A PROJECT REPORT ON RATIO ANALYSIS OF

VEEBASONS CORRUGATING PVT.LTD

PREPARED BY SARADAVA BHAVIK K. CLASS T.Y.B.B.A SEAT NO ACADEMIC YEAR 2010-2011 GUIDED BY Lect. ALPA JOSHI SUBMITTED TO SAURASHTRA UNIVERSITY RAJKOT COLLEGE GYANYAGNA COLLEGE OF SCIENCE & MANAGEMENT

DECLARATION
I, the undersigned Saradava Bhavik K. a student of T.Y.B.B.A. hereby declare that the project work presented in this report is my own contribution and has been carried out under the supervision of Prof. Alpa Joshi of Gyanyagna College Of Science & Management, Rajkot. This work has not been previously submitted to any other University for any other examination.

Date: Place: - Rajkot. Signature (Saradava Bhavik K.)

PREFACE
It is a part of T.Y.B.B.A. to accomplish internship with reputed company. Management states that each and every activity is started for the accomplishment of some predetermined goals. In this competitive environment, only theoretical knowledge is not sufficient and hence a practical exposure to real life situation of business is perquisite to be a successful manager. The objective of a project work in management pedagogy is to give an opportunity to apply the theoretical concepts into real industrial environment thereby to supplement the theoretical study of the management in general. Finance is very vital part for any company. Any mismanagement related to finance results into non fulfillment of main goals of the company. And so it is very important to study all aspects related to finance management of the company. This project report includes study and analysis of major areas of finance namely, capital structure decisions, capital budgeting decisions and working capital management.

ACKNOWLEDGEMENT
With immense pleasure and gratitude, I would hereby like to thank all the people who helped and guided me for this project. I would like to thank Prof. alpa joshi who have guided me for this project. I am thankful to Veebasons Corrugating Pvt. Ltd, who have helped me and provided information for reference. I would like to thank all my friends and family members for their constant support.

Date: Place: - Rajkot. Signature (saradava bhavik)

INDEX
NO.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19

PARTICULERS
General information Introduction History of the unit Company profile Promoter list Form of organization Organization structure Justification of location The size of unit Time keeping system Product detail Benefits & incentives Total employees & their classification Raw material & requirement List of plant and machinery Manufacturing process Power connection Production capacity & sales turnover FINANCIAL DEPARTMENT Introduction Owned & borrowed capital Sources of finance Organization structure Financial planning Capital structure capitalization capital budgeting management of fixed assets management of working capital management of receivables
5

PG NO.

20

financial leverage FINANCIAL ANALYSIS financial details power cost staff & labour details other manufacturing expenses administrative expenses

projection of performance profitability source of finance depreciation chart details of cost of project break even ratio cash flow analysis 21 22 23 24 25 26 27 ratio analysis competitors Contribution of the unit to the society Achievement and awards Future plan Conclusion Suggestion bibliography

INTRODUCTION
In India, a small-scale industry is presently defined as A unit engaged in manufacturing, servicing, reporting, processing and preservation of goods having investment in Plant & Machinery at an original cost not exceeding Rs. 30 Lacks. Since the economy of our country is based on rural development and more facilities and encouragement are allowed by the government to established industry in rural areas and certain declared backward areas (Industrial Estates). The India government is paying more emphasis from the last 10-15 years in the development of small-scale industries in such areas. Another important aspect is that small-scale industry is a labour intensive industry. Manpower is key resource in handling other activities and resources of the organization. Scientific Management ensures higher productivity of laborers, which indirectly affect the productivity of other resources. Industry means the economic activity which creates from utility. In other words, it creates economics value through the transformation of raw material in to finished goods. It is not possible to image a man without industry and an industry without man. Man con not direct use any natural resources or raw material. He has to undertake some or more process on natural resources

and then he can use the product. Thus, by industry raw material can be made finish product which is useful for mankind. Veebasons Corrugating Pvt. Ltd. is one of the firm which is producing corrugated boxes, having very well brand reputation for its quality and innovated products.

HISTORY OF THE UNIT

VEEBASONS CORRUGATING PVT.LTD. is situated at G.I.D.C., Lodhika, Metoda, and Rajkot. It has pioneered it as one of most reputed quality, manufacturing & exporters of corrugated box, corrugated liner, of various capacities with its well-known product. VEEBASONS CORRUGATING PVT.LTD. was established in 2004. The Company converted itself into a professionally managed private limited company with well-equipped plant of entire modern technologies, manufacturing facilities, skilled and qualified technical work persons, and total land area of 10000 square meter, office area of 3000 square feet and factory area of 15500 square feet which result in to a box capacity of 650 tons per annum for the domestic market.

10

COMPANY PROFILE

Name of the Firm

: VEEBASONS CORRUGATING PVT. LTD.

Address of the firm: VEEBASONS CORRUGATING PVT. LTD. G.I.D.C. Lodhika Plot No. 2412, Kranti Gate, Road No. H/11, Kalavad Road, Metoda, Rajkot 360003. Phone No. : 02827-287274 FAX No. : 02827-287275 E-mail Year of Establishment : 1990 Form of Organization : Private Limited Company Scale of Unit Sister Companies : Mediuml Scale Industries : Vimal Industries Mfr. of Supporting Tools Vimal Engineers Manufacturer of Auto Parts Mihir Industries Manufacturer of Auto Parts Mihir Engineers Manufacturer of Auto Parts Product : Corrugated Boxes Corrugated Liners Corrugated Sheets Corrugated Rolls
11

: tooltech@icenet.net.

State to which products are exported: Gujarat, Mahrashtra & Madhya Banks : The Co-Operative Bank of Rajkot Ltd. Oriental Bank of Commerce No. of Workers Accounting Year Accounting System : 55 : 1st April to 31st Marc : Double Entry

12

PROMOTER LIST

VEEBASONS CORRUGTING PVT. LTD. was established in 2004 though self design skills, dedication and dare to do something. It was started with an initial investment of Rs. 1000000/VEEBASONS CORRUGATING PVT. LTD. Produces the Corrugated box, Corrugated Sheet, Corrugated Liner and Corrugated Roll in different qualities. The Production Capacity of the Company is 650 tons per annum. The Company exports their products in Gujarat & Maharashtra. The objective of the company is to increase the turnover.

13

FORM OF ORGANISATION
Industries owned, managed & controlled by individual or group of person without state participation is known as private sector units. These firms are owned by private entrepreneur Industries under the private sector are setup with an aim of earning profit. The entire Investment is made by the owner profits or losses are also enjoyed by the owners. Private Sector units have to follows rules of the Government. Generally this units are managed by professional person who makes continues efforts to increase the all efficiently of the firm. VEEBASONS CORRUGATING PVT. LTD. is registered as a private ltd. firm. It is a small scale Industry in the private sector. VEEBASONS CORRUGATING PVT. LTD. has under the category of PRIVATE LIMITED COMPANY.

14

ORGANIZATION STRUCTURE

DIRECTOR

Industrial Relation Manager

General Manager

Administrative Manager

Assistant Manager

Typist / Clerk

Office Assistant

Workers

Workers

Workers

15

JUSTIFICATION OF LOCATION
The Project is being set-up at Shaper Ta: Kotda Sangani, Dis. Rajkot. Shaper is small village situated on national highway No. 8 B. It is only 15 Kms. Away from Rajkot and 15 Kms. From Gondal, which is Taluka head quarter. There are so many large, medium and small-scale industries established in Shaper. Shaper is nearer to Rajkot, which is the most easily accessible city in Saurashtra and centrally located in the Saurashtra region and it is only 15 Kms. Away from Verval, which is also direct head quarter. The Road Communication is very easily and conveniently available. There are regular an constant frequency of bus service is every half and hour. Thus, the road, communication has no problem at all as Shaper is situated on national highway, due to all these convenient and frequent facilities the question does not arise for the transportation and there by not coming and problem. Raw Material or finished goods can be transported from these center to anywhere in India very easily contently and reasonable rates of the transportation.

16

The ideal Location is that which permits the lowest cost in production and distribution of a product or a service. Therefore, Veebasons Corrugating Pvt. Ltd. had chosen a good location and that is Metoda GIDC where they may got raw material and infrastructural facilities like electricity, water , easily transportation etc.

1. Availability of Raw Material

Raw material is the basis produces any product so raw materials are most noticeable factor for location. VEEBASONS CORRUGATING PVT. LTD. gets its raw material from nearly areas of Jamnagar District. So VEEBASONS CORRUGATING PVT. LTD. gets its raw material easily, fast and with large quantity.

2. Availability of Labour
The labour factor is so much important for location. VEEBASONS CORRUGATING PVT. LTD. gets sufficient, educated, skilled, and unskilled labours because of VEEBASONS CORRUGATING PVT. LTD. located at near of Jamnagar city so VEEBASONS CORRUGATING PVT. LTD. has never face any difficulty for the labours.

3. Transportation Facility

17

To carry goods from one region to another transport facility must be needed. VEEBASONS CORRUGATING PVT. LTD.s location is suitable because roadways of the Gujarat and by water ways of about from Jamnagar port. So VEEBASONS CORRUGATING PVT. LTD. has not face any problem of VEEBASONS CORRUGATING PVT. LTD.

4. Availability of Electricity
Any business unit not runs without electricity.

VEEBASONS CORRUGATING PVT. LTD. purchases electricity from GEB and company has also his DG set (Diesel Generator) so electricity is not problem of VEEBASONS CORRUGATING PVT. LTD.

5. Government Support
The government policy of Gujarat is good and favorable. Government provides schemes for development and promoting the industries. Situated in Gujarat state Government also provides short term, long term financial loans.

18

SIZE OF THE UNIT

In the consideration of the size of the unit there are three tools 1. 2. 3. Large scale industry Medium scale industry Small scale industry At the birth the firm is medium scale industry. The industry which is having share capital between 1 crore to Rs. 5 crore is the medium scale industry. The 55 persons work in this factor

19

TIME KEEPING SYSTEM

Working Condition like working hours are very good of the Veebasons Corrugating Pvt. Ltd... There is no Pressure on the employees or workers. They have arranged their time as under For Workers : 08:00 am 12:30 pm 01:30 pm For Office Staff : 08:30 am 12:30 pm 01:30 pm Off Day : Tuesday to to to to to to 12:30 pm 01:30 pm (Lunch) 05:00 pm 12:30 pm 01:30 pm (Lunch) 08:00 pm

20

PRODUCT DETAILS
Product: Corrugated Box.

Product Usage: The Corrugated Boxes mainly we in packing of the finish good. Its also a one type of carton or box which use in every product like packing of Television, Wafers Packing, etc. Most of the consumer goods are packing in the Corrugated Box.

Brand Name: Packers.

21

BENEFITS AND INCENTIVES

Due to announcement of the state government Shaper declared backward area, which is situated in Kotda Sangani Taluka of Rajkot Dis., the unit, would be insisted to avail special benefits and incentives such areas under: 1. 2. 3. 4. No sales tax on sales. Exemption from lavvy of sales tax on purchase of raw materials. Scene Raw Materials are made available from the government on priority basis. Priority treatment in all respect for power allotment of building, materials such as cement, iron etc.

22

TOTAL EMPLOYEES & THEIR CLASSIFICATION

The Number of employees shows that how much the company is huge or large. The Veebasons Corrugating Pvt. Ltd. has many workers. Veebasons Corrugating Pvt. Ltd. has 55 Number of Workers working in it. There are 15 Workers Skilled & 40 Workers are unskilled in the staff. All the activities related to personnel department such as recruitment, section, promotion, transfer. Manager Prepare a Reports working at its department.

23

RAW MATERIAL REQUIREMENTS

In every industry smooth supply of raw material is important factor. The main raw material required for Corrugated Project is: (1) (2) (3) Kraft Paper. Stitching Wire. Gum.

Above all raw materials are easily available in open market. Total requirement of raw material will be as under: No. Items Raw [For 1. Kraft 3% 2. 3. 1 material Raw Material Rate At Total Cost

Requirement Production] Paper 1030 Kg. process 4.50 Kg. 25.00 Kg.

Requirement

M.T. 100% Production 593 10500 62.27

(including wastage). Stitching wire. Gum.

2.59 14.40 TOTAL

27000 12000

0.70 1.73 64.70

Year Wise Raw-Material will be as under: Year 1. 2. Capability Utilization 50 % 60 % Cost (In Lac) 32.35 38.82

24

LIST OF PLANT & MACHINERY

No. 1 Name of Machine Qty. Rate Oblique hype single face paper 1 3,15,125 Corrugated Heavy machine duty with size 62 stand Total/ Amt. 3,15,125

accessioned with motor starter and 2 3 one flute Rolls. Road cutters size 62 62 with motor & starter. Sheet pasting machine 2 24,125 41,560 48,250 41,560

with 1

Adjustment motorized with starter 4 for gum size 72. Sheet pasting machine with 1 46,520 46,520

adjustment motorized with starter 5 size 72? (For heavy). Bar Rotary cutting and causing 1 machine size 75 with 4 sets of cutting and creasing dies & creating dies with motorized with 6 starter. Eccentric stutter with 3 slotting 1 dies 1 corner die motorized size 7 8 9 75. Flat wire astiching machine size 1 48 with motor. Do but dolole head. 1 Die punching machine heavy duty 1 with magnetic clutch and timer 10 with electrical size 32 42. Cylinder machine hand fad with 1 Electrical and stand. Accessories
25

1,20,080

1,20,080

1,24,130

1,24,130

31,080 45,525 2,95,000

31,080 45,525 2,95,000

1,45,000

1,45,000

11

size 24 36. Partition slotter with 4 partition 1 slote, motorized size 42. TOTAL Add: 10% for transportation Electrification and Installation. TOTAL

46,075

46,075 12,58,345 1,25,835 13,84,180

26

MANUFACTURING PROCESS
Two rolls of Craft papers are put on Corrugating Machine. Craft paper from first roll pass through flute rolls which converts it in to liners. This is than fixed with the paper coming from other roll with the help of adhesive. After fixing it pass through heaters. The Corrugated Paper is then cut in to desired sizes. There after operations like creasing, cutting slotting and stitching are performed to convert in to the shape of boxes. And these after as per requirement boxes are printed. Finally the Corrugated Boxes are ready for dispatch in market for sale.

27

POWER CONNECTION
The unit will required approximately 40 H.P. Power connection the promoters have approached, Gujarat Electricity Board Authorities and they have been assured that power will be made available as and when required. The promoters have made a formal request to the Gujarat Electricity Board Authority. The promoter will not face any power problem. The supply is quite satisfactory. By the time the building will be constructed and the machineries are erected and installed the power will be made available. So, there is not going to be any delayed, or bottle necked due to shortage or non-availability of power. This industry is not high power intensive and does not need any special or extra ordinary facilities, so for as the power is concerned erection and installation of the machine and cable laying and power connection will pass no problem.

28

PRODUCTION CAPACITY & SALES TURNOVER

Taking in consideration the working efficiency of each machine is one shift daily production will be of 2 M.T. Annual production capacity will be as under: No. of days working in a year production per day 288 2. M.T. = 576 M.T. It is estimated that in first year 50% of plant capacity will be utilized. So, first year production will be 288 M.T. The sales price of Corrugated Boxes will be Rs. 15,000 per M.T. years wise sales will be as under: Year 1 2 Utilization of Capacity 50 % 60 % Production in M.T. 288.00 345.00 Sales (in Lac) 43.20 51.84

29

INTRODUCTION
30

Financial management can be defined as: The management of the finance of a business/ organization is in order to achieve financial objectives. Taking a commercial business as the most common organizational structure, the key objectives of financial management would be to: Create wealth for the business Generate cash Provide an adequate return on investment bearing in mind the risks that the business is taking and the resources invested. There are three key elements to the process of financial management: Financial Planning Management needs to ensure that funding is available at the right time to meet the needs of business. In the short term, funding may be needed to invest in equipment and stocks, pay employees and fund sales made on credit. In the medium and long term, funding may be required for significant additions to the productive capacity of the business or to make acquisitions.

Financial Control

31

Financial control is a critically important activity to help the business ensure that the business is meeting its objectives. Financial decision making A key financing decision is whether profits earned by the business should be retained rather than distributed to shareholders via dividends. If dividends are too high, the business may be starved of funding to reinvest in growing revenues and profits further.

32

OWNED & BORROWED CAPITAL

Capital is an important feature of finance department. It refers to total amount of capital employed in organization. The capital structure displays the total investment of the company. The organization is said to be under the capitalization when earning is more than investment. Veebasons corrugating Pvt. Ltd. is Pvt. Ltd. Company therefore there is share capital of Rs. 1 Lac.

SOURCE OF FINANCE
The Firm gets finance from the different factors. These factors are as follows: Banks Unsecured loans Reserves & surplus Bonds & debentures Borrowings from banks Share capital The Main Sources of Finance of Veebasons Corrugating Pvt. Ltd. is Banks, Unsecured Loans & They are using CC from the bank. The whole finance provided by the bank against their Assets like Land, Labors & Machineries. They are doing all the transaction by the bank.

33

ORGANIZATION STRUCTURE
Veebasons Corrugating Pvt. Ltd. has adopted a clear and detail division for function. Vice president is responsible for overall result of finance activities of department in the company. The company is having LINE type of organization in the finance department.

SS Senior Vice President

Manager

Dy. Manager

Chief Accounts Officer Share Accounts Officer

Dy. Manager

Accounts Officer Officer

Accounts Officer Assistance Accounts Officer Assistants

Assistants

Assistants

34

FINANCE PLANNING

Financial planning is one of the most important aspects of the finance managers job. Financial management has to make plan for capital investment and also for working capital for the ensuring year. In VEEBASONS CORRUGATING PVT. LTD. the task of financial planning is divided into 3 parts:

TOP LEVEL

This level prepares planes pertaining to the long-term requirement of the form of capital expenditure, permanent and short term needs, inflows and outflows.

MIDDLE LEVEL

This is constituted by the eventually routine finance plan. This level is generally concerned with listing and calculation of outflow.

LOWER MIDDLE LEVEL

In this level generally concerned with the listing and calculation of outflows. In VEEBASONS CORRUGATING PVT. LTD. financing decisions are very crucial and Head Office at Mumbai plan for new project of the company.

35

CAPITAL STRACTURE
Capital structure may be defined as the combination of debt and equity that leads to the maximum value of the firm. Capital structure refers to the mix of long- term sources of funds such as debenture long- term debt, preference share capital and equity share capital including reserves and surplus. The company should plan an optimum capital structure. Share capital of the company will increase, as same secured loans will also increase by the company.

CAPITALIZATION
Capitalization means the total amount of companies capital or value of its capital stock. The total amount of companys capital should be enough to meet its present and future needs. For the company the Book value and Real value of share are two main components for assessment of companys financial position.

36

CAPITAL BUDGETING

Capital Budgeting decision is a firms decision to invest its current funds most effectively in long term activities in anticipation of an expected flow of ever of future benefits over a series of years. With a reference to VEEBASONS CORRUGATING PVT. LTD., company has been making a capital budgeting at every year by taking services of experts and financial department. \ This company always aims to increase and expand the installed capacity of Rayon yarn production. It constantly tries for it and success. At present the installed capacity of the plant is 50 tones/day. There are various methods of capital budgeting like: Internal Rate of Return Profitability Pay Back Period method Accounting Rate of Return method

At present the main objectives of capital budgeting in VEEBASONS CORRUGATING PVT. LTD. are mainly replacement and modernization of machine and fixed assets and business expansion by adding new machinery technology and fixed assets this type of decision is taken by main head office Mumbai and experts of finance department.

37

Generally, company uses the techniques of Average Rate of Return for the purpose of capital budgeting. In this method company fixes average rate of return required in advance. The average rate of return is calculated as: Average Annual Income A.R.R. = Average Investment Many times company also use the other techniques of capital budgeting. After calculating which may select or not. VEEBASONS CORRUGATING PVT. LTD. has huge investment so it would be a capitalized company.

38

MANAGEMENT OF FIXED ASSETS

Fixed assets are those, which are fixed and listed by a business management of fixed assets is very important task which mgt has to face because fixed assets have relatively higher cost. To manage the fixed assets is most important task facing management today because of risk and investment factors. The fixed assets are that kind of assets in which of risk are for long period of time. Fixed assets create problems of replacement. VEEBASONS

CORRUGATING PVT. LTD maintains the plant register in which each detail of every fixed assets are entered moreover it has also appointed C. A. and Instrument experts. At least once in a year they check all the assets of the company and certify then as per their condition the depreciation of fixed assets company are calculated by Diminishing Balance method.

39

MANAGEMENT OF WORKING CAPITAL

Working capital is that capital which is required maintaining the daily expenses of the business management of working capital refers to the fine investment in current assets. Current assets are assets, which are converted into cash with operating cycle. Current assets include cash, short term, securities, debtors bills receivable and stock. Management of working capital is an integral part of finance management and it has earning on the objective of the objective of the owners wealth. Working capital is essential to operate the fixed assets in the sales activities. There are 2 concepts Gross working capital, Net working capital. GROSS WORKING CAPITAL: Means total current assets while. NET WORKING CAPITAL: Means between the current assets & current liabilities difference. Cash Work in progress Semi Finished Goods

40

Debtor

Sales

Finished goods

MANAGEMENT OF RECEIVABLES

The management of receivables is basically concerned with retaining the old customer and mining t5he new once by collecting a regulating the cost. Management of receivable is also known as trade receivable or customer or debtor receivable. It means when firm make ordinary sales on credit and payment has not been received yet, such management of receivable.

Veebasons Corrugating Pvt. Ltd. grants the credit term to its customer for 15 days. However in exceptional cases, it is increased to certain extent. The purchasing sends bank drafts on expiry of credit period. The receivable arises out of three characteristics:

It involves an element of risk, which should be carefully analyzed. It is based on economic value. It implies future management of receivable.

Management of receivable concerned with retaining the old customers and winning new by controlling and regulating the costs Veebasons Corrugating Pvt. Ltd. grants the credit from its customers for 15 days however in exceptional cases.

41

Debtors Turnover Ratio

Debtors Average daily credit sales

FINANCIAL LEVERAGE

Financial leverage is also called on trading on equity. A company can finance its investment by verity of sources such as preference shares capital including reserves and surplus. Financial leverage is defined as the activity of firm used financial leverages to magnify the effects of firms earning per shares. The financial leverage is controllable and also completely avoidable leverage. The degree of fund collected by the firm from outside is called financial m leverage.

42

FINANCIAL DETAILS
SR. NO.
1 2 3 4 5 6 7 8 9

PARTICULARS
Land. Land Development. Building. Plant and Machinery. Misc. Fixed Assets. Preliminary & Pre Operative Exp. Provisions of Contingency. Margin for Working Capital. Total Cost of Production

COST (Rs. In Lac)

8.10 0.75 8.77 13.84 0.10 0.70 1.13 8.86 34.65

POWER COST
The unit will require 40 H. P. Connection at 100% capacity cost will be as under: H.P. 40 HOUR 8 DAYS 288 UNIT 0.75 RATE 1.50

= 1,03,680
At 50% utilization it wills Rs. 51,840: Year
1 2

Capacity Utilization
50 60

Expenses (Rs. In Lac)

0.52 0.62

STAFF & LABOUR DETAILS

The requirement of labour & Staff & Cost of wages will be as under:
43

No. Designation 1 2 3 4 Production Manager. Machine Operator. Skilled Workers. Unskilled Workers. TOTAL Add: 20% Benefits TOTAL

No person 1 1 4 40

of Salary P.M. Total Rs. 2000 1500 700 500 Rs. 24,000 18,000 33,600 20,000 95,600 19,120 1,14,720

P.A.

OTHER MANUFACTURING EXPENSES

It is estimated that other manufacturing expenses will be Rs. 24,000 in first year and thereafter it will be increased by Rs. 6,000 per year. Year wise cost will be as under: Year
1 2

Cost (Rs. In Lac)

0.24 0.36

ADMINISTRATIVE EXPENSES
It is estimated that in first year administrative expenses will be as under: (A) Administrative Salary: 1 1 1 2 3000 1000 1000 500
44

Manager. Clerk / Cum / Typist. Accountant. Peon.

36,000 12,000 12,000 12,000

Total Total A. (B) Administrative Expenses: 15,000 6,000 7,000 5,000 3,000 15,000

72,000 14,400 86,400

Traveling and Conveyance Post, Telephone, Telegram Stationary and Printing Legal and Professional Exp. Bank Charges. Misc. Office Exp. Total A + B

51,000 1,37,400

It is estimated that it will be increase by 5% every year: Year wise cost will be as under: Year 1 2 Cost (Rs. In Lac) 1.37 1.44

PROJECTION OF PERFORMANCE PROFITABILITY

Particularly A. SALES: 1. Sales and Misc. Receipts 2. Less: Exise 3. Net sales. 43.20 51.84 43.20 51.84 1st Year 2ndYear

45

B. Cost of Production 1. Raw-Material Consumed. 2. Power and Fuel. 3. Direct Wages. 4. Consumable Stores. 5. Repair and Maintenance. 6. Other MFG. 7. Depreciation. 8. Preliminary Exp. Total cost of Production C. Cost of Sale D. Gross Profit. E. Interest: 1. On Term Loans. F. Selling Genereal 2 Admn. Exp. G. Profit before Taxation (D-E+F)) H. Provision for Taxation. I. Net Profit (G-H) pre-operative Expenses. K. Net Cash Accruals (I+J) 4.16
(rs. In lac)

32.35 00.52 1.05 00.24 00.24 00.24 05.03 00.07 39.74 39.74 03.46 3.03 1.37 -0.94 0.94

38.82 00.63 1.16 00.24 00.24 00.30 03.91 00.07 45.36 45.36 06.48 2.40 1.44 1.70 (2.64-0.94) 0.68 1.02 3.91 4.93

J. Depreciation added back & Preliminary and 5.10

SOURCES OF FINANCE
Sources of Finance Promoters contribution. Deposit. Term Loan. (Rs. In Lac) 16.65 3.00 15.00

46

Total

34.65

Promoters contribution 48.05%

Year Quarter Opening Equated Balance Monthly O/S

2005- 1st Qtr. 06 2nd Qtr. 3rd Qtr. 4th Qtr. 2006- 1st Qtr. 07 2nd Qtr. 3rd Qtr. 4th Qtr. 2007- 1st Qtr. 08 11,85,935 1,05,883 11,17,112 1,05,883 10,46,139 1,05,883 9,72,948 1,05,883 14,40,992 1,05,883 13,80,140 1,05,883 13,17,386 1,05,883 12,52,672 1,05,883

Principal Interest Yearly

Closing O/S

Interest Balance

Installment
59,008 46,875

15,00,000 1,05,883

14,40,992

60,852 62,754 64,715 66737

45,031 43,129 41,168 39,168 1,76,204

13,80,140 13,17,140 13,17,386 12,52,672

68,823 70,973 73,191 75,478

37,060 34,910 32,692 30,405 1,43,808

11,85,935 11,17,112 10,46,139 9,72,948

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2nd Qtr. 3rd Qtr. 4th Qtr. 2008- 1st Qtr. 09 2nd Qtr. 3rd Qtr. 4th Qtr. 2009- 1st Qtr. 10 2nd Qtr. 3rd Qtr.

8,97,469 8,19,469 7,39,363 6,56,585

1,05,883 1,05,883 1,05,883 1,05,883

77,837 80,269 82,778 85,365

28,046 25,614 23,105 20,518 1,07,169

8,97,469 8,19,632 7,39,363 65,585

5,71,220 4,83,188 3,92,404 2,98,784

1,05,883 1,05,883 1,05,883 1,05,883

88,032 90,783 93,620 96,546

17,851 1,61,100 12,263 9,337 65,731

5,71,220 4,83,188 3,92,404 2,98,784

2,02,238 1,02,675 Total

1,05,883 1,05,883

99,563 1,02,675 15,00,000

6,320 3,208 5,11,777 18,865

2,02,238 1,02,675

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DEPRECIATION CHART

Year Particular

Building P2M

Other Assets

Total

Opening Balance Depreciation

9.21 1.38

14.53 03.63

0.10 0.12

23.84 05.03

WDV Depreciation

7.83 1.17

10.9 2.73

0.98 0.11

19.71 03.91

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DETAILS OF COST OF PROJECT

No. Assets Total Rs.
1 Land: Consideration Stamp Registration Fees Legal Fee 94,620 12,120 1,590 1,500 1,09,820

Cost

Land Development: Estimated 15,000

Building: As per Estimate & Engineers 8,77,000

Plant & Machinery: As per Annexure 13,84,180

Misc. Fixed Assets: Furniture estimated 10,000

50

Preliminary Pre Operative Exp: A. Stamp. B. Legal Exp. C. Traveling & Conveyance. E. Stationary & Printing. F. Telephone Exp. G. Misc. Expenses. 1,000 20,000 5,000 2,000 2,000 10,000 70,000

D. Interest dining the construction 30,000

Provision for contingencies: 5%on Building 3P2M 1,13,000 8,86,000 34,65,000

Margin of Working Capital Total

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BREAK EVEN RATIO

Particulars 1st Year

Contribution (S-V)

8.8

Fixed Cost

6.71

BEP = =

FC Capacity of Utilization Contribution 6.71 60 8.8

45.75

Return on Investment: ROI = = EBIT 100 Cost of Project 3.46 100 34.65

9.99%

52

 Gross profit volume: GPV = = GP 100 Net Sales 3.46 100 43.2

8.009%

Net profit Volume: NPV = 1.02 100 43.2 =

2.36%

53

CASH FLOW ANALYSIS

(Rs Lakhs) Net profit before tax and exceptional items Add: Adjustments for Depreciation Marketing and technical know-how written-off Interest expenses (net) Voluntary retirement scheme (Profit) / loss on fixed assets sold (Profit) / loss on sale of investments Dividend income (Gain)/ loss on sale of Contract Exports Division Operating profit before

2009-10 2008-09 2007-08 2006-07 2005-06

A Cash flow from operating activities 312.51 271.75 164.70 161.48 146.73

120.43 171.16 (1.43) (2.66) (6.76) (23.73) (0.20) 256.81

111.91 55.80 (4.04) 0.34 (2.54)

77.84 2.95 18.73 (9.54) (0.36) (0.60)

77.67 3.93 14.82 0.16 (1.19) (8.74) 86.65

67.81 3.93 21.72 0.65 (1.41) (5.21) 87.49 234.22

(16.54) (6.41) 144.93 420.72 82.61

working capital changes Add: Adjustments for Decrease / (increase) in trade and other receivables Decrease / (increase) in

569.32

247.31 248.13

124.9

46.84

(87.18) 21.53

31.66

28.00 inventories Increase / (decrease) in (32.71)

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(118.66) (78.33) (31.49) (21.56) (275.57) 17.77 24.65 37.68

trade and other payables 120.19 Cash generated from operations Income taxes refund (paid) (net) Net cash from operating activities Cash flow from investing activities Proceeds from sale of fixed assets Proceeds from transfer of insulator business @ Capital subsidy received Proceeds from transfer of global exports and 5.40 marketing division Proceeds from sale of assets held for disposal Sale / redemption (net) Sale of ventures Proceeds / (48.01) (88.00) 689.51 (60.66) 628.85 (347.39) (147.74) 14.69 73.33 99.57 262.82 47.78 282.00

(81.00) (48.23) (48.12) 23.21 (7.67) 51.34 214.70 305.21

8.82 -

2.19 -

2.81

2.99 -

1.80 131.40 -

0.00

1.16

13.52

(purchase) of investments (116.08) 257.44 84.87 investments and from sale in joint 10.96 of -

subsidiaries

Contract Exports Division Interest received Dividend received Increase / decrease

34.50 24.29 23.73

13.15 16.54 -

4.34 6.41 -

9.17 8.74 -

22.00 5.21 (56.28)

in 55

corporate deposit Purchase of fixed assets Investment in equity of Joint Ventures Investment in equity of subsidiaries @@ Acquisitions Net cash (used in) / from investing activities Cash flow from financing activities Proceeds from issue of share capital (including 9.81 0.01 0.00 0.01 share premium) Security premium received 759.93 Proceeds from / (repayment of) borrowings (net) Dividends paid (including tax thereon) Interest and finance charges paid Net cash (used in) / from financing activities Net increase in cash and equivalents Cash and cash equivalents (opening balance) 1272.87 0.06 764.86 0.04 88.00 0.06 138.31 (163.80) (302.72) (199.97) (153.66) (105.13) (33.34) (1597.89) (661.09) 0.00 (8.00) (12.49)

(463.83) (91.40) (44.42) (150.18) (29.70) (42.54) -

(2378.22) (663.14) (94.25) (331.80) (45.88)

(106.13) (27.31) (27.08) (25.33) (19.76) (184.69) (62.06) (21.92) (23.97) (48.67) 1751.79 675.56 39.05 2.42 20.32 4.75 9.41 (3.86) 13.27 89.07 (232.23)

(28.03) 27.10 41.30 14.20

56

Cash of IGFL and BGFL Cash and cash equivalents (closing balance)

22.74

6.16 20.32 9.41 13.27 41.30

RATIO ANALYSIS
1. CURRENT RATIO:
= Current Assets/ current Liabilities PARTICULARS CURRENT ASSETS CURRENT LIABILITIES CURRENT RATIO CURRENT 2009-10 1585687 495694 3.20 YEAR PREVIOUS 2008-09 769106 454349 1.69 YEAR

INTERPRETATION

57

 Current ratio indicates how much the company is able to meet its shortly Maturing obligations. The ideal ratio is 2. During current year, ratio is very high This is not good situation. Keeping idle current assets invite higher costs to the company. Company should improve upon inventory management, cash management, credit management etc and try to reduce this ratio to 2.

2. ACID TEST RATIO:

= Current Assets- Inventories- prepaid Expenses / Current Liabilities

PARTICULARS
QUICK ASSETS CURRENT LIABILITIES ACID TEST RATIO

CURRENT YEAR PREVIOUS 2009-10

1155349 495696 2.33

YEAR 2008-09
379546 454349 0.84

INTERPRETATION Ideal quick ratio is 1.

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 Company needs to reduce this ratio by utilizing short term funds in better way. Excess short term funds invite higher costs to company.

3. CASH POSITION RATIO:

= (Cash on Hand & at Bank/Current Liabilities)*100

PARTICULARS

CURRENT YEAR 2009-10

PREVIOUS YEAR 2008-09

166485 454349 36.64 %

CASH ON HAND & 898333 BANK CURRENT LIABILITIES RATIO INTERPRETATION: 495696 181.23 %

Cash position ratio is very high, that indicates under utilization of short term funds. Company does not require too much funds on hand.

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 Company should utilize idle funds for productive purpose in the company or invest them outside.

4. INVENTORY TO GROSS WORKING CAPITAL RATIO:

= Inventory/ Gross working Capital

PARTICULARS

CURRENT YEAR 2009-10

PREVIOUS YEAR 2008-09

389560 769106 50.65 %

INVENTORY 430338 GROSS WORKING 1585687 CAPITAL RATIO INTERPRETATION: 27.14 %

Desired situation is that average inventory in store should be minimum. Ratio has improved compare to last year but actually inventory level has increased. Company requires improving inventory management to reduce average inventory in stores and reduce the cost of inventory.

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5. TOTAL ASSETS TURNOVER RATIO:

= Sales/ Total Assets

PARTICULARS
SALES TOTAL ASSETS RATIO

CURRENT YEAR 2009-10

3419171 3297981 1.04

PREVIOUS YEAR 2008-09

2885119 2427981 1.19

INTERPRETATION: Higher is the ratio, better is the utilization of total asset to generate more sales. Current year ratio is not satisfactory. Company should try to make better utilization of total assets to generate more sales.

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6. FIXED ASSETS TURNOVER RATIO:

= Sales/ Fixed Assets

PARTICULARS
SALES FIXED ASSETS RATIO

CURRENT YEAR PREVIOUS 2009-10

3419171 1106622 3.09

YEAR 2008-09
2885119 973890 2.96

INTERPRETATION: Higher is the ratio, better is the management of fixed assets to generate sales. This year ratio has improved compare to last year that indicates good situation. Better fixed asset management is always desired.

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7. CURRENT ASSETS TURNOVER RATIO:

= Sales/ Current Assets

PARTICULARS
SALES CURRENT ASSETS RATIO

CURRENT YEAR PREVIOUS 2009-10

3419171 1585687 2.16

YEAR 2008-09
2885119 769106 3.76

INTERPRETATION This ratio suggests utilization of current assets to generate sales. Higher ratio is always desired. Current year ratio is not satisfactory compare to last year ratio. Company should improve current assets management.

63

8. DEBTORS TURNOVER RATIO:

= Net Credit Sales/ Average Debtors

PARTICULARS
NET CREDIT SALES AVG. DEBTORS RATIO

CURRENT YEAR PREVIOUS 2009-10

306257 142595 21.48

YEAR 2008-09
2540844 78283 32.46

INTERPRETATION: This ratio suggests how many times in a year, debtors make payment to the company. Higher ratio is desired. Current year ratio is not satisfactory compare to last years ratio. Company should improve its credit management and make their debtors to make faster payments.

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9. DEBTORS COLLECTION PERIOD:

= 365/Debtors Turnover Ratio

PARTICULARS
DAYS IN A YEAR DEBTORS TURNOVER RATIO

CURRENT YEAR PREVIOUS 2009-10

365 2148 16.99 DAYS

YEAR 2008-09
365 3246 11.24 DAYS

INTERPRETATION: This ratio indicates average number of days that customers take to make payment. Lower the number of days better is the credit/debtors management. Current year ratio is not satisfactory compare to last year ratio. Company should improve its credit management and make their debtors to make faster payments.

10. CREDITORS TURNOVER RATIO:

65

= Net Credit Purchases/ Average Creditors

PARTICULARS

CURRENT YEAR 2009-10

PREVIOUS YEAR 2008-09

441101 259350 1.70

CREDIT PURCHASE 500840 AVERAGE 270909 CREDITORS RATIO 1.85

INTERPRETATION: This ratio indicates how many times on an average company make payments to its creditors. Lower the ratio is better. The company should try to negotiate with its suppliers for later payments and try to utilize those extra funds for productive purposes.

11.

INVENTORY TURNOVER RATIO:

= Sales/ Average Inventory

66

PARTICULARS SALES AVERAGE INVENTORY RATIO

CURRENT 2009-10 3419171 98959 34.55

YEAR PREVIOUS 2008-09 2885119 65396 44.12

YEAR

INTERPRETATION: This ratio indicates how many times, the stocks get rotated in a year. Higher ratio indicates better inventory management. Current year ratio is not satisfactory compare to last year ratio. Company should try to maintain inventory turnover and continuously try to achieve higher inventory turnover.

12.

OPERATING LEVERAGE:
= Contribution/ Earnings before Interest & Tax

PARTICULARS

CURRENT
67

PREVIOUS

YEAR 2009-10
CONTRIBUTION EBIT RATIO 1027173 361352 2.84

YEAR 2008-09
959134 358455 2.68

INTERPRETATION: Higher the operating leverage, the more the company's income is affected by fluctuation in sales volume. It measures the EBIT's percentage change as a result of a change of one percent in the level of output. Higher ratio is always desired. Ratio has improved compare to last year`s ratio, that indicates better situation.

13.

FINANCIAL LEVERAGE:
= Earnings before Interest & Tax/ Earnings before

Tax

68

PARTICULARS
EBIT EBT RATIO

CURRENT YEAR 2009-10

361352 251867 1.43

PREVIOUS YEAR 2008-09

358455 350965 1.021

INTERPRETATION: This ratio explains use of debt component in the capital structure to increase shareholders earnings. It also explains risks associated in adopting debt component. Current year`s ratio has improved compare to last year`s ratio. This indicates a little higher risk due to more debts but it also indicates company`s ability to increase shareholders` earnings by using debt component in its capital structure. There is always a tradeoff between risks involved and shareholders` return. Company should try to maximize both by proper balance between them.

14.

COMBINED LEVERAGE
= Contribution/Earnings before Tax

PARTICULARS
CONTRIBUTION EBT

CURRENT YEAR 2009-10

1027173 251867
69

PREVIOUS YEAR 2008-09

959134 350965

RATIO

4.08

2.73

INTERPRETATION: Combined leverage measures the percentage change in EPS that results from a change in one percent in sales. It helps in measuring the firms total risk. Current year`s risks have increased compare to last year`s risks due to increase in debt component. But this is not a concern of worry because it means better use of financial leverage.

15.

NET PROFIT RATIO:

= Net Profit after Tax/ Net Sales

PARTICULARS

CURRENT YEAR 2009-10

PREVIOUS YEAR 2008-09

-140214 2540844 -5.52 %

NET PROFIT AFTER 216645 TAX NET SALES RATIO 306257 7.07 %
70

INTERPRETATION: Higher net profits are always desired. Current year`s performance of the company is appreciable compare to last year`s. There is always a scope to improve current situation.

COMPETITORS

Todays Era of Cut Throught Competition. Every Company has to face Competition. The world is become a competition world. The Veebasons Corrugating Pvt. Ltd. is also face the problem of Competition. There are many competitors in the opposite of this company these competitors are as follows:

71

 Supack Industries Pvt. Ltd. Hari Om Packaging

CONTRIBUTION OF THE UNIT TO THE SOCIETY

Business is the activity done by the man for the man. Here, means the business person does business for the society because without society he cannot achieve his goals. There are various objectives of any business unit, like maximum profit. To earn maximum profit, to expand the business area, To change the modern era etc. Now a day to fulfill the

72

social responsibility is one of the objectives of the company to survive in the market. Veebasons Corrugating Pvt. Ltd. Fulfill its responsibilities towards the society.

Towards The Society

The Company does not make pollution. The Company is about 15 to 18 Kilometers from the city area. They also provide housing facility to their employees.

ACHIEVEMENT AND AWARDS

Every Business tries to earn reasonable amount of profit. This Company has immense pleasure in introducing over selves as the one of the leading manufacturer of the corrugated boxes. Their plant was established in the year of 2004 their investment corrugating plant is setup with latest sophistic and ultra modern infrastructure, equipment, instrument, and facility to maintain quality assurance to high precision degree of accuracy required in process. This industry established in 2004 so award has not taken during 5 Years.
73

74

FUTURE PLANS

Future Plan is the predetermined course of action is achieved a special aim or goal. Future planning is very necessary for the success of the business unit.

75

Veebasons Corrugating Pvt. Ltd. Want to start automatic 5 ply machine, plan for manufacturing all kinds of boxes in future. They constantly upgrade their machines and equipments and to some extant methods of production.

76

SUGGESTIONS
After giving the conclusion following are the suggestions to the company. This are displayed under.
77

1)

The aim of Veebasons Corrugating Pvt. Ltd. is to increase their turn over, I think, they also try to increase their turnover & profit too, But they have not enough workers to increase turnover so they should appoint new workers to increase turnover.

2)

They Purchase Raw Material form Delhi, Assam etc. It is very costly & time consuming process, so I think they should purchase raw material from local market.

3)

They should also do proper marketing because they are not doing marketing properly they should do more & more advertisement for selling their goods.

78

CONCLUSION
I visited Veebasons Corrugating Pvt. Ltd. for the industrial training. It is Small Scale & Private Limited Company. It has very good
79

location with the company. I had found that all the staff members and workers are working in a co ordinates manner and in a planned way they are more concentrating about their work and diversifying their efforts towards the desired target. It is looking the good management and maintenance of quality of their products. Its business expansion is possible in the future. So, at the end I wish the Veebasons Corrugating Pvt. Ltd. All The Best to get desired success in future.

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BIBLIOGRAPHY
81

 Principle of Marketing B.S. Prakashan Rana & Savjani Principle and Practice of Marketing Sultan Chand & Sons L.M. Prasad.

82