The Product Project Report

On

PVC Pipes
Prepared By

Bhavesh Parekh
Roll No.

Seat No.

Class
T.Y. B.B.A.

Year
2007-08

College
H. N. SHUKLA COLLEGE FOR IT &
MANAGEMENT

Submitted To
SAURASHTRA UNIVERSITY

Guided By
MISS KAUSHA MADAM

1
 Declaration...

I, the undersigned, Mr. Bhavesh Parekh, a

student of T.Y.B.B.A. here by declares that the
project work presented in this report in my
own work and has been carried out under the
supervision of Prof. Miss kausha Madam of Shri
H. N. Shukla College for IT & Management.
This report has been submitted previously to
any other university for examination or
correction.

Date :
Place : Rajkot

Signature

(Bhavesh Parekh)

2
 Preface...

Indian Management scenario seemed to

be mix at the commencement of nineties. In
the present era of big industries and global
competition the condition and position of small
scale industries is not in the best of its form.
So there is a great need to change the style of
management. In the syllabus of T.Y.B.B.A.
university has introduced the subject of
entrepreneurship and management of small
business. The main use of this subject is to
teach, to solve problems and to take decisions
in the management of small business. Another
aim is to develop entrepreneurial ability
among the students.

As per the rules and regulation of

Saurashtra university, I have under taken the
preparation of the product project report on
cpvc pipes, as it is of great demand in todays
dynamic business era.

3
Date :
Place : Rajkot

4
 Acknowledgement...

I, at the moment, am very pleased to put

this report before you. Firstly, I would like to
thank Saurashtra University to encourage us
towards practical aspect of business. I am very
thankful to Prof. Miss Kausha Madam for a
radical support in preparing the report.

I, along with my professor, would like to thank

all my friends, who have helped me in
preparing this report as a subject of
entrepreneurship and management of small
business.

Above all, I am lovingly thankful to one and

only supreme soul, the Almighty.

Finally, I am very glad to put this report before

you.

Date :
Place : Rajkot

5
 Thanking You,
Yours Faithfully,

( Bhavesh Parekh )

6
 Index...
Introduction........................................05
Project at Glance................................07
Profile of Promoter..............................08
Justification of Location......................10
Product details....................................13
Raw Material & its Sources.................18
Details of Suppliers.............................19
Manufacturing Process.......................20
Staff & Labour....................................23
Administrative Work...........................24
Financial Details.................................25
Break Even Point...............................33
Fixed Capital.......................................34
Cost of production & Sales details......37
Profitability & Ratio Analysis...............41
Market Analysis..................................43
Competitors........................................44
Risk Factors........................................40
Annexure............................................41
Conclusion..........................................43

7
 INTRODUCTION

The success of any country’s economy

largely depends upon the factors that make up
the economy. Industries being the integral and
important part of the country’s economy play a
great role in molding the future of the economy.
Industries can be classified into two categories:

 Large Scale Industries

 Small Scale Industries

The industries whose investment in their fixed

assets is more than Rs. 7500000 but does not
exceed, Rs. 3 crore is termed as small scale
industries. Small scale sector or industries is the
backbone of the industrial environment in
developing country.

The development of small scale industry is very

important for any country, because it provides
employment to many people also small scale
industry is the base for large scale industry as
parts or components used by large scale industry
is provided by SSI. It also gives chance to new

8
and young entrepreneur to start the SSI with very
limited capital. Anyone with adequate capital and
skills can set up their own SSI, which would
ultimately play a great role in shaping the
country’s economy.

This product project report, is one such report of

small scale industries engaged in the production
of rigid cpvc pipes. This project report gives a
brief introduction about the different phases
involved in the production of cpvc pipes. It also
informs about the financial aspect of the
production.

9
 PROJECT AT A GLANCE

Name of the Unit : Bramhputra pvc

Pipes

Form of the Org. : Partnership Firm

Address : Bramhputra pvc Pipes,

8/B National Highway,
(Factory) Sapar.
Dis. Rajkot
(OFFICE) : Bramhputra cpvc Pipes,
03, Khodiyar Chember,
B/H Bus Stand,
Dhebarbhai Road,
Rajkot 360001
Product Manufactured : PVC Pipes
Promoter : Bhavesh Parekh
Mahesh Satodiya
SSI Registration No. : Application already
made
Plants Installed Capacity : 7,20,000 kg. per
year
Fixed Capital : Rs. 65, 22, 500
Working Capital : Rs. 32, 92, 800

10
Cost of the Project : 1 Crore (Approx.)
Break Even Point : 51.31% / 182941
Units
Implementation Period : 18 months

11
 PROFILE OF PROMOTER

PARTNER : 1
Name : Bhavesh Parekh

Address : “Jagdish”,
Vadali Street,
Nani Bazar,
Gondal 360 311

Age : 22 years
Education : B.B.A. (Bachelor of
Business Administration)

Experience : Experience in Marketing,

Finance
& Personnel field during the
training period
of study.

Capital Contribution : 50%

Share in Profit : 50%

12
Nature of Work : Management of
Entire Unit

PARTNER : 2
Name : Mahesh Satodiya.

Address : 2/15 Station Plot,

Near Luhar Vadi,
Gondal 360 311

Age : 26 years

Education : B.E. (Plastic Engineering)

Experience : 3 years experience in the

similar industry

Capital Contribution : 50%

Share in Profit : 50%

Nature of Work : Production Manager

13
 JUSTIFICATION OF LOCATION

Location plays an important role in the

success of any firm. A good location helps
promoter to increase the sales of his product.
While a bad location leads to the failure of the
product. There are many factors affecting the
location of the company or firm. Some of them
factor affecting my firm is given below :

I) AVAILABILITY OF R.M.
Raw material is the basic input for the
production of PVC pipes. Raw materials like PVC
Resin, Tribasic Lead Sulphate, Clycerol Mono
Stearate etc. are easily available from Rajkot.
Other Raw Materials are also available from near
by state at reasonable cost. There are few
vendors at Rajkot who suppliers raw materials at
reasonable rate. Thus, the cost of production is
minimum.

II) AVAILABILITY OF LABOUR

Labor is one of the most important aspect of
location. Availability of cheap and skilled workers
add to the success of the firm. As Shapar is the

14
industrial area, there will be cheap and skilled
workers in adequate numbers.

III) INFRASTRUCTURAL FACILITIES

To run a firm, various infrastructural facilities
are needed like transportation, power, railways
etc.
The infrastructural facilities are available to use
easily, like...

 There is good facility of railway station

within 30 kms from Rajkot to Gondal.
 There is airport facility in Rajkot.
 Other infrastructural facilities like road
transport, post office, banks, telephone
exchange etc. are also easily available.
 Shapar is well connected to national
highway for transportation of raw
materials and finished goods. The local
transports are easily available for
transportation. Road transport is more
commonly used as it is cheaper than other
modern and delivery at site is also
possible.

15
  Supply of electricity and water is
adequate. The requirement of electricity is
around 125 H.P., which is available from
GEB industrial estate at cheaper rates.

IV) MARKET POTENTIAL

As we have seen that plastic has great
demand because of his unique features, so the
market potential of PVC is high. Secondly, here in
Gujarat rate of practicing agriculture is also high
as a result the demand of PVC pipes will be high
and there is good market of plastic pipes.

16
V) GOVERNMENT INCENTIVES
Agriculture is being supported greatly by
government. For this government provides great
help to plastic industries.

17
 PRODUCT DETAILS

Polyvinyl Chloride (PVC) is an organic

material in plastic class having broader range of
applications. Pipes manufactured with this
material, well known as PVC pipes, has been
widely accepted as replacement to heavy pipes
due to its light weight & easy transportation. It
has less fractional losses due to which there is
less power consumption and is easy to handle.

PVC pipes are used in irrigation, potable water

supplies, rural and urban water and drainage
system, agricultural and drip irrigation system,
industrial and chemical conveyance and drainage
system, tele-communication ducting, Bio-gas,
natural gas and petroleum lines, tube well casing,
open and underground drainage for housing
colonies, domestic plumbing and AC and
industrial ducting, sprinklers, etc.

MARKET POTENTIAL
The market potential of plastic as we have
seen is very bright. Thus due to this potential PVC
pipes have also gained a large market share.

18
Planning commission has estimated demand for
PVC pipes as 45000 mts for the year 1982-83 and
88000 mts for the year 1997-98 which as
expected to increase future rapidly. Out of this 60
percent demand is likely to be for sizes of PVC
pipes upto 110 mm outer diameter. Among all
PVC Pipes PVC Pipes introduced in market in 2001
-02.

The main market would be in irrigation, water

distribution system like sprinkler, drip irrigation,
field irrigation and bore wells and in chemical
process industries. These pipes are available at
very competitive rates and average life is
estimated to be around 50 years.

PVC pipes has huge market potential because of

following features.

 Light weight, which makes handling easier.

 Resistant to fungi, bacteria, insects and
rodent.
 Resistant to most chemically reacting
substances.

19
  Solid and shock-resistant.
 Resistant to bad weather.
 Does not propagate flames.
 Versatile and environmentally correct.
 Recyclable.
 Does not melt even when hot water with
100 oC temperature supplies

Product & its Uses

By virtue of their certain intrinsic value of
possessing the combination of excellent
properties the PVC pipes are fast replacing the
conventional metal pipes in many applications.
Their use as electrical conduit is well established
in the building construction. PVC conduits has
been accepted by all the electricity board. PVC
pipes of larger diameter have gained wider
acceptance for potable water supply. Their low
cost, easy installation, non-corrosiveness, high
tensile strength to with stand high fluid pressure,
and better durability make them ideal for the
purpose. Their use in tube well is a recent
innovation. They also offer very good resistance
to most of the chemicals and have excellent
electrical and heat insulation properties.

20
PVC pipes and fittings for soil rain water and
irrigation system have been producer and used in
advance countries in the world. In view of the
properties attached to rural water suppliers and
irrigation facilities in the national planning,
adequate precautions need to be taken regarding
the availability of raw material, while planning for
the expansion of existing production capacity in
PVC pipes.

The present scheme has been drawn for the

manufacture of rigid pipes with a maximum
diameter upto 110 mm outer diameter which are
reserved in small scale sector mainly used for
domestic potable water supplies and rain water
pipes. The scheme is based on a 65 mm twin
screw extruder and the envisaged production
capacity is 180 mt of PVC pipes per annum.

APPLICATION
i. Pressure pipes for potable water supply,
irrigational system, gas supply etc.

21
 ii. Non-pressure pipes for sanitary pipe work
in building, underground sewage system,
permeable drainage pipes etc.
iii. Pipes for chemical plant installation
conduit pipes for wiring etc.
iv. PVC pipes are being increasingly used in
central heating system.
Features of PVC Pipes
PVC pipes are in demand because of many
reasons. Some of which are mentioned here.

I. EASY INSTALLATION
PVC pipes are light in weight. They have
smooth, seamless interior walls. No special tools
are required for cutting. They can be installed
using solvent cementing, threading, flanging and
roll-grooved joining techniques.

II. STRENGTH
PVC pipes are highly re-salient, touch and
durable product that have high tensile and high
impact rate. They will with stand surprisingly high
pressure for long periods.

III. FIRE RESISTANCE

22
 They are self-extinguish and will not support
combustion.

IV. INTERNAL CORROSION RESISTANCE

PVC pipes resist chemical attack by most
acids, alkalis, salts, and organic media such as
alcohols and aliphatic hydrocarbons, with certain
limit of pressure and temperature.

V. IMMUNITY TO GALVANIC OR
ELECTROLYTIC ATTACK
They inherently immune to galvanic or
electrolytic action. They can be used
underground, underwater, in the presence of
metals, and can be connected to other materials
or used as an insulator between them.

VI. FREEDOM FROM TOXICITY, ODORS,

TASTES
They are nontoxic, odorless, and tasteless.
They have been listed by National Sanitation
Foundation (NSF) for use with potable water in
USA and worldwide.

VII. LOW FRICTION LOSS

23
The smooth interior surface of PVC pipes,
compared to metal and other materials assure
low friction loss and high flow rate.

VIII. LOW INSTALLATION COST

They are extremely light weight, convenient
to handle, relatively flexible and easy to installed
costs than conventional metal piping.

IX. MAINTANANCE FREE

Once a Rigid Piping system is properly
selected, designed and installed, it is virtually
maintenance free. It will not rust, pix, scale,
corrode, or promote build up on the interior.
Therefore years of trouble-free service can be
expected.

24
 RAW MATERIAL & ITS SOURCES
RAW MATERIALS
I. PVC Resin
II. Stabilizer
III. Calcium Carbonate
IV. Wax
V. Titanium Dioxide
VI. Carbon- Black
VII. Steric Acid

SUPPLIERS OF RAW MATERIALS

Reliance Industries Ltd.

Reliance Industries Ltd.

Lalitha Chem India Pvt. Ltd.

20 Microns Ltd.

Vinit hdw ltd.

Green Chemicals

Friends Chemical

D.K.Enterprise

25
 DETAILS OF SUPPLIERS

Raw Materials Suppliers

PVC Resin Reliance Industries Ltd.,
Hazira
IPCL, Baroda
DCW Ltd., Sahupuram
Stabilizer Lalitha Chem India Pvt.
Ltd., Tarapur
Arti Chemical Industries,
Ahmedabad
Power Aditives Pvt. Ltd.,
Gopalpura, Anand
Calcium Carbonate 20 Microns Ltd., Baroda
Steric Acid Cal. Chem. Ind., India
Ltd., Paontashib
Wax Vinit hdw ltd.,
Ahmedabad
Titanium Dioxide Green Chemicals,
Mumbai
Carbon- Black Friends Chemical,
Ahmedabad
D.K.Enterprise,
Ahmedabad

26
 MANUFACTURING PROCESS

 PRODUCTION DETAILS
Rigid or unplasticized pvc pipes are made
from polyvinyl chloride (PVC) which is resin form
is hard and rigid material. This rigidity can be
controlled by controlling the percentage at the
time of compounding.

Thus compounding the main process of

manufacturing pvc pipes. Compounding can be
divided into 3 steps.

 Pre-mixing
 Fusion or Gelatin
 Granulation

Compounding pvc formulation is mixing pvc and

additives to obtain as homogeneous compound
which is suitable for processing into a finished
product with desired properties at minimum cost.

 This compounding operations is classified

into two classification.

27
  Melt compounding where the mix is fluxed
and fused.
 Dry blending where the visitant compound
is a dry relatively free flowing powder
containing the liquid ingredients absorbed
in the resin plastics.

The main considerations that govern the choice of

formulation component, and their proportion
are...

a. processing requirements
b. service requirements
c. materials and process cost economy

A usual pvc formulation consists of following

chemicals part from pvc resin:-
 Stabilizers to prevent thermal degradation.
 Processing aids like SAM, MMA copolymer,
alpha methyl styrene polymeric additives
to enhance melt flow and strength.
 Lubricants to prevent adhesion-fatty acids
metallic soaps etc are used.

28
  Impact modifiers-ABS, MM-BS etc. used to
improve impact resistance.
 Colorants and
 Fillers to reduce the cost of pvc compound.
Apart from them antioxidants, UV,
absorbents etc. are also used to improve
the resistance of pvc product.

FOLLOWING ARE THE MACHINES REQUIRED

FOR COMPOUNDING PVC

 Binders
 Intensive Dry Mixers
 Internal intensive mixer
 Barberry mixer
 Fillet continuous mixer
 The roll mills
 Single screw extruder, compound extruder
and twin screw extruder
Of the above mixers, Barbary mixer and Roll Mills
are commonly used.
Following is the pvc compounding formulation.
Parts by

29
 weight
pvc resin (k value 65-67) 100
Plasticizer (D.O.P.) 0-6
Epoxy plasticizer 2-3
Stabilizer 2.5-4
Filler 8-15
Lubricant 1-2
Color 0.1-0.5
Pigment base 3
Pigment As required
Secondary plasticizer 5

30
 STAFF & LABOUR
No Designation No.of Amou Total
. Employe nt
es paid
per
month
A Administrative
Staf
Manager 1 7500 7500
Sales Executive 2 1500 3000
Accountant cum 1 3000 3000
Store keeper
Clerk cum 1 1500 1500
computer
operator
Peon 1 1000 1000
Watchman 2 1000 2000
Total (A) 1800
0

B Technical Staf
Work Manager 1 3000 3000
Maintenance 1 2500 2500
Engineer
Operators 3 2500 7500
Semi skilled 6 1500 9000
workers
Unskilled 8 1000 1000
workers
Total (B) 3000

31
 Total ( A + B ) 4800
0
Add Perquisite 9600
@ 20%
Total 5760
0
ADMINISTRATIVE WORK

There are 8 persons engaged in

Administrative works. Among them there is a
manager. He has to look after all administrative
works performed by middle level and bottom
level. Under his control there are 2 saless
executives who have to continuously keep
contact with distributers and have to observe
market opportunities. There is an accountant who
has to look after the firm’s account and he is also
appointed as a storekeeper. He has to check all
entries and exits of finished goods in the store
room. There is a computer operator in the firm
who has to do all computer works. Ther is a peon
to do miscellaneous work. There are two watch
men to keep watch for the factory.

32
 FINANCIAL DETAILS : FIXED
CAPITAL

(A) LAND & BUILDING

(i) Land : Location – Shapar

PARTICULARS AMOUNT
Area : 2500 sq. mts.
Rate : Rs. 200 per sq. mt.
Value of Land 500000
Stamp Duty 12% 60000
Registration Fees 2500
Advocate Fees 2500
Total Land Value Rs. 565000

(ii) Building : Cost of Construction

PARTICULARS AMOUNT
Built-up area : 510 sq. m. x 2250 11,47,500
Compound Wall : 200 x 300 60,000
Total Rs.
12,07,500

33
Distribution of Building Area

N PARTICULARS TYPE OF AREA IN

O. CONSTRUCT SQ.
ION MTS.
1. Factory Shed R.C.C. 330
2. Resin Godown “ 45
3. Chemical Godown “ 45
4. Mixture Room “ 45
5. Office “ 20
6. Chowkidar Room “ 5
7. Sanitary Block with “ 20
Overhead tank
8. Compound Wall “ 200
Total 710 Sq.
Mts.

34
(B) MACHINERY & EQUIPMENT
N PARTICULARS QT AMOU
O. Y. NT
1. 65 mm pvc rigid pipe 1 35,05,0
extrusion plant consisting of 00
twin screw extruder, vacuum
sizing unit, cooling tent, haul
off unit and cutting device
complete with controls
2. High speed mixture, honschel 2 4,45,00
type capacity 50 kg. per 0
baten, fitted with complete
controls & cooling
arrangements
3. Scrap Grinder, Heavy duty, 2 20,000
fitted with electric motor 5
(HP)
4. Water cooling arrangement 1 15,000
5. Dies & Mandrel size 20, 25, 1 80,000
45, 63, 73, 90 & 110 mm on
and 2.5 kg/cm2, 4 kg/cm2, &
10 kg/cm2 one set each
6. Electronic Weighing Machine 1 15,000
7. Pipe storage tracks, 1 50,000
maintenance of small hand
tools, greasing, oiling
equipments etc.
8. Testing equipments and 1 2,00,00
quality control, testing lab, 0
equipments for testing bulk

35
 density
9. Expenditure for direction, 3,00,00
installation and voltage 0
stabilizer, electrification
10. Office furniture, fixtures of 70,000
general uses and type write
etc.
11. Overhead water tanks and 50,000
recycling pump units
47,50,
000
Fixed Capital Statement

PARTICULARS AMOUNT
Land 5,65,000
Building 12,07,500
Machineries & Equipments 47,50,000
Total Rs.
65,22,500

36
 WORKING CAPITAL

(A) RAW MATERIAL

N Particul Qty/ Rate/ Volume/ Value/Y
o. ars Kg. Kg. Month ear
1. Pvc- 3250 25 812500 975000
Resin 0 0
2. Dop 1600 50 80000 960000
3. Stabilize 1300 40 52000 624000
rs
4. Lubrican 200 50 1000 120000
ts
5. Colorant 38 50 1900 22800
s
6. Fillers 90 40 3600 43200
960000 115200
00

(B) UTILITIES
PARTICULARS AMOUNT
Power Installed 125 HP 40000
utilized (60%) – 75 HP

37
(C) OTHER EXPENSES
N PARTICULARS AMOUNT/MON
O. THS
1. Postage & Telegram 4000
2. Printing & Stationary 500
3. Repairs & Maintenance 15000
4. Consumable Stores 2000
5. Traveling 3000
6. Adv. & Publicity 10000
7. Insurance 2000
8. Miscellaneous 3500
Total 40000

Working Capital Statement

N PARTICULARS AMOUNT/MON
O. THS
1. Raw Materials 960000
2. Salary & Wages 57600
3. Utilities 40000
4. Other Expenses 40000
Total 1097600

38
(D) SALARY & WAGES OF STAFF & LABOUR
No Designation No.of Amou Total
. Employe nt
es paid
per
month
A Administrative
Staf
Manager 1 7500 7500
Sales Executive 2 1500 3000
Accountant cum 1 3000 3000
Store keeper
Clerk cum typist 1 1500 1500
Peon 1 1000 1000
Watchman 2 1000 2000
Total (A) 1800
0

B Technical Staf
Work Manager 1 3000 3000
Maintenance 1 2500 2500
Engineer
Operators 3 2500 7500
Semi skilled 6 1500 9000
workers
Unskilled 8 1000 1000
workers
Total (B) 3000

Total ( A + B ) 4800
0

39
 Add Perquisite 9600
@ 20%
Total 5760
0

Total Capital Investment

PARTICULARS AMOUNT
Fixed Capital 6522500
Working Capital for 3 8292800
months
9815300

Means of Finance & its allocation

Particul Amount 40% 60% 60%
ars own Bank@ asfc@1
15% 8%
Land 565000 226000 - 339000
Building 1207500 483000 - 724500
Machine 4750000 2+0000 - 2850000
ry & 0
Equipme
nts
Working 3292800 1317120 1975680 -
Capital
981530 392612 197568 391350
0 0 0 0

40
 BREAK EVEN POINT (BEP)
ANALYSIS

The narrow interpretation of the term BEP

analysis refers to a system of determination of
that level of activity where total cost equal its
total sp.

The broader interpretation refers to that system

of analysis which determines the probable profit
at any level of activity. The relationship among
cost of production, volume of production the
profit and sales volume is established by ‘Break
Even Analysis’. Hence it is also termed as “Cost-
volume-profit (CVP) Analysis”.
The profit, which breaks the total cost and the SP
evenly to show the level of output or sales at
which there shall to be neither profit nor loss, is
regarded as BEP. At this point the income of the
business exactly equals its expenditure. If the
production is enhanced beyond this level, profit
shall occur to business & if it is decreasent from
this level loss shall be suffered by the business.

Fixed Cost
BEP = Contribution margin per unit

41
 Fixed Cost
BEP = PVR
Contribution 7941480
PVR = Sales
= 20400000
 100

= 38.93 %
3560937
BEP = 38.93%
= 9147025Rs / 50Rs = 182941

Units
Fixed Cost per Annum
BEP = Fixed cost per annum  PBT
 100

35,60,937
= 35,60,937  3379761
 100

= 51.31 %

42
 FIXED ASSETS
LAND & BUILDING
(i) Land : Location – Shapar

PARTICULARS AMOUNT
Area : 2500 sq. mts.
Rate : Rs. 200 per sq. mt.
Value of Land 500000
Stamp Duty 12% 60000
Registration Fees 2500
Advocate Fees 2500
Total Land Value Rs. 565000

(ii) Building : Cost of Construction

PARTICULARS AMOUNT
Built-up area : 510 sq. m. x 2250 11,47,500
Compound Wall : 200 x 300 60,000
Total Rs.
12,07,500

43
Distribution of Building Area

N PARTICULARS TYPE OF AREA IN

O. CONSTRUCT SQ.
ION MTS.
1. Factory Shed R.C.C. 330
2. Resin Godown “ 45
3. Chemical Godown “ 45
4. Mixture Room “ 45
5. Office “ 20
6. Chowkidar Room “ 5
7. Sanitary Block with “ 20
Overhead tank
8. Compound Wall “ 200
Total 710 Sq.
Mts.

44
(B) MACHINERY & EQUIPMENT
N PARTICULARS QT AMOU
O. Y. NT
1. 65 mm pvc rigid pipe 1 35,05,0
extrusion plant consisting of 00
twin screw extruder, vacuum
sizing unit, cooling tent, haul
off unit and cutting device
complete with controls
2. High speed mixture, honschel 2 4,45,00
type capacity 50 kg. per 0
baten, fitted with complete
controls & cooling
arrangements
3. Scrap Grinder, Heavy duty, 2 20,000
fitted with electric motor 5
(HP)
4. Water cooling arrangement 1 15,000
5. Dies & Mandrel size 20, 25, 1 80,000
45, 63, 73, 90 & 110 mm on
and 2.5 kg/cm2, 4 kg/cm2, &
10 kg/cm2 one set each
6. Electronic Weighing Machine 1 15,000
7. Pipe storage tracks, 1 50,000
maintenance of small hand
tools, greasing, oiling
equipments etc.
8. Testing equipments and 1 2,00,00
quality control, testing lab, 0
equipments for testing bulk

45
 density
9. Expenditure for direction, 3,00,00
installation and voltage 0
stabilizer, electrification
10. Office furniture, fixtures of 70,000
general uses and type write
etc.
11. Overhead water tanks and 50,000
recycling pump units
47,50,
000
COST OF PRODUCTION & SALES
DETAILS

(1) DETAILS OF SALES (MONTHLY)

Particular Qty/Kgs Rs/Kg Amount
s (Rs)
By sale of 34000 50 1700000
Rigid pvc
pipes
1700000

Years Sales = Rs. 1700000 x 12 months

= 20400000

(2) COST OF PRODUCTION

46
(A) Raw Materials ( As earlier mentioned ) (
Yearly )
N Particulars Qty. Amount for
o. 1 year
1. pvc-resin 32500 9750000
2. Dop 1600 960000
3. Stabilizer 1300 624000
4. Lubricants 200 120000
5. Colorants 38 22800
6. Fillers 90 43200
Total 11520000

47
(B) Utilities

PARTICULARS AMOUNT/MO AMOUNT/YE

NTH AR
Power Installed 40000 480000
60% utilized

(C) Depreciation Provision

N Assets Amou Dep Years Dep.

o. nt % in Rs.
1. Building 12075 15% 181125
00
2. Machineries & 47000 20% 940000
Office 00
Equipments
3. W/o Pre- 50000 W/o 5000
operative Exp. in 10
years
1126125

(D) INTEREST PROVISION

N Details Amount of % of Value/Y

o. Loan Int. ear
1. G.S.F.C. 3913500 18% 704430
2. S.B.S. 1975680 15% 296352
Loan
100078
2

48
(E) OTHER OVERHEAD EXPENSES

N Particulars Amount/M Amt./Year

o. onth
1. Postage & Telegram 4000 48000
2. Printing & 500 6000
Stationery
3. Repair & 15000 180000
Maintenance
4. Consumable Stores 2000 24000
5. Traveling Exp. 3000 36000
6. Adv. & Publicity 10000 120000
7. Insurance 2000 24000
8. Miscellaneous 3500 42000
Total 40000 480000

Total Expenses (Yearly)

PARTICULARS AMOUNT
Raw Material 11520000
Salary & Wages 691200
Utilities 480000
Other Expenses 480000
Depreciation 1126125
Total 14297325

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Total Variable Cost of Production

PARTICULARS AMOUNT
Raw Materials 11520000
Salary & Wages (60%) 441720
Utilities (60%) 288000
Contingent Expenses 288000
(60%)
Total 12537720

Total Fixed Cost of Production

N PARTICULARS AMOUNT/YEA
O. R
1. Total Depreciation 1126125
2. Interest Provision 1000782
3. Interest on capital (24%) 826350
4. 40% of Salary & Wages 276480
5. 40% of Other Exp. 192000
6. 40% of Utilities 192000
Total 3613737

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 PROFITABILITY & RATIO ANALYSIS
Profitability Statement

Particulars Amount Amount

Sales Values 20400000
( - ) Variable cost 12458520
Contribution  7941480
7941480
( - ) Fixed Cost 3560937
4380543
Net Profit ( EBIT)  4380543
( - ) Interest on Loan 1000782
(EBT) 3379761 3379761
Provision for Taxation 1182916
(35%)
Net Profit After Tax  2196845

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 Ratio Analysis

1. NET PROFIT RATIO

NP
= Sales
 100

21,96,845
= 2,04,00,00 0
 100

= 10.76 %

2. RETURN ON CAPITAL EMPLOYED RATIO

EBIT
= Total Capital Employed
 100

43, 80, 543

= 98, 15, 300
 100

= 44.63 %

3. RETURN ON INVESTMENT

NP
= Total Investment
 100

21, 96, 845

= 98, 15, 300
 100

= 22.38 %

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 MARKET POTENTIAL

The market potential of plastic as we have

seen is very bright. Thus due to this potential PVC
pipes have also gained a large market share.

Planning commission has estimated demand for

PVC pipes as 45000 mts for the year 1982-83 and
88000 mts for the year 1997-98 which as
expected to increase future rapidly. Out of this 60
percent demand is likely to be for sizes of PVC
pipes upto 110 mm outer diameter.

The main market would be in irrigation, water

distribution system like sprinkler, drip irrigation,
field irrigation and bore wells and in chemical
process industries. These pipes are available at
very competitive rates and average life is
estimated to be around 50 years.

PVC pipes has huge market potential because of

following features.

 Light weight, which makes handling easier.

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 Resistant to fungi, bacteria, insects and
rodent.
 Resistant to most chemically reacting
substances.
 Solid and shock-resistant.
 Resistant to bad weather.
 Does not propagate flames.
 Versatile and environmentally correct.
 Recyclable.

COMPETITORS

The major competitors are :

 Peremount Plastics Sapar
 Ganga PVC Pipes Sapar
 Narmada Pipes Sapar
 Excell Plastics Metoda
 Fieldmarcel Plastics Rajkot

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 RISK FACTORS

Risk factors associated with manufacturing

of PVC pipes are as follows:

1. For PVC pipes the rain factor will influence

its demand. For instance if rainfall is low
than there won’t be enough water for the
agricultural purpose and this ultimately
would result into low demand for pipes.
2. Changes in government policy may affect
profitability.
3. The company must take competition into
consideration of existing and new units, as
it is normal and prevalent factor in every
industry.
4. Any delay in implementation of the project
may push up the cost of project. However,
adequate contingency provision have been
made in advance.
5. Prices of major consumables like power,
fuel etc. are subject to change in
government policy which may effect the
demand of PVC pipes.

55
 FUTURE PROSPECTS

Despite global recession, plastic industries

have achieved 4 to 5 percent growth rte per
annum worldwide, where as, these Indian
polymer industries are growing at the rate of
15%. This implies that progress industry is very
high. Today our plastics industry is able to cater
to the world market and we have acquired
excellence to encash global opportunities. We will
be able to reach at third or second largest plastic
consumer level from our present 9th rank in the
world by the end of this decade. We have about
16 major raw material’s manufacturers and
23000 SSI units producing plastic products,
leading to abut 27000 crores of Rs. turnover.
About 3 million people are getting employment
from plastic industries.

The overall development of plastic industry in our

country is because plastic is versatile, light
weight, non-corrosive, energy efficient and users
friendly material. Its aesthetic appeal and
abandance are most effective factors for

56
industrial growth in India. In short there is
colourful future of plastic industry awaiting for
entrepreneurs in India.

57
 BIBLIOGRAPHY

I have used the following sites for the

preparation of the report:

www.fieldmarcelplastic.com

www.peremountpipes.com

Financial Mangement – I M Pandey

Manufacturing & Material Management –

GopalKrishna

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