NOTE BOOKS

A. INTRODUCTION:

The National Policy on education adopted in Parliament in 1968 stresses the

following objectives like free and compulsory education up to the age of 14,
improved status, emoluments and education of teachers, investment of 6% of
national income in education. According to latest reports, primary education
in the country is enforced as fundamental rights and the number of school
going children will be almost 100% of the children population in the near
future.

In order to meet the increased requirements of education and teaching, the

production of various materials like paper, note books, and other study
materials have to be increased. The consumption of paper and note books is
increasing every year in line with the literacy and education.

B. PRODUCT USES & SPECIFICATIONS:

The Bureau of Indian Standards has not prescribed any standards for note
books. Normally the note books are manufactured according to market
requirements such as 96 pages, 192 pages, 288 pages, 384 pages. These are
manufactured based on standard sizes of paper which are available in sizes
such as Double Foolscap and Demi sizes. The paper quality can also be
adjusted according to the market requirements. The wrappers and bindings
can be chosen with better materials for different note books.

C. MARKET POTENTIAL:

The demand for note books is directly linked to the status of education in the
country. The Government has formulated the new education policy and new
targets have been set up.
The market demand for various Note books is increasing year after year. The students’
community consume the note books in large number The growth in number of
students and colleges for the past several years is given below.
Enrolment 1990-91 2001-02 2002-03 2003-04

Primary (million) 73.8 109.9 122.0 128.3

Middle (million) 20.7 42.6 46.8 48.7

Higher secondary 11.0 28.4 33.2 35.0

No. of Institutions 1990-91 2001-02 2002-03 2003-04

General education college (No.) 4,862 8361 9166 9427

Professional colleges (No.) 886 2340 4592 5000

Universities (No.) 184+ 261+ 304+ 304+

Note: +
Including deemed universities and institutions of national

importance.
Source: Statistical outline of India

In addition to this, college going students, offices, commercial establishments

and traders also consume note books in large quantities. Further the per
capita consumption of paper remains at a low figure of 5 kgs. In India as
compared to 17.2 kgs in China and 290 kgs. in USA. The demand for paper
in India by 2010 will be around 9.5 million tons per annum. The demand for
note books is increasing every year. Every school student consumes
approximately 30 note books in a year. Considering this, demand for note
books is tremendous and there is a vast scope for new small units to convert
paper into note books.

D. TECHNICAL ASPECTS:
Installed Capacity:
The installed capacity of the unit proposed is 6,00,000 note books of standard
192 pages note book. The installed capacity is based on the items of
machinery proposed to be purchased and on a single shift basis working of 8
hours per day. The daily production will be 2000 note books.
Plant & Machinery

Sl Particulars Nos. Rs.lakh

s
1 Folding M/c. 23”x 36” 1 2.00
2 Wire Stitching M/c. 1 0.50
3 Double side Disc ruling M/c. 1 1.50
4 Paper Cutting M/c. 1 0.90
5 Single Colour Sheet Feed Offset Max printing area
18-1/4”x 25” 1 7.50
Total 12.40

Manufacturing Process:
The paper available in large sizes is first ruled in a ruling machine. They are
then cut with the help of a cutting machine and reduced in sizes. The cut
sizes are bound with wrappers and cloth and then they are stitched.

Raw Materials
The main raw materials namely paper of 50 to 54 GSM is used for the
manufacturing of Note books. These are available from reputed dealers of
paper located in Chennai. The same may also procured from Mills like
“Seshasayee Paper Mills”, Erode.

Land & Building:

The Building may be rented and an area of 400 sq. ft. is sufficient for this.

Utilities

Electricity: The unit requires about 4 HP (3KW) power load.

Water: Water is required only for human consumption.

Effluent treatment: This is a non-polluting industry.

Man Power Requirement:

S Designation Rs./Mont Rs./Month Rs.lakhs
l h
1. Skilled labour 4 4000 16000 1.92
2. Unskilled labour 6 3000 18000 2.16
3. Manager 1 6000 6000 0.72
4. Office boy 2 3000 6000 0.72
5.52
Add: Benefits 20% 1.10
Total 6.62
Administrative Salary
Sales Manager 1 6000 6000 0.72
Clerk 2 4000 8000 0.96
Accountant 1 5000 5000 0.60
2.28
Add: Benefits 20% 0.46
Total 2.74

7. IMPLEMENTATION SCHEDULE:
After making available finance for purchase of machinery and the rented
premises the project can be implemented in a month’s time.

8. ASSUMPTIONS:
1. Installed capacity 2000 note books of 192 pages per day, 600000 note
books p.a.

2. The selling price is assumed at Rs.16.50 per note book, which is the selling
price to dealer. This can be sold at higher rate to consumers.
3. Material price is assumed at Rs.9.00 per book.

4. Wages and salaries are estimated at Rs.9.36 lakhs per annum.

5. Power charges is calculated at Rs.5.00 per unit for 3 KW for 8 hours for
300 days.

6. Depreciation is calculated at 15% on Plant & Machinery.

7. Repairs & Maintenance is charged at Rs.2000 per month.

8. Administrative & general expenses are estimated at Rs.20000 per month.

9. Interest on Term Loan is calculated at 12% p.a.

10.Interest on Working Capital at 12% p.a.

11.Income tax is provided at 33.99%.

NOTE BOOKS

MACHINERY SUPPLIERS:
1. M/s.Sathya Machinery Corporation., 51, Kandappa Chetty Street, Chennai -

600001.

2. M/s.Standard Machinery Marketing Co (P) Ltd., 43, Mount Road, Chennai -

600002.

RAW MATERIALS

1. M/s.Standard Paper Company, 8, Anderson Street, Chennai 600001.

2. M/s.Ballapur Industries Ltd., 2B, Wellington Estate, 24, Ethiraj Salai

Chennai 600105.

3. M/s.ITC Badrachalam Paper Boards, 6E, Century Plaza, Annasalai

Chennai 600018.

FINANCIAL ASPECTS
1. COST OF PROJECT Rs.lakhs
Building (Advance) 0.32
Plant & Machinery 12.40
Contingencies 0.60
Electrical 1.00
Other Misc. assets 0.50
Pre-Operative expenses 0.60

Margin for WC 3.22

Total 18.64
2. MEANS OF FINANCE
Capital 8.14
Term Loan 10.50
Total 18.64

3. COST OF PRODUCTION & PROFITABILITY STATEMENTS

Years 1 2 3
Installed Capacity (Nos.) 600000 600000 600000
Utilisation 60% 70% 80%
Production/Sales (Nos.) 360000 420000 480000
Selling Price per Note Book Rs.16.50
Sales Value (Rs.lakhs) 59.40 69.30 79.20
Raw Materials 32.40 37.80 43.20
Power 0.22 0.25 0.29
Wages & Salaries 9.36 9.83 10.32
Repairs & Maintenance 0.24 0.26 0.29
Depreciation 1.95 1.66 1.41
Cost of Production 44.17 49.80 55.51
Admin. & General expenses 2.40 2.52 2.65
Selling expenses 0.00 0.00 0.00
Interest on Term Loan 1.26 1.10 0.79
Interest on Working Capital 1.35 1.35 1.35
Total 49.18 54.77 60.30
Profit Before Tax 10.22 14.53 18.90
Provision for tax 3.47 4.94 6.42
Profit After Tax 6.75 9.59 12.48
Add: Depreciation 1.95 1.66 1.41
Cash Accruals 8.70 11.25 13.89

4. WORKING CAPITAL:
Months Values % Margin Bank
Consumptions Amount Finance
Raw Materials 2.00 5.40 25% 1.35 4.05
Finished goods 1.00 3.68 25% 0.92 2.76
Debtors 1.00 4.95 10% 0.50 4.45
Expenses 1.00 0.45 100% 0.45 0.00
14.48 3.22 11.26

6. PROFITABILITY RATIOS BASED ON 80% UTILISATION

Profit after Tax 12.48
= 16%
Sales 79.20
Profit before Interest and Tax 21.04
= 70%
Total Investment 29.90
Profit after Tax 12.48
= 153%
Promoters Capital 8.14
7. BREAK EVEN LEVEL
Fixed Cost (FC): Rs.lakhs
Wages & Salaries 10.32
Repairs & Maintenance 0.29
Depreciation 1.41
Admin. & General expenses 2.65
Interest on TL 0.79
 15.46
Profit Before Tax (P) 18.90
FC x 100 15.46 80
BEL = = x x 100
FC +P 34.36 100
36% of installed capacity