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

management.

and

working

capital

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
ratio analysis
21

competitors

22

Contribution of the unit to the society

23

Achievement and awards

24

Future plan

25

Conclusion

26

Suggestion

27

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

: tooltech@icenet.net.

Year of Establishment : 1990

Form of Organization : Private Limited Company
Scale of Unit

: Mediuml Scale Industries

Sister Companies

: 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

State to which products are exported:

Gujarat, Mahrashtra & Madhya
Banks

: The Co-Operative Bank of Rajkot Ltd.

Oriental Bank of Commerce

No. of Workers

: 55

Accounting Year

: 1st April to 31st Marc

Accounting System

: 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
To carry goods from one region to another transport facility
must be needed. VEEBASONS CORRUGATING PVT. LTD.s location
17

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.

Large scale industry

2.

Medium scale industry

3.

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

For Office Staff

Off Day

08:00 am

to

12:30 pm

12:30 pm

to

01:30 pm (Lunch)

01:30 pm

to

05:00 pm

08:30 am

to

12:30 pm

12:30 pm

to

01:30 pm (Lunch)

01:30 pm

to

08:00 pm

Tuesday

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.

No sales tax on sales.

2.

Exemption from lavvy of sales tax on purchase of raw

materials.

3.

Scene Raw Materials are made available from the

government on priority basis.

4.

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)

Kraft Paper.

(2)

Stitching Wire.

(3)

Gum.

Above all raw materials are easily available in open market.

Total requirement of raw material will be as under:
No. Items

Raw

material Raw

Requirement
[For
1.

Kraft

Material Rate

Requirement

At

Total
Cost

M.T. 100% Production

Production]
Paper 1030 Kg.

593

10500

62.27

(including
3%

process

2.

wastage).
Stitching

4.50 Kg.

2.59

27000

0.70

3.

wire.
Gum.

25.00 Kg.

14.40
TOTAL

12000

1.73
64.70

Year Wise Raw-Material will be as under: Year

1.
2.

Capability Utilization
50 %
60 %

24

Cost (In Lac)

32.35
38.82

LIST OF PLANT & MACHINERY

No.
1

Name of Machine
Qty. Rate
Oblique hype single face paper 1
3,15,125
Corrugated
Heavy

machine
duty

size

with

Total/ Amt.
3,15,125

62
stand

accessioned with motor starter and

2

one flute Rolls.

Road cutters size 62 62 with

motor & starter.

Sheet pasting

24,125

48,250

with 1

41,560

41,560

46,520

46,520

1,20,080

1,20,080

1,24,130

1,24,130

75.
Flat wire astiching machine size 1

31,080

31,080

8
9

48 with motor.
Do but dolole head.
1
Die punching machine heavy duty 1

45,525
2,95,000

45,525
2,95,000

1,45,000

1,45,000

machine

Adjustment motorized with starter

4

for gum size 72.

Sheet pasting machine

with 1

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

with magnetic clutch and timer

10

with electrical size 32 42.

Cylinder machine hand fad with 1
Electrical and stand. Accessories
25

11

size 24 36.
Partition slotter with 4 partition 1

46,075

46,075

slote, motorized size 42.

TOTAL
Add: 10% for transportation

12,58,345
1,25,835

Electrification and Installation.

TOTAL

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

29

Sales (in Lac)

43.20
51.84

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
Financial control is a critically important activity to help the
business ensure that the business is meeting its objectives.
31

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.

OWNED & BORROWED CAPITAL

32

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

Accounts
Officer
Officer

Chief Accounts
Officer

Dy. Manager

Share Accounts
Officer

Accounts Officer

Assistants

Assistance
Accounts Officer
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

Debtor

Sales

Finished goods
40

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.

Debtors Turnover Ratio

Debtors
41

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.

PARTICULARS

COST (Rs. In Lac)

1
2
3
4
5
6
7
8
9

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

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

DAYS

UNIT

288

0.75

RATE
1.50

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

Capacity Utilization

Expenses (Rs. In Lac)

1
2

50
60

0.52
0.62

STAFF & LABOUR DETAILS

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

No. Designation

No

1
2
3
4

person
1
1
4
40

Production Manager.
Machine Operator.
Skilled Workers.
Unskilled Workers.
TOTAL
Add: 20% Benefits
TOTAL

of Salary P.M. Total

Rs.
2000
1500
700
500

P.A.

Rs.
24,000
18,000
33,600
20,000
95,600
19,120
1,14,720

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

Cost (Rs. In Lac)

1
2

0.24
0.36

ADMINISTRATIVE EXPENSES
It is estimated that in first year administrative expenses will
be as under:
(A)

Administrative Salary: -

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

1 3000
1 1000
1 1000
2 500

36,000
12,000
12,000
12,000
44

Total

72,000
14,400
86,400

Total A.
(B)

Administrative Expenses: -

Traveling and Conveyance

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

15,000
6,000
7,000
5,000
3,000
15,000

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

1st Year

2ndYear

43.20

51.84

43.20

51.84

A. SALES:
1. Sales and Misc. Receipts
2. Less: Exise
3. Net sales.

45

B. Cost of Production
1. Raw-Material Consumed.

32.35

38.82

2. Power and Fuel.

00.52

00.63

3. Direct Wages.

1.05

1.16

4. Consumable Stores.

00.24

00.24

5. Repair and Maintenance.

00.24

00.24

6. Other MFG.

00.24

00.30

7. Depreciation.

05.03

03.91

8. Preliminary Exp.

00.07

00.07

Total cost of Production

39.74

45.36

C. Cost of Sale

39.74

45.36

D. Gross Profit.

03.46

06.48

1. On Term Loans.

3.03

2.40

F. Selling Genereal 2 Admn. Exp.

1.37

1.44

G. Profit before Taxation (D-E+F))

-0.94

1.70 (2.64-0.94)

H. Provision for Taxation.

0.68

I. Net Profit (G-H)

0.94

1.02

J. Depreciation added back & Preliminary 5.10

3.91

E. Interest:

and pre-operative Expenses.

K. Net Cash Accruals (I+J)

4.16
(rs. In lac)

SOURCES OF FINANCE
Sources of Finance

(Rs. In Lac)

Promoters contribution.

16.65

Deposit.

3.00

Term Loan.

15.00

46

4.93

Total

34.65

Promoters contribution 48.05%

Year Quarter Opening Equated

Principal Interest Yearly

Balance Monthly
O/S
2005- 1st Qtr.

Closing

Interest Balance

Installment

O/S

15,00,000 1,05,883

59,008

46,875

14,40,992

2nd Qtr.

14,40,992 1,05,883

60,852

45,031

13,80,140

3rd Qtr.

13,80,140 1,05,883

62,754

43,129

13,17,140

4th Qtr.

13,17,386 1,05,883

64,715

41,168

2006- 1st Qtr.

12,52,672 1,05,883

66737

39,168

12,52,672

2nd Qtr.

11,85,935

1,05,883

68,823

37,060

11,85,935

3rd Qtr.

11,17,112

1,05,883

70,973

34,910

11,17,112

4th Qtr.

10,46,139 1,05,883

73,191

32,692

9,72,948

75,478

30,405

06

1,76,204

13,17,386

07

2007- 1st Qtr.

1,05,883

08

47

1,43,808

10,46,139
9,72,948

2nd Qtr.

8,97,469

1,05,883

77,837

28,046

8,97,469

3rd Qtr.

8,19,469

1,05,883

80,269

25,614

8,19,632

4th Qtr.

7,39,363

1,05,883

82,778

23,105

2008- 1st Qtr.

6,56,585

1,05,883

85,365

20,518

65,585

2nd Qtr.

5,71,220

1,05,883

88,032

17,851

5,71,220

3rd Qtr.

4,83,188

1,05,883

90,783

1,61,100

4,83,188

4th Qtr.

3,92,404

1,05,883

93,620

12,263

2009- 1st Qtr.

2,98,784

1,05,883

96,546

9,337

2,98,784

2nd Qtr.

2,02,238

1,05,883

99,563

6,320

2,02,238

3rd Qtr.

1,02,675

1,05,883

1,02,675

3,208

15,00,000

5,11,777

1,07,169

7,39,363

09

65,731

3,92,404

10

Total

48

18,865

1,02,675

DEPRECIATION CHART

Year Particular

Building P2M

Other

Total

Assets

Opening

9.21

14.53

0.10

23.84

Balance

1.38

03.63

0.12

05.03

WDV

7.83

10.9

0.98

19.71

Depreciation

1.17

2.73

0.11

03.91

Depreciation

49

DETAILS OF COST OF PROJECT

No.

Assets

Total
Rs.

Land:
Consideration

94,620

Stamp

12,120

Registration Fees

1,590

Legal Fee

1,500

Land Development:
Estimated

15,000

Building:
As per Estimate & Engineers

8,77,000

Plant & Machinery:

As per Annexure

1,09,820

13,84,180

Misc. Fixed Assets:

Furniture estimated

10,000

50

Cost

Preliminary Pre Operative Exp:

A. Stamp.

1,000

B. Legal Exp.

20,000

C. Traveling & Conveyance.

5,000

D. Interest dining the construction 30,000

E. Stationary & Printing.

2,000

F. Telephone Exp.

2,000

G. Misc. Expenses.

10,000

70,000

Provision for contingencies:

5%on Building 3P2M

1,13,000

Margin of Working Capital

8,86,000

Total

34,65,000

51

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)

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

A Cash flow from operating activities

Net profit before tax and
exceptional items

312.51

271.75 164.70 161.48 146.73

120.43

111.91

77.84

77.67

67.81

2.95

3.93

3.93

171.16

55.80

18.73

14.82

21.72

(1.43)

(4.04)

(9.54)

(2.66)

0.34

(0.36)

0.16

0.65

(6.76)

(2.54)

(0.60)

(1.19)

(1.41)

(23.73)

(16.54) (6.41)

(8.74)

(5.21)

(0.20)

256.81

144.93 82.61

86.65

87.49

569.32

420.72 247.31 248.13 234.22

124.9

46.84

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

working capital changes

Add: Adjustments for

Decrease / (increase) in
trade and other receivables
Decrease / (increase) in

28.00
inventories
Increase / (decrease) in (32.71)
54

(87.18) 21.53

31.66

(118.66) (78.33) (31.49) (21.56)

(275.57) 17.77

24.65

37.68

trade and other payables

Cash

generated

120.19

(347.39) (147.74) 14.69

689.51

73.33

(60.66)

(81.00) (48.23) (48.12) 23.21

628.85

(7.67)

51.34

214.70 305.21

8.82

2.19

2.81

2.99

1.80

131.40

0.00

1.16

and -

5.40

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

99.57

47.78

262.82 282.00

Proceeds from transfer of

global

exports

marketing division
Proceeds from sale of assets
held for disposal
Sale / redemption

(purchase) of investments (116.08) 257.44 84.87

(net)
Sale of

investments

subsidiaries

(48.01) (88.00)

in
-

34.50

Interest received

24.29

13.15

4.34

9.17

22.00

Dividend received

23.73

16.54

6.41

8.74

5.21

(56.28)

ventures
Proceeds

and

13.52

from

sale

joint 10.96
of

Contract Exports Division

Increase

decrease

in 55

corporate deposit
Purchase of fixed assets
Investment in equity of
Joint Ventures
Investment in equity of
subsidiaries @@
Acquisitions

(1597.89) (661.09) 0.00

investing activities
Cash flow from financing

(8.00)

(12.49)

(463.83) (91.40) (44.42) (150.18) (29.70)

-

Net cash (used in) / from

(302.72) (199.97) (153.66) (105.13) (33.34)

(42.54) -

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

activities
Proceeds from issue of
share

capital

(including 9.81

0.01

0.00

0.01

0.06

0.04

0.06

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)

1272.87 764.86 88.00

138.31 (163.80)

(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

89.07

2.42

4.75

(3.86)

(28.03) 27.10

20.32

9.41

13.27

41.30

56

(232.23)

14.20

Cash of IGFL and BGFL

Cash and cash equivalents
(closing balance)

6.16

22.74

20.32

9.41

13.27

41.30

RATIO ANALYSIS
1. CURRENT RATIO:
= Current Assets/ current Liabilities
PARTICULARS

CURRENT

YEAR PREVIOUS

CURRENT ASSETS
CURRENT

2009-10
1585687
495694

2008-09
769106
454349

LIABILITIES
CURRENT RATIO

3.20

1.69

YEAR

INTERPRETATION
Current ratio indicates how much the company is able to meet its
shortly
Maturing obligations. The ideal ratio is 2. During current year, ratio
57

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

CURRENT YEAR PREVIOUS

2009-10

YEAR 2008-09

QUICK ASSETS
CURRENT

1155349
495696

379546
454349

LIABILITIES
ACID TEST RATIO

2.33

0.84

INTERPRETATION
Ideal quick ratio is 1.
Company needs to reduce this ratio by utilizing short term funds in
better way.
Excess short term funds invite higher costs to company.

58

3. CASH POSITION RATIO:

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

PARTICULARS

CURRENT YEAR PREVIOUS

2009-10

YEAR 2008-09

CASH ON HAND & 898333

166485

BANK
CURRENT

495696

454349

LIABILITIES
RATIO

181.23 %

36.64 %

INTERPRETATION:
Cash position ratio is very high, that indicates under utilization of
short term funds. Company does not require too much funds on
hand.
Company should utilize idle funds for productive purpose in the
company or invest them outside.

59

4. INVENTORY TO GROSS WORKING CAPITAL

RATIO:

= Inventory/ Gross working Capital

PARTICULARS

CURRENT YEAR PREVIOUS

2009-10

YEAR 2008-09

INVENTORY
430338
GROSS
WORKING 1585687

389560
769106

CAPITAL
RATIO

50.65 %

27.14 %

INTERPRETATION:
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.

5. TOTAL ASSETS TURNOVER RATIO:

60

= Sales/ Total Assets

PARTICULARS
SALES
TOTAL ASSETS
RATIO

CURRENT YEAR PREVIOUS

2009-10

YEAR 2008-09

3419171
3297981
1.04

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.

6. FIXED ASSETS TURNOVER RATIO:

= Sales/ Fixed Assets
61

PARTICULARS
SALES
FIXED ASSETS
RATIO

CURRENT YEAR PREVIOUS

2009-10

YEAR 2008-09

3419171
1106622
3.09

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.

7. CURRENT ASSETS TURNOVER RATIO:

= Sales/ Current Assets

62

PARTICULARS
SALES
CURRENT ASSETS
RATIO

CURRENT YEAR PREVIOUS

2009-10

YEAR 2008-09

3419171
1585687
2.16

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.

8. DEBTORS TURNOVER RATIO:

= Net Credit Sales/ Average Debtors

PARTICULARS
NET CREDIT SALES

CURRENT YEAR PREVIOUS

2009-10

YEAR 2008-09

306257

2540844
63

AVG. DEBTORS
RATIO

142595
21.48

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.

9. DEBTORS COLLECTION PERIOD:

= 365/Debtors Turnover Ratio

PARTICULARS
DAYS IN A YEAR
DEBTORS

CURRENT YEAR PREVIOUS

2009-10

YEAR 2008-09

365
2148

365
3246

TURNOVER
64

RATIO

16.99 DAYS

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:

= Net Credit Purchases/ Average Creditors

PARTICULARS

CURRENT YEAR PREVIOUS

2009-10

YEAR 2008-09

CREDIT PURCHASE 500840

AVERAGE 270909

441101
259350

CREDITORS
RATIO

1.70

1.85

65

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

PARTICULARS

CURRENT

SALES
AVERAGE

2009-10
3419171
98959

2008-09
2885119
65396

INVENTORY
RATIO

34.55

44.12

INTERPRETATION:

66

YEAR PREVIOUS

YEAR

 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
CONTRIBUTION
EBIT
RATIO

CURRENT YEAR PREVIOUS

2009-10

YEAR 2008-09

1027173
361352
2.84

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
67

better situation.

13.

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

PARTICULARS
EBIT
EBT
RATIO

CURRENT YEAR PREVIOUS

2009-10

YEAR 2008-09

361352
251867
1.43

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
68

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
RATIO

CURRENT YEAR PREVIOUS

2009-10

YEAR 2008-09

1027173
251867
4.08

959134
350965
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.

69

15.

NET PROFIT RATIO:

= Net Profit after Tax/ Net Sales

PARTICULARS

CURRENT YEAR PREVIOUS

2009-10

YEAR 2008-09

NET PROFIT AFTER 216645

-140214

TAX
NET SALES
RATIO

2540844
-5.52 %

306257
7.07 %

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.

70

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:
Supack Industries Pvt. Ltd.
Hari Om Packaging

71

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
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.

72

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.
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.

75

76

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

77

78

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

79

80

BIBLIOGRAPHY

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

81