INTRODUCTION

Entrepreneurship is the act of being an entrepreneur, which is a French

word meaning "one who undertakes an endeavor". Entrepreneurs

assemble resources including innovations, finance and business acumen in

an effort to transform innovations into economic goods. This may result in

new organizations or may be part of revitalizing mature organizations in

response to a perceived opportunity. The most obvious form of

entrepreneurship is that of starting new businesses; however, in recent

years, the term has been extended to include social and political forms of

entrepreneurial activity. When entrepreneurship is describing activities

within a firm or large organization it is referred to as intra-preneurship and

may include corporate venturing, when large entities spin-off organizations.

According to Paul Reynolds, entrepreneurship scholar and creator of the

Global Entrepreneurship Monitor, "by the time they reach their retirement

years, half of all working men in the United States probably have a period

of self-employment of one or more years; one in four may have engaged in

self-employoment for six or more years. Participating in a new business

1

creation is a common activity among U.S. workers over their course of their

careers.

INDUSTRIAL BACK GROUND OF INDIA

The Economy of India is the eleventh largest in the world by nominal GDP

and the fourth largest by purchasing power parity (PPP). The country's per

capita GDP (PPP) is $3,290 (IMF, 127th) in 2010. Following strong economic

reforms from the socialist inspired economy of a post-independence Indian

nation, the country began to develop a fast-paced economic growth, as free

market principles were initiated in 1990 for international competition and

foreign investment. Economists predict that by 2020, India will be among

the leading economies of the world.

India was under social democratic policies from 1947 to 1991. The economy

was characterised by extensive regulation, protectionism, public ownership,

pervasive corruption and slow growth. Since 1991, continuing economic

liberalisation has moved the country toward a market-based economy. A

revival of economic reforms and better economic policy in first decade of

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the 21st century accelerated India's economic growth rate. In recent years,

Indian cities have continued to liberalise business regulations. By 2008,

India had established itself as the world's second-fastest growing major

economy. However, as a result of the financial crisis of 2007–2010, coupled

with a poor monsoon, India's gross domestic product (GDP) growth rate

significantly slowed to 6.7% in 2008–09, but subsequently recovered to

7.2% in 2009–10, while the fiscal deficit rose from 5.9% to a high 6.5%

during the same period. The unemployment rate for 2009–2010, according

to the state Labour Bureau, was 9.4 percent nationwide, rising to 10.1

percent in rural areas, where two-thirds of the 1.2 billion population live.

India's large service industry accounts for 57.2% of the country's GDP while

the industrial and agricultural sector contribute 28% and 14.6%

respectively. Agriculture is the predominant occupation in India, accounting

for about 52% of employment. The service sector makes up a further 34%,

and industrial sector around 14%. The labour force totals half a billion

workers. Major agricultural products include rice, wheat, oilseed, cotton,

jute, tea, sugarcane, potatoes, cattle, water buffalo, sheep, goats, poultry

and fish. Major industries include telecommunications, textiles, chemicals,

3

food processing, steel, transportation equipment, cement, mining,

petroleum, machinery, information technology-enabled services and

pharmaceuticals. However, statistics from a 2009-10 government survey,

which used a smaller sample size than earlier surveys, suggested that the

share of agriculture in employment had dropped to 45.5%.

Previously a closed economy, India's trade and business sector has grown

fast. India currently accounts for 1.5% of world trade as of 2007 according

to the WTO. According to the World Trade Statistics of the WTO in 2006,

India's total merchandise trade (counting exports and imports) was valued

at $294 billion in 2006 and India's services trade inclusive of export and

import was $143 billion. Thus, India's global economic engagement in 2006

covering both merchandise and services trade was of the order of $437

billion, up by a record 72% from a level of $253 billion in 2004. India's total

trade in goods and services has reached a share of 43% of GDP in 2005–06,

up from 16% in 1990–91.

4

INDUSTRIAL BACK GROUND OF KERALA

Kerala has witnessed tremendous development especially from the

economic point of view. Although Kerala economy is primarily based on

agriculture, the strong historical significance and natural attributes of the

state have resulted in the presence of several industries in Kerala.

Located in the south-western tip of India, Kerala has the following to its

credit:

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The highest literacy rate in India.

Tourism has grown to be a front line industry government backing and

private management.

An efficient public transport system.

Information Technology is becoming a key area of economic excellence

Role of agriculture in Kerala economy

The following are the features of the predominantly agrarian economy of

Kerala:

Kerala is a major producer of cash crops like coconuts, rubber, tea, coffee,

pepper, cardamom, cashew, areca nut, nutmeg, ginger, cinnamon, and

cloves.

Coconuts bring the people their principal source of earning in agriculture.

Nearly 70% of Indian output of coconuts is provided by Kerala. .

Cardamom is one of the major exports of India and the bulk of Cardamom

comes from Kerala.

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Role of industry in Kerala economy Industries of Kerala economy are hugely

based on agriculture and marine products. Some traditional industries are:

Coir and coir products

Marine products

Handloom and handicrafts related to ivory, wood, bone carving, hand

embroidery, cane works, coconut shell carving, and paddy straw picture

making.

Village industries manufacture Khadi, fiber, pottery, lime, paper, matches,

gobar gas, cane, and bamboo.

The economy of Kerala, though small and agro-based, has a lot to look

forward in future with the upcoming of IT and allied industries that are

willing to exploit the yet-to-be tapped resources.

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INTRODUCTION

Entrepreneurial activities are substantially different depending on the type

of organization that is being started. Entrepreneurship ranges in scale from

solo projects (even involving the entrepreneur only part-time) to major

undertakings creating many job opportunities. Many "high value"

entrepreneurial ventures seek venture capital or angel funding in order to

8

raise capital to build the business. Angel investors generally seek returns of

20-30% and more extensive involvement in the business.[3] Many kinds of

organizations now exist to support would-be entrepreneurs, including

specialized government agencies, business incubators, science parks, and

some NGOs. In more recent times, the term entrepreneurship has been

extended to include elements not related necessarliy to business formation

activity such as conceptualizations of entrepreneurship as a specific

mindset (see also entrepreneurial mindset) resulting in entrepreneurial

initiatives e.g. in the form of social entrepreneurship, political

entrepreneurship, or knowledge entrepreneurship have emerged

Total Indian Entrepreneurial Activity Average = 12.1%

India was second among all nations in Total Entrepreneurship Activity as

per the Global Entrepreneurship Monitor Report of 2002. But after several

years of data, India appears to have a TEA level rather close to the world

average.

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India is ninth in the Global Entrepreneurship Monitor (GEM) survey of

entrepreneurial countries. It is highest among 28 countries in Necessity

based entrepreneurship, while 5th from the lowest in opportunity based

entrepreneurship.

The liberalization, which was started in 1991, and the Information

Technology boom of the mid-late 90’s, have been significant factors,

leading to a wave of entrepreneurship sweeping through the country.

Indians have entrepreneurial capacity. However the society and

government are not very encouraging towards entrepreneurship. To a

large extent, the Indian society is risk averse. People usually seek secure

and long-term employment, such as government jobs. The physical

infrastructure needs to be improved. Social Attitudes, lack of capital,

inadequate physical infrastructure and lack of government support are

major factors of hindrance.

India is the fifth largest economy in the world (ranking above France, Italy,

the United Kingdom, and Russia) and has the third largest GDP in the entire

continent of Asia. It is also the second largest among emerging nations. The

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liberalization of the economy in the 1990s has paved the way for a huge

number of people to become entrepreneurs.

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SMALL SCALE INDUSTRIES

The contribution of small scale industries to the country's economy

has declined to six percent over the course of last ten years.

According to a survey report released by Central Statistics

Department, the contribution of such industries to the GDP in 2066

declined to six percent from 9 percent recorded in 2057.

The Department carries out this sort of survey in every 10 years.

The slower growth of industrial sector in comparison with service

one is attributed to such decline.

The survey was carried out by incorporating the industries involved

in income oriented activities.

As per the survey, some 32,326 small scale industries were

operating throughout the country during the fiscal year 2065/66.

Out of these, samples were collected from 3,737 industries.

Amongst them, 62 percent were based in rural areas while the

remaining 38 percent were situated in urban areas.

The survey also stated that the investment made by the small scale

industries was to the tune of Rs 3.03 billion while the value of the

products and services generated by them stood at Rs 1.49 billion.

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The survey also pointed out that electricity is a major challenge for

operation of such industries.

However, Dr Jagadish Chandra Pokharel, chairman, National

Planning Commission (NPC), believed that since these enterprises

do not demand high magnitude electricity, there should be an

arrangement of alternative energy to run them.

According to Pokharel, since the role of small scale industries is

pivotal in eradicating poverty as envisioned by Millenium

Development Goals (MDGs), the NPC will rethink the plans and

programmes vis-a-vis such industries. nepalnews.com

Opportunity

The opportunities in the small-scale sector are enormous due to the

following factors:

Less Capital Intensive

Extensive Promotion & Support by Government

Reservation for Exclusive Manufacture by small scale sector

Project Profiles

Funding - Finance & Subsidies

13

Machinery Procurement

Raw Material Procurement

Manpower Training

Technical & Managerial skills

Tooling & Testing support

Reservation for Exclusive Purchase by Government

Export Promotion

Growth in demand in the domestic market size due to overall

economic growth

Increasing Export Potential for Indian products

Growth in Requirements for ancillary units due to the increase in

number of greenfield units coming up in the large scale sector. Small

industry sector has performed exceedingly well and enabled our country to

achieve a wide measure of industrial growth and diversification.

14

INDUSTRY PROFILE

Comfortable and versatile, Churidar-style clothing, developed in India, can

be worn by both men and women. Simple shapes combine to create these

garments, making them a great first project for novice seamstresses. Outfits

consist of long pants and medium or long tunics. The ideal fabrics for these

garments are cotton, silk and rayon, easy fabrics for beginners to sew.

Because of their minimalistic design, they make the perfect framework for

embroidery or other types of embellishments.

Difficulty: Moderately Easy

Instructions

Things You'll Need:

Measuring tape

Sewing pattern

Fabric

Pins

15

Scissors

Marking pencil or tailor's chalk

Thread

Sewing machine

Seam binding (optional)

Measure yourself to get your chest, waist and hip measurements. Be

sure to wear only the undergarments you plan to wear under your new

Churidar clothing, or if you plan to layer these garments over other

clothing, measure yourself over these other garments. A trusted friend

can help make the measuring process easier.

Buy a pattern for Indian clothing, and find your size by comparing your

measurements to the measurements on the back of the pattern

envelope. The envelope will explain how much fabric is needed for your

size. Purchase the required amount of fabric for your outfit, as well as

any notions required, such as buttons or trim.

Cut out the pattern and fabric as directed by the pattern instructions.

Transfer all pattern markings, such as dots and notches, to the fabric

16

using your marking pencil or tailor's chalk. These markings are added to

the pattern to assist you in constructing your garment, and will be

referenced in the sewing instructions.

Fit the garment to your body by pinning it together and carefully putting

it on. Churidar clothing is designed to fit fairly loosely around the body.

Re-pin the seams until you are satisfied with the fit, trying it on

repeatedly until you are satisfied.

Sew the pieces together as instructed by the pattern's sewing directions.

If your fabric starts raveling at the edges as you sew, you may want to

enclose the seams with seam binding or by using a zigzag stitch on the

edges.

Hem the bottom of the Churidar pants to the desired length,

traditionally at the ankle. Hem the tunic and sleeves to the desired

length.

17

PROJECT AT A GLANCE

Name of the unit : M/S Angel Industries

Address : Kottayam

Constitution : Proprietorship

Location : Kottayam

About the project : Manufactures Of Churidar Materials

Name and address of proprietor : Subash

Thoppil house

Kottayam

Cost of the project : Rs: 1,00,00,000

Means of finance : Own Capital - Rs 60,00,000

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Bank loan - Rs 40,00,000 Rs 1,00,00,000

COMPANY PROFILE

M/S Angel Industries is a small scale business unit. It is a sole trading

concern concern. They produce various types of Churidar Materials. The

unit is located at Kottayam The location is favourable to the industry. The

name of the proprietor is Mr. Subash. He has several years experience in

the field. The unit has gained a reputation in a short span of operations.The

promoter’s skill and ability is the backbone of this industry.

VARIOUS DEPARTMENTS ASSOCIATED WITH THE COMPANY

PRODUCTION DEPARTMENT

The unit has a wide manufacturing process.So it has a production department to coordinate the activities

1. Maintain the quality

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2.Reduce the cost of Production

3.Increase the efficiency in production.

Marketing Department

Now a days paper has high demand.To earn maximum profit the unit has a good marketing department.Its functions are:

1. Give Value to customer needs

2.Selecting the advertising Campaign.

3. Plan Customer oriented marketing Strategies

Packing Department

1.Make the product packing Attractive.

2. Pack the products with care

PRODUCTS OF THE COMPANY

Churidar Materials

MISSION OF THE COMPANY

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Maintain good customer satisfaction.

Provide better product with cheaper rate

Maintain a stable growth in sales

PRICING METHOD

Before fixing the price the firm consider the raw material cost as it is

changing frequently.

BUYERS

Direct Sales

COMPETITORS

V Star Creations

Roshni Churidar Materials

DISTRIBUTION CHANNEL

Retailers

21

Agents

Direct Sales

COST OF THE PROJECT

Details of Plant

Table No: 4.1

Sl. No

Category Sq.ft Amount

1 Manufacturing Unit 1600 16,00,000

2 Quality Testing Machine 500 5,00,000

3 Were ho using & Packing Unit 900 9,00,000

TOTAL 30,00,000

Details of MachineTable No: 4.2

Sl. No Category No Amount

1 Clothing Machine 2 2,50,000

22

2 Cross Stitching Machine 3 2,00,000

3 Inter Lock Machine 4 2,00,000

4 Embroidery Machine 3 2,00,000

5 Swing Machine 20 1,50,000

Tax 1,30,000

TOTAL 32 11,30,000

Details of LandTable No: 4.3

Sl.No Acre/Cent Amount

1 59 Cent 50,00,000

TOTAL 50,00,000

Details of FurnitureTable No: 4.4

Sl.No Item No Amount

1 Chair 20 50,000

2 Table 7 70,000

3 Fixtures 30,000

23

TOTAL 27 150000

TAX 20000

GRAND TOTAL 170000

Details of Tools and other Accessories Table No: 4.5

Sl. No Category Amount

1 Tools 50,000

2 Accessories 50,000

TOTAL 1,00,000

Details of VehicleTable No: 4.6

Sl. No Category Amount

1 Tempo Van 6,00,000

TOTAL 6,00,000

Cost of Project at a GlanceTable No: 4.7

Sl.No

Item Amount

1 Plant 30,00,000

2 Machinery 11,30,000

24

3 Land 50,00,000

4 Furniture & Fittings 1,70,000

5 Tools & Accessories 1,00,000

6 Vehicle 6,00,000

TOTAL 1,00,00,000

Means of Finance

Own Capital - 60,00,000Borrowed Term loan - 40,00,000

TOTAL - 1,00,00,000

PROFITABILITY ANALYSIS

(A) INCOME

a) SALES

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The expected average annual turnover for the proposed project in the initial year is 42,,00,000 and a nominal increase is made in the subsequent years. The details of turnover are as follows:-

Table No: 4.8

Sl.No

Item Amount

1 Printed Churidar 6,88,000

2 Cotton Churidar 6,32,000

3 Chiridar Salvarkameez 6,94,000

4 Fancy Churidar 9,82,000

5 Designer Embroidary Churidar 6,04,000

6 Traditional Churidar 6,00,000

TOTAL 42,00,000

B) EXPENDITURE a) Raw Materials

The expected average annual raw materials for the proposed project is the initial year is Rs. 12,00,000 and a nominal increase is made in the subsequent years. The details of raw materials are given below:-

Table No: 4.9

Sl.No

Item Amount

26

1 Basic Materilal 6,65,000

2 Fine Fabric 4,25,000

3 Shimmer Threads 21,000

4 Beads 24,000

5 Mirror 12,000

6 Sewers 23,000

7 Packing Materials 30,000

TOTAL 12,00,000

b) Salary

This project may provide employment opportunity for 23 members. The expected average annual salary provided for the persons are Rs. 10,00,000 and a nominal increase is made in the subsequent years. Details of salary is as follows :-

Table No: 4.10

Sl.No

Category No Amount

1 Cutting Staff 2 1,00,000

2 Craftsman 2 1,00,000

3 Quality Controller 1 1,20,000

4 Stock Keeper 1 30,000

5 Office Staff 2 80,000

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6 Skilled Labour 15 5,60,000

7 Driver 1 10,000

TOTAL 23 10,00,000

C) Electricity Charges

The expected average annual electricity charges for the proposed project is Rs. 1,00,000 and a nominal increase is made in the subsequent years.

D) Repairs & Maintenance

The expected average repairs and maintenance of the proposed project is Rs. 50,000 and a nominal increase was made in the subsequent years.

E) Travelling Sales promotion Expense

The expected average travelling & sales promotion expense of the proposed project is Rs. 1,50,000 and a nominal increase was made is the subsequent years.

F) Office Expense

The expected average annual office expense of the proposed project is Rs. 2,00,000 and a nominal increase is made in the subsequent years.

G) Interest on Loan

Interest on loan is provided at 10% per annum.

H) Depreciation

Depreciation is provided at 10% per annum on straight line method. Its details are given below :-

28

Table No: 4.11

Sl. No

Category Amount Rate of Depreciation

Depreciation

1 Plant 30,00,000 10% 3,00,000

2 Machinery 11,30,000 10% 1,13,000

3 Land 50,00,000 - -

4 Furniture & Fitting 1,70,000 10% 17,000

5 Tools and Accessories

1,00,000 10% 10,000

6 Vehicle 6,00,000 10% 60,000

TOTAL 1000000 5,00,000

DETAILS OF EXPENDITURE AT A GLANCE

Table No: 4.12

Sl.

No

Category Amount

1 Raw Materials 12,00,000

29

2 Salary 10,00,000

3 Electricity charges 1,00,000

4 Repairs & Maintenance 50,000

5 Travelling & Sales Promotion Expense 1,50,000

6 Office Expense 2,00,000

7 Interest on Loan 4,00,000

8 Depreciation 5,00,000

TOTAL 36,00,000

WORKING CAPITAL REQUIREMENT OF THE PROPOSED PROJECT

The working capital requirement of the proposed project is for 2 months. Its details are as follows:-

Table No: 4.13

Sl. No

Category Amount

1 Raw Material 2,00,000

2 Salary 1,66,667

3 Electricity Charges 16,667

4 Repairs & Maintenance 8,333

5 Travelling & Sales Promotion Expense 25,000

6 Office Expense 33,333

7 Interest on Loan 66,667

8 Depreciation 83,333

TOTAL 6,00,000

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ANNEXURE REFERRED TO THE PROPOSED PROJECT

ANNEXURE I : PROJECTED PROFITABILITY STATEMENT

ANNEXURE II : PROJECTED CASH FLOW STATEMENT

ANNEXURE III : DEBT SERVICE COVERAGE RATIO

ANNEXURE IV : PROJECTED BALANCE SHEET.

ANNEXURE I : PROJECTED PROFITABILITY STATEMENT

RS. IN LAKHS

Year 1 2 3 4 5

A) INCOMESales: 42.00 47.00 53.00 59.00` 65.00B) TOTAL 42.00 47.00 53.00 59.00 65.00

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C) V ariable Expense

a) Opening stock - 2.00 3.00 3.00 2.00

b) Purchase 12.00 12.00 14.00 15.00 17.00

c) Closing stock (2.00) (3.00) (3.00) (2.00) (1.00)

Material Consumed (a+b)-c 10.00 11.00 14.00 16.00 18.00

D) TOTAL 10.00 11.00 14.00 16.00 18.00

E) Gross Profit (B-D) 32.00 36.00 39.00 43.00 47.00

F) Operating Expense

Salary 10.00 12.00 14.00 16.00 18.00

Electricity Charges 1.00 1.20 1.40 1.60 1.80

Repairs & Maintenance .50 .60 .70 .80 .90

Travelling& Sales Promotion expense

1.50 1.75 2.00 2.25 2.50

Office Expense 2.00 2.25 2.50 2.75 3.00

Interest on Loan 4.00 3.20 2.40 1.60 .80

Depreciation 5.00 5.00 5.00 5.00 5.00

G) TOTAL 24.00 26.00 28.00 30.00 32.00

H) Net Profit (E-G) 8.00 10.00 11.00 13.00 15.00

ANNEXURE II – PROJECTED CASH FLOW STATEMENTRs. In Lakhs

Year Pre-Operative

1 2 3 4 5

32

PeriodA) INFLOW

Owned Capital 60.00

Borrowed Term loan

40.00

Inflow from operation

- 8.00 10.00 11.00 13.00 15.00

Add Depreciation 5.00 5.00 5.00 5.00 5.00

Decrease in Current Asset

- 0.00 0.00 0.00 1.00 1.00

B) Total 100.00 13.00 15.00 16.00 19.00 21.00

C) Outflow

Fixed Asset

Plant 30.00

Machinery 11.30

Land 50.00

Furniture & Fittings 1.70

Tools & Accessories 1.00

Vehicle 6.00

Repayment of loan 8.00 8.00 8.00 8.00 8.00

Increase in current asset

- 2.00 1.00 0.00 0.00 0.00

Income Tax - 1.41 2.01 2.31 2.91 3.51

Drawings - 1.55 3.94 5.60 8.00 9.39

D) Total 100.00 12.96 14.95 15.91 18.91 20.90

E) Surplus 0 .04 .05 .09 .09 .10

F) Cumulative Surplus

0 .04 .09 .18 .27 .37

ANNEXURE III : DEBT SERVICE COVERAGE RATIO

RS. In lakhs

Year 1 2 3 4 5

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A) Source of Fund

Inflow 8.00 10.00 11.00 13.00 15.00

Add Depreciation 5.00 5.00 5.00 5.00 5.00

Less Income Tax (1.41) (2.01) (2.31) (2.91) (3.51)

B) TOTAL 11.59 12.99 13.69 15.09 16.49

C) Servicing of Debt

Repayment of Loan 8.00 8.00 8.00 8.00 8.00

D) TOTAL 8.00 8.00 8.00 8.00 8.00

E) DSCR (B/D) 1.45 1.62 1.71 1.89 2.06

ANNEXURE iv – PROJECTED BALANCE SHEET

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Rs. In Lakhs

Year Pre-Operating period

1 2 3 4 5

A) Source of FundOwned Fund 60.00 65.04 69.09 72.18 74.27 76.37

Borrowed Term Loan

40.00 32.00 24.00 16.00 8.00 0

B) TOTAL 100.00 97.04 93.09 88.18 82.27 76.37

C) Application of FundFixed Asset

Plant 30.00 27.00 24.00 21.00 18.00 15.00

Machinery 11.30 10.17 9.04 7.91 6.78 5.65

Land 50.00 50.00 50.00 50.00 50.00 50.00

Furniture & Fittings 1.70 1.53 1.36 1.19 1.02 .85

Tools & Accessories 1.00 .90 .80 .70 .60 .50

Vehicle 6.00 5.40 4.80 4.20 3.60 3.00

Current Asset

Stock 2.00 3.00 3.00 2.00 1.00

Cash in hand - .04 .09 .18 .27 .37

D) Total 100 97.04 93.09 88.18 82.27 76.37

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BREAK EVEN ANALYSIS

Table No: 4.14

Rs. In Lakhs

Particulars 1 2 3 4 5

A) Sales 42 47 53 59 65

B) Variable Cost Raw Material

10.00 11.00 14.00 16.00 18.00

C) Contribution (A-B) 32.00 36.00 39.00 43.00 47.00

D) PV Ratio (C/A)x100 76.19 76.59 73.58 72.88 72.30

E) Fixed Cost 24.00 26.00 28.00 30.00 32.00

F) Break Even Value (E/D) .3150 .3395 .3805 .4116 .4425

BREAK EVEN POINT

It is a point on sale at which total revenue is equal to total cost.

BREAK EVEN POINT:Fixed Cost/PV Ratio

PV Ratio: (Contribution/Sales) x 100

Contribution: Sales – Variable Cost

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BREAK EVEN ANALYSIS

1 2 3 4 50

5

10

15

20

25

19.05

21.28 20.7522.03

23.08

SCALE : 1 UNIT=0.05

YEAR

BREAK EVEN POINT

37

DEBT EQUITY RATIO

Table No: 4.15

Rs. In Lakhs

Particulars 1 2 3 4 5

A) Borrowed Fund 32.00 24.00 16.00 8.00 0

B) Owned Fund 65.04 69.09 72.18 74.27 76.37

C) Debt Equity Ratio (A/B) .4920 .3473 .2217 .1077 0

DEBT EQUITY RATIO

It is a ratio between proprietors fund and outsider’s fund Debt Quality Ratio:- Borrowed Fund/Owned Fund

38

DEBT EQUITY RATIO

1 2 3 4 50

5

10

15

20

25

19.05

21.28 20.7522.03

23.08

SCALE : 1 UNIT=0.1

YEAR

DEBT EQUITY RATIO

39

FIXED ASSET TO NET WORTH RATIO

Table No: 4.16

RS: In Lakhs

Particulars 1 2 3 4 5

A) Fixed Assets 95.00 90.00 85.00 80.00 75.00

B) Owned Fund 65.04 69.09 72.18 74.27 76.37

C) FANWR (A/B) 1.4606 1.3026 1.1776 1.0772 .9821

FIXED ASSET TO NET WORTH RATIO

It is the ratio between fixed assets to proprietor’s fund.

Fixed asset to net worth ratio = fixed assets/owned fund

40

FIXED ASSET TO NET WORTH RATIO

1 2 3 4 50

5

10

15

20

25

19.05

21.28 20.7522.03

23.08

SCALE : 1 UNIT=0.2

YEAR

FIXED ASSETS TO NETWORTH RA-

TIO

41

FIXED ASSET TURNOVER RATIO

Table No: 4.17

Rs: In Lakhs

Particulars 1 2 3 4 5

A) Sales 42 47 53 59 65

B) Fixed Asset 95 90 85 80 75

C) FTAR (A/B) .4421 .5222 .6235 .7375 .8667

FIXED ASSET TURNOVER RATIO

It is the ratio between sales and fixed assets.

Fixed Asset Turnover Ratio = Sales/Fixed Assets

42

FIXED ASSET TURNOVER RATIO

1 2 3 4 50

0.2

0.4

0.6

0.8

1

1.2

0.67020.7422

0.8186

0.96351

SCALE : 1 UNIT= 0.1

YEAR

FIXED ASSETS TURNOVER

RATIO

43

NET PROFIT RATIO

Table No: 4.18

Rs. In Lakhs

Particulars 1 2 3 4 5

A) Net Profit 8.00 10.00 11.00 13.00 15.00

B) Sales 42.00 47.00 53.00 59.00 65.00

C) Net Profit Ratio (A/B)x100

19.05 21.28 20.75 22.03 23.08

NET PROFIT RATIO

It is the ratio between net profit and sales

Net Profit Ratio = (Net profit/Sales x 100)

NET PROFIT RATIO

44

1 2 3 4 50

0.2

0.4

0.6

0.8

1

1.2

0.67020.7422

0.8186

0.96351

SCALE : 1 UNIT= 5

YEAR

NET PROFIT RATIO

PROPRITORY RATIO

45

Table No: 4.19

Rs. In Lakhs

Particulars 1 2 3 4 5

A) Shareholders fund 65.04 69.09 72.18 79.27 76.37

B) Total Assets 97.04 93.09 88.18 82.27 76.37

C) Proprietary Ratio (A/B) .6702 .7422 .8186 .9635 1.00

PROPRITORY RATIO

It is the ratio between shareholders fund and total assets.

Proprietary Ratio = Shareholders Fund/Total Asset

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PROPRITORY RATIO

1 2 3 4 50

0.2

0.4

0.6

0.8

1

1.2

0.67020.7422

0.8186

0.96351

SCALE : 1 UNIT= 0.2

YEAR

PROPRITORY RATIO

47

CONCLUSION

By verifying the balance sheet it is identified that the financial position of

the firm is sound.

By verifying debt service coverage ratio the firm is able to repay their

interest instalments.

The firm has the capacity to repay all their liabilities in time

Increase in profit is a measurement of operating efficiency of the firm

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SUGGESTION

The taste and preference of the customers are changing day to day in this

industry. The firm should be aware of changing trends in the industry.

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BIBLIOGRAPHY

Reserch Methodology – Patel ,Kithabi Publication.

Cost Accounting – L R Pooti Chand Publication

Web Site

www.indian economy.com

www.keralaeconomy.co.in

www.manufacturingprocess.com

www.smallscaleindustries.org

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