1

Preface

I am extremely happy to submit this report for small-scale

industries under the prescribed syllabus of Saurashtra University. The subject

“Entrepreneurship & manufacturing small scale business” helps to create &

develop particular skill attitudes among the student in practical & professional

education faculty of B.B.A.

Today most of small-scale industries in the country are

handicapped and there is an urgent need for substitution of traditional

management techniques by specific system of management. Hence it has

been suggested to under such short term training to manage the business unit

effectively.

2

Declaration

I the undersigned, Dharmesh B. Mehta student of T.Y.B.B.A

here by declare that the project work presented in this report is my own work

and has been carried out under the supervision of Mr. kuldip of R.P.

Bhalodiya College Rajkot.

This work has not been previously submitted to any other

university for any examination.

Date:

Place: - Rajkot

Signature of student

[Dharmesh B. Mehta]

3

Acknowledgment

Being a student of T.Y.B.B.A. We are required to prepare a

product project report as a part of our subject entrepreneurship and

management of small-scale industries. This report has been prepared by my

financial capacity and regulation sentence structure.

I have selected leather product because it is the fast moving

consumer product. Every leather products has big past, present, & future.

Leather is the most demandable product in this part of country. Leather is

useful in the making of shoes, purses, belts, clothes, school bags etc.,

I would like to thank my lecturer Mr. Kuldip & all staff members

of B.B.A. who have provided me proper guidance and knowledge in preparing

this report.

INDEXINDEX4

Sr. No.

Topic Page no.

1 Introduction of small scale industry

2 Project at a Glance

3 Partners Background

4 Implementation Schedule

5 Location.

6 Infrastructure, facilities

7 Product Introduction

8 Production Process

9 Inspection and Quality Control

10 Market Analysis

11 Basis & Presumption

12 Financial Aspects

13 Ratio Analysis

14 Raw Material Suppliers

15 Machinery Suppliers

16 Risk Factor

17 Conclusion

5

Introduction of small scale

Industry

The business system of a country is divided into three sectors

a. Large scale industryb. Medium scale industryc. Small scale industry

This classification of industry may be based on a number of

criteria, e.g. the number of persons employed, the amount of capital

investment, type of management, etc. A small scale industry is defined in

India as “A business unit employing less than 50 persons if using power and

less than 100 persons without using power and having fixed capital not

exceeding 3 crores.” Small-scale industries thus have a vital role to play in the

economic development of a country like India.

Today, in the growth rate of Indian economy, contribution of a

small-scale industry is very important along with the giants of India. The

contribution of small-scale industry is around 40% in the economic growth rate

of country.

Many measures are taken to boost up the development rate and

reduce unemployment SSI is also one of the indirect measures SSI’s being a

labour intensive provides more opportunity of employment. SSI’s also helps in

solving many economic problems like scarcity of money and helps to reduce

nation’s dependence on imports and promotes decentralization of economic

activities in the country. It increases exports and helps in bringing foreign

6

exchange. Overall SSI’s are strong support for all economy, in many different

ways. SSI’s are easy to establish as compared to large-scale industries as

finance required in establishing as SSI is less compared to a large scale

industry.

Thus, SSI helps to solve many economic problems like

unemployment and scarcity of money and helps to development.

7

Project At GlanceName of the firmName of the firm

Lio Leather Pvt.Ltd.

Product Name

Leather Bags, Purses $ Belts

Registered Office and work atRegistered Office and work at

Lio Leather Pvt.Ltd. Plot No. 225, GIDC,

Lodhika,Kalawad Road,

Metoda,Rajkot-360 005

SSI Registration No.SSI Registration No.

Applied for

Form of OrganizationForm of Organization

Partnership firm

Size of UnitSize of Unit

Small Scale Industry

Partners’ NamePartners’ Name

Dharmesh B.MehtaMayank C. Amrutiya

8

Market AreaMarket Area

Gujarat & Maharashtra

BankerBanker

Bank of Baroda, Rajkot.

Accounting YearAccounting Year

1st April to 31st March

9

Partners BackgroundPartners Background

Partner-1

Name : - Dharmesh Mehta

Address : - “Jay Ambe”6, sadhana society,Nr.anand nagar,Rajkot.360 002

Age : - 20 Year

Qualification : - BBA ( Finance)

Experience : - Fresh, Experience during industrial

training period.

Capital Contribution : - 25%

Share in profit : - 50%

Nature of work : - Finance Manager

10

Partner-2

Name : - Mayank Amrutiya

Address : - “Shri Nathji Krupa”

4,Khodiyar Society,

Sahakar Main Road,

Rajkot 360 002.

Age : - 24 Year

Qualification : - BBA(Marketing)

Experience : - 2 Year’s in a company

Capital Contribution : - 25%

Share in profit : - 50%

Nature of work : - Marketing Manager

11

Implementation Schedule

The major activities in the implementation of the project have

been listed and the average time for implementation is estimated at 11 month.

SR

NOPARTICULARS MONTH

1. Preparation of Report ½ month

2. Registration and other formalities 1½ month

3.

Sanction of loan by financial

institutions 3 month

4. Plant and Machinery

Placement of orders

Procurement

Power Connection

Installation of Machine

1 month

1 month

1 month

1 month

5. Procurement of Raw Materials 1 month

6. Recruitment of staff 1 month

12

Location

Location is very import factor to succeed industry. Every

entrepreneur of a business unit must give full consideration to the suitable

location of his enterprise. An enterprise must choose an ideal location at the

time of launching the enterprise. The selection of an appropriate location

enables the factory to operate smoothly efficiently and minimum of cost.

It is quite known that metoda G.I.D.C. (Rajkot) is an industrial

area & we can obtain any facility as a convenient way. Surrounding area is

containing a big market for the Leather. There are many other facilities of

factors, which inspired us to choose proposal location.

LABOURS: ~

Generally all types of main power are available have at

reasonable cost. As for as this manufacturing firm is concerned with

semiskilled labour and there we also get labour in adequate number and at

cheap rate.

RAW-MATERIALS: ~

There is more transportation facility because of center point of

Saurashtra. From this we can easily get the raw materials like Leather, PVC

Solution etc., we purchase raw materials from Delhi, Aakola and also from

Rajkot.

13

TRANSOPRTATION & COMMUNICATION: ~

As we have seen that Rajkot is a center point of Saurashtra. So

transportation facilities are available in Rajkot. It is situated on National High

Way. So, road transport is easily available.

INDUSTRIAL ATMOSPHERE: ~

There is better industrial atmosphere in metoda near Rajkot as

so many other industrial. Like Textile, Steel, Cotton, chemical, oil Industrial

etc., are located there. Hence we could easily develop our industry through

inspiration of other industries.

FINANCIAL FACILITIES: ~

There are so many banks and individual sours from which our

financial requirement is satisfied.

OTHER FACTORS: ~

There are so many other factors, like electric connection,

maintenance of machine, technical knowledge, which are responsible for the

set up of our industry in this area.

Thus, location proposed by us in suitable in every aspects.

14

Infrastructure, facilities provided by G.I.D.C.

The industrial sheds of G.I.D.C. are fully equipped with facilities

like electricity, telephone, water, transportation, etc

Skilled & semi-skilled workers are available from Rajkot &

surrounding areas.

From marketing viewpoint, a good demand exists for own

product.

Rajkot, being a big city, all the means of transportation is

available.

15

Product Introduction

The leather product of this industry related with each &every

person though he or she is a child, elder or old. It is current years demand or

fashion that each &every wants different types of leather product through it is

related with clothes, shoes, purses, belts or school bags.

Generally majority of people uses leather products because

other products related with plastic and rubber etc., are not so much good for

nature and status. It is only reason why demand for leather work never

decreases.

We have so many designs and patterns as per running fashion.

We produce the item as per the demand of the market i.e. which type of item

customers wants to purchase.

16

Production Process

There are various steps of production process they are as follows:-

(1) Receiving of Balls: -

The first steps in the process to making product are

receiving of balls. Generally each ball includes 100 kgs. Of leathers.

(2) Cutting: -

In the second step of production the leather is cut as per

the diagram of various products and of various sizes with the helps of cutting

machine.

(3) Sewing: -

In the next step of production the leather is sewed as per

the design and pattern with the machine.

(4) Sticking: -

In this step, a product is going to be sticked with the help

of the solution. This process is mostly related with Belt.

(5) Polishing: -

After the completion of sticking for get up of product

polishing is necessary. Because of polishing the items like good. The work of

polishing is made wit the help of machine.

17

(6) Packing: -

The last step of process is packing of each item. All

three items are packed in different boxes. These products are sent to different

places as per the order.

18

Inspection & Quality Control

To survive in a competitive business environment organization

makes all possible efforts to produce the products, which satisfy their

customers to the maximum extent.

“Quality cannot reliability. Quality is that why consumer is the

golden code the existence of the product”.

In a product like leather, from raw material to finish goods

inspection & quality control is required. Simple devices & methods will be

used to check the raw material proportion & quality & every stage.

19

Market Analysis

The life style of urban class is changing & therefore the demand

for leather products is increasing at a rapid rate. Purses, Belts, School bags

itself suggest status.

These three products have wide market. Because each & every

lady uses purses though she is professional or housewife. Belts are used only

for man’s status and different types of school bags are need for children. So

these three products are used only for status and that’s why we can say that

these products have broad market.

Not only is this but the most important thing that our product

should be standard one.

Basis & PresumptionBasis & Presumption

20

1) The scheme is based on 50% efficiency for 16 hour in a day for 312

days in a year.

2) Time period required to achieve full capacity utilization will be 3 year.

3) Labors wages are paid as per the rate prevailing in the area.

4) Interest rate on Fixed capital is 9% and on Working capital is 12%

5) Payback period of the project is 1 Year.

6) Land and Building: - 2000ft @ Rs.330 =6,60,000

21

FINANCIAL ASPECTS(A) FIXED CAPITAL DETAILS OF THE PROJECT

1. Land & Building: -

Area 2000 Sq. feet

Rate Rs. 330 per Sq. feet

Amount Rs. 6,60,000

22

2. Machinery: -

23

555444444452

Sr. No.

Type of MachineryQty. Rate Amt.

1 Cutter 2 30000 60,0002 Sewing Machine 15 50,000 2,25,0003 Sticking Machine 2 25,000 50,0004 Polishing Machine 5 20,000 1,00,0005 Loose Tools

- - 30,00

0Total 4,65,000

3. Furniture: -

Sr. No.

Particular Amt. Rs.

1 Computer 25,0002 Office Furniture 30,000

Total 55,000

Total Fixed Capital

Sr. No. Particular Amt. Rs.

1 Land & Building 6,60,000

2 Machinery 4,65,000

3 Furniture 55,000

Total 11,80,000

24

(B) WORDING CAPITAL DETAILS OF THE PROJECT

[Per Month]

1 Raw Material :-

Sr. No. Particular Amt.

1 Leather 3,00,0002 Solution 40,000

3 Cotton Cloths 50,000

4 Chain, Threads & Switch 10,000 T

otal4,00,000

25

2 Salary and Wages: -

Sr. No.

Particular SalaryNo. Of

employee

Amt.

1 Supervisor 3,000 2 6,000

2 Tailor 3,000 10 30,000

3 Semi- Skilled Worker 2,000 3 6,000

4 Unskilled Worker 1,200 5 6,000

5 Accountant 3,000 1 3,000

26

6 Marketing Manger 7,000 1 7,000

7 Clerk 1,500 1 1,500

8 Watchman 1,000 1 1,000

Total 24 60,500

27

3 Utilities: -

4 Other Expenses: -

Total Working Capital

Sr. No. Particulars Total Value (1 month)

Total Value (3 month)

1. Raw Materials 4,00,000 12,00,000

2. Salary and Wages 60,500 1,81,500

3. Utilities 12,700 38,100

4. Other expenses 14,000 42,000

Total 4,87,200 14,61,600

Sr. No. Particular Amt.

1 Power 8,000

2 Transportation Cost 4,000

3 Water 700

Total 12,700

Sr. No. Particulars Total Value

1. Postage and stationery 1,000

2. Repair and Maintenance 900

3. Insurance and Taxes 2,000

4. Sales Expenses 8,000

5. Telephone Expenses 1,200

6. Miscellaneous Expenditure 900

Total 14,000

28

Total Capital Requirement

Sr. No.

Particular Amt.

1 Fixed Capital 11,80,000

2 Working Capital 14,61,600

Total 26,41,600

Sources of Finance

Sr. No. Particular Capital % Amt.

1 Partners Capital 50% 13,20,800

2 Borrowed Capital 50% 13,20,800

Total 26,41,600

Interest on Capital

Sr. No. Particular Interest Rate Amt.

1 Partners Capital 9% 1,18,872

2 Borrowed Capital 12 % 1,58,496

Total 2,77,368

Depreciation on Assets

Particula

rBuilding

10%

Machinery

20%

Furniture15%

Total

1 66,000 93,000 8,250 1,67,250

2 66,000 93,000 8,250 1,67,250

3 66,000 93,000 8,250 1,67,250

29

Total Fixed Cost

Sr. No. Particular 1st Year 2nd Year 3rd Year

1 Salary 1,50,000 1,50,000 1,50,000

2 Interest 1,58,496 1,58,496 1,58,496

3 Depreciation 1,67,250 1,67,250 1,67,250

4 Other Exp. 20,000 20,000 20,000

Total 4,95,746 4,95,746 4,95,746

Total Variable Cost

Sr. No. Particular 1st Year60%

2nd Year80%

3rd Year100%

1 Raw Material 48,00,000 64,00,000 80,00,000

2 Wages 5,76,000 7,68,000 9,60,000

3 Other Exp. 1,68,000 2,24,000 2,80,000

4 Utility 1,52,400 2,03,200 2,54,000

Total 56,96,400 75,95,200 94,94,000

30

Cost of Production

Particulars

1st year

(60% Prod.

Capacity)

2nd year

(80% Prod.

Capacity)

3rd year

(100% Prod.

Capacity)

Variable CostRaw materialWagesOther expensesUtility Total Variable Cost

48,00,000 5,76,000 1,68,000 1,52,400 56,96,400

64,00,000 7,68,000

2,24,000 2,03,200 75,95,200

80,00,000 9,60,000

2,80,000 2,54,000 94,94,000

Fixed CostSalary to StaffDepreciationInterest paidOther expenses Total Fixed Cost

1,50,0001,67,2501,58,496 20,000 4,95,746

1,50,0001,67,2501,58,496

20,000 4,95,746

1,50,0001,67,2501,58,496

20,000 4,95,746

Total Cost 61,92,146 80,90,946 99,89,746

Sales Estimation

(For 1st year at 60% Production Capacity)

Sr. No. Particular Quantity Rate Total

1Leather Purses 23,000 125

28,75,00

0

2Leather Bags 25,000 105

26,25,00

0

3Leather Belts 22,000 80

17,60,00

0

31

Total72,60,00

0

Projected Net Profit

Particular Amt.

Total Annual Sales 72,60,000Less: Total Cost of Production 61,92,146

Gross Annual Profit 10,67,854

Less: Tax Liability @ 35% 3,73,749

Net Annual Profit 6,94,105

32

Ratio Analysis

(1) GROSS PROFIT RATIO = Gross Profit x 100 Total Sales

= 10,67,854 x 100 72,60,000

= 14.71%

(2) NET PROFIT RATIO = Net Profit x 100 Total Sales

= 6,94,105 x 100 72,60,000

= 9.56%

(3) RETURN ON INVESTEMENT = Profit after tax x 100 Total Capital Investment = 6,94,105 x 100 26,41,600 = 26.28%

Break Even Point = Fixed Cost x 100 Fixed Cost + Profit

= 4,95,746 x 100 11,89,851

=41.66%

33

Name of Raw Material Suppliers

Sensitive Leather

Delhi

Bharat Soluation

Nh 8B

Rajkot 360 002

Steel Well Tailor Material

Jay Khodiyar Road,

Aakola

34

Name of Machinery Suppliers

M/S Industrial M/C (P) Ltd.

A-32, phase-1, Naraina Indl. Area,

New Delhi.

M/S Sandhu Mechnical Engg. Work ,

Industrial Area-A, Plot No. – 32,

Ludhiana.

M/S Indo Europe Trading Co.,

1980, Chandni Chowk, Delhi-6.

M/S Irupal Industrial (Regd.),

728, Industrial Area-B, Aakola.

M/S. Kohli Industries, 29,

Sona Udyog Indl. Estate,

Parsi panchyat Road,

Anderi(E), Mumbai-68.

35

Risk Factors

1. Changes in the government policy, may affect the profitability of the

firm.

2. High level of competition with existing units.

3. Adverse climatic condition may affect the availability and prices of raw

materials.

4. It is essential to keep pace with exiting environment so changes should

be needed in quantity, Design, Colour, packing form, etc.

5. Purses, School Bags, Belts are fashionable product so there may be

risk of wastage of raw materials and finished goods.

36

Conclusion

As such we as a citizen of India having some responsibility to uplift the

economic level and also make the life more and more compatible.

In view of above all information which can have the best way to get

comfort in the life of all household work. In earlier time, Leather Product is

being prepared in traditional way and it is consider as time consuming &

wastage of energy. But now with the introducing the technical equipments,

which survives high quality with much quantity in lesser time.

Thus, we are feeling great pleasure to make the product in front of you

and so expecting move response from market& trying to satisfy the

prospecting customer.

37

38