A PROJECT REPORT

ON

PROJECTED FINANCIAL STATEMENT

TO BE SUBMITTED TO BANK

FOR LOAN PURPOSE

PREPARED BY

SURAJMAL CHANDAK

(T.Y.B.B.A.)

UNDER THE GUIDANCE

OF

MRS. MRUGAKSHI RAJHANS

BRIHAN MAHARASTRA COLLEGE OF COMMERCE

PUNE - 411 004

SUBMITTED TO UNIVERSITY OF PUNE

FOR PARTIAL FULFILLMENT OF

BACHELOR OF BUSINESS

ADMINISTRATION

UNIVERSITY OF PUNE

(2009-2010)

CERTIFICATE

This is to certify that Mr. Surajmal Chandak is a bonafide Student of our Institute pursuing a course in Bachelor of Business Administration (BBA) under the University of Pune With Finance as Specialization.

The topic of the Project Titled “Term Loan Proposal For Chandak Cement Pvt. Ltd.” is submitted by him in partial fulfillment as per guidelines and requirement of University of Pune.

The Project Report has been found worthy of acceptance.

MRS. MRUGAKSHI RAJHANS MRS. BHARATI UPADHAYE

(INTERNAL PROJECT GUIDE) (B.B.A. CO-ORDINATOR)

ACKNOWLEDGEMENT

I take this opportunity to acknowledge my debt to various people for the successful completion of this project work. It would be rather unrealistic to say that my efforts would be successfully carried out without the help of these various people, who have played a vital role in the conclusion of this work.

First and foremost I would like to express my deep gratitude to Mr. Pranay Bhandari (Accountant) for the consent co-operation and guidance and his support which helped me in completing my project.

I would like to express my sincere gratitude to our Subject Teacher and Project Head, Mrs. Mrugakshi Rajhans for her aid and guidance.

I remain extremely indebted to Brihan Maharashtra College of Commerce and the Coordinator of B.B.A. Department, Mrs. Bharati Upadhaye, for the opportunity and co-operation they gave me.

Last but not the least I want to thank all my friends, parents, teachers and all the people who helped me directly or in any other way to make this Project a success.

Any suggestion for the improvement would be like pathway for me to come out the mist of errors.

Surajmal Chandak

(T.Y.B.B.A)

CONTENTS

Sr .No. PARTICULARS PAGE NO

1

2

3

4

5

6

7

8

9

10

PROJECT REPORT HIGHLIGHTS

COMPANY PROFILE

DIRECTORS PROFILE

OBJECTIVES OF REPORT

ASSUMPTIONS

FINANCIAL STATEMENTA)STATEMENT OF TOTAL PROJECT COST AND MEANS OF FINANCEB)PROJECTED PROFITABILITY STATEMENTC)PROJECTED BALANCESHEETD)CALCULATION OF BOOK DEPRECIATIONE)CASH FLOW STATEMENTF)WORKING CAPITAL REQUIREMENTG)RATIO ANALYSISH)INTREST REPAYMENT SCHEDULE

DOCUMENTS REQUIRED

CONCLUSION

BIBLIOGRAPHY

ANNEXURESLOAN APPLICATION FORM

01 – 02

03 – 10

11 – 13

14 – 15

16 – 17

18 - 18

19 – 1920 – 2021 – 2223 – 2324 – 2526 – 2627 – 2930 – 31

32 – 32

33 – 33

34 – 34

35 - 35

PROJECT REPORT FOR

CHANDAK CEMENT PVT. LTD.

PROJECT REPORT HIGHLIGHTS

Name of the Unit : CHANDAK CEMENT PVT. LTD.

Constitution : Private Limited Company

Directors : 1) MR. SONU CHANDAK

2) MR. KAILASH CHANDAK

3) MR. SANKET RAVOORI

Location : 69/1A/B, Galli NO - 3,

Wanwarie Industrial Estate, Pune -411040

Nature of Business : Manufacturing of Cement

Total Cost of Project : Rs. 50.00 Lakhs

Bank Finance Required : Rs. 27.00 Lakhs as Term Loan

Rs. 08.00 Lakhs as Working Capital Loan

Repayment Period : Term loan is to be repaid within 84 months.

Issued & Paid-up

Share Capital : Rs. 15.00 Lakhs

Securities Offered : Assets of the Company

COMPANY PROFILE

CHANDAK CEMENT PVT. LTD.

69/1A/B, Galli NO - 3,

Wanwarie Industrial Estate,

Pune - 411 040

P R O P O S A L F O R F I N A N C E

O F

RS.50.00 L A K H S

1. INTRODUCTION :

This scheme perta ins to the techno economic feas ib i l i ty of the proposed Smal l Sca le Industr ia l Un i t a t 69/1A/B, Ga l l i No. 3 , Wanwar ie Industr ia l Estate , Pune -411 040 to be set up for the manufactur ing of cement wi th M/s . Chandak Cement Pvt . L td .

The un i t was formed by a l l above ment ioned d i rectors hav ing exper ience of more than 10 years in the f ie ld of Cement Industr ies , espec ia l ly in Manufactur ing of Cement . They have ga ined a

lo t of Pract ica l and Technica l Knowledge in such bus iness , so they have dec ided to set up a un i t o f manufactur ing of cements at Wanwar ie , Pune.

2. BUSINESS POTENTIAL :

The demand for cement , which i s used in the construct ion

work , has gone up cons iderab ly . The Government and other f inanc ing

inst i tut ions have env isaged separate programmes for house bu i ld ing

act iv i t ies by prov id ing ass i s tance under l ibera l terms and condi t ions .

Many publ i c sector undertak ings and banks are a l so prov id ing loans to

employees for the construct ion of res ident ia l bu i ld ings .

Government have a l so dec lared house construct ion

programme as an Industr ia l act iv i ty in the country . Therefore there i s

very good hope for set t ing up a number of industr ia l un i t for

manufactur ing of cement . Hence i t i s proposed to set -up th is

Industr ia l un i t equipped wi th the necessary machines for the

manufactur ing of Cement .

3. LOCATION AND PLACE OF BUSINESS :

On the bas i s of invest igat ion , the company has found a

su i tab le locat ion at Wanwar ie , Pune in industr ia l zone. The premises

i s a l ready wel l constructed f rom bus iness po int of v iew.

The promoters of company have contr ibuted there own

land and bu i ld ing for carry ing out the bus iness of company.

4 . INFRASTRUCTURAL FACIL ITES :

Al l in f rast ructura l fac i l i t ies to run th is un i t are ava i lab le

in the proposed s i te . A l so proper e lectr i c i ty supply for carry ing out

the bus iness of company i s go ing to a l lot by the M.S .E .B . author i t ies

and the un i t i s go ing to arrange d iese l eng ine for the un interrupted

power supply . Water i s ava i lab le in the s i te for the use of workers

and for other ameni t ies .

T ransport and communicat ion fac i l i t ies are a l ready

ava i lab le in the s i te . Hence a l l in f rast ructura l fac i l i t ies are ava i lab le

for the implementat ion of pro ject .

5. MANAGEMENT :

The company has worked in a s imi lar type of undertak ing for more than 10 years in which i t has ach ieved a cons iderab le exper ience in th is f ie ld , which i s o f use to them in manag ing the day to day af fa i rs of the i r venture . They can therefore manage the i r own bus iness very successfu l ly and ef f i c ient ly .

6. MACHINERY :

The main machines requi red for the un i t are Polysius Rotary

Kilns, Tubular Cooler , Polytrack Clinker Cooler, SEPOL high efficiency separator, etc.

M/s Sadhana Industr ies , Pune i s agreed to supply the same for th i s

uni t . The cost under th i s head inc lud ing e lectr i f i cat ion and erect ion

charges i s est imated at Rs .3075000.00

7. SKILLED LABOUR :

Pune, be ing a large industr ia l c i ty , i s hav ing ava i lab i l i ty of number of workers in d i f ferent f ie lds . Labours requi red for the company’s bus iness are very much ava i lab le in Pune & nearby areas . The company has a l so reta ined sk i l led labour , which a l so have got suf f i c ient knowledge regard ing the company’s bus iness , for i t s fast growth and deve lopment .

8. MARKET POTENTIAL :

As i s i l lust rated above, the product of th i s un i t wi l l en joy

very good market in th i s loca l i ty and outs ide . Hence on the

commerc ia l g round, by tak ing into account the var ious aspects of th i s

industry , i t w i l l be a favourab le s i tuat ion to s tar tup the bus iness .

Hence market ing of these products wi l l never be a prob lem for the

next severa l years to come, moreover , there i s a good growing

demand for these products .

9. DETAILS OF FUNDS REQUIREMENT:

TERM LOAN:

1) The company’s bus iness main ly depends on the machiner ies . They requi re fo l lowing machiner ies to be purchased which are

very growthfu l for the bus iness of company. The quotat ion amounts of the machiner ies are as fo l lows:

DETAILS OF MACHINARY & EQUIPMENTS

No. Part iculars Amount (Rs.)

1 Polysius Rotary Kilns 550000.00

2 Tubular Cooler 500000.00

3 Polytrack Clinker Cooler 250000.00

4 Two-compartment separator mill 125000.00

5 SEPOL high efficiency separator 525000.00

6 Polysius preheater and calciner systems 450000.00

7 Hammer Mi l l Crusher 130000.00

8 Rol ler Mi l l 115000.00

9 Other Machiner ies 340000.00

10 Electr i f i cat ion and Erect ion Charges 90000.00

GRAND TOTAL 3075000.00

Polysius Rotary Kilns

Tubular Cooler

Two-compartment separator mill

SEPOL high efficiency separator

2) The un i t which i s be ing set up has to be furn ished, so work shop i s to d iv ided into var ious parts i .e . s tores , o f i i ce , rest room, admin is t rat ion , etc . On the bas i s of arch i tect , the cost of furn i ture & f i x tures i s est imated around Rs .565000.00

WORKI ING CAPITAL :

In i t ia l l y the company requi res raw mater ia l such as l imestone, c lay , sand, i ron , etc . for the manufactur ing of cement . I t w i l l cost around Rs .1100000.00 inc lud ing other work ing cap i ta l requi rement .

10. PROFITABILTY:

As in formed by the d i rectors of company , the net prof i t marg in of company wi l l be around 2 .36%. They are qu iet conf ident about ach iev ing an increment in growth of turnover of every year . I t i s assumed that there wi l l be same deprec iat ion rates as appl i cab le at present for the next seven years .

11. REPAYMENT SCHEDULE:

As env isaged by the company, the loan wi l l be repa id in seven years & interest wi l l be pa id on month ly bas i s (as per EMI Statement) @ 11.50% p .a .

12. AVAILABILTY OF SUPPLIERS:

The main raw mater ia l s requi red are l imestone, c lay , sand,

i ron , etc . These a l l a re ava i lab le in reasonable pr ice at requi red

quant i ty and wi thout d i f f i cu l ty .

1) DIRECTOR’S PROFILE

NAME OF DIRECTOR : MR. SONU CHANDAK

STATUS : D IRECTOR

DATE OF B IRTH : 30 .05.1975

QUALIF ICATION : B .E . -MECH.

FROM UNIVERSITY OF PUNE

LOCAL ADDRESS : 51 , NARAYAN PETH,

PUNE – 411 030

NATURE OF BUSINESS : MANUFACTURING OF CEMENT

OWNERSHIP : 1/3 SHARE HOLDING

2) DIRECTOR’S PROFILE

NAME OF DIRECTOR : MR. KAILASH CHANDAK

STATUS : D IRECTOR

DATE OF B IRTH : 21 .08.1980

QUALIF ICATION : B .E . -C IV IL

FROM UNIVERSITY OF PUNE

LOCAL ADDRESS : 51 , NARAYAN PETH,

PUNE – 411 030

NATURE OF BUSINESS : MANUFACTURING OF CEMENT

OWNERSHIP : 1/3 SHARE HOLDING

3) DIRECTOR’S PROFILE

NAME OF DIRECTOR : MR. SANKET RAVOORI

STATUS : D IRECTOR

DATE OF B IRTH : 10 .04.1982

QUALIF ICATION : MBA-F INANCE

FROM UNIVERSITY OF MUMBAI

LOCAL ADDRESS : 21/2 , MARKET YARD,

PUNE – 411 037

NATURE OF BUSINESS : MANUFACTURING OF CEMENT

OWNERSHIP : 1/3 SHARE HOLDING

OBJECTIVES OF PROJECT

1. To s tudy the need to ra i se f inance through Bank.

2 . To s tudy the d i f ferent means of f inance ava i lab le to people accord ing to the i r needs .

3 . To s tudy and understand the concept and ca lcu lat ion of EMI (Equated Month ly Insta lments)

4 . To forecast expected growth in turnover due to increase in demand of the product .

5 . To ca lcu late and s tudy the importance of d i f ferent rat ios such as Current Rat io , Net prof i t Rat io , Debt Serv ice Coverage Rat io etc . , and the i r app l i cat ions for the sanct ion of loan.

6 . To s tudy var ious requi rement needed for tak ing a Term Loan f rom Bank.

7 . To learn the expected ef fect on the act iv i ty and f inanc ia l pos i t ion of the bus iness caused by acceptance and repayment of loan.

8 . To understand the ef fects of in f lows and out f lows of cash on bus iness through Cash F low Statement .

9.To understand the use of Work ing Capi ta l Requi rement for sanct ion ing of Work ing Capi ta l Loan.

10. To understand the work ing and ca lcu lat ion of deprec iat ion on F ixed Asset at d i f ferent rates

GENERAL ASSUMPTIONS

1. Interest Rate i s cons idered @ 11.5% p .a . on Term Loan and a l so on Work ing Capi ta l Loan

2. Term Loan i s complete ly repa id at the end of seventh years .

3 . The amount of work ing cap i ta l loan wi l l remain the same and interest on same wi l l be pa id @ 11.5% every year .

4 . Income Tax rate i s cons idered @ 33.99%, i . e . , Preva i l ing Income Tax Rate For Companies .

5 . Deprec iat ion rates are cons idered as per Income Tax Act , 1961 which are as fo l lows :

F ixed Assets Dep. rate

Machinery 15%

Furn i ture and F ix tures 10%

Computer 60%

6. Deprec iat ion on F ixed Assets in ca lcu lated on Wr i t ten Down Va lue Method (W.D.V) as per Income Tax Act , 1961.

7 . For pro ject ions current market condi t ion are cons idered.

8. I t i s assumed that the amount of term loan sact ioned by the bank wi l l not be more 75% of F ixed Assets (other than Computer ) .

9 . I t i s assumed that work ing cap i ta l loan sanct ioned wi l l not be more than 75%of work ing cap i ta l requi rement .

10 . I t i s assumed that no d iv idend wi l l be rece ived on investments made in shares .

FINANCIAL STATEMENTS

A) STATEMENT OF TOTAL PROJECT COST AND MEANS OF F INANCE.

B) PROJECTED PROFITABIL ITY STATEMENT.

C) PROJECTED BALANCESHEET

D) CALCULATION OF BOOK DEPRECIATION

E) CASH FLOW STATEMENT

F) WORKING CAPITAL REQUIREMENT

G) RATIO ANALYSIS

H) INTREST REPAYMENT SCHEDULE

DOCUMENTS REQUIRED

1. L i s t o f D i rectors and a l so l i s t o f Shareholders wi th deta i l s o f Sharehold ing .

2 . Or ig ina l b i l l s in respect of purchases of F ixed Assets as they are of fered as secur i ty aga inst term loan.

3 . Or ig ina l b i l l s /vouchers in respect of expenses and purchases and a l so or ig ina l b i l l s / invo ices in respect of sa les .

4 . Copy of Memorandum of Assoc iat ion and Art ic les of Assoc iat ion of the company and a l so Copy of Cert i f i cate of Incorporat ion.

5 . Purchase agreement for ownersh ip and possess ion of manufactur ing un i t .

6 . Copy of Board Reso lut ion passed.

7 .B io-data of a l l the D i rectors wi th the i r deta i led resume.

8 . Min imum 2 Guarantors and the i r I .T . returns .

CONCLUSION

Look ing at the pro ject ions i t can be reasonably sa id that the pro ject i s v i s ib le . The f igures are rea l i s t i c & can be ach ieved. The exper ience & capabi l i ty of the company wi l l reasonably resu l t in ach iev ing the pro ject ions & can run the bus iness very successfu l ly . The amount of f inance i s abso lute ly sa fe & secured.

And a l so debt serv ice coverage rat io i s a l so sat i s factory in a l l the years which shows ab i l i ty of company to repay the loan.

As the f igures in the pro ject are ach ievable &the company can repay the term loan , the proposa l can be f inanced.

Through th is pro ject I got to know what are the essent ia l s o f to get term loan. I got the opportun i ty to understand the pract ica l use of the f inanc ia l s tatement and pro ject report and a l so use of rat io ana lys i s .

I hope th is Pro ject Report wi l l he lp me in my Future educat iona l as wel l as profess iona l l i fe .

BIBLIOGRAPHY

BOOKS:

1. PRINCIPLES OF F INACIAL MANAGEMENT – SATISH INAMDAR

2. STUDENT’S GUIDE TO INCOMETAX – DR. V INOD K .S INGHANIA

PERSONAL REFRENCES:

1. MR.PRANAY BHANDARI

2 .MR.SHIVKUMAR YERAWAR

3.MR.PRAMOD MURHKYA

INTERNET:

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