards the international market also.