PRODUCT PROJECT REPORT ON



Product Project Report On

Air Coolers

Prepared By

Zala Pratipalsinh

Academic Year

2006 – 2007

Class

T.Y.B.B.A.

Roll No. 41

Seat No.

Submitted To

R.P. Bhalodia College

Saurashtra University-Rajkot

Guided By

Ms. Rhuta

Declaration

I undersigned Zala Pratipalsinh K., the student of T.Y. B,B.A. here by declares that this project is my own work & has been carried out under the supervision of my guide Ms Rhuta,

The work has not been previously submitted to any other university for any examination.

Date: - Signature:

Place: - Zala Pratipalsinh K.

Preface

As a management student of the final year of graduation, practical knowledge about the corporate world is no more a desire or a voluntary action to be undertaken but a simple bare necessity. Books don’t suffice the level of knowledge a student is required to possess. A student should have a purview about the real happenings of the corporate structure.

To suffice the above mentioned requirements BBA the course has expanded its purview and scope to the world of practical training. Along with the big corporate entities, a student should have knowledge about all the happenings and functioning of the small scale industries, in order to be competent managers or entrepreneurs.

As a student of BBA, one should have sufficient and basic knowledge regarding how to start a small business, how to management it, how to make a financial estimates and manage funds and the most important of all how to make a product project report on the basis of which they can apply for a loan from bank.

Thus, product project report at this stage makes many things clear in mind of student which helps lot in future therefore it ensures practical exposure in the world of business and entrepreneurship and inculcates necessary skills which are indispensable for any venturous entrepreneur.

Acknowledgement

Successful accomplishment of any work requires co-operation, help and guidance from many people. I had a wonderful opportunity to make a product project report on Air Coolers as a part of my practical training in T.Y. B.B.A.

This report would not have been possible without the help of many people whom I would like to acknowledge and thank for their kind co-operation.

First of all I thank R.P. Bhalodia College – Rajkot, for giving me opportunity of doing product project report.

I specially thank Ms. Rhuta for giving me important guidance for making the project informative and well –constructed. She had spent her precious time for my product project report. It would be impossible for me to complete this project without her important instruction and supervision.

I thank All My Friends and Classmates for giving me their important guidance, which was very helpful for me to complete my project in perfect time duration.

At last, but not least, I thank MY PARENTS & MY FAMILY MEMBERS to give me every kind of support, and almighty the GOD for helping me out whenever I viewed an obstacles, as they have left no stone unturned and betterment.

Date: - Signature:-

Place: - Rajkot

Index

[1] Introduction

[2] Project at Glance

[3] Management Set – Up

[4] About the Partners

[5] Proposed Location Justification

[6] Location

[7] Market Potential

[8] Raw – Materials

[9] Names & Address of Suppliers

[10] Manufacturing Process

[11] Basis & Presumption

[12] Implementation Schedule

[13] Total Fixed Capital

- Land & Building

- Machinery & Equipments

- Pre – Operative Expenses

[14] Total Working Capital

- Personnel

- Raw Materials

- Utilities

- Other Contingencies Expenses

[15] Total Investments

[16] Cost of Production

[17] Net Profit per Year

[18] Net Profit Ratio

[19] Rate of Return

[20] Break Even Point

Introduction

As a part of practical training, I have selected to prepare a product project report on Air Coolers. There are mainly two types of coolers;

1. Room Coolers.

2. Desert Coolers.

Evaporative type Air Coolers are used in peak summer season for cooling of rooms, offices, hotels etc. In general Air Coolers are used for cooling similar areas and desert coolers are used for larger area. Air Coolers basically consist of body, fan, water pump and control switch etc.

An electric fan generally of exhaust fan type is mounted inside a louvered housing and three vertical sides of the housing are fitted with filtered pads which are kept wet with help of water pump. Rotation of fan mounted inside the body draws air from all the three sides through wet pads. Thus, air gets cooled by evaporation of water and which is blown into the room.

But this benefits are not enough reasons to pursue an entire project in order to commence such a business, a business person has to check the financial viability of the project also certain questions to be answered like,

▪ How much capital is more required?

▪ From where this capital will be procured?

▪ What will be the cost of production?

▪ What will break even point be reached?

▪ What would be the profits and return on investments?

And the list is endless …………..!!!!

A genuine attempt has been made to answer all these questions with almost justification possible in the following pages…….

Project at Glance

Name of the Unit: Gaytri Air Coolers

Address For: “Gayatri Air Coolers”

Plus Point – 09

Opp. Haribhai Hall,

Dr. Yagnik Road,

Rajkot – 360001.

Size of Unit: Small Scale Industry

Form of Organisation: Partenership Firm

Name of Partners: Miss Pooja J. Vyas

Mr. Prakash P. Pathak

Name of the Product: Air Coolers

SSI Registration No: Applied For

Location of the Unit: “Gayatri Air Coolers”

Shapar Industrial Zone,

Gondal Road,

National High-Way,

Village: Shapar,

Dis.:- Rajkot.

Management Set – Up

Both the partners of the firm, viz,

Miss Pooja J. Vyas

Mr. Prakash P. Pathak

They will be the working partners of the firm whose capital contribution and profit sharing ration will be as per the partnership deed.

➢ While, Mr. Prakash P. Pathak on the basis of his business experience and expertise will look after the factory work as well as some of the major office work, Miss Pooja J. Vyas will take care of official work.

➢ All stage and policy decisions shall be taken by the consent of all the parties concerned.

About the Partners

1) About Mr. Abhijitsinh H. Jadeja …

Name: Mr. Abhijitsinh H. Jadeja

Address: ‘Osho’ app.

4, Vidhyanagar,

Vidhyanagar main road,

Rajkot – 360002.

Age: 35 Years

Qualification: Master in Science

Experience: 10 Years Experience in Similar

Business

Responsibility: Factory Work Supervision and

Major Official Work.

2) About Mr. Zala Pratipalsinh K.

Name: Mr. Zala Pratipalsinh K.

Address: “Ashutosh”,

1, Brahamkunj Soci,

B/H Chandrapark,

150 ft Ring Road,

Rajkot- 360005

Age: 23 Years

Qualification: Master in Business

Administration

Experience: Fresh

Responsibility: Official Work.

PROPOSED LOCATION JUSTIFICATION

Factory Location is the decision regarding geographical situation of the plant. This decision is a very crucial one because it is not easily alterable and involves a considerably huge amount of investment. The location of the factory plays a very vital role in success of failure of the business. But this decision is affected by many factors, which are to be kept in mind while selecting the location.

The following site has been selected for work premises:-

“Gayatri Air Coolers”

Shapar Industrial Zone,

Gondal Road,

National High-Way,

Village: Shapar,

Dis.:- Rajkot.

The correctness of this decision can be justified on the full basis:

1. Industry Choice:

Many other industries are situated in this locality, and hence it is a common choice of all the entrepreneurs in this business.

2. Nearness to the Registered Office:

As the registered office located at Dr. Yagnik Road, the location of the factory is near to the administrative office and the computer room which is useful in faster communication.

3. Market Proximity:

The location also provides proximity to the market in the sense that a direct sale from factory is also possible.

4. Transportation Cost:

As the materials is loaded from railway boggy and it is sprightly carried to factory such not transportation cost is incurred and so far as finished goods are to be dispatched, Factory owns a delivery van.

5. Rapid Sales:

As the factory location is nearer to industrial area of shaper as well as registered office locations are situated in the heart of the city, sales are bound to increase at unimaginable rates.

Locations

▪ Registered Office:

“Gaytri Air Coolers”

Plus Point – 09

Opp. Haribhai Hall,

Dr. Yagnik Road,

Rajkot – 360001.

▪ Factory Office:

“Gaytri Air Coolers”

Nr. K. K. Chemicals,

Shaper.

MARKET POTENTIAL

As the construction of residential accommodation, office complex and the standard of living is increasing day by day, demand for this item is also increasing specially in the sections of society who are not able to afford air conditioned. It is understood that during the period of last 10 years there is a rise in demand for the item @ 60 % p.a. and this trend is likely to continue.

Raw Materials

The main raw materials required for manufacturing Air Cooler are as follows:

1. GI Sheet

2. Cooler Motor

3. Pump Vertical

4. Wire Net

5. Filter Pad

6. Switches

7. Cable ( 3 core )

8. Hardware Items

9. Consumable Stores

Names and Addresses of Suppliers

[1] M/S. Amar Sons,

57, Rani Jhansi Road,

New Delhi.

[2] M/S. Prem Engineering Works,

Okhala Industrial Estate,

New Delhi.

[3] M/S. K. G. Khosla & Co.

1, Deshbandhu Gupta Road,

New Delhi.

[4] M/S. Jaymes Engg. Co. Pvt. Ltd.

M-block,

Connaught Place,

New Delhi.

[5] M/S. Toshniwal Brothers Pvt. Ltd.

3E/8, Jhandewalan Extension,

New Delhi.

[6] M/S. Philips India Ltd.,

68, Najafgarh Road,

New Delhi.

[7] M/S. Balak Ram Banarasi Das & Sons,

37/19, The Mall,

Kanpur – 208001.

[8] M/S. Bazari Trading Co.,

129, Moti Street,

Fort,

Bombay – 400001

[9] M/S. Maruti Electricals,

123/286 A, Gaddarian Purwa,

Fazalganj, Kanpur.

Manufacturing Process

[1] GI sheets are purchased from the local market and cut to size, louvers made and bent for making the vertical sides, top cover and water pump. Filter pads are fitted in the 3 vertical sides and electric fan and vertical pump are mounted. On the grill is fixed through which cooled air is brown out. Switches are provided in the front panel, vertical sides, top cover are assembled together with screws/ nut and both assembled cooler is then painted.

[2] Assembled cooler is tested as per the requirement of ISO: 2000. The basic requirements of the tests are as follows:

a) Insulation Resistance Test :-

The insulation resistance between all electrical circuits when measures at normal room temperature with measure of 500 V DC should be not less then 1 Mega Ohm.

b) High Voltage Test :-

The electrical insulation all electric circuits shall be able to withstand high voltage tests of 1000 V rms for single phase motors applied for not less then 2 seconds.

c) Production Efficientcy Test :-

Cooling efficiency and air delivery for various capacities of air coolers shall bee within the limits prescribed in relevant ISS.

[3] Production Capacity:-

(a) Quantity 2500 nos. Air Coolers p.a.

(b) Value Rs. 1,00,00,000

[4] Approximate Motive Power Requirement:-

5KW

[5] Pollution Control Requirement:-

No Pollution control certificate is required for registration of the units for manufacture of this item.

[6] Energy Conservation Need:-

The design of the fan and electric pump should ensure minimum iron losses and the cooler should be able to withstand cooling efficient and air delivery tests as per ISO: 2000

Basis and Presumption

1. The basis for calculation of production capacity is on single shift basis, working of 25 days per month on 75% efficiency. Time required for achieving visualized capacity utilisation is assumed as one year.

2. BEP for the scheme has been calculated on full capacity utilisation

3. Rate of interest has been taken as 18% on an average. This however, is likely to vary depending upon the financial outlay and the location of unit.

4. Labour wages have been taken on the basis of minimum applicable. These are likely to change depending upon the location of the unit.

5. Rental Charges of Rs. 100/- per sq. meter per month has been taken on an average. This figure is likely to vary depending upon the location of the unit.

6. Margin money requirement differs from project to project to project and type of entrepreneurs such women, SC/ST, physically handicapped etc. and the minimum margin money usually asked for by the financial institutions and banks is 15%. Margin money upto 25% in some cases is also asked for. The entrepreneur may check up the margin money requirement form financial institutions for the project.

7. Terms of loan differ from one financial institution to another and in generals minimum growth period is normally 6 months and it could be 2 years. Maximum period for repayment of loan is 7 years including growth period. The exact terms and conditions may be found by the entrepreneurs from the concerned financial institutions.

8. The costs of machinery and equipment as indicated in the scheme are approximate to those ruling at the time of preparation of the scheme. The entrepreneur may check up the exact price for specific make and model of the machine selected.

9. Non-refundable deposits, cost of preparation of project report etc. may be considered under pre-operative expenses.

10. The provisions made in other respects viz; raw materials, utilities, overheads etc. Are drawn on the basis of standard variations and output. The costs indicated against each are approximate based on local market conditions and observation. The entrepreneur may find out the exact cost from the concerned sources.

11. The operative period of this project is estimated to be about 10 years considering technology obsolescence.

Implementaion Schedule

The period required from the time of provisional registration with the concerned District Industries Centre to commercial production is 6 months to 2 years. This includes clearance from concerned agencies including financial institutions etc.

Land & Building

|Particulars |Amt Rs. |

| Land & Building |30,00,000 |

|Construction |45,00,000 |

| |75,00,000 |

Machinery & Equipments

|Particulars |Amt Rs. |

|Guillotine Shearing Machines |7,50,000 |

|Power Press 20 tons capacity |9,00,000 |

|Screw type break press |4,50,000 |

|Air Compressor complete with motor spray |3,00,000 |

|Gas welding set |3,00,000 |

|Portable electric drill |90,000 |

|Portable flexible shaft grinder |90,000 |

|Double ended grinder |1,20,000 |

|Merger |3,00,000 |

|High voltage test set 3 KV |1,65,000 |

|Control panel for measuring power input consisting of ammeter, voltmeter, wattmeter etc. |1,80,000 |

|Multimeter |60,000 |

|Air flow & temperature measuring apparatus |1,50,000 |

|Anemometer |1,50,000 |

| |40,05,000 |

Pre – Operative Expenses

|Particulars |Amt Rs. |

|Fees for preparation of project report, Deposit to electricity boarded etc. |1,00,000 |

|Total Pre – Operative Expenses |1,00,000 |

Total Fixed Capital

|Particulars |Amt Rs. |

| Land & Building |75,00,000 |

|Machinery and Equipment |40,05,000 |

|Pre – Operative Expenses |1,00,000 |

| |1,16,05,000 |

Personnel

|Designation |No. |Salary |Total |

|Works Manager |1 |15,000 |15,000 |

|Accountant |1 |10,000 |10,000 |

|Skilled fitter |3 |2,500 |7,500 |

|Unskilled fitter |5 |1500 |7,500 |

|Store keeper |2 |1500 |3000 |

|Peon-cum-Watch man |3 |1000 |3000 |

|Mechanic |3 |5000 |3000 |

|Skilled fitter |2 |5000 |10000 |

| | | |56,000 |

|Perquisites @ 20% of salary | | |11,200 |

|Total Personnel | | |67,200 |

Raw Materials

|Particulars |Qty |Rate |Amount Rs. |

|GI sheet |3 tons |20,000 |60,000 |

|Cooler Motor |100 |800 |80,000 |

|Pump Vertical |100 |200 |20,000 |

|Wire Net |L.S. |- |17,000 |

|Filter Pad |200 kg |16/kg |3,200 |

|Switches |200 kg |10/kg |2,000 |

|Cable(3 core) |250 mtr |10/mtr |2,500 |

|Hardware Items |L.S. | |500 |

|Consumable Stores |L.S. | |3,000 |

| | | |1,88,200 |

Utilities

|Particulars |Amt Rs. |

|Power (6000 Units) |75,000 |

|Water |25,000 |

|Total Utilities |1,00,000 |

Other Contingent Expenses

|Particulars |Amt Rs. |

|Postage & Stationary |10,000 |

|Telephone |15,000 |

|Consumable stores |12,000 |

|Repairs & maintenance |4,500 |

|Transport Charges |5,000 |

|Advertising and publicity |2,000 |

|Miscellaneous expenses |4,500 |

|Total Contingencies |53,000 |

Total Working Capital

|Particulars |Amt Rs. |

| | |

| | |

| | |

| | |

| | |

| | |

| | |

| | |

PARTICULARS AMOUNT

Personnel 67,000

Raw Materials 1,88,200

Utilities 1,00,000

Other Contingencies Expenses 43,000

TOTAL RECURRING EXPENSES 3,58,400

TOTAL WORKING CAPITAL :-

= 3,58,400 * 3

=10,75,200 /-

TOTAL INVESTMENTS

FIXED CAPITAL 80,00,500

WORKING CAPITAL 10,75,200

TOTAL CAPITAL

INVESTMENT 90,75,700

COST OF PRODUCTION

PARTICULARS AMOUNT

Total recurring cost pre unit 43,00,800

Depreciation on building @ 10 % 7,50,000

Depreciation on machinery and equipment @ 15 % 60,075

Interest on total capital investment @ 23 % 17,49,265

TOTAL COST OF PRODUCTION 68,60,140

TURNOVER

PARTICULARS QTY. RATE AMOUNT

Desert Coolers Of 2,000 5,000 1,00,00,000

Assorted Capacity

➢ NET PROFIT PER YEAR :-

= Turnover – cost of production

= 1,00,00,000 – 68,60,140

= 31,39,860

| |

|NET PROFIT PER YEAR = Rs.31,39,860 /- |

➢ NET PROFIT RATIO :-

= Net Profit Per Year x 100

Turnover Per Year

= 31,39,860 x 100

------------------------

1,00,00,000

= 31.40 %

| |

|NET PROFIT RATIO - 31.40 % |

➢ RATE OF RETURN :-

= Net Profit Per Year x 100

Total Investments

= 31,39,860 x 100

90,75,700

= 34.60%

BREAK EVEN POINT

➢ FIXED COST :-

[a] Depreciation on Building 7,50,000

[b] Depreciation on Machinery 60,075

[c] Interest on Total Investments 17,49,265

[d] 40 % Salary on Wages 3,22,560

[e] 40 % Other Contingency Expenses 2,06,400

TOTAL FIXED COST 30,88,300

➢ NET PROFIT PER YEAR :-

B.E.P. = Total Fixed Cost x 100

Total Fixed Cost + profit

= 30,88,300 x 100 .

30,88,300 + 31,39,860

= 30,88,30,000

62,28,160

= 49.58 %

| |

|BREAK EVEN POINT - 49.58 % |

-----------------------

RATE OF RETURN – 34.60%

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