14171275 soap-industry

DETERGENT SOAP INDUSTRY

COMPANY SUMMARY

The company is to be co founded at Patrapada, Bhubaneswar. Harmony Soaps Pvt Ltd is an

enterprise company engaged in manufacturing detergent soaps. In our country, people in villages

are accustomed to washing clothes near rivers and ponds using cakes by scrubbing and applying

mild force. Detergent cakes or bars are suitable for this purpose and are becoming popular both in

the villages and urban areas. This is detergent in cake form, which can be used with hand as well as

in soft water.

START UP SUMMARY

Start up of the company will require a capital of Rs. 16,80,000 of which Rs. 10,00,000 will come as

loan from Syndicate Bank and the rest Rs. 6,80,000 will be provided by the founders. Approximately

Rs. 80,000 will be allocated to equipments.

COMPANY LOCATION AND FACILITIES

The plant is to be located at Patrapada, Bhubaneswar, Orissa for now. Upon expansion, plants will

move to different locations within the state as well outside it.

SERVICE DESCRIPTIONS

The aim of the company is to provide this product throughout the state and country by widening of

distribution channels.


INTRODUCTION TO ENTREPRENEURSHIP

The word ‘entrepreneur’ has its origin in the French language. It refers to the ORGANISER OF

MUSICAL or OTHER ENTERTAINMENTS. ENTREPRENURSHIP can be described as a creative

&innovative response to the environment. Such responses can takes place in any field of social

Endeavour-business, agriculture, education, social work the like.

An ENTREPRENEUR is one who organizes, manages & assumes the risks of an enterprise.

An entrepreneur visualizes a business, takes bold steps to establish under taking, co-ordinates the

various factors of production gives it a start.

ENTREPRENEURS are the owners of the business who contribute the capital & bear the risk

of uncertainties in business life.

ENTREPRENEUR is action-orient & highly motivated person who has the ability to evaluate

business opportunities, to gather the necessary resources to take advantage of them &to intimate

appropriate action to ensure success.

ENTREPRENEUR takes decision regarding what to produce, where to produce & whom to

produce. He mobilizes other factors of production namely; land, labour, capital, organization &

initiates production process. He is responsible for either profit or the loss.

ENTREPRENEUR is associated with innovations. He is the main factor of production.


ENTREPRENEURIAL PHILOSOPHY

To take calculated risk.

Willingness to accept responsibility for one’s own work

Failure must be accepted as a learning experience.

Goal orientedness.

Acceptable results are more important than perfect results.

Personal growth.

EXPECTATIONS OF ENTREPRENEURSHIP

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

Increase number of industries.

Increase production.

Increase employment opportunities.

Earn foreign exchange through exports.

Develop the underdeveloped parts of the country.

Economical development.

CHARACTERSTICS OF ENTREPRENEUR

Self confidence

Task-result oriented

Risk-taker

Leadership

Originality

Future oriented


ROLE OF FIs & BANKS IN SSI FINANCING

The credit needs of entrepreneurs could be divided in three parts:

Short term

Medium term

Long term finance

Accordingly, the conventional mechanism for financing of SSIs in India stressed provision of terms

loans and working capital.

The public and private sector banks, Small Industries Development Bank of India (SIDBI), Regional

Rural Banks (RRBs), Urban Cooperative Banks (UCBs) and foreign loans for setting up of new

industries or modernization of the existing ones, Khadi and Village Industries Commission (KVIC)

and Khadi and Village Industries Boards (KVIBs) assist in financing khadi and village industry

sector. National Small Industries Corporation (NSIC) and State Small Industries Corporations

(SSICs) in their own way, also attempt to develop the cottage and small scale sector by supplying

machinery on a hire-purchase basis to small-scale and ancillary industries, inclusion of the value of

machinery and equipment already installed.

SFCs are one of the oldest credit institutions in the country which mainly cater to the long term

credit needs of small & medium enterprises. At present, there are 18 SFCs covering the entire

country & they have been in existence for 5 decades now. The cumulative sanctions &

disbursements of SFCs aggregated Rs 33000 crore & Rs 27000 crore respectively. It needs to be

high lighted that almost 75% of SFCs assistance flows to the SSI sector. Over the years the

financial health of SFCs has become a cause of concerns. Some of the reasons for the poor

financial health of SFCs are poor recovery performance increase in non performing assets.

Govt. of India had amended the SFCs act 1951 in the year 2000 so as to give them more operational

flexibility & freedom so that they can improve their performance & play their role more effectively.


CHALLENGES FOR ENTREPRENEURSHIP PROJECT:-

1. Technology up gradation:-

It is found that our small scale sector is not able to compete because of outdated technology.

We must appreciate that small scale industry has to keep itself updated and then only it can sell

goods. In the post WTO era, the best thing would be available anywhere in the world as there is no

restriction for goods to move. People will purchase only if the goods are of good quality.

We must remember that we may or may not need imported technology for up gradation. Our

small industries have the advantage of developing in import substitution period. Many SSI can

therefore become world class with only small modifications or improvement.

2. Testing facilities: -

Because our small scale industries are situated in far flung areas there for it is not possible

to service by one or two central laboratory. We suggest that educational institution even in small

towns should be equipped to provide testing facilities to small scale industries.

3. Exports: -

We find that small scale industries engaged in exports do not have any benefits, although

they count for bulk export. We strongly advocate special concessions for small scale industries,

which are engaged in exports.


4. Involvement of Industrial Associations:-

We feel that many problems of small sector can be taken care of if industrial associations are

involved in a big way.

5. Infrastructure Development:

Small scale industries suffer maximum from lack of infrastructure development. The quality

of power is bad and the power available is at very high cost. This must be corrected. Roads are bad.

Communication facilities are not up to mark etc.

6. Credit: -

The credit is still not available to small scale industries. The credit Guarantee Fund created

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

7. Skill Up gradation: -

Small scale Industries are known for providing on job training. But in the post WTO era when

cost cutting is order of the day, the people are running small scale industries must be skilled and

these skills must be up graded continuously so that they are in the job & no unemployment results.

8. Marketing:-


The present market assistance scheme is most welcome. More such schemes are required

.Small Scale Industries are being bundled out of the market by aggressive advertisement done by

large scale& multinationals. The small sector must be protected from this, if the small sector has to

survive.

9. Changing the Labour Laws:-

The present labour laws must be changed to have more flexibility & suitability for running of

small scale sector.

Products Applications,

Market Potential

Basis and Presumptions Traditionally, soap has been manufactured from alkali (lye) and animal fats (tallow), although

vegetable products such as palm oil and coconut oil can be substituted for tallow. American

colonists had both major ingredients of soap in abundance and so soap making began in America

during the earliest colonial days. Tallow came as a by-product of slaughtering animals for meat, or

from whaling. Farmers produced alkali as a by-product of clearing their land; until the nineteenth

century wood ashes served as the major source of lye. The soap manufacturing process was

simple, and most farmers could thus make their own soap at home.

The major uses for soap were in the household, for washing clothes and for toilet soap, and in

textile manufacturing, particularly for fulling, cleansing, and scouring woolen stuffs. Because

colonial America was rural, soap making remained widely dispersed, and no large producers

emerged. By the eve of the American Revolution, however, the colonies had developed a minor


export market; in 1770 they sent more than 86,000 pounds of soap worth £2,165 to the West Indies.

The Revolution interrupted this trade, and it never recovered.

The growth of cities and the textile industry in the early nineteenth century increased soap usage

and stimulated the rise of soap-making firms. By 1840, Cincinnati, then the largest meatpacking

center in the United States, had become the leading soap-making city as well. The city boasted at

least seventeen soap factories, including Procter and Gamble (established 1837), which was

destined to become the nation's dominant firm. A major change in soap making occurred in the

1840s when manufacturers began to replace lye made from wood ashes with soda ash, a lye made

through a chemical process. Almost all soap makers also produced tallow candles, which for many

was their major business. The firms made soap in enormous slabs, and these were sold to grocers,

who sliced the product like cheese for individual consumers. There were no brands, no advertising

was directed at consumers, and most soap factories remained small before the Civil War.

The period between the end of the Civil War and 1900 brought major changes to the soap industry.

The market for candles diminished sharply, and soap makers discontinued that business. At the

same time, competition rose. Many soap makers began to brand their products and to introduce

new varieties of toilet soap made with such exotic ingredients as palm oil and coconut oil.

Advertising, at first modest but constantly increasing, became the major innovation. In 1893 Procter

and Gamble spent $125,000 to promote Ivory soap, and by 1905 the sales budget for that product

alone exceeded $400,000. Advertising proved amazingly effective. In 1900 soap makers

concentrated their advertising in newspapers but also advertised in streetcars and trains. Quick to

recognize the communications revolution, the soap industry pioneered in radio advertising,

particularly by developing daytime serial dramas. Procter and Gamble originated Ma Perkins, one of

the earliest, most successful, and most long-lived of the genre that came to be known as Soap

Operas, to advertise its Oxydol soap in 1933. By 1962 major soap firms spent approximately $250

million per year for advertising, of which 90 percent was television advertising. In 1966, three out of

the top five television advertisers were soap makers, and Procter and Gamble was television's

biggest sponsor, spending $161 million.


Advertising put large soap makers at a competitive advantage, and by the late 1920s three firms

had come to dominate the industry: (1) Colgate-Palmolive-Peet, incorporated as such in 1928 in

New York State, although originally founded by William Colgate in 1807; (2) Lever Brothers, an

English company that developed a full line of heavily advertised soaps in the nineteenth century

and in 1897 and 1899 purchased factories in Boston and Philadelphia; and (3) Procter and Gamble.

Synthetic detergent, which was not a soap, but was made through a chemical synthesis that

substituted fatty alcohols for animal fats, had been developed in Germany during World War I to

alleviate a tallow shortage. Detergents are superior to soap in certain industrial processes, such as

the making of textile finishes. They work better in hard water, and they eliminate the soap curd

responsible for "bathtub rings." In 1933 Procter and Gamble introduced a pioneer detergent, Dreft,

which targeted the dishwashing market because it was too light for laundering clothes. It

succeeded, especially in hard-water regions, until World War II interrupted detergent marketing.

In 1940 the "big three"—Colgate, Lever, and Procter and Gamble—controlled about 75 percent of

the soap and detergent market. They produced a wide variety of products, such as shampoos,

dishwashing detergents, liquid cleaners, and toilet soap, but the most important part of their

business was heavy-duty laundry soap, which accounted for about two-thirds of sales. Procter and

Gamble had about 34 percent of the market. Lever was a close second with 30 percent, and Colgate

trailed with 11 percent. In 1946 Procter and Gamble radically shifted the balance in its favor when it

introduced Tide, the first heavy-duty laundry detergent. By 1949, Tide had captured 25 percent of

the laundry-detergent market. By 1956, even though Lever and Colgate had developed detergents of

their own, Procter and Gamble held 57 percent of the market, as compared with 17 percent for Lever

and 11 percent for Colgate. Despite Procter and Gamble's triumph, the big three still competed

fiercely.

By 1972, detergents had almost eliminated soap from the laundry market, although toilet soap

remained unchallenged by detergents. In the 1970s, bans on detergents by some local

governments, which feared contamination of their water supplies, had little impact on the

composition or sales of laundry products. In the early 2000s, the smaller firms within the industry

still produced a multitude of specialized cleansers for home and industry, although in the highly


important fields of toilet soaps, laundry soaps, and detergents, the big three remained dominant,

controlling about 80 percent of the total market.

The following ingredients are often used in hand dishwashing soaps and detergents; not all

products contain all ingredients.

INGREDIENTS

• Cleaning Agents/Surfactants lift dirt and soil and produce good grease-cutting capability.

• Stability and Dispensing Aids keep the product consistent under varying storage conditions and

provide desirable dispensing characteristics.

• Mildness Additives may include moisturizing agents, certain oils and emollients, certain protein

compounds, or other neutralizing or beneficial ingredients.

• Fragrance is added to produce a pleasant or distinctive scent.

• Preservatives help prevent any microbiological growth in the product that could cause color or

odor change, poor performance and/or separation of the ingredients.

• Colorants are added to lend individuality and an appealing appearance to the product.

• Enzymes help break down tough stains and burned-on soils.

• Encapsulates deliver stability for special materials/additives (e.g., moisturizer or fragrance).


BASIS AND PRESUMPTIONS

1. Single shift of 8 hours a day, 25 days a month and 300 days in an year is presumed.

Efficient machines and workers are also presumed.

2. The quantity of products produced are sold in the market.

3. Labour rates are as per the prevailing rates.

4. An average interest rate of 18% is considered.

5. The estimates are drawn for a production capacity generally considered techno-

economically viable for model type of manufacturing activity.

6. The information supplied is based on a standard type of manufacturing activity viable for

model type of manufacturing activity.

7. The information supplied is based on a standard type of manufacturing activity utilising

conventional techniques of production at optimum level of performance.

8. Costs in respect of land and building, machinery and equipment, raw materials and the

selling prices of the finished products etc., are generally prevailing at the time of

preparation of the project profiles and may vary depending upon various factors.


FINANCIAL ASPECTS

FIXED CAPITAL

MACHINERY AND EQUIPMENT

Sl. No. Details Qty Value (in Rs.)

1 Detergent plodder with 5 HP Motor 1 47,000

2 Sigma blender (350 Kgs. capacity) 1 15,000

3 Stamping machine 1 5,000

4 Platform weighing scale 1 5,000

5 Miscellaneous expenditure 3,000

6 Furniture and fixture 5,000

Total 80,000

1 Land 5000sqft 500000

2 Godown 3000sqft 1100000

3 Loan 12% of 10lakhs 120000

4 Machinery And Equipment 80000

Total 18,00,000

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


WORKING CAPITAL PER MONTH

PERSONNEL

Sl. No. Description Nos. Value per kg

production

1 Skilled Worker 2 1.5

2 Semiskilled Worker 2 1.25

3 Watchman 1 0.3

Total 3.05

RAW MATERIALS

Sl. No. Particulars Qty.(Kg.) Rate(Rs./Kg.) Value (Rs.)

1 Oil 100 32 3200

2 Soda Ash 16 38 608

3 Water 50

4 Sodium silicate (binder) 100 9 900

5 Filler powder 50 3.25 162.5

6 Foam booster 2 120 240

7 Color 0.5 500 250

8 Perfume 0.2 200 40

Total 318.7 ≈ 315 5400

Cost of raw materials to produce 1kg of soap: Rs.17.14


UTILITIES

Sl.

No. Particulars Cost per month

Cost per kg of

production

1 Power 5000 0.5

2 Water 200 0.02

Total 1,700 0.52

OTHER EXPENSES

1 Postage and Stationery 400 0.04

2 Repairs and Maintenance 400 0.04

Total 800 0.08

DEPRICIATION

10% of Rs.12000 per month: Rs.0.06 per kg of production of soaps

Total VARIABLE COST per kg of production of soap:

3.05+17.14+.52+0.08+0.06 = Rs.20.85


TOTAL SALES (Per Annum)

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

PROFITABILITY (Per Annum)

Profit =36,00,000 – 20,56,800 – 1,20,000(interest on loan)= Rs. 14,23,200

Net Profit Ratio : Net profit x 100 / Turnover

14,23,200 * 100 / 36,00,000

= 39.53%

Rate of Return : Net profit x 100 / Total Investment

14,23,200x 100 / 18,00,000

= 79.06%


BREAK EVEN ANALYSIS

Sales price = Rs. 30 per kg

Variable cost = Rs. 20.85 per kg

Fixed cost = Rs. 18,00,000

Break Even Quantity = X

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

18,00,000 + X * 20.85 = X * 30

X = 196721 kg

Taking 10,000 kg per month production capacity,

No. of months required to achieve Break-Even Quantity = 196721/10000 = 19.67 ≈ 20 months


Address of Suppliers

NAMES AND ADDRESSES OF MACHINERY AND EQUIPMENT SUPPLIERS

1. M/s Prototype Development and Training Centre, P.O. Okhla Industrial Estate, New Delhi –

110 020.

2. M/s Precision Machinists, Plot No. 356(D), Kandivli, Industrial Estate, Kandivli, Bombay –

400 067

3. M/s Steel & Brass Trading Corporation, Nirman Nagar, Kesar Baugh, Plot No. 116/17,

Bhavanagar – 364 001.

4. M/s Oriental Machinery Supplying Co. Ltd., Mission road Extension, Calcutta.

NAMES AND ADDRESSES OF RAW MATERIAL SUPPLIERS

1. M/s S.P. Chemical, Plot No. 4, Kengeri, Mysore Road, Bangalore.

2. M/s Surcoats (India), C-29. Royal Industrial Estate, 5-B Naigaum Cross Road, Wadala,

Bombay – 400 031

3. M/s Supertex (India) Corporation, 132, Dr.A.B. Road, Bombay – 53.

4. M/s Saibaba Sugandh Bhandar, 53, Santhusapet, Bangalore – 53

5. M/s M.M. Chemicals, A.S. Char Street, Bangalore – 53

6. M/s Prakash Chemical Agency, Purnaseshachar Street, Behind Chickpet Post, Bangalore –

53.


REFERENCES

Bhalla Industries, Mancheswar, Bhubaneswar

www.smallindustryindia.com

www.wikipedia.org

www.codissa.com

www.books-directory-projectreports.com/small-scale-industries.html

http://www.wikipedia.org/

http://www.codissa.com/

http://www.books-directory-projectreports.com/small-scale-industries.html

14171275 soap-industry

Marketing

Transcript of 14171275 soap-industry