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DETERGENT SOAP INDUSTRY

COMPANY SUMMARY

The company is to be co founded at Patrapada, Bhubaneswar.


Harmony Soaps Pvt Ltd is an enterprise company engaged in
manufacturing detergent soaps. In our country, people in villages
are accustomed to washing clothes near rivers and ponds using
cakes by scrubbing and applying mild force. Detergent cakes or
bars are suitable for this purpose and are becoming popular both in
the villages and urban areas. This is detergent in cake form, which
can be used with hand as well as in soft water.

START UP SUMMARY
Start up of the company will require a capital of Rs. 16,80,000 of
which Rs. 10,00,000 will come as loan from Syndicate Bank and the
rest Rs. 6,80,000 will be provided by the founders. Approximately
Rs. 80,000 will be allocated to equipments.

COMPANY LOCATION AND FACILITIES

The plant is to be located at Patrapada, Bhubaneswar, Orissa for


now. Upon expansion, plants will move to different locations within
the state as well outside it.
DETERGENT SOAP INDUSTRY

SERVICE DESCRIPTIONS

The aim of the company is to provide this product throughout the


state and country by widening of distribution channels.

INTRODUCTION TO
ENTREPRENEURSHIP

The word ‘entrepreneur’ has its origin in the French language. It


refers to the ORGANISER OF MUSICAL or OTHER ENTERTAINMENTS.
ENTREPRENURSHIP can be described as a creative &innovative
response to the environment. Such responses can takes place in
any field of social Endeavour-business, agriculture, education,
social work the like.

An ENTREPRENEUR is one who organizes, manages &


assumes the risks of an enterprise. An entrepreneur visualizes a
business, takes bold steps to establish under taking, co-ordinates
the various factors of production gives it a start.
DETERGENT SOAP INDUSTRY

ENTREPRENEURS are the owners of the business who


contribute the capital & bear the risk of uncertainties in business
life.

ENTREPRENEUR is action-orient & highly motivated person


who has the ability to evaluate business opportunities, to gather
the necessary resources to take advantage of them &to intimate
appropriate action to ensure success.

ENTREPRENEUR takes decision regarding what to produce,


where to produce & whom to produce. He mobilizes other factors of
production namely; land, labour, capital, organization & initiates
production process. He is responsible for either profit or the loss.

ENTREPRENEUR is associated with innovations. He is the


main factor of production.
DETERGENT SOAP INDUSTRY

ENTREPRENEURIAL PHILOSOPHY
✔ To take calculated risk.
✔ Willingness to accept responsibility for one’s own work
✔ Failure must be accepted as a learning experience.
✔ Goal orientedness.
✔ Acceptable results are more important than perfect results.
✔ Personal growth.

EXPECTATIONS OF ENTREPRENEURSHIP

It is expected from the entrepreneurs that they will help:-


✔ Increase number of industries.
✔ Increase production.
✔ Increase employment opportunities.
✔ Earn foreign exchange through exports.
✔ Develop the underdeveloped parts of the country.
✔ Economical development.

CHARACTERSTICS OF ENTREPRENEUR
✔ Self confidence
✔ Task-result oriented
✔ Risk-taker
✔ Leadership
✔ Originality
✔ Future oriented
DETERGENT SOAP INDUSTRY

ROLE OF FIs & BANKS IN SSI FINANCING

The credit needs of entrepreneurs could be divided in three


parts:
• Short term
• Medium term
• Long term finance

Accordingly, the conventional mechanism for financing of SSIs in


India stressed provision of terms loans and working capital.

The public and private sector banks, Small Industries Development


Bank of India (SIDBI), Regional Rural Banks (RRBs), Urban
Cooperative Banks (UCBs) and foreign loans for setting up of new
industries or modernization of the existing ones, Khadi and Village
Industries Commission (KVIC) and Khadi and Village Industries
Boards (KVIBs) assist in financing khadi and village industry sector.
National Small Industries Corporation (NSIC) and State Small
Industries Corporations (SSICs) in their own way, also attempt to
develop the cottage and small scale sector by supplying machinery
on a hire-purchase basis to small-scale and ancillary industries,
inclusion of the value of machinery and equipment already
installed.

SFCs are one of the oldest credit institutions in the country which
mainly cater to the long term credit needs of small & medium
enterprises. At present, there are 18 SFCs covering the entire
country & they have been in existence for 5 decades now. The
cumulative sanctions & disbursements of SFCs aggregated Rs
DETERGENT SOAP INDUSTRY

33000 crore & Rs 27000 crore respectively. It needs to be high


lighted that almost 75% of SFCs assistance flows to the SSI sector.
Over the years the financial health of SFCs has become a cause of
concerns. Some of the reasons for the poor financial health of SFCs
are poor recovery performance increase in non performing assets.

Govt. of India had amended the SFCs act 1951 in the year 2000 so
as to give them more operational flexibility & freedom so that they
can improve their performance & play their role more effectively.
DETERGENT SOAP INDUSTRY

CHALLENGES FOR ENTREPRENEURSHIP PROJECT:-

1. Technology up gradation:-

It is found that our small scale sector is not able to compete


because of outdated technology. We must appreciate that small
scale industry has to keep itself updated and then only it can sell
goods. In the post WTO era, the best thing would be available
anywhere in the world as there is no restriction for goods to move.
People will purchase only if the goods are of good quality.
We must remember that we may or may not need imported
technology for up gradation. Our small industries have the
advantage of developing in import substitution period. Many SSI
can therefore become world class with only small modifications or
improvement.

2. Testing facilities: -

Because our small scale industries are situated in far flung


areas there for it is not possible to service by one or two central
laboratory. We suggest that educational institution even in small
towns should be equipped to provide testing facilities to small scale
industries.
DETERGENT SOAP INDUSTRY

3. Exports: -

We find that small scale industries engaged in exports do not


have any benefits, although they count for bulk export. We strongly
advocate special concessions for small scale industries, which are
engaged in exports.

4. Involvement of Industrial Associations:-

We feel that many problems of small sector can be taken care


of if industrial associations are involved in a big way.

5. Infrastructure Development:

Small scale industries suffer maximum from lack of


infrastructure development. The quality of power is bad and the
power available is at very high cost. This must be corrected. Roads
are bad. Communication facilities are not up to mark etc.

6. Credit: -

The credit is still not available to small scale industries. The


credit Guarantee Fund created by SIDBI is not being exploited as
there are still short coming in the scheme.

7. Skill Up gradation: -
DETERGENT SOAP INDUSTRY

Small scale Industries are known for providing on job


training. But in the post WTO era when cost cutting is order of the
day, the people are running small scale industries must be skilled
and these skills must be up graded continuously so that they are in
the job & no unemployment results.

8. Marketing:-

The present market assistance scheme is most welcome.


More such schemes are required .Small Scale Industries are being
bundled out of the market by aggressive advertisement done by
large scale& multinationals. The small sector must be protected
from this, if the small sector has to survive.

9. Changing the Labour Laws:-

The present labour laws must be changed to have more


flexibility & suitability for running of small scale sector.

Products Applications,
Market Potential
DETERGENT SOAP INDUSTRY

Basis and Presumptions


Traditionally, soap has been manufactured from alkali (lye) and
animal fats (tallow), although vegetable products such as palm oil
and coconut oil can be substituted for tallow. American colonists
had both major ingredients of soap in abundance and so soap
making began in America during the earliest colonial days. Tallow
came as a by-product of slaughtering animals for meat, or from
whaling. Farmers produced alkali as a by-product of clearing their
land; until the nineteenth century wood ashes served as the major
source of lye. The soap manufacturing process was simple, and
most farmers could thus make their own soap at home.

The major uses for soap were in the household, for washing clothes
and for toilet soap, and in textile manufacturing, particularly for
fulling, cleansing, and scouring woolen stuffs. Because colonial
America was rural, soap making remained widely dispersed, and no
large producers emerged. By the eve of the American Revolution,
however, the colonies had developed a minor export market; in
1770 they sent more than 86,000 pounds of soap worth £2,165 to
the West Indies. The Revolution interrupted this trade, and it never
recovered.

The growth of cities and the textile industry in the early nineteenth
century increased soap usage and stimulated the rise of soap-
making firms. By 1840, Cincinnati, then the largest meatpacking
center in the United States, had become the leading soap-making
city as well. The city boasted at least seventeen soap factories,
DETERGENT SOAP INDUSTRY

including Procter and Gamble (established 1837), which was


destined to become the nation's dominant firm. A major change in
soap making occurred in the 1840s when manufacturers began to
replace lye made from wood ashes with soda ash, a lye made
through a chemical process. Almost all soap makers also produced
tallow candles, which for many was their major business. The firms
made soap in enormous slabs, and these were sold to grocers, who
sliced the product like cheese for individual consumers. There were
no brands, no advertising was directed at consumers, and most
soap factories remained small before the Civil War.

The period between the end of the Civil War and 1900 brought
major changes to the soap industry. The market for candles
diminished sharply, and soap makers discontinued that business. At
the same time, competition rose. Many soap makers began to brand
their products and to introduce new varieties of toilet soap made
with such exotic ingredients as palm oil and coconut oil.
Advertising, at first modest but constantly increasing, became the
major innovation. In 1893 Procter and Gamble spent $125,000 to
promote Ivory soap, and by 1905 the sales budget for that product
alone exceeded $400,000. Advertising proved amazingly effective.
In 1900 soap makers concentrated their advertising in newspapers
but also advertised in streetcars and trains. Quick to recognize the
communications revolution, the soap industry pioneered in radio
advertising, particularly by developing daytime serial dramas.
Procter and Gamble originated Ma Perkins, one of the earliest, most
successful, and most long-lived of the genre that came to be known
as Soap Operas, to advertise its Oxydol soap in 1933. By 1962 major
DETERGENT SOAP INDUSTRY

soap firms spent approximately $250 million per year for


advertising, of which 90 percent was television advertising. In 1966,
three out of the top five television advertisers were soap makers,
and Procter and Gamble was television's biggest sponsor, spending
$161 million.

Advertising put large soap makers at a competitive advantage, and


by the late 1920s three firms had come to dominate the industry:
(1) Colgate-Palmolive-Peet, incorporated as such in 1928 in New
York State, although originally founded by William Colgate in 1807;
(2) Lever Brothers, an English company that developed a full line of
heavily advertised soaps in the nineteenth century and in 1897 and
1899 purchased factories in Boston and Philadelphia; and (3)
Procter and Gamble.

Synthetic detergent, which was not a soap, but was made through a
chemical synthesis that substituted fatty alcohols for animal fats,
had been developed in Germany during World War I to alleviate a
tallow shortage. Detergents are superior to soap in certain
industrial processes, such as the making of textile finishes. They
work better in hard water, and they eliminate the soap curd
responsible for "bathtub rings." In 1933 Procter and Gamble
introduced a pioneer detergent, Dreft, which targeted the
dishwashing market because it was too light for laundering clothes.
It succeeded, especially in hard-water regions, until World War II
interrupted detergent marketing.
DETERGENT SOAP INDUSTRY

In 1940 the "big three"—Colgate, Lever, and Procter and Gamble—


controlled about 75 percent of the soap and detergent market. They
produced a wide variety of products, such as shampoos,
dishwashing detergents, liquid cleaners, and toilet soap, but the
most important part of their business was heavy-duty laundry soap,
which accounted for about two-thirds of sales. Procter and Gamble
had about 34 percent of the market. Lever was a close second with
30 percent, and Colgate trailed with 11 percent. In 1946 Procter and
Gamble radically shifted the balance in its favor when it introduced
Tide, the first heavy-duty laundry detergent. By 1949, Tide had
captured 25 percent of the laundry-detergent market. By 1956,
even though Lever and Colgate had developed detergents of their
own, Procter and Gamble held 57 percent of the market, as
compared with 17 percent for Lever and 11 percent for Colgate.
Despite Procter and Gamble's triumph, the big three still competed
fiercely.

By 1972, detergents had almost eliminated soap from the laundry


market, although toilet soap remained unchallenged by detergents.
In the 1970s, bans on detergents by some local governments, which
feared contamination of their water supplies, had little impact on
the composition or sales of laundry products. In the early 2000s,
the smaller firms within the industry still produced a multitude of
specialized cleansers for home and industry, although in the highly
important fields of toilet soaps, laundry soaps, and detergents, the
big three remained dominant, controlling about 80 percent of the
total market.
DETERGENT SOAP INDUSTRY

The following ingredients are often used in hand dishwashing


soaps and detergents; not all products contain all ingredients.
INGREDIENTS
• Cleaning Agents/Surfactants lift dirt and soil and produce good
grease-cutting capability.
• Stability and Dispensing Aids keep the product consistent under
varying storage conditions and provide desirable dispensing
characteristics.
• Mildness Additives may include moisturizing agents, certain oils
and emollients, certain protein compounds, or other neutralizing
or beneficial ingredients.
• Fragrance is added to produce a pleasant or distinctive scent.
• Preservatives help prevent any microbiological growth in the
product that could cause color or odor change, poor performance
and/or separation of the ingredients.
• Colorants are added to lend individuality and an appealing
appearance to the product.
• Enzymes help break down tough stains and burned-on soils.
• Encapsulates deliver stability for special materials/additives
(e.g., moisturizer or fragrance).
DETERGENT SOAP INDUSTRY

BASIS AND PRESUMPTIONS


1. Single shift of 8 hours a day, 25 days a month and 300 days in
an year is presumed. Efficient machines and workers are also
presumed.
2. The quantity of products produced are sold in the market.
3. Labour rates are as per the prevailing rates.
4. An average interest rate of 18% is considered.
5. The estimates are drawn for a production capacity generally
considered techno-economically viable for model type of
manufacturing activity.
6. The information supplied is based on a standard type of
manufacturing activity viable for model type of manufacturing
activity.
7. The information supplied is based on a standard type of
manufacturing activity utilising conventional techniques of
production at optimum level of performance.
8. Costs in respect of land and building, machinery and
equipment, raw materials and the selling prices of the finished
products etc., are generally prevailing at the time of
preparation of the project profiles and may vary depending
upon various factors.
DETERGENT SOAP INDUSTRY

FINANCIAL ASPECTS
FIXED CAPITAL
MACHINERY AND EQUIPMENT
Sl. No. Details Qty Value (in Rs.)
1 Detergent plodder with 5 HP Motor 1 47,000
2 Sigma blender (350 Kgs. capacity) 1 15,000
3 Stamping machine 1 5,000
4 Platform weighing scale 1 5,000
5 Miscellaneous expenditure 3,000
6 Furniture and fixture 5,000
Total 80,000

1 Land 5000sqft 500000


2 Godown 3000sqft 1100000
3 Loan 12% of 10lakhs 120000
4 Machinery And Equipment 80000
Total 18,00,000

Total FIXED COST per kg of production of soap: Rs. 18,00,000


DETERGENT SOAP INDUSTRY

WORKING CAPITAL PER MONTH


PERSONNEL
Value per kg
Sl. No. Description Nos.
production
1 Skilled Worker 2 1.5
2 Semiskilled Worker 2 1.25
3 Watchman 1 0.3
Total 3.05
RAW MATERIALS
Sl. No. Particulars Qty.(Kg.) Rate(Rs./Kg.) Value (Rs.)
1 Oil 100 32 3200
2 Soda Ash 16 38 608
3 Water 50
4 Sodium silicate (binder) 100 9 900
5 Filler powder 50 3.25 162.5
6 Foam booster 2 120 240
7 Color 0.5 500 250
8 Perfume 0.2 200 40
Total 318.7 ≈ 315 5400
Cost of raw materials to produce 1kg of soap: Rs.17.14
DETERGENT SOAP INDUSTRY

UTILITIES
Sl. Cost per kg of
Particulars Cost per month
No. production
1 Power 5000 0.5
2 Water 200 0.02
Total 1,700 0.52
OTHER EXPENSES
1 Postage and Stationery 400 0.04
2 Repairs and Maintenance 400 0.04
Total 800 0.08
DEPRICIATION
10% of Rs.12000 per month: Rs.0.06 per kg of production of soaps
Total VARIABLE COST per kg of production of soap:
3.05+17.14+.52+0.08+0.06 = Rs.20.85
DETERGENT SOAP INDUSTRY

TOTAL SALES (Per Annum)


By sale of 1,20,000 kg @ Rs. 30 per kg Rs. 36,00,000

PROFITABILITY (Per Annum)


Profit =36,00,000 – 20,56,800 – 1,20,000(interest on loan)= Rs. 14,23,200
Net Profit Ratio : Net profit x 100 / Turnover
14,23,200 * 100 / 36,00,000
= 39.53%
Rate of Return : Net profit x 100 / Total Investment
14,23,200x 100 / 18,00,000
= 79.06%
DETERGENT SOAP INDUSTRY

BREAK EVEN ANALYSIS


Sales price = Rs. 30 per kg
Variable cost = Rs. 20.85 per kg
Fixed cost = Rs. 18,00,000
Break Even Quantity = X

Fixed Cost + X * Variable Cost = X * Sales Price


18,00,000 + X * 20.85 = X * 30
X = 196721 kg
Taking 10,000 kg per month production capacity,
No. of months required to achieve Break-Even Quantity = 196721/10000 = 19.67 ≈ 20 months
DETERGENT SOAP INDUSTRY

Address of Suppliers

NAMES AND ADDRESSES OF MACHINERY AND EQUIPMENT


SUPPLIERS
1. M/s Prototype Development and Training Centre, P.O. Okhla Industrial Estate, New Delhi –
110 020.
2. M/s Precision Machinists, Plot No. 356(D), Kandivli, Industrial Estate, Kandivli, Bombay –
400 067
3. M/s Steel & Brass Trading Corporation, Nirman Nagar, Kesar Baugh, Plot No. 116/17,
Bhavanagar – 364 001.
4. M/s Oriental Machinery Supplying Co. Ltd., Mission road Extension, Calcutta.

NAMES AND ADDRESSES OF RAW MATERIAL SUPPLIERS


1. M/s S.P. Chemical, Plot No. 4, Kengeri, Mysore Road, Bangalore.
2. M/s Surcoats (India), C-29. Royal Industrial Estate, 5-B Naigaum Cross Road, Wadala,
Bombay – 400 031
3. M/s Supertex (India) Corporation, 132, Dr.A.B. Road, Bombay – 53.
4. M/s Saibaba Sugandh Bhandar, 53, Santhusapet, Bangalore – 53
5. M/s M.M. Chemicals, A.S. Char Street, Bangalore – 53
6. M/s Prakash Chemical Agency, Purnaseshachar Street, Behind Chickpet Post, Bangalore –
53.
DETERGENT SOAP INDUSTRY

REFERENCES

✔ Bhalla Industries, Mancheswar, Bhubaneswar


✔ www.smallindustryindia.com
✔ www.wikipedia.org
✔ www.codissa.com
✔ www.books-directory-projectreports.com/small-scale-
industries.html