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.

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]

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.

INDEX
Sr.
No.

Topic

1
2
3
4
5
6
7

Introduction of small scale industry

Project at a Glance
Partners Background
Implementation Schedule
Location.
Infrastructure, facilities
Product Introduction

8
9
10
11
12
13
14
15
16
17

Production Process
Inspection and Quality Control
Market Analysis
Basis & Presumption
Financial Aspects
Ratio Analysis
Raw Material Suppliers
Machinery Suppliers
Risk Factor
Conclusion

Page
no.

Introduction of small scale Industry

The business system of a country is divided into three sectors
a. Large scale industry
b. Medium scale industry
c. 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 SSIs being a
labour intensive provides more opportunity of employment. SSIs also helps in
solving many economic problems like scarcity of money and helps to reduce
nations dependence on imports and promotes decentralization of economic
activities in the country. It increases exports and helps in bringing foreign
exchange. Overall SSIs are strong support for all economy, in many different
ways. SSIs 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.

Project At Glance
Name of the firm
Lio Leather Pvt.Ltd.

Product Name
Leather Bags, Purses $ Belts

Registered Office and work at

Lio Leather Pvt.Ltd.
Plot No. 225, GIDC,
Lodhika,
Kalawad Road,
Metoda,
Rajkot-360 005

SSI Registration No.

Applied for

Form of Organization
Partnership firm

Size of Unit
Small Scale Industry

Partners Name
Dharmesh B.Mehta
Mayank C. Amrutiya

Market Area
Gujarat & Maharashtra
8

Banker
Bank of Baroda, Rajkot.

Accounting Year
1st April to 31st March

Partners 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 Years 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 NO PARTICULARS

MONTH

1.

Preparation of Report

month

2.

Registration and other formalities

1 month

3.

Sanction of loan by financial institutions

3 month

4.

Plant and Machinery

Placement of orders

1 month

Procurement

1 month

Power Connection

1 month

Installation of Machine

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 mans status and different types of school bags are need for children. So
these three products are used only for status and thats 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.

20

Basis & Presumption

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

2. Machinery: -

555444444452
Sr.
No.
1
2
3
4
5

Type of Machinery

Qty.

Cutter
Sewing Machine
Sticking Machine
Polishing Machine
Loose Tools

Rate

2
15
2
5
-

Amt.

30000
50,000
25,000
20,000
-

Total

60,000
2,25,000
50,000
1,00,000
30,000
4,65,000

3. Furniture: Sr.
No.
1
2

Particular

Amt. Rs.

Computer
Office Furniture
Total

25,000
30,000
55,000

22

Total Fixed Capital

Sr. No.
1
2
3

Particular
Land & Building
Machinery
Furniture
Total

Amt. Rs.
6,60,000
4,65,000
55,000
11,80,000

(B) WORDING CAPITAL DETAILS OF THE PROJECT

[Per Month]
1 Raw Material :Sr. No.
1
2
3
4

Particular

Amt.
3,00,000
40,000
50,000
10,000

Leather
Solution
Cotton Cloths
Chain, Threads & Switch
Tot
al

4,00,000

23

2 Salary and Wages: Sr.

No.
1
2
3
4
5
6
7
8

Particular
Supervisor
Tailor
Semi- Skilled Worker
Unskilled Worker
Accountant
Marketing Manger
Clerk
Watchman

Salary
3,000
3,000
2,000
1,200
3,000
7,000
1,500
1,000

No. Of
employee
2
10
3
5
1
1
1
1

Amt.
6,000
30,000
6,000
6,000
3,000
7,000
1,500
1,000
24

Total

24

Particular

Amt.
8,000
4,000
700
12,700

60,500

3 Utilities: Sr. No.

1
2
3

Power
Transportation Cost
Water
Total

Other

Expenses: Sr. No.

1.
2.
3.
4.
5.
6.

Particulars
Postage and stationery
Repair and Maintenance
Insurance and Taxes
Sales Expenses
Telephone Expenses
Miscellaneous Expenditure
Total

Total Value
1,000
900
2,000
8,000
1,200
900
14,000

Total Working Capital

Sr. No.
1.
2.
3.
4.

Particulars
Raw Materials
Salary and Wages
Utilities
Other expenses
Total

Total Value
(1 month)
4,00,000
60,500
12,700
14,000
4,87,200

Total Value
(3 month)
12,00,000
1,81,500
38,100
42,000
14,61,600

25

Total Capital Requirement

Sr.
No.
1
2

Particular

Amt.

Fixed Capital
Working Capital
Total

11,80,000
14,61,600
26,41,600

Sources of Finance
Sr. No.
1
2

Particular
Partners Capital
Borrowed Capital

Capital %
50%
50%
Total

Amt.
13,20,800
13,20,800
26,41,600

Interest on Capital
Sr. No.
1
2

Particular
Partners Capital
Borrowed Capital

Interest Rate
9%
12 %
Total

Amt.
1,18,872
1,58,496
2,77,368

Depreciation on Assets
Particular
1
2
3

Building
Machinery
10%
20%
66,000
93,000
66,000
93,000
66,000
93,000

Furniture
15%
8,250
8,250
8,250

Total
1,67,250
1,67,250
1,67,250

26

Total Fixed Cost

Sr. No.
1
2
3
4

Particular
Salary
Interest
Depreciation
Other Exp.
Total

1st Year
1,50,000
1,58,496
1,67,250
20,000
4,95,746

2nd Year
1,50,000
1,58,496
1,67,250
20,000
4,95,746

3rd Year
1,50,000
1,58,496
1,67,250
20,000
4,95,746

Total Variable Cost

Sr. No.
1
2
3
4

Particular
Raw Material
Wages
Other Exp.
Utility
Total

1st Year
60%
48,00,000
5,76,000
1,68,000
1,52,400
56,96,400

2nd Year
80%
64,00,000
7,68,000
2,24,000
2,03,200
75,95,200

3rd Year
100%
80,00,000
9,60,000
2,80,000
2,54,000
94,94,000

27

Cost of Production

Particulars

1st year

2nd year

3rd year

(60% Prod.

(80% Prod.

(100% Prod.

Capacity)

Capacity)

Capacity)

Variable Cost
Raw material
Wages
Other expenses
Utility
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 Cost
Salary to Staff
Depreciation
Interest paid
Other expenses
Total Fixed Cost
Total Cost

1,50,000
1,67,250
1,58,496
20,000
4,95,746
61,92,146

1,50,000
1,67,250
1,58,496
20,000
4,95,746
80,90,946

1,50,000
1,67,250
1,58,496
20,000
4,95,746
99,89,746

Sales Estimation
(For 1st year at 60% Production Capacity)

Sr. No.
1
2
3

Particular
Leather Purses
Leather Bags
Leather Belts
Total

Quantity

Rate

Total

23,000
25,000
22,000

125
105
80

28,75,000
26,25,000
17,60,000
72,60,000

28

Projected Net Profit

Particular
Total Annual Sales
Less: Total Cost of Production
Gross Annual Profit
Less: Tax Liability @ 35%
Net Annual Profit

Amt.
72,60,000
61,92,146
10,67,854
3,73,749
6,94,105

29

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 =

Break Even Point =

=

Profit after tax x

Total Capital Investment

6,94,105 x 100
26,41,600

26.28%

100

Fixed Cost x 100

Fixed Cost + Profit
4,95,746 x 100
11,89,851

=41.66%

30

Name of Raw Material Suppliers

Sensitive Leather

Delhi
Bharat Soluation
Nh 8B
Rajkot 360 002
Steel Well Tailor Material
Jay Khodiyar Road,
Aakola

31

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.

32

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.

33

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.

34

35