Product Project Report On 'Star Soap Industry'

PRODUCT PROJECT REPORT ON ’STAR
SOAP INDUSTRY’
Prepared By
MISS. SWETA B. MASHRU
College
CHRIST COLLEGE, RAJKOT.
Academic Year
2006 – 2007
Class
T. Y. B. B. A.
Roll No.
26
Submitted To
Saurashtra University, Rajkot
Guided By
“Dr. Swati K. Doshi"
THE STAR - FEEL LIKE HEAVEN 1

DECLARATION
I, the undersigned, Sweta B. Mashru, a student of T. Y. B. B. A. hereby

declare that the project work presented in this report is my own work and has
been carried out under the supervision of Dr. Swati K. Doshi of Christ
College, Rajkot.
This work has not been previously submitted to any other university for
any examination.
Date :-
Place :-
Signature
[Sweta B. Mashru]

PREFACE
As students of final year of the B.B.A. course conducted by Saurashtra

University, we have one special subject called Entrepreneurship and
management of small-scale business and this project report is prepared as a
part of it.
The business system of a country is divided into 3 sectors.
(1) Large Scale Industry

(2) Medium Scale Industry
(3) Small Scale Industry
These classifications of industry may be based on a no. of criteria, e.g.

The no. of persons employed, the amount of capital investment, type of mgt.
etc. A small-scale industry is defined in India. As a business unit employing
less than 50 persons if using power and less than 100 persons without using
power & having fixed capital not exceeding 3 crores. Small-scale industries
thus have a vital role to play in the economic development of a country like
India.
Preparing & presenting the details regarding a product & submitted to

Saurashtra University in the form of report. This report has been prepared
under the prescribed format of Saurashtra University, Rajkot for practical
subject.

The subject entrepreneurship and management of a small-scale business
has been included in the syllabus of T.Y.B.B.A. with a view to create and
develop entrepreneurial skill up afresh industrial.
Today in the growth rate of Indian economy, contribution of small-scale

industry is very important along with the giants of India. The contribution of
small-scale industry is ground 40% in the economic growth rate of the
country.
Hence, it is suggested by the University to under go a short training to

manage small unit efficiency right from the inception to avoid all the
difficulties that comes in the way by keeping in mind these views and
objectives. I am submitting this report.

Acknowledgement
“ Planning is necessary in every walk of life. For successful planning

guidance is necessary.”
Many individuals have supported me during the completion of this

project.
First of all, I would like to thank out principal Resp. Father for
providing me an opportunity for the study of B.B.A. College at Christ College
and Dr. Swati K. Doshi, out faculty, who provided me with invaluable
guidance through out my project.
Lastly, I would thank my parents my sister & my friends, whose words

have encouraged and inspired me throughout the preparation of the project.
Date: -
Signature

INDEX
Sr. Page
Particulars
No. No.
1 Introduction 7
2 History of Soaps 9
3 General Information 10
4 Proprietor’s Profile 12
5 Organizational Structure 13
6 Justification of Location 14
7 Product Details 16
8 Marketing Analysis 18
9 Raw Materials 25
10 Machineries 26
11 Manufacturing Process 30
12 Staff & Labour Details 32
13 Implementation Schedule 34
14 Financial Details 35
15 Cost of Capital 43
16 Loan Repayment Schedule 44
17 Cost of Production 44
18 Means of Finance & Its Allocation 46
19 Sales Details 47
20 Profitability Analysis 48
21 BEP Analysis 49
22 Ratio Analysis 50
23 Cost Sheet 51
24 Analysis of Profit for 5 years 55
25 Projected Profit & Loss A/c. & Balance Sheet 56
26 List of Suppliers of Raw Materials 58
27 Acquisitions of Machines 60
28 Risk Factors 61
Introduction
The development and importance of small-scale industries has

increased to a large extent immensely in this country. There is a great scope
for expansion of small scale units because it requires less capital at the same
time more opportunities for development. The share of the small scale
industries in the overall GDP (Growth & Development Programme) of the

country is about 45%. Thus we can say that the small-scale industries play a
vital role in the Indian economy.
Small scale industries play a key role in industrialization of a

developing country. They provide large scale employment, optimal utilization
of resources, better use of machineries, lower risk. They offer a method more
equitable distribution of national income and facilitate effective mobilization
of resources of capital and skills which would otherwise remain unutilized.
These industries stimulate growth of industrial entrepreneurship and
promote a more flexible pattern of ownership and location.

Features: -
1. Capital investment is less as compared to large scale industries.
2. They are generally engaged in the production of small products.
3. Generally located in rural and semi – urban areas.
4. Virtually all of them are privately owned. E.g Sole proprietorship,

partnership firm.
5. The fixed assets form the largest component of the small scale units.
6. Most of the funds come from the internal sources of the entrepreneur.

HISTORY OF SOAPS
In 2800 B.C. archeologist found soap like material in clay cylinders

during an excavation of ancient Babylonian site.
According to an ancient Roman legend, soap got its name from Mount
Sapo, a place where animals were sacrificed. People found that a mixture of
melted tallow (otherwise known as animal fat) and wood ashes made their
bodies and clothing clean.
As Roman civilization advanced in around 312 B.C., Galen, a Greek
physician recommended soap for both medicinal and cleansing purpose.
Elsewhere in the world, bathing became a common custom. In Italy, Spain
and France quick supply of olive oil made early soap making possible.
England began making soap in the 12th century. Soap was heavily taxed as a
luxury item in several countries in the early 19 th century. When taxes were
lowered, soap became available to ordinary people.
In 1971, a French chemist named Nicholas Leblanc patented a process
for making soda ash, or sodium carbonate from common salt. Chevreul &
Solvay discovered the ammonia process and the invention of electricity
allowed this industry to become much more productive. Many new types of
soaps developed including mild bath soaps, soaps for washing clothes, and
other household chores.
We all prefer to start our own business. Hence, I am starting my own
business. My venture would be titled, as “STAR SOAP INDUSTRY” ‘STAR
soap industry’ would be a soap manufacturing company. ‘STAR soap
industry’ would be a small-scale industry located in the Shapar Industrial
Estate in Rajkot. The main product of my concern will be “Bathing Soaps”.
General Information

1 Name & Address of the unit : STAR SOAP INDUSTRY
Plot No. 25,
Metoda G.I.D.C.,
Kalawad Road,
Village – Lodhika
Dist. – Rajkot
2 Form of Organization : Sole proprietorship
3 Phone Number (0281) 02
: 0281-2571492
4 Fax Number : 0281–2571491
5 E-mail address : starsoaps@yahoo.com
6 Year of Establishment : 2006
7 SSI Registration No. : Application has been made
8 Proprietor : Miss. Sweta B. Mashru
9 Product : Bathing Soaps
10 Brand name : “STAR”
11 Slogan : “STAR – Feel like heaven”
12 Type of Organization : Manufacturing concern
13 Accounting Year : April 2006 – March 2007
14 Divisions : There are 4 divisions
(1) Production Department
(2) Sales Department
(3) Personnel Department
(4) Finance Department
15 Initial Capital : Rs. 35,74,450/-
16 Size of the unit : Small Scale Industry
17 Total No. Of employee :
Total No of workers 6
Skilled 3
Semi-Skilled 2
Unskilled 1
Other Employees 13
Production Manager 1
Sales Manager 1
Packing In-Charge 1
Stock Officer 1
Salesman 3

Accountant 1
Chemist 1
Clerk cum typist 1
Foreman 1
Peon 1
Watchman 1
Total 19
18 Bankers : State Bank of India, Rajkot
19 Working days & : 8 Hours working per day and 1
Holidays Day off on Wednesday due to
Power staggering every week.
Work Shift 08:30 to 12:30
12:30 to 01:00 (Lunch break)
01:00 to 05:00
20 Total Area Covered : 2500 Sq. feet.
21 Installed & Utilized Capacity :
Installed capacity 500 kgs per day

Utilised Capacity 250 kgs per day
PROPRIETOR’S PROFILE
Name :- Miss. Sweta B. Mashru

Address :- Akruti Appartment,
Uni. Road,
Rajkot – 360 005.
Age :- 20 Years
Educational
Qualification :- Bachelor is Business Administration
(B.B.A.)

Capital
Contribution :- 55%
Nature of Work :- Overall management.

ORGANISATIONAL STRUCTURE
Proprietor

   
Personnel Production Sales Finance
Department Department Department Department
   
Employees  Sales Manager Accountant
  
Packing Foreman Chemist
In charge
 
Workers Workers
NOTE : - The proprietor herself is n direct contact with the employees’

workers. The proprietor would take care of personnel Department.

JUSTIFICATION OF LOCATION
It is very important for every firm to decide about the

establishment of plant. At the time of selection of place for a unit, we have to
take into consideration many point. It involves cost, which affects the overall
profitability of a unit. Moreover there are other environment consideration
and infrastructures facilities to which have to be kept in mind while selecting
a plant site.
The unit will be located at Metoda (Village – Lodhika) Dist. – Rajkot in

Gujarat State. The various factors considered whole selecting the location are
as follows: -
1. Machines Availability :
The required machines for soaps are available from
Rajkot district. There is a vendor at Shapar itself who
Sells machines at reasonable rates.
2. Raw Materials :
The raw materials required for soap is procured
From Mumbai and Ahmedabad. Mumbai and Ahmedabad
Are well connected to Rajkot by roads, rails and airways.
3. Infrastructures Facilities :
The infrastructures facilities like railway station
(Within 30 kms. In Rajkot & Gondal), airport (in Rajkot),
road transport, post office, banks, telephone exchange

Connecting through STD, ISD, & FAX are available.
Shapar is connected to national highway for transportation of raw

materials and finished goods. The local transports are also easily
available. Road transport is more commonly used as it is cheaper than
other modes & delivery at site is also possible.
The supply of water and electricity is also available.
The requirement of electricity is 3750 kw p.m. which is
Available from G.E.B. Industrial Estate.
4. Availability of Labour :
Skilled & semi skilled labourers are available at
Reasonable rates in Rajkot.
Besides the site is connected with Rajkot city, which
is a big commercial city.

PRODUCT DETAILS
Soap is a product that many people might take for granted or consider
rather ordinary, but for some, lathering up can be a treasured part of a
morning or nightly routine.
Scented, or unscented, in bars, gels and liquids, soap is a part of our
daily lives.
USAGE: -
Soap manufacturers originally targeted their products to the lowest
income strata in well as rural areas, positioning their brands as a way to
remove dirt and clean the body. For some brands, that positioning persists
even today with a focus on removal of body odour and keeping the user
healthy. However, soap positioning is moving towards skin care as a value
added benefit.
The usage of soaps has increased manifold with changing life styles,
growing purchasing power, increased awareness of the consumer to brands
offering superior value and the spread of audio-visual media.
“STAR” is a bathing soap, which removes body dirt and odour
providing soft, silky skin and refreshing tint.
FEATURES: -
“STAR” is a bathing soap with fragrance and extracts of real
watermelons. The fragrance of this soap is unmistakably unique and
transports you directly to the refreshing world.
The USP of “STAR” is that no other soap in Indian soap industry
presents the formula of using watermelon scents. Moreover, the whole of
India, especially Saurashtra region has to face scorching heat and “STAR”

would provide refreshing tints in such a climate with its fragrance and
ingredients. “STAR” also promises soft skin with its unique composition.
“STAR” promises to suit your skin type completely. It is available for 3
skin types – normal, dry and oily skin. “STAR” has a composition, which is
suitable to a person’s skin according to its type.
All these at a reasonable price of Rs. 6.25 per bar of 75 gm.
 Ingredents of Soap :-
Ingredients Functions
 Aqua Solvent
 Sodium Laureth Sulfate Surfactant
 Cocamidopropyl Betaine Surfactant
 Acrylates Copolymer Structurant
 Parfum Fragrance
 Mica Colourant
 PEG-75 Shea Butter Glycerides Skin Conditioning Agent
 Guar Hydroxypropyltrimonium Chloride Skin Conditioning Agent
 Disodium EDTA Sequestrant
 Sodium Chloride Viscosity Controlling Agent
 Bis-PEG/PPG-20/20 Dimethicone Viscosity Controlling Agent
 Sodium Hydroxide pH Adjuster
 Citric Acid pH Adjuster
 Sodium Benzoate Preservative
 Benzyl Salicylate Fragrance
 Butylphenyl Methylpropional Fragrance
 Citronellol Fragrance
 Geraniol Fragrance
 Hexyl Cinnamal Fragrance
 Limonene Fragrance
 Linalool Fragrance
 CI 15985 Colourant

MARKETING ANALYSIS
Marketing is the most important activity for any product. Once the
product 15 produced producers has to offer that production to the market. So,
fat as STAR SOAP is concerned there is nothing need to worry about
marketing activities because is not a final product. The final product of this
unit is a component of a part of watchcase. So we will produce on the basis of
batch production (order wise production)
MARKET POTENTIAL
Soap is a product that many people might take for granted or consider
rather ordinary, but for some, lathering up can be a treasured part of a
morning or nightly routine.
Scented, or unscented, in bars, gels and liquids, soaps is a part of out

daily lives. At the end of 2000, soap was a $ 1.032 million US dollars (Rs. 4500
crores) business in India.
India is a vast country with a population of 1030 million people.

Household penetration of soaps is 98%. People belonging to different income
levels use different brands, which fall under different segments but all income
levels use soaps, making it the second largest category in India (detergents are
number one). Rural consumers in India constitute 70% of the population.
Rural demand is growing with more 7 more soap brands being launched in
the discount segments targeting the lower socio-economic strata of
consumers.

CHALNNEL OF DISTRIBUTION
There is no specific channel for this unit. But for the sale of classifying
the distribution channel we can say that this unit follow “Zero Level” i.e.
manufacture to consumer directly. The kind of channel of distribution to be
used by STAR SOAP company understood in the good once with the help of
following chart.
Manufacturer
↓
Consumer Directly
It indicates that the buyers are coming at the site and buy their quantity
and take in their own vehicles.

SUBSTITUTES
Toilet soaps are always used in the bar form – there is no other form in
the Indian market – and they are used in the bath. Showers are a distant
dream for 70% of India’s population, who live in villages where there is not
even a regular supply of drinking water. In the urban areas, people bathe by
using a bucket of water, mug and a bar soap. In villages, they usually bathe by
the riverbank or village ponds. Although most of the urban houses have a
shower facility, showers are seldom used because of the scarcity of water.
So, even if Multi National Companies introduces bath & body shower
gels, it would be treated as a luxury by most of the population. For new
entrants in soap industry, they do not have to fear substitutes and they are
very rarely available and used.

COMPETITORS
Now since household penetration of soaps is 98% and as it is second

largest category in India after detergents, the Soap Industry in India is
flourishing with products ranging from super premium soaps by MNC’s to
carbolic soaps made by local.
Now, on the national front, there are 5 major competitors:
[1] Hindustan Lever Ltd. (HLL)

Hindustan Lever Ltd. is India’s largest packaged mass
consumption goods company. Hindustan Lever is the leader in soap
industry with a 65% share. Their brands include LIFEBUOY, REXONA,
LIRIL, LUX and BREEZE.
[2] Nirma
Nirma is the Rs. 17 billion detergents, soaps and personal care
products brand, and second largest in the Indian bathing soaps market.
It offers varieties like NIRMA BATH, NIRMA BEAUTY SOAP, NIRMA
PREMIUM, NIRMA LIME FRESH, NIRMA SHIKAKAI SOAP, NIMA –

Rose, Lime and Sandal. Nirma sells 100000 tones soaps every year.
Nirma has picked up a substantial 14% share in the 4.5 lakh tone
popular segment of the toilet soaps market.
[3] Godrej India Ltd.

Godrej consumer Products Ltd. (GPCL) is a major player in the
Indian soap market. Godrej total soap volume is 25000 tones per annum.
Godrej has a share around 7% in this category. They are among the
largest marketer of toilet soaps in the country with leading brands such
as CINTHOL, FIARGLWO, and GODREJ NO.1.
[4] Wipro
Wipro consumer care is yet another principal player enjoying a 4%
market share. Wipro has important brands of soap in its portfolio like
SANTOOR, SHIKAKAI AND BABY SOFT.
[5] Colgate – Palmolive

Colgate Palmolive deals in fresh natural products that include
bath soaps and liquid hand washes. Palmolive’s total soap volume is
8000 tones. Colgate – Palmolive has a share of 2%. The soaps are
available in varieties such as PALMOLIVE EXTRA CARE, PALMOLIVE

NATURALS, PALMOLIVE AROMA THERAPY SOAP – Energy and
Anti stress.
[6] Others
(1) DETTOL soap by Reckitt & Colman of India Ltd. (RCIL) is a
front-runner in the Rs. 50 crores antiseptic category. It has a share of
70% in the antiseptic category whereas 10 to 12% market is covered by
SALVON (J & J and HLL)
(2) Another player is Karnataka Soaps & Detergents Ltd. (KSDL).

For years now, KSDL has been surviving on the fortunes of the singular
brand – MYSORE SANDAL SOAP. It has tremendous equity in South
where it commands market share of about 18%.
(3) Johnson & Johnson has two popular brands – BABY SOAP
and KIDS SOAP.
(4) DOY from VVF Industries is a brand consisting of a range of

soaps that offer gentle protection to the child. It is cheaper than the J & J
baby soap.

MARKET SHARE (%)
The toilet soaps industry under personal care products is segmented

into economy, popular and premium segments. The market is to witness
fierce competition from Multinational companies and requires substantial
efforts for market penetration and brand development, reflected by the fact
that only 5% of the total production comes from the small scale sector.
The Soap Industry is characterized by a number of small-scale

manufacturers at one end and of the spectrum and large multi national
companies at the other end.
Below is a pie chart showing market share held by each soap

manufacturer in Indian context:
HLL - 65% NIRMA - 15%
GODREJ - 07% OTHERS - 13%
Small Scale Sector - 05% Wipro - 04%
P&G And Colgate Palmolive - 02% Others - 02%
MARKET SHARE
HLL
NIRMA
GODREJ
OTHERS
RAW MATERIALS

Raw Materials Used:
The raw materials used for manufacturing “STAR” soaps are –

1. Soap Noodles
2. Talc Powder
3. Colors
4. Perfumes
5. Additives (Includes Neem Oil,Ti02 formaline)
QUANTITIES REQUIRED:
The quantities required of each raw material are –

Production – 250 Kgs. Per day.
Number Particulars Proportion Kgs.
1 2 3 4
1 Soap Noodles 95.00% 237.50
2 Talc Powder 03.00% 007.50
3 Colors 00.20% 000.50
4 Perfumes 00.30% 000.75
5 Additives 01.50% 003.75
Total 100.00% 250.00

COST OF RAW MATERIALS USED:
The cost per kg. Of various raw materials used are as under:
1. Soap Noodles Rs. 35 per kg.
2. Talc Powder Rs. 4 per kg.
3. Colors Rs. 500 per kg.
4. Perfumes Rs. 400 per kg.
5. Additives Rs. 100 per kg.
PLACE OF ACQUISITION OF RAW MATERIALS:
Raw materials are acquired from Mumbai and Ahmedabad. Soap

Noodles are available in packs of 25 Kgs. Per bags. The mode of
transportation is road. It would be purchased on credit for 30 days.
MACHINES
The machines used for manufacturing soaps are as under:

1. Sigma Mixture
Sigma Mixture machine is used to mix
Soap chips with perfume, color and other
Additives.
2. Noodle plodder
The Noodle plodder machine is used to convert the mixture
into pallets for further processing.
3. Triple Roller Mill

Triple Roller Mill is a vital machine for making quality soap.
The milling machine makes the mixed soap more homogenous,
free from grainy appearance and gives more transparency to soap.
4. Duplex Plodder
The Duplex Plodder is also known as Extruder. The duplex
Plodder has a seamless pipe made of SS-304 stainless steel.
5. Cutting Table & Stamping Press

Cutting and embossing of bars of rectangular cross section
can be done on semi-automatic press operated machine.
Stamping Press is power operated which is suitable for
stamping small cakes of various shapes.
6. Dies & Moulds

The number of machines required and its cost are as under:
Number Particulars Qty Price (Rs.) Total amt.
1 Sigma Mixture 1 1,25,000 1,25,000
2 Noodle Plodder 1 1,10,000 1,10,000
3 Triple Roller Mill 2 1,15,000 2,30,000
4 Duplex Plodder 1 2,50,000 2,50,000
5 Cutting Machine 1 50,000 50,000
6 Stamping Machine 1 25,000 25,000
7 Dies & Moulds 5 12,000 60,000
Total 8,50,000

MATERIAL HANDLING EQUIPMENT:
Material handling equipments move materials from one place to another

for the purpose of processing.
The Material handling equipment used would be –

1. Conveyor
Conveyor is used to move materials of
Uniform loads between fixed points.
2. Plastic Trays
They are used to transfer materials
Manually.
Specifications regarding material handling equipment:

Number Particulars Qty Price (Rs.) Total amt.
1 Conveyor 1 50,000 75,000
2 Plastic Trays 20 225 4,500
Total 79,500

REPAIRS & MAINTENANCE OF MACHINES:
Whenever a problem would be detected in machines, a mechanic would

be called and the problem would be rectified. As the machines are not
imported, the machines would e repaired locally. The cost of purchasing tools
would be incurred. The tools required are as under –
(1) Spanner Sets
(2) Pliers
(3) Screw Driver
(4) Pipe Wrench
Total cost of tools would be Rs. 5000
Therefore, total cost of machines:
Machines + Material + Tools for

Handling equipment repairs
=Rs.8, 50,000 + Rs.79,500 + Rs.5,000
=Rs.9,34,500

MANUFACTURING PROCESS
The manufacturing process for manufacturing ‘STAR Soaps’ is as under

–
STAGE – 1 The Mixing Stage

Add soap noodles in sigma mixture. Grind within 10
minutes. Then add color, perfumes and additives. Mix for 20
minutes. Then discharge the whole mixture and add in noodle
plodder.
STAGE – 2 Conversion of mix-mass into soap pallets

Discharge material with way of screen is compressed. A
screen on noodle plodder converts it into pallets with the use of
pressure.
STAGE – 3 Conversion into ribbon form

Add pallets to Roll Mill to convert it into ribbon form. This
would break any noodles or any granule particles into fine pieces
and make the mixture homogenous. Two roll mills are sued. The
first roll converts into medium ribbon while the second roll mill
converts it into fine ribbon form.
STAGE - 4
The conveyor then feeds the ribbon the triple roll mill to
Duplex plodder.

STAGE – 5 The final stage
The Duplex Plodder is like the Noodle Plodder. The first
part of the plodder converts the ribbon into pallets and the second
pushes the pallets into the dye to convert it into a long soap bar.
The soap bar then goes into the rotary cutter and is cut into pieces.
This pieces then goes into a cake cutter and get cut into soap
cakes. The soap cakes then to into a foot operated stamper and get
stamped into a shape desired with a brand name of it.
The following are the technical specifications of machines during the

manufacturing process:
(1) Sigma mixture produces 125 Kgs. Per batches.
(2) Average speed of Noodle Plodder is 250 Kgs. Per hours.
(3) Cutting Machines works at 125-500 Kgs. Per hours.
(4) The Stamping Machine stamps 600 soap cakes per hour.

STAFF & LABOUR DETAILS
As ‘STAR soap industry’ is a small-scale industry, it would be more of

labor intensive and less capital intensive. “STAR” soap industry’ would not be
that technologically advanced. Yet, all the production would be machine
aided and no manual aid required except the workers running the machines
i.e. looking after the production.
The Staff and Labour at ‘ STAR’ soap industry’ comprise the following –
(1) Production Department

1. Production Manager – Rs. 10,000 p.m. (one person)
2. Packing In charge – Rs. 3,000 p.m. (one person)
3. Stock Maintenance Officer – Rs. 3,000 p.m. (one person)
4. Chemist – Rs. 3,000 p.m. (one person)
5. Foreman – Rs. 2,500 p.m. (one person)
6. Production workers – Rs. 2,000 p.m. (four persons)
7. Packing Workers – Rs. 1,800 p.m. (two persons)
Total – 11

(2) Sales Department
1. Sales Manager – Rs. 5,000 p.m. (one person)
2. Salesman – Rs. 2,500 p.m. (Three person)
Total – 4
(3) Finance Department

1. Accountant – Rs. 3,000 p.m. (one person)
2. Clerk-cum-typist – Rs. 1,500 p.m. (One person)
Total – 2
(4) Others
1. Peon – Rs. 1,000 p.m. (one person)
2. Watchman – Rs. 500 p.m. (One person)
Total – 2
TOTAL STAFF & LABOUR PEOPLE : 19 PERSONS

IMPLEMENTATION SCHEDULE
I take a maximum of 8 months to implement this type of project. The

time required for completing each activity at the project till commercial
production is as follows:
No Activity Completion time

1 2 3
1 Preparation of Project 15 days
2 Selection of Site 45 days
3 Registration of SSI 15 days
4 Availability of finance 30 days
5 Construction of Building 6 months
6 Arrangement of Machines 30 days
7 Erection & Electrification 30 days
8 Recruitment of Personnel 15 days

FINANCIAL DETAILS
1. FIXED CAPITAL
(1) LAND
Number Particulars Area Rate Amount
1 Land 2500 sq. feet 100 2,50,000
2 Stamp Duty --- --- 54,000
3 Registration --- --- 3,000
4 Advocate Fees --- --- 3,000
Total 3,10,000
(2) BUILDING
Number Particulars Area
1 Factory Shed R.C.C.
2 Godown R.C.C.
3 Office R.C.C.
4 Watchman Room R.C.C.
5 Sanitary Block with Overhead Tank R.C.C.
6 Compound Wall R.C.C.
Total Area 2500 sq.feet

Cost of construction
Number Particulars Area * Rate Amount
1 Built-up Area 1900 sq. feet * Rs. 250 per 4,75,000
sq. feet
2 Compound Wall 600 sq. feet * Rs. 250 per 1,50,000
sq. feet
Total Area 2500 sq. feet * Rs. 250 6,25,000
per sq. feet
TOTAL COST OF LAND & BUILDING : Rs. 9,35,000
(3) PLANT AND MACHINERIES

Number Particulars Qty amount
1 Sigma Mixture 1 1,25,000
2 Noodle Plodder 1 1,10,000
3 Triple Roller Mill 2 2,30,000
4 Duplex Plodder 1 2,50,000
5 Cutting Machine 1 50,000
6 Stamping Machine 1 25,000
7 Dies & Moulds 5 60,000
8 Conveyor 1 75,000
9 Plastic Trays 20 4,500
10 Tools 5 5,000
Total Cost of Machines 9,34,500

(4) OTHER FIXED ASSETS
Number Particulars Qty amount
1 Delivery Van 1 3,00,000
2 Furniture --- 60,000
3 Computer 1 40,000
Total 4,00,000
(5) Pre-operative & Preliminary Expenses:

Rs. 50,000
TOTAL FIXED ASSETS:

Number Particulars Amount
1 Land 3,10,000
2 Building 6,25,000
3 Plant & Machineries 9,34,500
4 Other Fixed Assets 4,00,000
5 Pre-Operative & Preliminary Expenses 50,000
TOTAL FIXED ASSETS 23,19,500

2. WORKING CAPITAL
(1) RAW MATERIALS
N Particulars Qty Rate M 4M Annually
O. (KG)
1 Soap 237.50 035 2,16,125 8,64,500 25,93,500
Noodles
2 Talc Powder 007.50 004 780 3,120 9,360
3 Colours 000.50 500 6,500 26,000 78,000
4 Perfumes 000.75 400 7,800 31,200 93,600
5 Additives 003.75 100 9,750 39,000 1,17,000
TOTAL 250.00 --- 2,40,955 9,63,820 28,91,460
(2) SALARY & WAGES

TOP LEVEL
NO Particulars No of Emp. M 2M Annually
1 Prod. Manager 1 10,000 20,000 1,12,000
2 Sales Manager 1 5,000 10,000 60,000
TOTAL 2 15,000 30,000 1,80,000

MIDDLE LEVEL
No Particulars Emp M 2M Annually
1 Packing In charge 1 3,000 6,000 36,000
2 Stock Maintenance officer 1 3,000 6,000 36,000
3 Salesman 3 7,500 15,000 90,000
4 Accountant 1 3,000 6,000 36,000
5 Chemist 1 3,000 6,000 36,000
6 Clerk-cum-typist 1 1,500 3,000 18,000
TOTAL 8 21,000 42,000 2,52,000
BOTTOM LEVEL
N Particulars No of Emp M 2M Annually
o
1 Foreman 1 2,500 5,000 30,000
2 Prod. Workers 4 8,000 16,000 96,000
3 Packing Workers 2 3,600 7,200 43,200
4 Peon 1 1,000 2,000 12,000
5 Watchman 1 500 1,000 6,000
TOTAL 9 15,600 31,200 1,87,200

LEVEL OF MANAGEMENT
No Particulars Type M 2M Annually
1 Top Level Fixed 15,000 30,000 1,80,000
2 Middle Level Fixed 21,000 42,000 2,52,000
3 Bottom Level Variable 14,100 28,200 1,69,200
4 Foreman & Fixed 1,500 3,000 18,000
Workers Others
TOTAL SALARY & WAGES 51,600 1,03,200 6,19,200
(3) UTILITIES
No Particulars Qty. Rate M 2M Annually
1 Electricity 3750 kw 4 15,000 30,000 1,80,000
TOTAL UTILITIES 15,000 30,000 1,80,000
(4) ADMINISTRATIVE EXPENSES

No Particulars M 2M Annually
1 Telephone charges 2,000 4,000 24,000
2 Postage-stamp duty 500 1,000 6,000
3 Advg. & Mktg. 26,000 52,000 3,12,000
4 Miscellaneous exp. 300 600 3,600
5 Insurance 4,000 8,000 48,000
6 Traveling expenses 1,000 2,000 12,000
7 Packing expenses 16,000 32,000 1,92,000
8 Selling expenses 15,000 30,000 1,80,000
TOTAL ADM. EXPENSES 64,800 1,29,000 7,77,600
(5) OTHER EXPENSES

N Particulars M 2M Annually
o
1 Factory Expenses 3,000 6,000 36,000
2 Maintenance & Repairs 5,560 11,120 66,725
3 Contingencies 3,000 6,000 36,000
TOTAL OTHER EXPENSES 11,560 23,120 1,38,725

TOTAL WORKING CAPITAL:
No Particulars Amount Annual Amt.
1 Raw Materials (4 months) 9,63,820 28,91,460
2 Salary & Wages (2 months) 1,03,200 9,19,200
3 Utilities (2 months) 30,000 1,80,000
4 Administrative Expenses (2 months) 1,29,600 7,77,600
5 Other Expenses (2 months) 23,120 1,38,725
TOTAL WORKING CAPITAL 12,49,740 46,06,985
3. TOTAL COST OF PROJECT

No Particulars Amount(Rs)
1 2 3
1 Total Fixed capital 23,19,500
2 Total Working Capital 12,49,740
(Raw material for 4 months & other for 2 months)
TOTAL COST OF THE PROJECT 35,69,240
4. TYPE OF FINANCE BROUGHT

No Particulars % Amount
(Rs)
1 Ownership Capital 55% 19,63,082
2 Borrowed Capital 45% 16,06,158
TOTAL 100% 35,69,240
5. INTEREST
No Particulars Rate Amount(Rs)
1 2 3 4
1 Ownership Capital 9% 1,76,677
2 Borrowed Loans (SBI Bank) 11% 1,76,677
TOTAL INTEREST 3,53,354
6. DEPRECIATION

N Particulars Amount Rate Amt of Dep.
o
1 Building 6,25,000 10% 62,500
2 Machinery 9,34,500 25% 2,33,625
3 Delivery Van 3,00,000 20% 60,000
4 Furniture 60,000 15% 9,000
5 Computer 40,000 60% 24,000
TOTAL DEPRECIATION 3,89,125
7. MAINTENANCE & REPAIRS

N Particulars Amount Rate Value
o
1 2 3 4 5
1 Plant & Machinery 9,34,500 5% 46,725
2 Other Fixed Assets 4,00,000 5% 20,000
TOTAL MAINTENANCE & REPAIRS 66,725
COST OF CAPITAL
Cost of Capital (COC) =

Interest rates of + Interest rates of borrowed
Ownership Capital Loans
--------------------------------------------
2
= 9% + 11%
---------
2

= 10%
LOAN REPAYMENT SCHEDULE
Statement showing loan repayment schedule with calculation of interest:
No. Loan Amt Installment Rem. Loan Amt Interest

1 2 3 4 5
1 16,06,158 2,75,000 16,06,158 1,76,677
2 16,06,158 2,75,000 13,31,158 1,46,427
3 13,31,158 2,75,000 10,56,158 1,16,177
4 10,56,158 2,75,000 7,81,158 85,927
5 7,81,158 2,75,000 5,06,158 55,627
6 5,06,158 2,75,000 2,31,158 25,427
7 2,31,158 2,31,158 --- 25,427
COST OF PRODUCTION
Installed Capacity in Kgs (p.m.) = 13,000 Kgs p.m.

Utilized Capacity in Kgs (p.m.) = 6,500 Kgs p.m.
Production quantity in Kgs (p.m.) = 78,000 Kgs
Production of soap per annum =

78,000 Kgs
----------------
0.075 Kgs (75 gms bar)

= 10,40,000 bars produced per annum
Per month = 86,667 bars
Per day = 3333 bars
STATEMENT OF COST OF PRODUCTION
Particulars Rs. Rs.

Variable Expenses
Raw Materials 28,91,460
Utilities 1,80,000
Salary & Wages 1,69,200
Other Adm. Expenses
Telephone 24,000
Postage & Stamp Duty 6,000
Advg. & Mktg. 3,12,000
Miscellaneous Expenses 3,600
Traveling Expenses 12,000
Packing Expenses 1,92,000
Selling Expenses 1,80,000 7,29,000
Contingencies 36,000
TOTAL PER ANNUM (A) 40,06,260
FIXED EXPENSES
Salaries 4,50,000
Depreciation 3,89,125
Written off pre-op expenses 10,000
Insurance 48,000
Other Expenses
Factory Expenses 36,000
Maintenance & Repairs 66,725 1,02,725
Interest 3,53,354
TOTAL PER ANNUM (B) 13,53,204

Total cost of Production (A + B) =
Rs. 40,06,260 + Rs. 13,53,204
= Rs. 53,59,464
Total cost per unit =

= Total cost
---------------------
Total soaps per annum
= Rs. 53,59,464
---------------
10,40,000 soaps
= Rs. 5.15 per bar
MEANS OF FINANCE & ITS ALLOCATION
No Particulars Amount Own SBI Bank

1 Land 3,10,000 3,10,000 ---
2 Building 6,25,000 6,25,000 ---
3 Plant & Machinery 9,34,500 5,78,082 3,56,418
4 Other Fixed Assets 4,00,000 4,00,000 ---
5 Pre-operative exp 50,000 50,000 ---
6 Working Capital 12,49,740 --- 12,49,740
TOTAL 35,69,240 19,63,082 16,06,158

SALES DETAILS
Deciding the Selling Price
Total cost per barRs. 5.15

+ Profit Rs. 1.10
Selling Price Rs. 6.25
The amount of goods sold during the year
STAR Soap Industry plans to produce 10,40,000 soap bars per annum.
Particulars Amount
Opening Stock 10,40,000
(-) Closing Stock 1,60,000
Goods sold 8,80,000
Configuration of “STAR” soaps sold

No. Particulars Price(Rs) Qty Amt(Rs)
1 STAR – Oily 6.25 2,50,000 15,62,500
2 STAR– Dry 6.25 2,50,000 15,62,500
3 STAR – Normal 6.25 3,80,000 23,75,000
TOTAL 8,80,000 55,00,000

PROFITABILITY ANALYSIS
Particulars Rs. Rs.

Sales 55,00,000
Less: Variable Expenses
Raw materials 28,91,460
Utilities 1,80,000
Wages 1,69,200
Administrative Expenses 7,29,600
Contingencies 36,000 40,06,260
CONTRIBUTION 14,93,740
Less: Fixed Expenses
Salaries 4,50,000
Depreciation 3,89,125
Maintenance & Repairs 66,725
Interest 3,53,354
Written off pre-operative expenses 10,000
Factory expenses 36,000
Insurance 48,000 13,53,204
PROFIT BEFORE TAX (PBT) 1,40,536
Less: Taxes 17,449
PROFIT AFTER TAX (PAT) 1,23,087
Note :- Since STAR soap Industry is a sole proprietor firm, the taxes would be
calculated according slab wise. Here, first Rs. 50,000 is exempted, then 10% on
Rs. 10,000, then 20% on Rs. 90,000 and on remaining at 30% Add to it 2%
surcharge.

BREAK EVEN ANALYSIS
No. Particulars Amt (Rs)

1 2 3
1 Sales 55,00,000
2 Variable Expenses 40,06,260
3 Fixed Expenses 13,53,201
Profit Volume Ratio:-
PVR = Contribution/sales*100
= 14,93,740/55,00,000*100
= 27.16%
BEP (in Rs.)
BEP (in Rs.) = Fixed cost/PVR

= 13,53,204/27.16%
= Rs. 49,82,342
BEP(in %)
BEP (in %) = Fixed cost/Contribution*utilized

capacity
= 13,53,204/14,93,740*50
= 45.30%

RATIO ANALYSIS
Return on Investment
RTO = EBIT/Project cost*100
Now, EBIT = PBT + Total Interest

= 1,40,536 + 3,53,354
= 4,93,890
Therefore, ROI = 4,93,890/35,69,240*100
= 13.84%
Net Profit Ratio
NPR = PAT/Sales*100
= 1,23,087/55,00,000*100
= 2.25%
Gross Profit Ratio
GPR = Gross Profit/Sales*100

= 33,13,385/55,00,000*100
= 60.24%
Fixed Asset Turn Over Ratio
FATR = Sales/Fixed Assets

= 55,00,000/23,19,500
= 2.37%

COST SHEET
Particulars c.p.u. Rs. Rs.

Raw Material Consumed
Opening Stock of RM ---
+ Purchases 31,32,415
31,32,415
Closing Stock of RM 2,40,955
COST OF RM CONSUMED 2.78 28,91,460
Direct Wages 1,26,000
Utilities 0.30 1,80,000
PRIME COST 3.08 31,97,460
Factory Overheads
Salaries 1,92,000
Factory expenses 36,000
Depreciation on building & machine 2,96,125
Maintenance & Repairs machine 0.55 46,725 5,70,850
WORKS COST 3.62 37,68,310
Office/Administrative Overheads
Telephone 24,000
Postage & stamp duty 6,000
Insurance 48,000
Salaries 72,000
Miscellaneous expenses 3,600
Contingencies 36,000
Interest on ownership capital 1,76,677
Depreciation on other fixed assets 33,000
Maintenance & repairs 0.39 5,000 4,04,277
COST OF PRODUCTION 4.01 41,72,587
Add: Op. stock of finished goods ---
41,72,587
Less: Cl. Stock of finished goods 8,24,000
COST OF PROD OF GOODS SOLD 3.81 33,48,587
Selling & distribution Overheads
Selling expenses 1,80,000
Packing expenses 1,92,000
Salaries 2,29,200
Advertising & Marketing 3,12,000

Depreciation on Delivery Van 60,000
Maintenance & Repairs 15,000
Traveling expenses 1.14 12,000 10,00,200
COST OF SALES 4.95 43,48,787
SALES 6.25 55,00,000

PROFIT 1.30 11,51,213

Calculations:
1. Direct Wages
Wages to foreman = 30,000
+ Wages to prod. Workers = 96,000
Total = 1,26,000
2. Salaries under factory overheads

Salary to prod. Mgr. = 1,20,000
+ Salary to stock officer = 36,000
+ Salary to chemist = 36,000
Total = 1,92,000
3. Salaries under office overheads

Salary to accountant = 36,000
+ Salary to clerk-typist = 18,000
+ Salary to peon = 12,000
+ Salary to watchman = 6,000
Total = 72,000
4. Salaries under Selling & distribution overheads

Salary to sales mgr. = 60,000
+ Salary to salesman = 90,000
+ Salary to packing
In charge = 36,000
+ Salary to packing
Workers = 43,200
Total = 2,29,200
SALES FORECASTING

Sales forecast for 5 years:
Year Utilized No. of Closing Sales Amt. Net
Capacity units Stock (units) Per Sales
(%) (soaps) (Units) Unit (Rs.)
1st
50% 10,40,000 1,60,000 8,80,000 6.25 55,00,000
2nd 60% 14,08,000 3,08,000 11,00,000 6.00 66,00,000
3rd 70% 17,64,000 4,14,000 13,50,000 6.00 81,00,000
4th 80% 20,78,000 3,78,000 17,00,000 6.00 1,02,00,000
5th 90% 22,50,000 2,50,000 20,00,000 6.00 1,20,00,000
Calculation of units of soaps:

No. Of soaps = op. stock + production
2nd year 1,60,000 + 12,48,000

14,08,000
3rd year 3,08,000 + 14,56,000

17,64,000
4th year 4,14,000 + 16,64,000

20,78,000
5th year 3,78,000 + 18,72,000

22,50,000
ANALYSIS OF PROFIT FOR 5 YEARS
Year Operating Profit Net Profit

1 1,40,536 1,23,087
2 3,92,294 2,98,772
3 9,75,752 7,03,691

4 11,94,274 8,55,346
5 13,81,058 9,91,623

PROJECTED TRADING PROFIT & LOSS ACCOUNT
Particulars 1st year 2nd year 3rd year

Sales 55,00,000 66,00,000 81,00,000
NET SALES/INCOME (A) 55,00,000 66,00,000 81,00,000
Manufacturing Expenses
Raw materials 28,91,460 34,69,752 40,48,044
Labour 1,39,200 1,68,000 1,95,000
Utilities 1,80,000 2,16,000 2,52,000
Factory expenses 36,000 36,000 36,000
Maintenance & Repairs 46,725 46,725 46,725
TOTAL MANU. EXP. (B) 32,93,385 39,36,477 45,77,769
GROSS PROFIT (A-B) (C) 22,06,615 26,63,523 35,22,231
Adm & Selling Expenses
Stamp & Postage duty 6,000 9,000 13,000
Telephone 24,000 30,000 45,000
Traveling expenses 12,000 15,000 25,000
Advg. &Mktg. 3,12,000 4,00,000 5,25,000
Misc. expenses 3,600 5,000 7,500
Selling expenses 1,80,000 2,30,000 3,00,000
Packing expenses 1,92,000 2,30,000 2,70,000
Contingencies 36,000 50,000 75,000
Salaries 4,80,000 5,20,000 5,50,000
Depreciation 3,89,125 3,81,125 3,65,125
Maintenance & Repairs 20,000 20,000 20,000
W/o pre-operative exp. 10,000 10,000 10,000
Insurance 48,000 48,000 48,000
Interest 3,53,354 3,23,104 2,92,854
TOTAL AD. EXP. (D) 20,66,079 22,71,229 25,46,479
OPERATING PROFIT (C- 1,40,536 3,92,294 9,75,752
D)
Less: Taxes 17,449 93,522 2,72,061
NET PROFIT 1,23,087 2,98,772 7,03,691
CAPITAL-LIABILITY
Capital 19,63,082 19,63,082 19,63,082
+ Int. on capital 1,76,677 1,76,677 1,76,677
+Net profit 1,23,087 2,98,772 7,03,691
22,62,846 24,38,551 28,43,450
Borrowed Loans 16,06,158 13,31,158 10,56,158
+ Interest 1,76,677 1,46,427 1,16,177
17,82,835 14,77,585 11,72,335
Creditors 2,40,955 2,40,955 2,40,955
TOTAL (A) 42,86,636 41,57,091 42,56,740
PROPERTY-ASSETS

Fixed Assets:
Land 3,10,000 3,10,000 3,10,000
Building less dep. 5,62,500 5,00,000 4,37,500
Machinery less dep. 7,00,785 4,67,250 2,33,625
Delivery van less dep. 2,40,000 1,80,000 1,20,000
Furniture less dep. 51,000 42,000 33,000
Computer less dep. 16,000 --- ---
Cl. stock of goods 10,00,000 19,25,000 25,87,500
Debtors 13,00,000 6,54,040 4,35,000
Cash 66,261 48,801 80,115
Pre-op exp less w/o 40,000 30,000 20,000
TOTAL (B) 42,86,636 41,57,901 42,56,740

RAW MATERIALS SUPPLIERS:
The raw materials required would be available from the following

suppliers:
Talc Powder
Mamgeem Minerals,
Plot no. 26054
GIDC,
Opp. Siddharth Ice Factory,
Vatva,
AHMEDABAD – 380 015
Ph. No. (079) 25840380
Additives
Ramesh Brothers,
H-34 Vijay Towers,
Opp. Ahmedabad Diary
Kankaria,
Ph. No. (079) 25453156

Colours & Perfumers
Flowers & Essence Resource,

Scent House,
Station Road,
Goregaon (West)
MUMBAI – 400 062
Ph. No. (022) 28722280
Soap Noodles
Mangalam Drugs & Organics Ltd.,

292, Princess Street,
Marine Lines
MUMBAI – 400 062
Ph. No. (022) 22087969
Sigma Lime Cam,

C/103 Yash Tower,
Near Hasubhai Park,
Satellite,
Mobile No. 98244 53053

ACQUISITION OF MACHINES
The machines would be of ownership nature and they would be

acquired from:
MICRO MACHINES,
Plot No.2,
Dharmajivan Industrial Estate4
Gokuldham Road,
RAJKOT – 360 004.
Ph. No. (0281) 368564
E-mail. micro_machines@yahoo.com

RISK FACTORS
Like in any other business, the soap industry too faces a lot many risks.
They are as under:
(1) Competition
(2) Obsolescence of machines
(3) Price War
(4) Quality Maintenance Management
(5) New Entrants in soap Industry

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PRODUCT PROJECT REPORT ON ’STAR

THE STAR - FEEL LIKE HEAVEN 1

I, the undersigned, Sweta B. Mashru, a student of T. Y. B. B. A. hereby

THE STAR - FEEL LIKE HEAVEN 2

As students of final year of the B.B.A. course conducted by Saurashtra

The business system of a country is divided into 3 sectors.

(1) Large Scale Industry

These classifications of industry may be based on a no. of criteria, e.g.

Preparing & presenting the details regarding a product & submitted to

THE STAR - FEEL LIKE HEAVEN 3

Today in the growth rate of Indian economy, contribution of small-scale

Hence, it is suggested by the University to under go a short training to

THE STAR - FEEL LIKE HEAVEN 4

“ Planning is necessary in every walk of life. For successful planning

Many individuals have supported me during the completion of this

Lastly, I would thank my parents my sister & my friends, whose words

THE STAR - FEEL LIKE HEAVEN 5

The development and importance of small-scale industries has

THE STAR - FEEL LIKE HEAVEN 6

Small scale industries play a key role in industrialization of a

THE STAR - FEEL LIKE HEAVEN 7

1. Capital investment is less as compared to large scale industries.

2. They are generally engaged in the production of small products.

3. Generally located in rural and semi – urban areas.

4. Virtually all of them are privately owned. E.g Sole proprietorship,

THE STAR - FEEL LIKE HEAVEN 8

In 2800 B.C. archeologist found soap like material in clay cylinders

THE STAR - FEEL LIKE HEAVEN 9

THE STAR - FEEL LIKE HEAVEN 10

Installed capacity 500 kgs per day

Name :- Miss. Sweta B. Mashru

THE STAR - FEEL LIKE HEAVEN 11

THE STAR - FEEL LIKE HEAVEN 12

NOTE : - The proprietor herself is n direct contact with the employees’

THE STAR - FEEL LIKE HEAVEN 13

It is very important for every firm to decide about the

The unit will be located at Metoda (Village – Lodhika) Dist. – Rajkot in

THE STAR - FEEL LIKE HEAVEN 14

Shapar is connected to national highway for transportation of raw

THE STAR - FEEL LIKE HEAVEN 15

THE STAR - FEEL LIKE HEAVEN 16

THE STAR - FEEL LIKE HEAVEN 17

Scented, or unscented, in bars, gels and liquids, soaps is a part of out

India is a vast country with a population of 1030 million people.

THE STAR - FEEL LIKE HEAVEN 18

THE STAR - FEEL LIKE HEAVEN 19

THE STAR - FEEL LIKE HEAVEN 20

Now since household penetration of soaps is 98% and as it is second

[1] Hindustan Lever Ltd. (HLL)

THE STAR - FEEL LIKE HEAVEN 21

[3] Godrej India Ltd.

[5] Colgate – Palmolive

THE STAR - FEEL LIKE HEAVEN 22

(2) Another player is Karnataka Soaps & Detergents Ltd. (KSDL).

(4) DOY from VVF Industries is a brand consisting of a range of

THE STAR - FEEL LIKE HEAVEN 23

The toilet soaps industry under personal care products is segmented

The Soap Industry is characterized by a number of small-scale

Below is a pie chart showing market share held by each soap

THE STAR - FEEL LIKE HEAVEN 24

The raw materials used for manufacturing “STAR” soaps are –

The quantities required of each raw material are –

THE STAR - FEEL LIKE HEAVEN 25