Sonbir ETPS Final Report-2003

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A

Practical Report On

SMALL SCALE INDUSTRIES

M S ROUND & HOLLOW ROD INDUSTRIESSUBMITTED IN

PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE AWARD

OF THE DEGREE

BACHELOR OF TECHNOLOGY

IN

(MECHANICAL ENGINEERING)

(SESSION 2010-2013)

SUBMITTED BY

SONBIR

Roll No. 7509183

SUBMITTED TO

Er. Raman Bhambu

Assistant Professor

Department of Mechanical Engineering

PPIMT, Hisar


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PRANNATH PARNAMI INSTITUTE OF MANAGEMENT & TECHNOLOGY

HISAR-125001 (HARYANA)

CONTENTS

S.No Particulars Page No.

1 Certificate 3

2 Acknowledgement 4

3 Entrepreneur 5

4 Introduction to SSI 9

5 SWOT Analysis 14

6 Name of Product 20

7 Supplier & Buyer List 21

8 Specification of Product 23

9 Process Flow Diagram 22

10 Cost Estimation 24

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Break Even Point Analysis 28

12 Conclusion 29

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CERTIFICATE

This is to certify that I am student of B.Tech. 8 th semester (Mechanical Engineering) have

successfully completed the SSI project report on M S ROUND & HOLLW ROD

INDUSTRIES in the partial fulfillment for the award of Bachelor of Technology

Degree in Mechanical Engineering from Kurukshetra University, Kurukshetra During the

academic year 2013.

I wish him a prosperous & bright future with all the great silvery success in their career.

Sonbir (7509183)

Er. Raman Bhambu Er. Sunil Bishnoi

Asst. Proff.ME Deptt. HOD , ME Deptt.

PPIMT , Hisar PPIMT , Hisar

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ACKNOWLEDGEMENT

It gives me great pleasure to present this project report on

SMALL SCALE INDUSTRIES (M S ROUND & HOLLOW ROD INDUSTRIES)

I would like to express my sincere thanks, with a deep sense of gratitude to my guide,

Er.Raman Bhambu, Lecturer in Mechanical Department for his kind interest, valuable

guidance and constant motivation which is preliminary responsible for successful completion

of this project report.

I am thankful to all the Lecturers of Mechanical Engineering Department for their valuable

suggestions and timely help. The well-experienced and skilled staff of mechanical department

imparted me good knowledge about the small-scale industries. I have enhanced my technical

knowledge to a great extent by preparing this project report under the guidance of my guide

lecturer and other lecturers of mechanical department.

At last, I would like to thank the management of my college & university for introducing this

project report in our study curriculum.

Sonbir

Roll No.-7509183

B.Tech Mech Engg;

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ENTREPRENEUR

Entrepreneur is the owner of the business who contributes the capital and bears the risk of

uncertainties in business life. He organizes, manages, assumes the risks and takes the decision

about the enterprise. He takes all the steps to establish undertaking, coordinates the various

factors of production, and gives it a start. He should be able to evaluate, business,

opportunities, together all the necessary resources and ensures the success of the enterprise.

Entrepreneur views are broadly classified into three groups:

1. Risk bearer

2. Organizer

3. Innovator

ENTREPRENEUR AS A RISK BEARER:-

According to Richard Cotillion, a rich man living in France was the first who introduced the

term entrepreneur as an agent who buys the factory production at certain price in order to

combine them into product with a view to selling it at certain price. He illustrated the framer

who pays out contractual income, which is certain to landlord, labour and sells at price that is

uncertain. Thus they too are risk bearer agent of production. Uncertainty is defined as the risk

which cannot be insure against and incalculable.

ENTREPRENEUR AS AN ORGANIZER:-

According to Jean-Baptize, Entrepreneur is a function of co-ordination, organization and

supervision. According to him, an Entrepreneur is one who combines the land of one, the

labor of another, capital of one another and thus produces product. By selling the product in

the market he pays interest in capital, rent on land, wages to labor and what remains in his

profit.

ENTREPRENEUR AS AN INNOVATOR:-

According to Joseph who has introduced new combination of factors of production said, it

may occur in any one of the following five forms:

1. The introductions of new product in market.

2. The instituting of new production technique, which is not yet tested by experience in the

branch of manufacture concern.

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3. The opening of new market into which the specific product has not previously entered.

4. The discovery of new source of supply of raw material.

5. The carry input of new form of organization of any industry by creating of monopoly position

or breaking up of it.

CHARACTERISTICS OF AN ENTREPRENEUR:-

1. Hardworking, willingness

2. Desire of high achievement

3. Highly optimistic

4. Independence

5. Foresight

6. Good organizer

7. Innovative

8. Energetic

9. Flexible

10. Knowledgeable

FUNCTIONS OF ENTREPRENEUR:-

1. Idea generation

2. Determination of business objectives

3. Product analysis and market research

4. Determination of form of ownership of organization

5. Completion of promotion facilities

6. Raising the necessary funds

7. Proper use of machine and material

8. Recruitment of men

9. Undertaking business funds

10. To manage business and take decision, whenever required.

11. To study the market and to take advantage from opportunities.

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ENTREPRENEUR DEVELOPMENT:-

The myth that entrepreneurs are born not made no longer holds good. Entrepreneur

characteristic can be developed through entrepreneur development program. The duration of

training under this program ranges from 7 days to 3 months. The basic objectives of

entrepreneur development program can be started as:

1. To develop and strengthen their entrepreneurship quality.

2. To analyze the environment relating to small-scale industry.

3. To select project and product.

4. To formulate the project.

5. To know the influence support needed for launching enterprise.

6. To ensure providing self-employment to a number of young men and women.

7. To acquire the basic managerial skills.The biggest advantage of entrepreneur development program has bought about is creating a

social awareness in the country. It has provided new paths and carrier choices to large

number of persons in the systematic manner. It has bought in fresh thinking and attitudinal

changes amongst families who are traditionally from non-business background.

Basis & Presumption

The machinery and the equipment are of a particular type and are available in

the open market. The cost indicated against the raw material, utilities and other

expenditures are approximate and are on the basis of the local market.

ROLE OF SMALL SECTOR:-

The contribution of this sector is c\considerably to Indian economy. About 204 million units

are provided employment to over 14 million people. This sector is also contributing about

one third of the countrys export, today central and state governments are providing all type

of help to interested persons to solve their problems regarding small scale sector. Small scale

industries plays dynamic role in acerbating the rate of industrial growth and attaining

economic prosperity of nation. Therefore in a developing country like India small-scale

industries are much importance for building up of national economy.

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ADVANTAGES OF SMALL SCALE INDUSTRIES:-

1. These create immediate and permanent employment in large scale at relatively small

capital cost.

2. These can immediately meet a substantial part of the increased demand for consumer

goods.

3. These offer a good method of ensuring more equitable distribution of national income.

4. These provide more chances of work and income

OBJECTIVES OF SMALL SCALE INDUSTRIES:-

1. Employment generation

2. Equitable distribution of national income

3. To meet increased demand

4. Decentralization

5. Better utilization of services

6. Balanced economic development

7. Self employment

8. Labor intensive and capital saving

9. With small investment production can be easily started

10. Highly prcised machines and modern techniques is not needed

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INTRODUCTION TO SSI

The SSI (Small Scale Industries) today is immense for the growth of country. Small Scale

Industries are the industries which are run with the help of hired labour and which also use

some simple machine and power.

The investment scale in the industry varies from 5 lakhs to 4 crore for the fixed assets.

Irrespective to number of workers engaged is called small-scale unit.

In India these types of industries are promoted to meet with the problems of excess

population and unemployment so the government of India promotes entrepreneur to set up

small scale industries by aiding him by giving loans, subsidiaries, land, guidance etc. The

strategy adopted by the government, is:

1. Public entrepreneurship should remain confirmed only to those industries and sectors

where private enterprise, individual or corporate, is generally not attracted. Existing

public entrepreneurship be improved through better management and by putting relatively

greater emphasis on research and development. There is need to streamline the R&D

wing of public sector enterprises.

2. All possible efforts are made very seriously (not carefully) for the development of an

industrial culture. It should be realized that the central core of entrepreneurship is the

motive force since by its very nature, entrepreneurship implies positive action and

initiative, motivated individuals with the right kind of combination of abilities and

attributes can pursue their goal with unremitting courage and enthusiasm.

3. There is need to develop management education and industrial training.

4. The development of backward regions and areas constitutes a new challenge, programs

for their development be drawn up and should be effectively implemented.

5. Adequate measures are a must for mobilizing and fostering the entrepreneurial talent in

the country. In the context, it should be realized that entrepreneurs are not the gift of aparticular class.

6. Economic administration by the state should be improved and made more effective so

that economic policies may fully achieve their objectives in the overall interest of the

economy.

7. Financial institutions should provide adequate and timely credit and technical assistance,

especially to the small and medium sized enterprises. They may also impart knowledge

about the needs of the economy and they should file their massive data in terms of growth

of new entrants or entrepreneurs in the field of industry.

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MARKETING MANAGEMENT IN SSI:-

What is marketing? Why it is needed? Are such questions that are to be answered for up

liftment of SSIs.

According to P.Felton marketing can be described as

A cooperate state of mind that insists on the integration and coordination of all marketing

functions which in turn answered with all other cooperate functions, for the basic objective of

producing maximum long range corporate profits.

STUDS IN MARKETING MANAGEMENT:-

1. Product Planning

2. Sales Forecasting

3. Pricing Policy

4. Distribution Policy

5. Role of Advertising (Personnel Selling)

6. Quality

1. PRODUCT PLANNING:-

Product planning may be defined as the act of marketing out and supervising the search,

screening, development and commercialization of new products, modification of existinglines.

Product planning involves three important considerations

1. The development and introduction of new ideas

2. Modification of existing lines as may be required in terms of changing consumers need

and preferences.

3. The discontinuance of elimination of marginal or profitable products.

Products can be classified as:

1. Consumer Products

2. Industrial Products

3. Defense Products

2. SALES FORECASTING:-

A sales forecast is an estimate for the amount or unit sale for a specified further period

under a proposed marketing plan or programme.

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As defined by the American Marketing Association It is an estimate of sales in dollars or

physical units for a specified further period under a proposed marketing or programme under

an assumed set of economic and other forces outside the unit for which the forecast is made.

Marketing of proper sales forecast requires an assessment of

1. The outside uncontrollable likely influence the company sales.

2. The internal proposed changes in the marketing strategies and tactics of the company,

which are likely to affect the sales.

Sales forecast can be for a specified product line or it can be for a market as a whole or for

any portion of it. According to the time period, the sale forecast can be divided in three types-

SHORT RANGE FORECAST:-

Which generally extended from a few weeks to about six month or at most one year in future.This is mostly done by companies day-to-day forecasts for their production control needs

and to plan for long time financial needs.

MEDIUM RANGE FORECAST:-

Which extends from one year to about four years into future.

This type of forecasting is important for

1. Estimating profits, budgeting expenses etc.2. Determining dividend policy.

3. Decide range of maintenance expenditure.

4. Determining schedule of operation.

It is useful for the following purpose-

1. Estimating inventory requirement

2. Providing adequate shipping facilities

3. Assessing production worker requirements

4. Estimating working capital needs

5. Setting production runs for each products

LONG RANGE FORECAST:-

Extending to at least five years into future and in case of really large organization

extended over a longer period up to ten years or even more.

It is useful in following ways-

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1. Anticipating the magnitude and timing of capital expenditures required new facilities in

the future.

2. Determining probable trends and range of cash inflows from sales.

3. Estimating companies long-range personnel needs.

4. Highlighting future problems.

3. PRICING POLICY:-

Pricing is a very critical decision pricing decisions are not easy to make. Hence sound-pricing

policy must be adopted to ensure that the organization secures satisfactory profits. For pricing

decision a marketing manager has to be familiar with economic concept useful in pricing

decision. He has to consider various pricing factors which influence pricing apart from cost

such as the customer characteristics, the economic product characteristics, competitiveenvironment and governmental control wherever applicable the price of the product

materially effect the demand for it as well as the organization competitive ability for

expenditure if the quality of product is to be improved the may be possible only if the

customer are willing to pay a higher price for it. Besides, if the product is not properly priced

there might be reluctance from the channels of distribution.

4. DISTRIBUTION STRATEGY:-Distribution may be defined as an operation or a series of operations, which physically bring

goods manufactured or produced by only particular manufacturers into the hands of the final

consumers to the users.

A distribution strategy consists of distributing or sub-dividing the total products of a

manufacturer to various specific markets. There may be state market, a national market or

even a world market.

5. ADVERTISING:-

To counter the markets at national and international level the government of India set up

various institutes like: -

1. Export credit guarantee corporation ltd. (ECGC)

2. State trading corporation (STC)

3. Trade development authority

4. National small industries corporation (NSIC)

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PROCEDURE TO START A SMALL SCALE INDUSTRY:-

Starting of a small-scale industry is not a very easy task. At the same time it is not difficult

so, if different factors are considered before taking a decision to start it. For starting, the first

and most important work is to select a suitable site and then to make a proper scheme and yet

approved.

Procedure to start small scale industry consist of following important steps-

GETTING FAMILIAR:-

An entrepreneur desiring to set up an industry must first formulate comprehensive setting the

industry for its success. For this, he should be confident, enthusiastic and realizing. He should

therefore make himself familiar with the permanent policies and procedures, assistants and

facilities he can get from whom and how.

SELECTION OF INDUSTRY:-

Selection of a suitable place for an industry is the key to success. Different factors for the

selection of the site are availability of the land, labour, raw material, power and transport

facilities and nearness to the market.

Type and size of industry should be decided by the market study, quality and price of other

product with which proposed item be in competition. Demand and supply of position of the

product should be before selecting the type of industry. Owner should make himself

conversant with all acts, rules of central and state governments etc.

PREPARATION OF SCHEME:-

After deciding the product to be manufactured and the place of industry, a detailed scheme is

prepared. This scheme include number of machines, their approximate cost, requirements of

land and building, number of workers and other staff, their salaries and estimated production

cost, expected profit, proposed factory layout and plant

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SWOT-ANALYSIS

INTRODUCTION:-

Environmental opportunities are only potential opportunities unless the organization can

utilize resources to take advantage of them and until the strategic leader decides that it is

appropriate to pursue the opportunity. It is therefore important to evaluate environment

opportunities in relation to the strengths and weaknesses of the organizations resources, and

in relation to the organizations resources, and in relation to the organizational culture. Real

opportunities exist when there is a close fit between environment, values and resources. An

evaluation of an organizations strengths and weaknesses in relation to environmental

opportunities and threats is generally referred to as a SWOT analysis. The following report

will look closely into the SWOTs concept, its main aspects, and criteria for successful and

effective SWOT analysis.

SWOT is an acronym for Strengths, Weaknesses, Opportunities, Threats. Occasionally, it

may also be found as a WOTS up analysis or the TOWS analysis. A SWOT analysis is a

planning tool used to understand the Strengths, Weaknesses, Opportunities, and Threats

involved in a project or in a business. It involves stating the objective of the business or

project and identifying the internal and external factors that are either supportive or

unfavourable to achieving that objective. SWOT is often used as part of a strategic orbusiness planning process, but can be useful in understanding an organisation or situation and

decision-making for all sorts of situations.

THE CONCEPT:-

Any organisation undertaking strategic planning will at some point assess its own strengths

and weaknesses. When combined with an inventory of opportunities and threats in the

organisations external environment, the organisation is effectively making a SWOT analysis,that is it is establishing its current position in light of its Strengths, Weaknesses,

Opportunities and Threats.

There are several ways of graphically representing the SWOT analysis matrix or grid.

Examples are shown later in this factsheet.

While at first glance the SWOT looks like a simple model and easy to apply, experience

shows that to do a SWOT analysis that is both effective and meaningful, requires time and asignificant resource. It requires a team effort and cannot be done effectively by only one

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person. The SWOT methodology has the advantage of being used as a 'quick and dirty' tool

or a comprehensive management tool, and that one (the quick) can lead to the other (the

comprehensive). This flexibility is one of the factors that has contributed to its success. The

term SWOT analysis is in itself a curious term, for a SWOT is not an analysis in itself, but a

number of elements when used together form a valuable framework for analysis. It is

essentially a summary of a set of previous analyses even if those were just 15 minutes of

mini-brainstorming with yourself in front of your computer although this approach is not

recommended! The analysis, or more correctly interpretation, comes after the SWOT

summary has been produced.

HISTORY:-

The SWOT analysis technique is credited to Albert Humphrey who led a research project at

Stanford University in the 1960s and 1970s using data from leading companies involved in

long range planning processes. The original goal was to identify why corporate planning

failed. Humphrey created a team method for planning originally called SOFT analysis

(Satisfactory, Opportunity, Fault, Threat) which was used by organisations like WH Smith

who made it part of their long range planning programme for almost 20 years. The thinking

behind the tool was:

What is good in the present is Satisfactory.

What is good in the future is an Opportunity.

What is bad in the present is a Fault.

What is bad in the future is a Threat.

Humphreys work has developed the implementation to use the SOFT in the context of six

categories which provide a framework by which issues can be developed into actions and

managed using teams:

Product: what are we selling?

Process: how are we selling it?

Customer: to whom are we selling it?

Distribution: how does it reach them?

Finance: what are the prices, costs and investments?

Administration: how do we manage all this?

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SWOT / TOWS ANALYSIS:-

These can be defined as follows and can of below type for industry or organization:-

STRENGTH:-

Determine an organisations strong points. This should be from both internal and external

customers. Strength is a resource advantage relative to competitors and the needs of the

markets a firm serves or expects to serve. It is a distinctive competence when it gives the

firm a comparative advantage in the marketplace.

WEAKNESS:-

Determine an organisations weaknesses, not only from its point of view, but also more

importantly, from customers. Although it may be difficult for an organisation to acknowledge

its weaknesses it is best to handle the bitter reality without procrastination. A weakness is a

limitation or deficiency in one or more resources or competencies relative to competitors

that impedes a firms effective performance

OPPORTUNITIES:-

Another major factor is to determine how organisations can continue to grow within the

marketplace. After all, opportunities are everywhere, such as the changes in technology,

government policy, social patterns, and so on. Key trends are one source of opportunities.

Identification of a previously overlooked market segment, changes in competitive or

regulatory circumstances, technological changes, and improved buyer or supplier

relationships could represent opportunities for the firm.

THREATS:-

No one likes to think about threats, but we still have to face them, despite the fact that they

are external factors that are out of our control, for example, the recent economic slump in

Asia. It is vital to be prepared and face threats even during turbulent times. A threat is a major

unfavourable situation in a firms environment. Threats are key impediments to the firms

current or desired position. The entrance of new competitors, slow market growth, increased

bargaining power of key buyers or suppliers, technological changes, and new or revised

regulations could represent there threats to a industrials firms success.

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TABLES & DIAGRAM

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HOW TO WRITE A GOOD SWOT ANALYSIS:-

In order to write a good SWOT the following criteria must be taken

Make your points long enough, and include enough detail, to make it plain why a particular

factor is important, and why it can be considered as a strength, weakness, opportunity or

threat. Include precise evidence, and cite figures, where possible;

Be a specific as you can about the precise nature of a firms strength and weakness. Do not

be content with general factors like economies of scale;

Avoid vague, general opportunities and threats that could be put forward for just about any

organisation under any circumstances; Do not mistake the outcomes of strength (such as profits and market share) for strengths in

their won right;

Improvements is not the same as strength do not confuse the two.

Avoid contradicting yourself in the course of the analysis, by having strengths and

weaknesses that are essentially different aspects of the same strategy of resource. Come to a

reasoned conclusion about whether the good points outweigh the bad ones.

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SITUATIONAL ANALYSIS SWOT ANALYSIS:-

Translating SWOT issues into actions under the six categories

1. Product (what are we selling?)

2. Process (how are we selling it?)

3. Customer (to whom are we selling it?)

4. Distribution (how does it reach them?)

5. Finance (what are the prices, costs and investments?)

6. Administration (and how do we manage all this?

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NAME OF PRODUCT

NAME OF PRODUCT - M S ROUND & HOLLOW ROD

They manufacture, export and supply a range of Hot rolled steel and structural steel products.

Their products are manufactured from the superior quality mild steel and stainless steel which

are procured from the leading vendors.M.S. ROUND ROD:-

We offer M S Round Rod which are manufactured with great precision and undergo stringent

quality checks. These are highly beneficial for engineer, railways, window grills, and

collapsible gate manufacturers.

1. Name M S ROUND & HOLLOW ROD INDUSTRY

2. Name of Director Sonbir

3. Address Plot No.-7, Balsamand-Adampur Road,

Balsamand (Hisar)

5. Size Small Scale Industry

6. Product Mild Steel Round Rod and Round Hollow Rod

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M.S. HOLLOW ROUND ROD:-

The M.S. Round Hollow Rods are offered by us are available in various thickness and

diameters. These are offered to serve various industrial requirements and are available at

industry leading prices.

PURPOSE: - Mild Steel

round and hollow rod used in various engineering components , railways , making nut

bolts ,machines etc.

These are used because of their high strength, resist corrosion, high load carrying capacity.

SUPPLIERS LIST:-

1. Naveen Steels Co.op

2. Lakshmi Steels

3 Ratan Steels

BUYERS LIST:-

1. Goyal Steel Works Hisar.

2. Vijay Iron Trading Balsamand.

3. Mahesh Steel Shop Bhadra.

4. Lakshmi Steel Co.op Adampur.

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DIAGRAM PROCESS FLOW

S

MACHINES USED:-

Name No.

1. Lathe Machine 2

2. Drill Machine 2

3. Round Rolling Machine 2

4. Cupola 2

5. Coal Meshing Machine 1

6. Shearing Machine 1

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Rolls

Floor

Cupola Furnace

Shearing Machine

Raw Materials (Scrap)

Shearing

Cutting by

Scissors


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SPECIFICATIONS OF THE PRODUCT

PRODUCT:-

Specification

1. Mild Steel Round Rod 8 mm

10 mm

12 mm

16 mm20 mm

2. Mild Steel Hollow Round Rod

10mm

14mm

16mm

20mm

The thickness of Hollow Round Rod is varying according to increase in diameter. It may be

2mm, 4mm, 6mm, and 8mm.

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COST ESTIMATION

LAND

Land cost Rs. 15,00,000

Building Cost Rs. 20,00,000

MACHINERY & EQUIPMENT

Name Amount

1. Lathe Machine (Two) 5 lac

2. Drill Machine (Two) 4 lac

3. Round Rolling Machine (Two) 4 lac

4. Cupola(Two) 4 lac

5. Coal Meshing Machine 3 lac

6. Shearing Machine 3 lac

Total 23 Lac

COST OF RAW MATERIAL (PER MONTH)

S. No. Particulars Quantity Rate Amount

(Including Transportation)

1. Old Plate Scrap 50 ton 20000/ton 1000000

2. Ingots 50 ton 15000/ton 750000

Total 175000

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STAFF & LABOUR (PER MONTH)

S. No. Description No. Salary

(Rs.)

Total

1 Foreman 2 8000 160002 Skilled workers 6 5000 30000

3 Testing Person 4 6000 24000

4 Sales Man 2 8000 16000

5 Helpers 8 5500 44000

6 Peon-Cum-Watchman 2 5000 10000

Total 24 Rs 140000

OTHER EXPENDITURE AND UTILITIES (PER MONTH)

S. No. Description Amount (Rs.)

1 Power and water 50000

2 Consumables & Tools 50000

3 Postage, Stationary & Telephone 30000

4 Transportation & other expenses 50000

Total 180000

FIXED CAPITAL

Sr.No. Particular Value in Rs

1. Land Cost 1500000

2. Building Cost 2000000

3. Machinery & Equipment Cost 2300000

Total Fixed Capital58,00,000

WORKING CAPITAL (PER MONTH)

S. No. Description Amount (Rs.)

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1 Raw material 175000

2 Staff and labour 140000

3 Other expenses 180000

Total 495000

TOTAL COST OF PROJECT

Sr.No. Particular Value in Rs.

1. Fixed Capital 5800000

2. Working Capital (10) 495000*12=5940000

Total Cost of Project 1,17,40,000

COST OF PRODUCTION (PER YEAR)

1 Recurring Expenditure 11740000

2 Interest on Capital at 11 % 1291400

3 Depreciation on Machinery & Equipment @10% 1174000

Total Rs 14205400

VARIABLE COST OF PRODUCTION

Sr.No. Particular Value in Rs.

1. Raw Material for one year 175000*12

Total Variable cost of Production 2100000

TOTAL COST OF PRODUCTION

Total Cost = Fixed Cost of Production + Variable Cost of Production

= Rs. 14205400 + 2100000

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= Rs. 16305400

TURNOVER PER YEAR

1100 Ton @ 17668 = Rs 19435400

CALCULATION FOR SCRAP PER YEAR

8.5 % of Raw Material = 100 Ton

100 Ton Scrap Sold at 12000/Ton = Rs 120000

Total Turnover after Selling Scrap (Per Year)

= Rs 19435400+120000 = Rs 19555400

GROSS PROFIT

= Turnover Cost of Production

= Rs. 19555400 16305400

= Rs. 3250000

NET PROFIT

= Gross Profit Income Tax

= Rs 3250000 800000

= Rs 2450000

RATE OF RETURN

= Profit 2450000

X 100 = x 100

Capital Investment 11740000

= 20.86%

BREAK EVEN POINT ANALYSIS

BEP = ANNUAL FIXED COST / (SALE PRICE PER TON UNIT VARIABLE COST)

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BEP = 14205400 / (17668 - 2177)

= 917 Ton/Annum

We have to produce at least 917 ton per annum to achieve Break Even Point. More

production than 917 tons will lead to profit to company.

CONCLUSION

Now the net profit (p.a), profit ratio & breakeven point are up to our expectations. So we can

start a S.S.I for manufacturing of rods. In the case that the net profit, profit ratio, rate of

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return, & breakeven point are not according to our expectations we can choose dropping the

idea & plan for manufacturing a new product which would include making a new techno-

economic feasibility report.

Documents

Sonbir ETPS Final Report-2003