A PRODUCT PROJECT REPORT ON

Gas
PREPARED BY:

MR. Akash A. Varia

ACADEMIC YEAR 2008 -2009 GUIDED BY: PROF. Chirag Erda FOR PARTIAL FULFILLMENT OF T.Y.B.B.A. SUBMITTED TO: SAURASHTRA UNIVERSITY, RAJKOT.

SHRI G. H. GOSRANI COM (ENG.MED.) & SHRI D. D. NAGDA B. B. A. COLLEGE, JAMNAGAR.

DECLARATION
I, AKASH A. VARIA a student of T.Y.B.B.A. of Shri D. D. Nagda B.B.A Collage, here by declare that this project report has been carried out successfully under the guidance of Prof. K. J. Thankachan and staff member. The product project report is based on the GAS situated at Mumbai. I am further declaring that this Project Report is not previously submitted to any collage.

Place: Date: (Signature)

PREFACE
In todays world ,the managerial ability is so demand in the company for doing the better managerial work ,the person must have the knowledge of the management this knowledge is not only based on theoretical but also on practical aspect .in short ,for being a good manager a person must have both the knowledge theoretical as well as practical . I am extremely happy to submit this product project report on small scale unit as per the syllabus of T.Y.B.B.A of Saurastra University of particularly introducing the subject Entrepreneurship and Management of Small Business. The main objective of this project report is to make student learn about various factors that should be taken into consideration before setting up an industry. In other words it is purely Entrepreneurship Development and Training for the establishment of Small Scale Industry.

ACKNOWLEDGEMENT
It is really a matter of great pleasure for me to present this creative and practical work at this stage, project report is an important part of learning and every entrepreneur prepares it before starting of actual production. I have taken this opportunity to express my sincere thanks to all these who helps me in the preparation of this report.

Place: Date: (Signature)

CONTENTS SR.N O
1 2 3 4 5 6 7 8 9 10 11 12
Project at a glance Name and address of promoter Proposed location and justification Market analysis Manufacturing process Financial details of the project Financial provision and sources of finance Break even analysis Ratio analysis Conclusion Appendix Bibliography

PARTICULARS

PAGE. NO
06 08 11 16 18 21 25 34 35 37 38 39

PROJECT AT GLANCE
Units Name Address for communication GLOBAL GAS
A 72, Midc Phase- 2, Mumbai

Type Of The Unit Nature of the industry Size of the unit S.S.I. Registration No. Subsidy Registration No. Installed Capacity Utilized Capacity Utilized Capacity in percentage Power requirement Man power required

Partnership Firm

To Manufacture Gas

Small scale unit

Applied for registration

Applied for Reg. 115440 units (p.a.) 237120 unit (p.a) 48.68% 45 horse power Prod. Supervisor Skilled workers Sales man 05 10 03

Unskilled workers 05 Clerk-accountant 02

Peon

01

Total investment Working capital Prod. Cost per unit Sales value per unit Gross profit Net profit Gross profit ratio Net profit ratio Return on Investment

Rs. 32,16300 Rs.6,50,000 Rs. 122.89 Rs. 141 Rs. 20,90,328 Rs.13,58,714 12.84% 8.35% 42.24%

DETAILS OF PROMOTERS
The main promoters of the project are combination of both young and experienced businessman. The promoters are form various business

Partner 1
Name Address
AKASH A. VARIA SWAYAM Sad guru colony, Swastik society, Jamnagar -361008

Age Education Qualification Nature of work Experience

30 years MBA in marketing BBA

Marketing & Finance Department 5 years

Partner 2
Name Address
MAULIK VARIA SWAYAM Sadguru colony, Swastik society Jamnagar-361008

Age Education Qualification Nature of work Experience

35years MBA IN FINANACE

B.Com
production & purchase

5 years

Partnership Deed
The format of the partnership of global gas is as follows

Partnership Deed
We both are partners of GLOBAL GAS Mr. Akash varia & Mr. Maulik varia Here by declare that this is the partnership firm at will subjected to the following terms and conditions.

Conditions
The name of the firm till exists is GLOBAL GAS It will commence its production immediately on receiving license. The Investment in firm is as follows Mr. Akash Varia Mr. Maulik Varia Mr. Akash Varia Mr. Maulik Varia 50% 50% 50% 50%

The Profit And Loss shall be distributed as follows

Both partner act as Active Partner in the unit No other new partner can be entered without the consent of both the partners Above all, the firm is bound to follow the rules and regulations of the Partnership Act, 1932

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LOCATION AND JUSTIFICATION

The location is prime factor to be studied for initiating a business plan. This unit is situated at MIDC (Maharashtra Industrial Development Corporation), which is an industrial area. Therefore beside incentives all the sources of facilities like water, electricity, transport, communication etc. are easily available at reasonable rate.

Infrastructure Facilities
1) Availability of raw material
Raw materials are basic requirement of any type of industries. The basic raw materials required by this unit are pphenylenediamine or popularly known as PPD, isopropyl alchol, Resorcinol & coloring agents. Which is supplied by the suppliers of the Mumbai. The problem of shortage of raw material hardly arise as they are acquired from nearby. Although inventory of raw material is kept aside.

2) Water facilities
The unit has installed jet pumps, an owned borewell from where adequate water is available to fulfill the water requirement of the unit.

3) Power and Electricity

The total Power requirement for the unit is 45 Horse power. This is easily supplied by BSES sub station located at MIDC.

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4) Available of labour
The skilled, semi-skilled and unskilled work force are easily available at at reasonable rates

5) Transportation
Alike other facilities transport facilities are well managed. This unit is well blessed with well developed roads that link to major area of city.

6) Communication
There is a dedicated electronic telephone exchange set up by MTNL in the MIDC Industrial area. There is optional services if ISND and also services of internet are easily provided to the unit.

7) Government Policy
The unit gets many incentives and benefits from the government, some are listed below. Electricity duty exemption Stamp duty exemption exemption to all units of MIDC Registration changes exemption - 100% exemption to all units of MIDC Special capital incentives (SCI) - To all small scall industries of MIDC - To all units in MIDC - 100% stamp duty

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8) Supporting Facilities
Banking: there are branches of many major banks in MIDC to cater the needs of industries Post office: There is post office in the industrial Area, Pin code 4000093 Police station: There is MIDC police station near by the unit. Hospital: There are several hospital in the MIDC, ESIS hospital being one of them

9) Proximity to market:
The product i.e. gases generally consumed highly in metro cities. Hence Mumbai can be considering as best location for this type of industrial activity.

Source: www.midcindia.org

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Type Of Industries Available

There are specialized parks created to cater to specific industries Food Parks Gems and Jewellery Parks Textile Parks Win Parks etc Beside above parks various industries are located in MIDC area which are listed below Birla Tecnology Ltd Part of Aditya birla group BSES Indians Standard Institute (ISI) Mahanagar Telephone Nigam Ltd.(MTNL) Zenith Computers Source: www.midcindia.org

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About The Product

Introduction to the product
As it has always been case in every country since history began, gases still possesses powerful symbolic & evocative properties. The Romans were fascinated with gases and history has uncovered as many as 100 different formulas that were use to alter the gases. Time has not lessened the power of gases. Gases can be that magic wand that instantly transforms dull mousy locks into glorious golden lights that shimmer and shine. It can instantly erase years of age by covering gray, adding depth to fading colors and cranking up overall shine.

Uses of the product

Widely used for cook Commonly used by all It helps in transforming dull and mousy looks in to glorious lights Widely acceptable among the common people It also used for balloons.

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Market Analysis
The demand for oxygen gas in metro cities is more. The major oxygen consumer industries and business such as fabrication of steel, Barge, Manufacturing and repairing, ship breaking and other steel fabrication are more in Jamnagar The preset demand for Oxygen cylinders in metro cities is more the 1000 cylinders per day and as against that there is only one plan with capacity to produce 300 cylinders per day. Thus there is a demand supply gap of at least 700 cylinders per day. The present gap is met by outside suppliers, which is costly. The two Indian Corporate giant plans located near the gas plan will approximately require at leas 2500 to 3000 cylinders of Oxygen per day during the period of their plants. It is estimated that more the 300 down stream projects will be set up near by areas which is also increase the demand Oxygen gas and thus the market for Oxygen gas will be never ending. The promoters are engaged in different business and one of them is also a ship breaking line, which will help in marketing the gas

16

The promoters have before deciding to set up Oxygen plants, personally conducted the market survey and revealed that they will be able to catch the market for their product easily. The promoters have decided to keep selling compared to others. The averages market price for Oxygen gas per cub meter is Rs.15.00 as against that projected selling price is Rs, 14.00 per cub meter. This is a price strategy to capture initial market. Considering the industrial development taking place in Mumbai , increasing demand for the product, comparative lower selling price of the products the promoters will easily get their share in market very rapidly and comfortably.

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MANUFACTURING PROCESS
The Oxygen producing is simple process of separating various gasses natural air. The plant will separate Oxygen gas from air. The main steps in manufacturing process are as under. Collection of air with filtration. Compressing the air to working pressure Cooling, clearing, making moisture free and purifying the air. Further cooling of air in first exchanger Further cooling air is 2nd exchanger i.e. liquidating of air. Separation of Oxygen and Nitrogen Expansion of both liquid gases Boiling crude from gases Separation of both gases at the different boiling points. Cooling, compressing and collecting separate gases by separate pipelines at filling manifold. Filling the gases into cylinders If nitrogen not required, letting out in the atmosphere as waste

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PRODUCTION SCHEDULE
Sr.no
1. Particulars Production per day (26working 2. 3. days) Production per month Production per 9620 1,15,440 141 141 13,56,420 1,62,77,040

Production Units
370

Rate/ unit
141

Total value
52170

annum Table 1 - Production schedule

Production Capacity
SR.NO. PARTICULARS Production units
1. Production per day 2. (26working days) Production per month
19

rates
141

Total value
1,07,160

760

19,760

141

27,86,160

3.

Production per

2,37,120

141

3,34,33,920

annum Table 2 - Installed capacity

Utilized Capacity
Particulars Production Rate SR.NO.
1. Production per day (26 working 2. 3. days) Production per month Production 9620 3001,15,440 149 149 14,33,380 1,72,00,560

Total value
55,130

units
370 149

per month Table 3 - utilized Capacity

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Financial Detail Of The Land

Finance is blood of the business unit Finance is required for the establishment of unit, for its smooth running and its innovations. The following is details of the fixed assets acquired by the unit.

Land:
Location of the land Plot no. A-77 Mahakali Caves road, MIDC Andheri (east) MUMBAI-93 Permission Letter No. 054/ANE/MAH/135/209

Details of the land

Sr. no. Particulars Area (sq. mtr) 1750 Rate (rs.) 650 Total value 1137500

1. Open land Table 4- land

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Building :
The details related to the building construction acquired by this unit is as under Sr. no. Particulars Area (sq. 1. Factory shed 2. Godown 3. Office room 4. Store room 5. Water & toilet 6. Compound & wall Total cost of building Table 5 Building mtr) 800 500 150 100 50 150 Rate (Rs.) 200 150 350 200 200 100 Total value (Rs) 240000 75000 52500 20000 10000 15000 412500

DETAILS OF MACHINERY
Sr. no
1. 2.

Name of machine
Generator Oxygen plant

No. of machine
1 1

Table: 6 Machinery details

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FIXED CAPITAL & FIXED COST OF PRODUCT

Sr.no Particulars
Land Building Machinery Preliminary expenses Total Table: 7 Fixed capital and fixed cost of capital 1 2 3 5

Amount(Rs)
11,37,500 4,12500 7,53000 30000 23,33000

Fixed capital Contingency 10% of 23,33,000 Total Fixed Capital

23,33,000 + 2,33,300 25,66,300

WORKING CAPITAL REQUIREMENT

23

Sr.no Particular
1 2 3 4 5 Stock of raw material Work-in-progress Finished goods Bills receivables Current expenses Total Working capital Table: 8 working capital

Duration
26 days 15 days 07 days 26 days 26 days

Amt
2,80,000 50,000 78,600 1,89,400 52,000 6,50,000

TOTAL COST OF THE PROJECT

Sr.no Particular Amount
25,66,300 6,50,000 32,16,300

1 Total fixed cost 2 Total working capital Total Table: 9 Total cost of capital

FINANCIAL PROVISION & SOURCES OF FINANCE

Sr.no Particular Amount(Rs) Bank loan
24

Owned capital

Subsidy

1 Land 11,37,500 ----2 Building 4,12,500 2,60,000 3 Machinery 7,53,000 3,80,000 4 Contingency 2,33,300 1,30,000 5 Preliminary expenses 30000 ----6 Working capital 6,50000 2,10,000 Total 32,16,300 9,80,000 Table: 10 financial provision and source of finance

6,70,000 42,500 2,50,000 1,03,300 30000 4,40,000 15,35,800

------23000 ---------23000

DETAILS OF SOURCE OF FINANCE

Sr.no
1 2 3

Details
Bank loan Contribution Subsidy

Interest
14% -------

Loan Amount
9,80,000 15,35,800 23000 25,38,800

Interest
1,37,200 1,37,200

Total Table: 11 Details of source of finance

DETAILS OF SALES
Sr.no
1 2 3

Particular

AMT. (Rs)
20,00,000 6,00,000 1,75,000 27,75,000

Oxygen Asceteline M22 gas Total annual sale Table: 12 Sales details

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Salary and wages

Sr.no
1 2 3 4 5

Details
Production supervisor Skilled workers Unskilled workers Sales man Clerk-cumaccountant

Numbers Salary
2 3 3 4 2 6000 4500 4000 4000 4200

Amount (yearly)
1,44,000 1,62,000 1,44,000 1,92,000 1,00,800

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6. 7.

Peon/ chowkidar 1 Other benefits Total 15 Table: 13 Wages and salary

2200 ----

26400 48000 8,17,200

ELECTRICITY CONSUMPTION
The electricity consumption of the unit is of Rs 22000 per month. The annual electricity consumption is 22000*12=Rs 2,64,000

RENT TAXES & INSURANCE

The amount of rent taxes and insurance are as follows. Taxes & Insurance = Rs. 1,47,162

REPARING & MAINTENANCE

Cost of Repairing and Maintenance = 81,000

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INTEREST
Sr.No
1. 2. TOTAL Table: 14 Details about interest

Details
GSFC Bank loan

Rate of intrest
18% 14%

Loan Amount
6,77,500 9,80,000

Interest
1,21,950 1,37,200

16,57,500 2,59,150

DEPRECIATION

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Sr.No Details
1 2

Amount

Rate
10% 15%

Total
41250 1,12,950 1,54,200

BUILDING 4,12,500 Machinery 7,53,000 Total Table: 15 Details about depreciation

ADMINISTRATION EXPENSES
Sr.n o
1 2 3 4 Accounts Printing & stationary Postage Others Total Table: 16 Administration expenses 1,000 7,000 19,000 2,000 12,000 84,000 2,28,000 24,000 3,48,000

Details

Monthly

Yearly

SALES & DISTRIBUTION EXPENSES

Sr.no Details
1 2 Commission Advertising
29

Amount
2,88,000 3,80,000

Salesman TOTAL Particular Table: 17 Sales and distribution

Per unit

1,56,000 8,24,000 Amount (Rs) Amount (Rs)

Profitability statement

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Total sales (141 x 115440) Less : Cost Of Production Raw materials (9,11,000 x 12monthd Salaries and wages Electricity Rent taxes and ins. Intrest on loans Depreciation Admin. Exp. Partners remuneration (15000 x 12 x 2 ) Total overhead expense Gross profit Less : tax @ 35% Net profit

141.00

1,62,77,040

1,09,32,000 8,17,200 2,64,000 1,47,162 3,48,000 8,24,000 122.89 3,60,000 _______ _ 18.11 ____________ _ 1,41,86,712____ 20,90,328 7,31,614_______ 13,58,714

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RATIO ANALYSIS
1 Gross profit ratio=
gross profit X 100 Sales = 20,90,328 X 100 1,62,77,040 = 12.84%

2 Net profit ratio

net profit X 100 Net sales

13,58,714(after tax) X 100 1,62,77,040

8.35%

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3 Return On Investment =

Netprofit X 100 Investment

13,58,714 X 100 32,16,300

42.24%

BREAK EVEN STATEMENT

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Particulars
Total sales Less : cost of production Raw material including packaging Salary and wages Electricity consumption Administration expenses Sales and distribution expenses CONTRIBUTION FIXED COSTS : Rent Taxes and Insurance Salary & Wages (60%) Repairs and maintenance Intrest Depreciation Electricity (40%) Selling and Distribution expense Partners Remuneration TOTAL FIXED COST

Amount
1,09,32,000

Amount
1,62,77040

3,26,880 1,58,400 3,48,000 3,29,600 1,20,94,880 41,82,160 1,47,162 4,90,320 81,000 2,59,150 1,54,200 1,05,600 4,94,400 3,60,000 20,91,832

Table: 18 : Break even analysis

Break even point = Fixed Cost Contribution per unit In order to find out reak even point we must first find out contribution per unit, in order to find contribution per unit following formula us used, Variable Cost per unit = Total Variable cost

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Annual Production = = Contribution per unit unit = = BEP UNITS = = = BEP in Rupees = = = 141-104.77 36.23 Fixed Cost Contribution per unit 20,91,832 36.23 57740 units BEP in units x Sales value per unit 57740 x 141 81,41,340 = 1,20,94,880 1,15,440 104.77 Sales Value - Variable Cost Per

BEP in percentage

= =

BEP in units x 100 Annual Production 57740 x 100 1,15,440

50.01%`

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CONCLUSION
The promoters are educates young and experienced having sound financial background and having experience in different business The demand for product i.e. Oxygen gas is increasing day by day and there is shortage of supply. The cost of product to the

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promoters will be lower and supply will be immediate. The market is sure and certain The financial working i.e. cost of product, profitability are satisfactory and encouraging. The break-even point is lower ; cash flow is adequate to pay back term finance within time schedule. Fully automatic plant and machinery, no raw material cost, these are all factors/indicators of a sound and successful project. The market is increasing and the industrial developmenttaking place in nearby areas will increase market tremendously. There is one competitor in the area The timely decision to start the project by promoters will be an additional benefit to the promoters. Considering the above points and parameters of a sound project. The project seems to be financially viable

APPENDIX
List of table Table. no
1 2 Production schedule Installed capacity 19 19

Particulars

Page. no

37

3 4 5 6 7 8 9 10 12 13 14 15 16 17 18

Utilized capacity Details about land Details about building Details about machinery Finance provision and fixed cost of capital Working capital Total cost of capital Financial provision and source of finance Details of source of finance Detail of sales Details about wages salary Details about of intrest Administration expenses Sales and distribution expenses Details about break even analysis

20 21 22 22 23 24 24 25 25 26 27 29 30 30 34

BIBLIOGRAPHY
BOOK
Vasant deasai MAGAZINE Material provided by INDEXT B industrial extension Web site http://science.howstuffworks.com/hair-coloring.htm http://www.manufacturers.com Bureau

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