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DECLARATION
I, the undersigned Saradava Bhavik K. a student of
T.Y.B.B.A. hereby declare that the project work presented in this
report is my own contribution and has been carried out under the
supervision of Prof. Alpa Joshi of Gyanyagna College Of
Science & Management, Rajkot.
This work has not been previously submitted to any other
University for any other examination.
Date: -
Place: - Rajkot.
Signature
(Saradava Bhavik K.)
1
PREFACE
It is a part of T.Y.B.B.A. to accomplish internship with reputed
company. Management states that each and every activity is started for
the accomplishment of some predetermined goals. In this competitive
environment, only theoretical knowledge is not sufficient and hence a
practical exposure to real life situation of business is perquisite to be a
successful manager.
The objective of a project work in management pedagogy is to
give an opportunity to apply the theoretical concepts into real industrial
environment thereby to supplement the theoretical study of the
management in general.
Finance is very vital part for any company. Any mismanagement
related to finance results into non fulfillment of main goals of the
company. And so it is very important to study all aspects related to
finance management of the company. This project report includes
study and analysis of major areas of finance namely, capital structure
decisions, capital budgeting decisions and working capital
management.
2
ACKNOWLEDGEMENT
With immense pleasure and gratitude, I would hereby like to
thank all the people who helped and guided me for this project.
I would like to thank Prof. alpa joshi who have guided me
for this project.
I am thankful to Veebasons Corrugating Pvt. Ltd, who have
helped me and provided information for reference.
I would like to thank all my friends and family members for
their constant support.
Date: -
Place: - Rajkot.
Signature
(saradava bhavik)
3
INDEX
NO. PARTICULERS PG NO.
1 General information
2 Introduction
3 History of the unit
4 Company profile
5 Promoter list
6 Form of organization
7 Organization structure
8 Justification of location
9 The size of unit
10 Time keeping system
11 Product detail
12 Benefits & incentives
13 Total employees & their classification
14 Raw material & requirement
15 List of plant and machinery
16 Manufacturing process
17 Power connection
18 Production capacity & sales turnover
19 FINANCIAL DEPARTMENT
Introduction
Owned & borrowed capital
Sources of finance
Organization structure
Financial planning
Capital structure
capitalization
capital budgeting
management of fixed assets
management of working capital
management of receivables
4
financial leverage
20 FINANCIAL ANALYSIS
financial details
power cost
staff & labour details
other manufacturing expenses
administrative expenses
projection of performance
profitability
source of finance
depreciation chart
details of cost of project
break even ratio
cash flow analysis
ratio analysis
21 competitors
22 Contribution of the unit to the society
23 Achievement and awards
24 Future plan
25 Conclusion
26 Suggestion
27 bibliography
5
INTRODUCTION
6
In India, a small-scale industry is presently defined as “A unit
engaged in manufacturing, servicing, reporting, processing and
preservation of goods having investment in Plant & Machinery at an
original cost not exceeding Rs. 30 Lacks.”
Since the economy of our country is based on rural development
and more facilities and encouragement are allowed by the government to
established industry in rural areas and certain declared backward areas
(Industrial Estates). The India government is paying more emphasis from
the last 10-15 years in the development of small-scale industries in such
areas.
Another important aspect is that small-scale industry is a labour
intensive industry. Manpower is key resource in handling other activities
and resources of the organization. Scientific Management ensures higher
productivity of laborers, which indirectly affect the productivity of other
resources.
Industry means the economic activity which creates from utility. In
other words, it creates economics value through the transformation of raw
material in to finished goods.
It is not possible to image a man without industry and an industry
without man. Man con not direct use any natural resources or raw
material. He has to undertake some or more process on natural resources
and then he can use the product. Thus, by industry raw material can be
made finish product which is useful for mankind.
7
Veebasons Corrugating Pvt. Ltd. is one of the firm which is
producing corrugated boxes, having very well brand reputation for its
quality and innovated products.
HISTORY OF THE UNIT
8
“VEEBASONS CORRUGATING PVT.LTD.” is situated at
G.I.D.C., Lodhika, Metoda, and Rajkot. It has pioneered it as one of most
reputed quality, manufacturing & exporters of corrugated box, corrugated
liner, of various capacities with its well-known product.
“VEEBASONS CORRUGATING PVT.LTD.” was established in
2004. The Company converted itself into a professionally managed
private limited company with well-equipped plant of entire modern
technologies, manufacturing facilities, skilled and qualified technical
work persons, and total land area of 10000 square meter, office area of
3000 square feet and factory area of 15500 square feet which result in to a
box capacity of 650 tons per annum for the domestic market.
COMPANY PROFILE
9
Name of the Firm : VEEBASONS CORRUGATING PVT. LTD.
Address of the firm: “VEEBASONS CORRUGATING PVT. LTD.”
G.I.D.C. Lodhika Plot No. 2412,
Kranti Gate, Road No. H/11,
Kalavad Road, Metoda, Rajkot – 360003.
Phone No. : 02827-287274
FAX No. : 02827-287275
E-mail : [email protected].
Year of Establishment : 1990
Form of Organization : Private Limited Company
Scale of Unit : Mediuml Scale Industries
Sister Companies : Vimal Industries Mfr. of Supporting Tools
Vimal Engineers Manufacturer of Auto Parts
Mihir Industries Manufacturer of Auto Parts
Mihir Engineers Manufacturer of Auto Parts
Product : Corrugated Boxes
Corrugated Liners
Corrugated Sheets
Corrugated Rolls
State to which products are exported:
10
Gujarat, Mahrashtra & Madhya
Banks : The Co-Operative Bank of Rajkot Ltd.
Oriental Bank of Commerce
No. of Workers : 55
Accounting Year : 1st April to 31st Marc
Accounting System : Double Entry
PROMOTER LIST
11
VEEBASONS CORRUGTING PVT. LTD. was established in
2004 though self design skills, dedication and dare to do something. It
was started with an initial investment of Rs. 1000000/-
VEEBASONS CORRUGATING PVT. LTD. Produces the
Corrugated box, Corrugated Sheet, Corrugated Liner and Corrugated Roll
in different qualities. The Production Capacity of the Company is 650
tons per annum. The Company exports their products in Gujarat &
Maharashtra. The objective of the company is to increase the turnover.
FORM OF ORGANISATION
12
Industries owned, managed & controlled by individual or group of
person without state participation is known as private sector units. These
firms are owned by private entrepreneur Industries under the private
sector are setup with an aim of earning profit. The entire Investment is
made by the owner profits or losses are also enjoyed by the owners.
Private Sector units have to follows rules of the Government. Generally
this units are managed by professional person who makes continues
efforts to increase the all efficiently of the firm.
VEEBASONS CORRUGATING PVT. LTD. is registered as a
private ltd. firm. It is a small scale Industry in the private sector.
VEEBASONS CORRUGATING PVT. LTD. has under the category of
“PRIVATE LIMITED COMPANY”.
ORGANIZATION STRUCTURE
13
14
DIRECTOR
JUSTIFICATION OF LOCATION
The Project is being set-up at Shaper Ta: Kotda Sangani,
Dis. Rajkot.
Shaper is small village situated on national highway No. 8 B.
It is only 15 Kms. Away from Rajkot and 15 Kms. From Gondal,
which is Taluka head quarter. There are so many large, medium
and small-scale industries established in Shaper.
Shaper is nearer to Rajkot, which is the most easily
accessible city in Saurashtra and centrally located in the Saurashtra
region and it is only 15 Kms. Away from Verval, which is also
direct head quarter.
The Road Communication is very easily and conveniently
available. There are regular an constant frequency of bus service is
every half and hour. Thus, the road, communication has no
problem at all as Shaper is situated on national highway, due to all
these convenient and frequent facilities the question does not arise
for the transportation and there by not coming and problem.
Raw Material or finished goods can be transported from
these center to anywhere in India very easily contently and
reasonable rates of the transportation.
15
General Manager
Industrial Relation Manager
Administrative Manager
Typist / Clerk
Assistant Manager
Office Assistant
WorkersWorkers Workers
The ideal Location is that which permits the lowest cost in
production and distribution of a product or a service.
Therefore, Veebasons Corrugating Pvt. Ltd. had chosen a good
location and that is Metoda GIDC where they may got raw material and
infrastructural facilities like electricity, water , easily transportation etc.
1. Availability of Raw Material
Raw material is the basis produces any product so raw
materials are most noticeable factor for location. VEEBASONS
CORRUGATING PVT. LTD. gets its raw material from nearly areas of
Jamnagar District. So VEEBASONS CORRUGATING PVT. LTD. gets
its raw material easily, fast and with large quantity.
2. Availability of Labour
The labour factor is so much important for location.
VEEBASONS CORRUGATING PVT. LTD. gets sufficient, educated,
skilled, and unskilled labours because of VEEBASONS
CORRUGATING PVT. LTD. located at near of Jamnagar city so
VEEBASONS CORRUGATING PVT. LTD. has never face any
difficulty for the labours.
3. Transportation Facility
16
To carry goods from one region to another transport facility
must be needed. VEEBASONS CORRUGATING PVT. LTD.’s location
is suitable because roadways of the Gujarat and by water ways of about
from Jamnagar port. So VEEBASONS CORRUGATING PVT. LTD. has
not face any problem of VEEBASONS CORRUGATING PVT. LTD.
4. Availability of Electricity
Any business unit not runs without electricity.
VEEBASONS CORRUGATING PVT. LTD. purchases electricity from
GEB and company has also his DG set (Diesel Generator) so electricity is
not problem of VEEBASONS CORRUGATING PVT. LTD.
5. Government Support
The government policy of Gujarat is good and favorable.
Government provides schemes for development and promoting the
industries. Situated in Gujarat state Government also provides short term,
long term financial loans.
17
SIZE OF THE UNIT
In the consideration of the size of the unit there are three tools
1. Large scale industry
2. Medium scale industry
3. Small scale industry
At the birth the firm is medium scale industry. The industry which
is having share capital between 1 crore to Rs. 5 crore is the medium scale
industry. The 55 persons work in this factor
18
TIME KEEPING SYSTEM
Working Condition like working hours are very good of the
Veebasons Corrugating Pvt. Ltd... There is no Pressure on the employees
or workers. They have arranged their time as under
For Workers : 08:00 am to 12:30 pm
12:30 pm to 01:30 pm (Lunch)
01:30 pm to 05:00 pm
For Office Staff : 08:30 am to 12:30 pm
12:30 pm to 01:30 pm (Lunch)
01:30 pm to 08:00 pm
Off Day : Tuesday
19
PRODUCT DETAILS
Product: -
Corrugated Box.
Product Usage: -
The Corrugated Boxes mainly we in packing of the
finish good. Its also a one type of carton or box which use in
every product like packing of Television, Wafers Packing,
etc. Most of the consumer goods are packing in the
Corrugated Box.
Brand Name: -
Packers.
20
BENEFITS AND INCENTIVES
Due to announcement of the state government Shaper
declared backward area, which is situated in Kotda Sangani Taluka
of Rajkot Dis., the unit, would be insisted to avail special benefits
and incentives such areas under:
1. No sales tax on sales.
2. Exemption from lavvy of sales tax on purchase of raw
materials.
3. Scene Raw Materials are made available from the
government on priority basis.
4. Priority treatment in all respect for power allotment of
building, materials such as cement, iron etc.
21
TOTAL EMPLOYEES & THEIR
CLASSIFICATION
The Number of employees shows that how much the company is
huge or large. The Veebasons Corrugating Pvt. Ltd. has many workers.
“Veebasons Corrugating Pvt. Ltd. “has 55 Number of Workers
working in it. There are 15 Workers Skilled & 40 Workers are unskilled
in the staff. All the activities related to personnel department such as
recruitment, section, promotion, transfer. Manager Prepare a Reports
working at its department.
22
RAW MATERIAL REQUIREMENTS
In every industry smooth supply of raw material is important
factor. The main raw material required for Corrugated Project is:
(1) Kraft Paper.
(2) Stitching Wire.
(3) Gum.
Above all raw materials are easily available in open market.
Total requirement of raw material will be as under:
No
.
Items Raw material
Requirement
[For 1 M.T.
Production]
Raw Material
Requirement At
100% Production
Rate Total
Cost
1. Kraft Paper
(including
3% process
wastage).
1030 Kg. 593 10500 62.27
2. Stitching
wire.
4.50 Kg. 2.59 27000 0.70
3. Gum. 25.00 Kg. 14.40 12000 1.73
TOTAL 64.70
Year Wise Raw-Material will be as under: -
Year Capability Utilization Cost (In Lac)
1. 50 % 32.35
2. 60 % 38.82
23
LIST OF PLANT & MACHINERY
No. Name of Machine Qty
.
Rate Total/ Amt.
1 Oblique hype single face paper
Corrugated machine size 62”
Heavy duty with stand
accessioned with motor starter
and one flute Rolls.
1 3,15,125 3,15,125
2 Road cutter’s size 62” 62” with
motor & starter.
2 24,125 48,250
3 Sheet pasting machine with
Adjustment motorized with
starter for gum size 72”.
1 41,560 41,560
4 Sheet pasting machine with
adjustment motorized with starter
size 72?” (For heavy).
1 46,520 46,520
5 Bar Rotary cutting and causing
machine size 75” with 4 sets of
cutting and creasing dies &
creating dies with motorized with
starter.
1 1,20,080 1,20,080
6 Eccentric stutter with 3 slotting
dies 1 corner die motorized size
75”.
1 1,24,130 1,24,130
7 Flat wire astiching machine size
48” with motor.
1 31,080 31,080
8 Do but dolole head. 1 45,525 45,525
9 Die punching machine heavy
duty with magnetic clutch and
1 2,95,000 2,95,000
24
timer with electrical size 32”
42”.
10 Cylinder machine hand fad with
Electrical and stand. Accessories
size 24” 36”.
1 1,45,000 1,45,000
11 Partition slotter with 4 partition
slote, motorized size 42”.
1 46,075 46,075
TOTAL 12,58,345
Add: 10% for transportation
Electrification and Installation.
1,25,835
TOTAL 13,84,180
25
MANUFACTURING PROCESS
Two rolls of Craft papers are put on Corrugating Machine.
Craft paper from first roll pass through flute rolls which converts it
in to liners. This is than fixed with the paper coming from other
roll with the help of adhesive. After fixing it pass through heaters.
The Corrugated Paper is then cut in to desired sizes. There after
operations like creasing, cutting slotting and stitching are
performed to convert in to the shape of boxes. And these after as
per requirement boxes are printed.
Finally the Corrugated Boxes are ready for dispatch in
market for sale.
26
POWER CONNECTION
The unit will required approximately 40 H.P. Power
connection the promoters have approached, Gujarat Electricity
Board Authorities and they have been assured that power will be
made available as and when required. The promoters have made a
formal request to the Gujarat Electricity Board Authority. The
promoter will not face any power problem. The supply is quite
satisfactory.
By the time the building will be constructed and the
machineries are erected and installed the power will be made
available. So, there is not going to be any delayed, or bottle necked
due to shortage or non-availability of power. This industry is not
high power intensive and does not need any special or extra
ordinary facilities, so for as the power is concerned erection and
installation of the machine and cable laying and power connection
will pass no problem.
27
PRODUCTION CAPACITY & SALES TURNOVER
Taking in consideration the working efficiency of each
machine is one shift daily production will be of 2 M.T.
Annual production capacity will be as under:
No. of days working in a year production per day
288 2. M.T. = 576 M.T.
It is estimated that in first year 50% of plant capacity will be
utilized. So, first year production will be 288 M.T.
The sales price of Corrugated Boxes will be Rs. 15,000 per
M.T. years wise sales will be as under:
Year Utilization of Capacity Production in M.T. Sales (in Lac)
1 50 % 288.00 43.20
2 60 % 345.00 51.84
28
INTRODUCTION
29
Financial management can be defined as:
The management of the finance of a business/
organization is in order to achieve financial objectives.
Taking a commercial business as the most common
organizational structure, the key objectives of financial management
would be to:
Create wealth for the business
Generate cash
Provide an adequate return on investment bearing in mind the risks that
the business is taking and the resources invested.
There are three key elements to the process of financial management:
Financial Planning
Management needs to ensure that funding is available at the right
time to meet the needs of business. In the short term, funding may be
needed to invest in equipment and stocks, pay employees and fund sales
made on credit.
In the medium and long term, funding may be required for
significant additions to the productive capacity of the business or to make
acquisitions.
Financial Control
Financial control is a critically important activity to help the
business ensure that the business is meeting its objectives.
30
Financial decision making
A key financing decision is whether profits earned by the
business should be retained rather than distributed to shareholders via
dividends. If dividends are too high, the business may be starved of
funding to reinvest in growing revenues and profits further.
OWNED & BORROWED CAPITAL
31
Capital is an important feature of finance department. It refers to
total amount of capital employed in organization. The capital structure
displays the total investment of the company. The organization is said to
be under the capitalization when earning is more than investment.
Veebasons corrugating Pvt. Ltd. is Pvt. Ltd. Company therefore
there is share capital of Rs. 1 Lac.
SOURCE OF FINANCE
The Firm gets finance from the different factors. These factors are
as follows:
Banks
Unsecured loans
Reserves & surplus
Bonds & debentures
Borrowings from banks
Share capital
The Main Sources of Finance of Veebasons Corrugating Pvt. Ltd.
is
Banks, Unsecured Loans & They are using CC from the bank. The whole
finance provided by the bank against their Assets like Land, Labors &
Machineries. They are doing all the transaction by the bank.
ORGANIZATION STRUCTURE
32
Veebasons Corrugating Pvt. Ltd. has adopted a clear and detail division
for function. Vice president is responsible for overall result of finance
activities of department in the company. The company is having LINE
type of organization in the finance department.
SS
FINANCE PLANNING
33
Senior Vice President
Manager
Dy. Manager
Accounts Officer
Officer
Assistants
Chief AccountsOfficer
Share AccountsOfficer
Assistants
Dy. Manager
Accounts Officer
Assistance Accounts Officer
Assistants
Financial planning is one of the most important aspects of the finance
managers’ job. Financial management has to make plan for capital
investment and also for working capital for the ensuring year. In
VEEBASONS CORRUGATING PVT. LTD. the task of financial
planning is divided into 3 parts:
TOP LEVEL
This level prepares planes pertaining to the long-term requirement of the
form of capital expenditure, permanent and short term needs, inflows and
outflows.
MIDDLE LEVEL
This is constituted by the eventually routine finance plan. This level is
generally concerned with listing and calculation of outflow.
LOWER MIDDLE LEVEL
In this level generally concerned with the listing and calculation of
outflows. In VEEBASONS CORRUGATING PVT. LTD. financing
decisions are very crucial and Head Office at Mumbai plan for new
project of the company.
CAPITAL STRACTURE
Capital structure may be defined as the combination of debt and
equity that leads to the maximum value of the firm.
34
“Capital structure refers to the mix of long- term sources of
funds such as debenture long- term debt, preference share capital
and equity share capital including reserves and surplus. The
company should plan an optimum capital structure”.
Share capital of the company will increase, as same secured loans
will also increase by the company.
CAPITALIZATION
Capitalization means the total amount of companies’ capital or
value of its capital stock. The total amount of company’s capital should
be enough to meet its present and future needs.
For the company the Book value and Real value of share are two
main components for assessment of company’s financial position.
CAPITAL BUDGETING
35
Capital Budgeting decision is a firm’s decision to invest its
current funds most effectively in long term activities in anticipation
of an expected flow of ever of future benefits over a series of years.
With a reference to VEEBASONS CORRUGATING PVT. LTD.,
company has been making a capital budgeting at every year by taking
services of experts and financial department. \
This company always aims to increase and expand the installed capacity
of Rayon yarn production. It constantly tries for it and success. At present
the installed capacity of the plant is 50 tones/day.
There are various methods of capital budgeting like:
Internal Rate of Return
Profitability
Pay Back Period method Accounting Rate of Return method
At present the main objectives of capital budgeting in VEEBASONS
CORRUGATING PVT. LTD. are mainly replacement and modernization
of machine and fixed assets and business expansion by adding new
machinery technology and fixed assets this type of decision is taken by
main head office Mumbai and experts of finance department.
Generally, company uses the techniques of Average Rate of Return for
the purpose of capital budgeting. In this method company fixes average
rate of return required in advance.
The average rate of return is calculated as:
36
Average Annual Income
A.R.R. =
Average Investment
Many times company also use the other techniques of capital budgeting.
After calculating which may select or not.
VEEBASONS CORRUGATING PVT. LTD. has huge investment so it
would be a capitalized company.
MANAGEMENT OF FIXED ASSETS
Fixed assets are those, which are fixed and listed by a business
management of fixed assets is very important task which mg’t has to face
because fixed assets have relatively higher cost.
37
To manage the fixed assets is most important task facing
management today because of risk and investment factors. The fixed
assets are that kind of assets in which of risk are for long period of
time.
Fixed assets create problems of replacement. VEEBASONS
CORRUGATING PVT. LTD maintains the plant register in which each
detail of every fixed assets are entered moreover it has also appointed C.
A. and Instrument experts. At least once in a year they check all the
assets of the company and certify then as per their condition the
depreciation of fixed assets company are calculated by Diminishing
Balance method.
MANAGEMENT OF WORKING CAPITAL
Working capital is that capital which is required maintaining the
daily expenses of the business management of working capital refers
to the fine investment in current assets. Current assets are assets,
38
which are converted into cash with operating cycle. Current assets
include cash, short term, securities, debtor’s bills receivable and
stock.
Management of working capital is an integral part of finance
management and it has earning on the objective of the objective of the
owners wealth.
Working capital is essential to operate the fixed assets in the sales
activities. There are 2 concepts – Gross working capital, Net working
capital.
GROSS WORKING CAPITAL: -
Means total current assets while.
NET WORKING CAPITAL: -
Means between the current assets & current liabilities difference.
Cash Work in progress
Semi
Finished Goods
Debtor Sales Finished goods
MANAGEMENT OF RECEIVABLES
39
The management of receivables is basically concerned with retaining the
old customer and mining t5he new once by collecting a regulating the
cost. Management of receivable is also known as trade receivable or
customer or debtor receivable.
It means when firm make ordinary sales on credit and payment has
not been received yet, such management of receivable.
Veebasons Corrugating Pvt. Ltd. grants the credit term to its
customer for 15 days. However in exceptional cases, it is increased to
certain extent. The purchasing sends bank drafts on expiry of credit
period.
The receivable arises out of three characteristics:-
It involves an element of risk, which should be carefully
analyzed.
It is based on economic value.
It implies future management of receivable.
Management of receivable concerned with retaining the old customers
and winning new by controlling and regulating the costs Veebasons
Corrugating Pvt. Ltd. grants the credit from its customers for 15 days
however in exceptional cases.
Debtors Turnover Ratio Debtors
Average daily credit sales
FINANCIAL LEVERAGE
40
Financial leverage is also called on trading on equity. A
company can finance its investment by verity of sources such as
preference shares capital including reserves and surplus.
Financial leverage is defined as the activity of firm used financial
leverages to magnify the effects of firms earning per shares.
The financial leverage is controllable and also completely
avoidable leverage. The degree of fund collected by the firm from
outside is called financial m leverage.
41
FINANCIAL DETAILS
SR. NO. PARTICULARS COST (Rs. In
Lac)
1 Land. 8.10
2 Land Development. 0.75
3 Building. 8.77
4 Plant and Machinery. 13.84
5 Misc. Fixed Assets. 0.10
6 Preliminary & Pre Operative
Exp.
0.70
7 Provisions of Contingency. 1.13
8 Margin for Working Capital. 8.86
9 Total Cost of Production 34.65
POWER COST
The unit will require 40 H. P. Connection at 100% capacity cost will be
as under:
H.P. HOUR DAYS UNIT RATE
40 8 288 0.75 1.50
= 1,03,680
At 50% utilization it wills Rs. 51,840:
Year Capacity Utilization Expenses (Rs. In
Lac)
42
1 50 0.52
2 60 0.62
STAFF & LABOUR DETAILS
The requirement of labour & Staff & Cost of wages will be
as under:
No. Designation No of
person
Salary P.M.
Rs.
Total P.A.
Rs.
1 Production Manager. 1 2000 24,000
2 Machine Operator. 1 1500 18,000
3 Skilled Workers. 4 700 33,600
4 Unskilled Workers. 40 500 20,000
TOTAL 95,600
Add: 20% Benefits 19,120
TOTAL 1,14,720
OTHER MANUFACTURING EXPENSES
It is estimated that other manufacturing expenses will be Rs.
24,000 in first year and thereafter it will be increased by Rs. 6,000
per year.
Year wise cost will be as under:
Year Cost (Rs. In Lac)
1 0.24
2 0.36
43
ADMINISTRATIVE EXPENSES
It is estimated that in first year administrative expenses will
be as under:
(A) Administrative Salary: -
Manager. 1 3000 36,000
Clerk / Cum / Typist. 1 1000 12,000
Accountant. 1 1000 12,000
Peon. 2 500 12,000
Total 72,000
14,400
Total A. 86,400
(B) Administrative Expenses: -
Traveling and Conveyance 15,000
Post, Telephone, Telegram 6,000
Stationary and Printing 7,000
Legal and Professional Exp. 5,000
Bank Charges. 3,000
Misc. Office Exp. 15,000 51,000
Total A + B 1,37,400
It is estimated that it will be increase by 5% every year:
Year wise cost will be as under:
Year Cost (Rs. In Lac)
1 1.37
44
2 1.44
PROJECTION OF PERFORMANCE
PROFITABILITY
Particularly 1st Year 2ndYear
A. SALES:
1. Sales and Misc. Receipts
2. Less: Exise
3. Net sales.
43.20
43.20
51.84
51.84
B. Cost of Production
1. Raw-Material Consumed.
2. Power and Fuel.
3. Direct Wages.
4. Consumable Stores.
5. Repair and Maintenance.
6. Other MFG.
7. Depreciation.
8. Preliminary Exp.
Total cost of Production
32.35
00.52
1.05
00.24
00.24
00.24
05.03
00.07
39.74
38.82
00.63
1.16
00.24
00.24
00.30
03.91
00.07
45.36
C. Cost of Sale 39.74 45.36
D. Gross Profit. 03.46 06.48
E. Interest:
1. On Term Loans. 3.03 2.40
F. Selling Genereal 2 Admn. Exp. 1.37 1.44
G. Profit before Taxation (D-E+F)) -0.94 1.70 (2.64-0.94)
H. Provision for Taxation. - 0.68
I. Net Profit (G-H) 0.94 1.02
J. Depreciation added back & Preliminary
and pre-operative Expenses.
5.10 3.91
45
K. Net Cash Accruals (I+J) 4.16 4.93
(rs. In lac)
SOURCES OF FINANCE
Sources of Finance (Rs. In Lac)
Promoters contribution. 16.65
Deposit. 3.00
Term Loan. 15.00
Total 34.65
Promoter’s contribution 48.05%
Ye
ar
Quar
ter
Openi
ng
Balan
ce
O/S
Equated
Monthl
y
Installm
ent
Princi
pal
Inter
est
Yearl
y
Inter
est
Closi
ng
Balan
ce
O/S
200
5-
06
1st Qtr. 15,00,0
00
1,05,883 59,008 46,875 14,40,
992
2nd
Qtr.
14,40,9
92
1,05,883 60,852 45,031 13,80,
140
3rd Qtr. 13,80,1
40
1,05,883 62,754 43,129 13,17,
140
46
4th Qtr. 13,17,3
86
1,05,883 64,715 41,168 1,76,2
04
13,17,
386
200
6-
07
1st Qtr. 12,52,6
72
1,05,883 66737 39,168 12,52,
672
2nd
Qtr.
11,85,9
35
1,05,883 68,823 37,060 11,85,
935
3rd Qtr. 11,17,1
12
1,05,883 70,973 34,910 11,17,
112
4th Qtr. 10,46,1
39
1,05,883 73,191 32,692 1,43,8
08
10,46,
139
200
7-
08
1st Qtr. 9,72,94
8
1,05,883 75,478 30,405 9,72,9
48
2nd
Qtr.
8,97,46
9
1,05,883 77,837 28,046 8,97,4
69
3rd Qtr. 8,19,46
9
1,05,883 80,269 25,614 8,19,6
32
4th Qtr. 7,39,36
3
1,05,883 82,778 23,105 1,07,1
69
7,39,3
63
200
8-
09
1st Qtr. 6,56,58
5
1,05,883 85,365 20,518 65,585
2nd
Qtr.
5,71,22
0
1,05,883 88,032 17,851 5,71,2
20
3rd Qtr. 4,83,18
8
1,05,883 90,783 1,61,1
00
4,83,1
88
4th Qtr. 3,92,40
4
1,05,883 93,620 12,263 65,731 3,92,4
04
47
200
9-
10
1st Qtr. 2,98,78
4
1,05,883 96,546 9,337 2,98,7
84
2nd
Qtr.
2,02,23
8
1,05,883 99,563 6,320 2,02,2
38
3rd Qtr. 1,02,67
5
1,05,883 1,02,67
5
3,208 18,865 1,02,6
75
Total 15,00,0
00
5,11,7
77
48
DEPRECIATION CHART
Yea
r
Particular Buildin
g
P2M Other
Assets
Total
1 Opening
Balance
Depreciation
9.21
1.38
14.53
03.63
0.10
0.12
23.84
05.03
2 WDV
Depreciation
7.83
1.17
10.9
2.73
0.98
0.11
19.71
03.91
49
DETAILS OF COST OF PROJECT
No. Assets Total Cost
Rs.
1 Land:
Consideration
Stamp
Registration Fees
Legal Fee
94,620
12,120
1,590
1,500 1,09,820
2 Land Development:
Estimated 15,000
3 Building:
As per Estimate & Engineers 8,77,000
4 Plant & Machinery:
As per Annexure 13,84,180
5 Misc. Fixed Assets:
Furniture estimated 10,000
50
6 Preliminary Pre Operative Exp:
A. Stamp.
B. Legal Exp.
C. Traveling & Conveyance.
D. Interest dining the
construction
E. Stationary & Printing.
F. Telephone Exp.
G. Misc. Expenses.
1,000
20,000
5,000
30,000
2,000
2,000
10,000 70,000
7 Provision for contingencies:
5%on Building 3P2M 1,13,000
8 Margin of Working Capital 8,86,000
Total 34,65,000
51
BREAK EVEN RATIO
Particulars 1st Year
Contribution (S-V) 8.8
Fixed Cost 6.71
BEP = FC Capacity of Utilization
Contribution
= 6.71 60
8.8
= 45.75
Return on Investment: -
ROI = EBIT 100
Cost of Project
= 3.46 100
34.65
= 9.99%
52
Gross profit volume: -
GPV = GP 100
Net Sales
= 3.46 100
43.2
= 8.009%
Net profit Volume: -
NPV = 1.02 100
43.2
= 2.36%
CASH FLOW ANALYSIS
53
(Rs Lakhs) 2009-102008-
09
2007-
08
2006-
07
2005-
06
A Cash flow from operating activities
Net profit before tax and
exceptional items312.51 271.75 164.70 161.48 146.73
Add: Adjustments for
Depreciation 120.43 111.91 77.84 77.67 67.81
Marketing and technical
know-how written-off- - 2.95 3.93 3.93
Interest expenses (net) 171.16 55.80 18.73 14.82 21.72
Voluntary retirement
scheme(1.43) (4.04) (9.54) - -
(Profit) / loss on fixed
assets sold(2.66) 0.34 (0.36) 0.16 0.65
(Profit) / loss on sale of
investments(6.76) (2.54) (0.60) (1.19) (1.41)
Dividend income (23.73) (16.54) (6.41) (8.74) (5.21)
(Gain)/ loss on sale of
Contract Exports
Division
(0.20) - - - -
256.81 144.93 82.61 86.65 87.49
Operating profit before
working capital changes569.32 420.72 247.31 248.13 234.22
Add: Adjustments for
Decrease / (increase) in
trade and other
receivables
124.9 46.84 (87.18) 21.53 31.66
54
Decrease / (increase) in
inventories28.00
(118.66
)(78.33) (31.49) (21.56)
Increase / (decrease) in
trade and other payables(32.71)
(275.57
)17.77 24.65 37.68
120.19(347.39
)
(147.74
)14.69 47.78
Cash generated from
operations689.51 73.33 99.57 262.82 282.00
Income taxes refund
(paid) (net)(60.66) (81.00) (48.23) (48.12) 23.21
Net cash from operating
activities628.85 (7.67) 51.34 214.70 305.21
B Cash flow from
investing activities
Proceeds from sale of
fixed assets 8.82 2.19 2.81 2.99 1.80
Proceeds from transfer of
insulator business @ - - - 131.40
Capital subsidy received - - 0.00 1.16 -
Proceeds from transfer of
global exports and
marketing division
- - 5.40 -
Proceeds from sale of
assets held for disposal - - - - 13.52
Sale / redemption /
(purchase) of investments
(net)
(116.08) 257.44 84.87 (48.01) (88.00)
Sale of investments in 10.96 - - - -
55
subsidiaries and joint
ventures
Proceeds from sale of
Contract Exports
Division
34.50 - - - -
Interest received 24.29 13.15 4.34 9.17 22.00
Dividend received 23.73 16.54 6.41 8.74 5.21
Increase / decrease in
corporate deposit - - - - (56.28)
Purchase of fixed assets (302.72)(199.97
)
(153.66
)
(105.13
)(33.34)
Investment in equity of
Joint Ventures
(1597.89
)
(661.09
)0.00 (8.00) (12.49)
Investment in equity of
subsidiaries @@ (463.83) (91.40) (44.42)
(150.18
)(29.70)
Acquisitions - - - (42.54) -
Net cash (used in) /
from investing activities
(2378.22
)
(663.14
)(94.25)
(331.80
)(45.88)
C Cash flow from
financing activities
Proceeds from issue of
share capital (including
share premium)
9.81 0.01 0.00 0.01 -
Security premium
received 759.93 0.06 0.04 0.06 -
Proceeds from / 1272.87 764.86 88.00 138.31 (163.80
56
(repayment of)
borrowings (net) )
Dividends paid
(including tax thereon) (106.13) (27.31) (27.08) (25.33) (19.76)
Interest and finance
charges paid (184.69) (62.06) (21.92) (23.97) (48.67)
Net cash (used in) /
from financing activities 1751.79 675.56 39.05 89.07
(232.23
)
Net increase in cash and
equivalents 2.42 4.75 (3.86) (28.03) 27.10
Cash and cash
equivalents (opening
balance)
20.32 9.41 13.27 41.30 14.20
Cash of IGFL and BGFL - 6.16
Cash and cash
equivalents (closing
balance)
22.74 20.32 9.41 13.27 41.30
57
RATIO ANALYSIS
1. CURRENT RATIO:
= Current Assets/ current Liabilities
PARTICULARS CURRENT YEAR
2009-10
PREVIOUS YEAR
2008-09
CURRENT ASSETS 1585687 769106
CURRENT
LIABILITIES
495694 454349
CURRENT RATIO 3.20 1.69
INTERPRETATION
Current ratio indicates how much the company is able to meet its
shortly
Maturing obligations. The ideal ratio is 2. During current year,
ratio is very high
This is not good situation. Keeping idle current assets invite higher
costs to the company.
Company should improve upon inventory management, cash
management, credit management etc and try to reduce this ratio to
2.
58
2. ACID TEST RATIO:
= Current Assets- Inventories- prepaid Expenses / Current
Liabilities
PARTICULARS CURRENT YEAR
2009-10
PREVIOUS
YEAR 2008-09
QUICK ASSETS 1155349 379546
CURRENT
LIABILITIES
495696 454349
ACID TEST RATIO 2.33 0.84
INTERPRETATION
Ideal quick ratio is 1.
Company needs to reduce this ratio by utilizing short term funds in
better way.
Excess short term funds invite higher costs to company.
59
3. CASH POSITION RATIO:
= (Cash on Hand & at Bank/Current Liabilities)*100
PARTICULARS CURRENT
YEAR 2009-10
PREVIOUS
YEAR 2008-09
CASH ON HAND &
BANK
898333 166485
CURRENT
LIABILITIES
495696 454349
RATIO 181.23 % 36.64 %
INTERPRETATION:
Cash position ratio is very high, that indicates under utilization of
short term funds. Company does not require too much funds on
hand.
Company should utilize idle funds for productive purpose in the
company or invest them outside.
60
4. INVENTORY TO GROSS WORKING CAPITAL
RATIO:
= Inventory/ Gross working Capital
PARTICULARS CURRENT
YEAR 2009-10
PREVIOUS
YEAR 2008-09
INVENTORY 430338 389560
GROSS WORKING
CAPITAL
1585687 769106
RATIO 27.14 % 50.65 %
INTERPRETATION:
Desired situation is that average inventory in store should be
minimum.
Ratio has improved compare to last year but actually inventory
level has increased.
Company requires improving inventory management to reduce
average inventory in stores and reduce the cost of inventory.
5. TOTAL ASSETS TURNOVER RATIO:
61
= Sales/ Total Assets
PARTICULARS CURRENT
YEAR 2009-10
PREVIOUS
YEAR 2008-09
SALES 3419171 2885119
TOTAL ASSETS 3297981 2427981
RATIO 1.04 1.19
INTERPRETATION:
Higher is the ratio, better is the utilization of total asset to
generate more sales.
Current year ratio is not satisfactory.
Company should try to make better utilization of total assets to
generate more sales.
6. FIXED ASSETS TURNOVER RATIO:
62
= Sales/ Fixed Assets
PARTICULARS CURRENT YEAR
2009-10
PREVIOUS
YEAR 2008-09
SALES 3419171 2885119
FIXED ASSETS 1106622 973890
RATIO 3.09 2.96
INTERPRETATION:
Higher is the ratio, better is the management of fixed assets to
generate sales.
This year ratio has improved compare to last year that indicates
good situation.
Better fixed asset management is always desired.
7. CURRENT ASSETS TURNOVER RATIO:
63
= Sales/ Current Assets
PARTICULARS CURRENT YEAR
2009-10
PREVIOUS
YEAR 2008-09
SALES 3419171 2885119
CURRENT ASSETS 1585687 769106
RATIO 2.16 3.76
INTERPRETATION
This ratio suggests utilization of current assets to generate
sales. Higher ratio is always desired.
Current year ratio is not satisfactory compare to last year
ratio.
Company should improve current assets management.
8. DEBTORS TURNOVER RATIO:
64
= Net Credit Sales/ Average Debtors
PARTICULARS CURRENT YEAR
2009-10
PREVIOUS
YEAR 2008-09
NET CREDIT SALES 306257 2540844
AVG. DEBTORS 142595 78283
RATIO 21.48 32.46
INTERPRETATION:
This ratio suggests how many times in a year, debtors make
payment to the company. Higher ratio is desired.
Current year ratio is not satisfactory compare to last year’s
ratio.
Company should improve its credit management and make
their debtors to make faster payments.
9. DEBTORS COLLECTION PERIOD:
65
= 365/Debtors Turnover Ratio
PARTICULARS CURRENT YEAR
2009-10
PREVIOUS
YEAR 2008-09
DAYS IN A YEAR 365 365
DEBTORS
TURNOVER
2148 3246
RATIO 16.99 DAYS 11.24 DAYS
INTERPRETATION:
This ratio indicates average number of days that customers take to
make payment.
Lower the number of days better is the credit/debtors management.
Current year ratio is not satisfactory compare to last year ratio.
Company should improve its credit management and make their
debtors to make faster payments.
10. CREDITORS TURNOVER RATIO:
66
= Net Credit Purchases/ Average Creditors
PARTICULARS CURRENT
YEAR 2009-10
PREVIOUS
YEAR 2008-09
CREDIT PURCHASE 500840 441101
AVERAGE
CREDITORS
270909 259350
RATIO 1.85 1.70
INTERPRETATION:
This ratio indicates how many times on an average company make
payments to its creditors. Lower the ratio is better.
The company should try to negotiate with its suppliers for later
payments and try to utilize those extra funds for productive
purposes.
11. INVENTORY TURNOVER RATIO:
67
= Sales/ Average Inventory
PARTICULARS CURRENT YEAR
2009-10
PREVIOUS YEAR
2008-09
SALES 3419171 2885119
AVERAGE
INVENTORY
98959 65396
RATIO 34.55 44.12
INTERPRETATION:
This ratio indicates how many times, the stocks get rotated in a
year. Higher ratio indicates better inventory management.
Current year ratio is not satisfactory compare to last year ratio.
Company should try to maintain inventory turnover and
continuously try to achieve higher inventory turnover.
12. OPERATING LEVERAGE:
= Contribution/ Earnings before Interest & Tax
68
PARTICULARS CURRENT
YEAR 2009-10
PREVIOUS
YEAR 2008-09
CONTRIBUTION 1027173 959134
EBIT 361352 358455
RATIO 2.84 2.68
INTERPRETATION:
Higher the operating leverage, the more the company's income is
affected by fluctuation in sales volume. It measures the EBIT's
percentage change as a result of a change of one percent in the
level of output. Higher ratio is always desired.
Ratio has improved compare to last year`s ratio, that indicates
better situation.
13. FINANCIAL LEVERAGE:
69
= Earnings before Interest & Tax/ Earnings before
Tax
PARTICULARS CURRENT
YEAR 2009-10
PREVIOUS
YEAR 2008-09
EBIT 361352 358455
EBT 251867 350965
RATIO 1.43 1.021
INTERPRETATION:
This ratio explains use of debt component in the capital
structure to increase shareholders earnings. It also explains risks
associated in adopting debt component.
Current year`s ratio has improved compare to last year`s ratio.
This indicates a little higher risk due to more debts but it also
indicates company`s ability to increase shareholders` earnings
by using debt component in its capital structure.
There is always a tradeoff between risks involved and
shareholders` return.
Company should try to maximize both by proper balance
between them.
14. COMBINED LEVERAGE
= Contribution/Earnings before Tax
70
PARTICULARS CURRENT
YEAR 2009-10
PREVIOUS
YEAR 2008-09
CONTRIBUTION 1027173 959134
EBT 251867 350965
RATIO 4.08 2.73
INTERPRETATION:
Combined leverage measures the percentage change in EPS that
results from a change in one percent in sales. It helps in measuring
the firm’s total risk. Current year`s risks have increased compare to
last year`s risks due to increase in debt component. But this is not a
concern of worry because it means better use of financial leverage.
15. NET PROFIT RATIO:
= Net Profit after Tax/ Net Sales
71
PARTICULARS CURRENT
YEAR 2009-10
PREVIOUS
YEAR 2008-09
NET PROFIT AFTER
TAX
216645 -140214
NET SALES 306257 2540844
RATIO 7.07 % -5.52 %
INTERPRETATION:
Higher net profits are always desired.
Current year`s performance of the company is appreciable
compare to last year`s.
There is always a scope to improve current situation.
COMPETITORS
72
Today’s Era of Cut Throught Competition. Every Company has to
face Competition. The world is become a competition world. The
Veebasons Corrugating Pvt. Ltd. is also face the problem of Competition.
There are many competitors in the opposite of this company these
competitors are as follows:
Supack Industries Pvt. Ltd.
Hari Om Packaging
CONTRIBUTION OF THE UNIT TO THE
SOCIETY
73
Business is the activity done by the man for the man. Here, means
the business person does business for the society because without society
he cannot achieve his goals. There are various objectives of any business
unit, like maximum profit. To earn maximum profit, to expand the
business area, To change the modern era etc. Now a day to fulfill the
social responsibility is one of the objectives of the company to survive in
the market.
Veebasons Corrugating Pvt. Ltd. Fulfill its responsibilities towards
the society.
Towards The Society :
The Company does not make pollution. The Company is about 15 to 18
Kilometers from the city area. They also provide housing facility to their
employees.
ACHIEVEMENT AND AWARDS
Every Business tries to earn reasonable amount of profit. This
Company has immense pleasure in introducing over selves as the one of
the leading manufacturer of the corrugated boxes. Their plant was
established in the year of 2004 their investment corrugating plant is setup
74
with latest sophistic and ultra modern infrastructure, equipment,
instrument, and facility to maintain quality assurance to high precision
degree of accuracy required in process. This industry established in 2004
so award has not taken during 5 Years.
75
FUTURE PLANS
76
Future Plan is the predetermined course of action is achieved a
special aim or goal. Future planning is very necessary for the success of
the business unit.
Veebasons Corrugating Pvt. Ltd. Want to start automatic 5 ply
machine, plan for manufacturing all kinds of boxes in future. They
constantly upgrade their machines and equipments and to some extant
methods of production.
77
SUGGESTIONS
78
After giving the conclusion following are the suggestions to the
company. This are displayed under.
1 ) The aim of Veebasons Corrugating Pvt. Ltd. is to increase their
turn over, I think, they also try to increase their turnover & profit
too, But they have not enough workers to increase turnover so they
should appoint new workers to increase turnover.
2 ) They Purchase Raw Material form Delhi, Assam etc. It is very
costly & time consuming process, so I think they should purchase
raw material from local market.
3 ) They should also do proper marketing because they are not doing
marketing properly they should do more & more advertisement for
selling their goods.
79
CONCLUSION
80
I visited Veebasons Corrugating Pvt. Ltd. for the industrial
training. It is Small Scale & Private Limited Company. It has very good
location with the company. I had found that all the staff members and
workers are working in a co ordinates manner and in a planned way they
are more concentrating about their work and diversifying their efforts
towards the desired target. It is looking the good management and
maintenance of quality of their products. Its business expansion is
possible in the future.
So, at the end I wish the “Veebasons Corrugating Pvt. Ltd.” All
The Best to get desired success in future.
81
BIBLIOGRAPHY
82
Principle of Marketing
B.S. Prakashan
Rana & Savjani
Principle and Practice of Marketing
Sultan Chand & Sons
L.M. Prasad.
83
