patidar cotton

7/31/2019 Patidar Cotton

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S Patidar Cotspin Pvt. Ltd.

SUBMITTED FOR

Partial Fulfullments of the Requirements

of the Three Years Fulltime

Bachelor of Business Administration.

SUBMITTED BY

Hitesh B. Patel

Exam No:- 297

Roll No :- 19

Academic year 2007-08 (T.Y.BBA)

SUBMITTED TO


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M.B.A programmed is a study of management. North Gujarat university has

made the summer training and preparing project report during the training, which is

compulsory for each and every student of management. As the student of M.B.A. I

strongly believe that this training is much essential to strengthen our practical awareness

with theoretical knowledge. The student of the management have to undergone through

training programme for practical training. so I have undergone through this training

programme at M/S Patidar Cotspin Pvt. Ltd. and I have made project report of a

company during the summer training on all the department of a company.

M/S Patidar Cotspin Pvt. Ltd. efforts in the right direction with the

specialization of good manufacturing practices in textile industries. Company is largest

Yarn manufacture in India. The companys principal business consists of manufacturing

several count yarn.

The basic objective of practical training is to achieve practical knowledge as

well as theoretical knowledge from the company management. And also to know how

company run in the real life and what is the problem faced, How to handling a problem.

As we knew the remark that PRACTICAL WITHOUT THEORY HAS NO ROOT

AND THEORY WITHOUT PRACTICE HAS NO FRUIT.

I am pleased to place my report ofM/S Patidar Cotspin Pvt. Ltd. Company.

This training session is important because in order to develop a practical skill of M.B.A.student. And the information of this project report is collected from the company

production unit & office at ahmedabad with the help and discussion with concerned

officers and executives of the industrial unit.


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Industrial Practical training is the one of the important part of the studies of .M.B.A.

which gives us knowledge about the practical training and also encourages us to learn more as

per the syllabus. We received lots of help from our professors and other persons.

I am grateful and thankful to each of them who helped me to collect the information

about the industry.

I would like to express my gratitude to our who gave me a good opportunity

to learn about industrial environment during industrial visit.

The above mentioned sirs have helped us lot for getting informations regarding the

industry. I am also thankful to the staff of the college from whom I got lot of co-operation.

Thank you.

Table of Contents- M/s Patidar Cots_Spin Pvt. Ltd

I. General details of the Company

II. About the company and Background of the directors


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III. Project facilities

IV. The 3 Ps -Product, Production and Profitability

V. Market Scenario & Marketing Aspect of the company

VI. Security Coverage

VII. Financials

Estimated profitability statement

Margin Money Calculations

Balance Sheet- Provisional and Projected

Cashflow Statement

Depreciation and Tax Calculations

Breakeven Analysis

Interest Calculation

DSCR Calculation


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Overview of textile industries :-

The textile industry is the second largest industry after agriculture in India

contributing about 20% of the total industrial output and 8% of GDP. It provides direct


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employment to about 350 Lacs people. Besides this, there are a large number of

ancillary industries, which are dependent upon this sector, such as manufacturing

various machines, accessories, stores, ancillary items and chemicals. Known globally

for its skill and craftsmanship, the Indian textile industry is also one of the largestexport earners and accounts for about 35% of the gross export earnings in trade. Trade

restrictions have hitherto kept the Indian textile industry from soaring to the height it is

capable of, but this is expected to change, as after January 2005 the quota and other

trade restrictions are being removed.

About 31.07% of the countrys export earning is contributed by textiles and

clothing industry. With barely 2-3% import intensity, it is also the highest netforeign

exchange earner. It also contributes significantly to the exchequer, about Rs. 6000

Crores annually. job opportunities are indirectly provided to millions in the cotton

farming and processing, stores & accessories and a wide network of marketing of textileand allied products. The Indian Textile Industry has turned around since 2004 and

improved since the beginning of 2005 and further expected to improve in the near and

distant future by leaps and bounds. Indian textile industry to benefit from the end of

MFA The multi-fibre agreement (MFA), which governed global textile trade for a

number of years, ended on December 31st , 2004. One of the biggest beneficiaries of

this development is the Indian textile industry, in particular the readymade garment

industry. As far as India is concerned, the domestic textile industrys latent strengths,

such as low labour costs, one of the least-cost producers of cotton yarn and fabrics,

abundant availability of cotton and strong presence in niche short run- fashion productsare likely to bolster its competitive advantage vis--vis other nations such as Pakistan,

Bangladesh and Sri Lanka, who will also gain from the end of MFA. Since nearly 70

percent of Indian textile exports are cotton based, the cotton yarn segment will also

benefit from greater export opportunities. On the flip side, the threat of competition

exists from countries such as China, Pakistan and Bangladesh, who are equally

competitive in garmenting. Indian readymade garment exports to be the major demand

driver for cotton yarn. The demand for cotton yarn is expected to grow at a robust 6.8

per cent CAGR between 2004-05 and 2009-10 largely driven by the expected growth of

about 15 per cent CAGR in cotton readymade garment exports (in volume terms) due to

opportunities available to India in a quota-free regime. But achieving the projected

growth in readymade garment exports would be contingent on Indias ability to

compete effectively with rivals such as China, Bangladesh and Sri Lanka.

Introduction of Company :-

The company is a closely held private limited company incorporated at vijapur on 5th

April 2006. The company plans to manufacture denim yarn, undertake processing work and

reselling it. The company plans to establish itself in both domestic as well as export.


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M/s Patidar Cotspin Private Limited was founded on 5 th April this year under the

vision of Mr. Suresh Amin, who believed in offering quality products and plans to achieve

growth through empowerment, flexibility, dynamism, technology and shared competencies.

Mr. Suresh Amin is the director of M/s Komal Amin Pvt. Ltd., involved in exports of cotton

and related products. He is associated with number of cotton related business both in

manufacturing and trading in domestic& international market. The company has been

promoted by well experienced promoters who has been in this business for past number of

years.

Project :-

The company proposes to set up a unit for manufacturing and processing cotton

into yarn with a total capacity of 15210 kg of yarn per day. The unit under consideration is

proposed in Vijapur Taluka of Mehsana. The proposed manufacturing facility is intended

keeping in view the ever growing demand of cotton in local and international markets andexpertise and experience of the promoters.

The company has approached the bank for funding the project having the

outlay of Rs. 1585.89 Lakhs. The company plans to avail a term loan to the tune of Rs.706.15 Lakhs and working capital cash credit limit of Rs. 250.00 Lakhs. The balance of

Rs. 629.74 is to be contributed by promoters by way of equity share capital(Rs. 100.00

Lakhs) and unsecured loans ( Rs. 529.74 Lakhs)( Quasi equity).

Company Detail:-

Name :- M/s Patidar Cotspin Pv. Ltd.


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Constitution :- Private Limited Company

Activity :- Manufacturing , Processing and Reselling of

Denim Yarn.

Date of Establishment :- 5th April 2006

Registered Office Address :- M/s Patidar Cotspin Pvt. Ltd

101, Shanti Arcade, 132 Ft Ring Road,

Naranpura, Ahmedabad-380 013.

Factory Address :- Survey No 3975/1, Ladol Road,

Vizapur, Dist: Mehasana,

Gujarat.

Name of the Directors :- 1) Mr. Suresh Amin

2) Mrs. Ashaben Patel3) Mr. Jayesh Patel

Present Directors /Shareholders/Technical Professional of the

company :-


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1) Mr Sureshbhai Amin, aged 37 yrs is the founder of the company. He looks

after overall operations of the company and will be involved in

routine decision making for the company like purchase, sales etc. He will look

after marketing both exports and domestic. He is a regular visitor of

international fair which has helped him in understanding the need of different

markets of the world. He will also take care of all the major domestic

procurement in consultancy with Mr. Jayesh Patel. He is the director of M/s

Komal Amin Exports Pvt. Ltd. He is also proprietor of M/s. S. P Enterprise,

Komal Sales Corporation. He is partners of M/s. Raj Fabrics, M/s. Rajeswari

Textile Mills Activity of all these unit is mentioned separately as associateconcern. He has very good experience of procurement of cotton bales from

ginning mills, and have his own unit of spinning mills, weaving units etc. and

also of family members. He is well versed with all the operation of spinning mill

as he began his career by monitoring overall operation of a spinning unit of his

close relative. His close family members are having a number of spinning unit

carrying out business of manufacturing yarn on highly profitable lines. His

functional responsibility in the unit is to look after marketing and sales.

2) Mrs Ashaben Patel aged 31 years is presently looking after export

documentation and correspondence of overseas buyers in M/s Komal Amin

Exports Pvt. Ltd. She also takes care of administration of the company since

inception of the company. She is proposed to perform the all the above

functions in M/s Patidar Cot- Spin Pvt. Ltd. She along with her husband Mr.

Vishnubhai Patel (C.A) will look after finance & accounts of the company as

well.


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3) Mr. Jayeshbhai Patel aged 41 years will look after finances of the company

along with routine decision making in the company. He is actively involved in

the formation of the company and is involved in routine decision making of the

company. He is carrying out diversified businesses of name and style M/sNilkanth Cold Storage, M/s Unique finance, M/s Alap Chemicals. He has

experience of trading in yarn. He will assist Mr. Suresh Amin in marketing both

for domestic and international markets.

4) Mr Rohit Patel:- is one of the share holder of the company. He is associated

with companies and firm of real estate development. He is keenly interested in

the unit and will share functional responsibility of looking after finances of the

company. He is one of the director of M/s Divyam Real Estate Pvt. Ltd. whichhas a deposit of over Rs. 300 lakhs with Corporation Bank, Navrangpura

branch, Ahmedabad. He is director of M/s Parth Builders Pvt. Ltd and proprietor

of M/s Shanti Developers. He is well versed in managing finance of the

company.

5) Mr Jitendra Borsaliya:- Mr. Jitendra Borsaliya is shareholder of the company .

His functional responsibility in the firm is to look after procurement of raw

material. He is director of M/s Patidar Industries Pvt. Ltd. involved in

manufacturing of cotton seeds and cotton. He is director of M/s Somnath

Ginning and Pressing Mill Pvt. Ltd. He has vast experience in trading and

manufacturing of cotton and cotton seeds of over 10-12 years.

6) Mr Priteshbhai Patel & Mr. Jigneshbhai Patel will monitor daily routine at

factory site. They are both shareholders of the company. The company has tied

up with M/s Techmex Project consultants for their expertise in textile project

implementation and production. Mr. Amitav Patnaik will look after

implementation of project and monitor production process of the company. He

is a qualified textile engineer. Besides this the company will hire technical

professionals to carry out the production process ficiently.


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Shareholding pattern of the company :-

The companys proposed shareholding pattern is as under

Sr

No

Name of the Shareholders Share

Capital

% of Shareholding

1 Sureshbhai Amin 18,00,000 18%

2 Ashaben Patel 18,00,000 18%

3 Jayeshbhai Patel 22,00,000 22%

4 Jitendrabhai Borsaliya 18,00,000 18%

5 Rohitbhai Patel 10,00,000 10%

6 Jigneshbhai Patel 9,00,000 9%

7 Priteshbhai Patel 5,00,000 5%

Total 1,00,00,000 100%


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Group Associates :-

1) M/s Komal Amin Exports Pvt Ltd :-

Involved in export of cotton and related product. The company has penetrated

the export markets of Singapore and China within 18 months. The companys

turnover as on 30th September 2006 is over 2900 Lacs and estimated turnover

for the year is over 7600 Lakhs.

2) M/s Komal Sales Corporation:-

Mr Suresh Amin is the proprietor of M/s Komal Sales corporation. The

company is involved in the business of trading of cotton and yarn. The turnoverof the firm as on 31st March 2006 is over 158 Lakhs.

3) M/s Raj Fabrics :-

Manufacturing and undertaking jobwork for processing into grey cloth is

carried out in this firm. Mr. Suresh Amin is the partner in this firm. Turnover as

on 31st March 2006 is Rs. 89.44 Lakhs.

4) M/s Rajeshwari Fabrics:-

Manufacturing and undertaking jobwork for processing into grey cloth iscarried out in this firm. Mr. Suresh Amin is the partner in this firm. Turnover as

on 31st March 2006 is63.55 Lakhs

5) M/s Nilkanth Cold Storage:-

Mr. Jayesh Patel is a partner in M/s Nilkanth Cold Storage. The firm is carrying

out the business of maintaining cold storage.

6) M/s Aalap Chemicals:-

Mr Jayesh Patel is the partner in M/s Aalap Chemicals which is involved in

manufacturing of dyes intermidates.

7) Mrs. Ashaben Patel

is the partner in M/s P.D. Patel. M/s P.D Patel firm is into development of real

estate.

8) M/s Uma Developers:-

M/s Uma Developers is into business of real Estate development. Mrs. Ashaben

is one of the partners in the firm.


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FUTURE PROSPECTS :-

The future prospects of our Company are better considering the expected

industrial growth of 8% in the Textile Industry in the country due to abolition of quota

system. This growth rate requires matching capacity addition in the basic raw material

of textile i.e. cotton yarn for meeting the increased requirement of the textile industry

domestically. Our Company has been expanding production base by undertaking

periodical expansion to become a sizeable player in the cotton yarn spinning industry.

Our manufacturing facilities are presently running at optimum capacity, but we are

producing coarse and medium count of cotton yarns, whereas there is enough demand

for special cotton yarns from our existing customers as well as in the market. This

demand for special yarn has triggered the plans for setting-up of the ProposedExpansion.

We believe that after the Proposed Expansion is implemented, we would be

able to cater the demand special yarns in domestic market. Currently, end users of our

cotton yarns are from various fields like apparels and garment industry. These

customers also require cotton yarns of all counts, which they currently procure from

other manufacturers. Our Company also has a competitive advantage in terms of cost

and performance. cotton yarns from India are exported to around 80 countries from

various textile mills of the country. Our strong long-term relationship with customers,

marketing agents wholesale dealers in domestic market and positive industry outlook,places our Company in favorable position to tap market potential and enhance our

business accordingly.

Risky Factors affected to company :-

Unless specified or quantified in the relevant risk factors below, the financial

or other implications of any of the risks described in this section cannot be quantified:

1. The price of Cotton,

2. The Company has availed substantial loans and working capital facilities from

banks.

3. Dependence on weather conditions

4. Company is dependent on the manufacturing facilities

5. The manufacturing activities are dependent upon availability of skilled and

unskilled labour.


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6. Risk of political instability

7. Competitive business environment

8. Dependence on prices of the raw materials

9. Change in Government Policies

10. Effect of natural disasters.


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Implication on Indian Textile Industry :-

India has a very strong and diverse raw material base for manufacturing

fibres/yarn from natural (i.e., cotton, wool, silk, jute) to artificial (i.e., synthetic,cellulosic and multiple blend of such fibres/yarn) raw materials. India has competitive

advantage in terms of labour cost also. International Textile Manufacturers Federation

(ITMF) conducted a comparative manufacturing cost study of 7 countries including

India. This study has indicated that Indian industry has competitive advantage in terms

of raw material cost and labour cost in manufacture of yarn and fabric. Therefore MFA

phase out may not have much adverse impact on domestic textile industry. Top textile

importing countries like USA and the EU are looking towards India for meeting their

import requirements. India, according to several recent studies, is going to emerge as

alternative source of supply to China. Indias growth in exports will be driven by value

added made ups and apparel as India has comparative advantages over its competitors

in relation to (i) availability of relatively inexpensive and skilled workforce; (ii) design

expertise; (iii) large production base of basic raw material like home grown cotton,

yarns and fabrics; and (iv) availability of wide range of textiles.

According to a recent study by CRISIL (commissioned by ICMF), the Indian

textiles and apparel industry can achieve a potential size of USD 85 billion by 2010, of

which, the domestic market potential would be USD 45 billion and export potential

would be USD 40 billion. Nearly 60% of exports would comprise garments. This would

create 12 million job opportunities, comprising of 5 million direct jobs in textileindustry, and 7 million jobs in allied sectors.

The textile industry is the second largest industry in India contributing about

20% of the total industrial output and 8% of GDP. About 31.07% of the countrys

export earning is contributed by textiles and clothing industry. With barely 2-3% import

intensity, it is also the highest net foreign exchange earner. It also contributes

significantly to the exchequer, about Rs. 6000 Crores annually. The industry provides

employment to about 38 million persons. In addition, job opportunities are indirectly


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provided to millions in the cotton farming and processing, stores & accessories and a

wide network of marketing of textile and allied products.

Product, Production and Profitability :-

Product :-

The company proposes to produce denim yarn or Internationally accepted

Cotton yarn, both combed and carded qualities from 20's to 60's counts.

Contamination free cotton yarn of all counts & qualities,

Organic cotton yarn for high end users.

Compact yarn, fancy yarns under implementation

Production :-

Based on the total production capacity of 1512 rotors working for 24 hours a

day and considering 300 working days in a year total installed capacity of the plant

works out to be between 15210 kg of yarn per day.

Total production for yarn of 10 count with rotor point production per shift per

day rotor at 3.5 kg is 15210 kg of yarn per day at 92% efficiency. Taking this 92%

efficiency at 100% capacity of the machine being imported various capacity production

has been worked out.

Capacity Annual production of yarn in kg

80% 3967826

85% 4215815

90% 4463804


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The quality and productivity achieved will depend on various raw material

parameters like staple length, g/tx, micron ire, maturity, trash content and on

departmental condition. Technical sheet for production is as per Annexure I.

Project Facilities :-

M/s Patidar Cotspin Pvt. Limited is set up with the primary objective of keeping

in pace with the changing customer demand for quality yarn and focus its attention on

select product only. With this mission the company is confident of playing a dominant

role in the market.

The company proposes to install 1512 rotors which can produce around 15210

kgs of denim yarn of per day. The company proposes to install an industrial shed for

installing the spinning machines , a building for storage of cotton and yarn, a

humidification plant and other necessary works at the site.

The cost of project is Rs 1585.89 Lakhs. The company has approached the bank

to avail a term loan of Rs. 706.15 Lakhs and working Capital loan of Rs 250 lakhs

summing upto Rs 956.15 Lakhs and balance Rs. 629.74 Lakhs will be funded by the

promoters by way of share capital and unsecured loans which will be treated as quasi

equity during the tenure of the loan. Since the machinery to be installed is to be

imported the company wants to avail one time Letter of Credit to the tune of Rs 635

Lakhs ( 10,92,000 Euros) which is to be utilized for balance payment of machinery

cost. The company has already paid up 20% of machinery cost to the supplier as

advance towards procurement of machinery. The invoice value of machinery to be

installed is Rs. 1.365 million Euros.

Sr. No Particulars

1. Land

2. Building & Site Development

3. Plant & MachineryImported ( Transportation & Duties)


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Indigenious

4. Electrification

GEB Deposit

5. Furniture & Fixture, Office Equipment

6. Erection & Commissioning

Stores & Spares

7. Miscellaneous Asset

8. Working Capital Gap

9. Preliminary & Pre-operative Expenses

Land :-

The proposed unit is to be established by the company at Survey no 3975/1 at

Ladol Village in Vijapur in Mehasana District of Gujrat. The total area of the land is

13760 sq. mts. The company has procured this land from Mr. Jayeshbhai Patel who is

also one of the directors of the company. The total cost of procurement of land is at Rs.

5.45 Lakhs which includes stamp duty, registration charges and legal Charges of Rs.

94,504. Present marketable value of the land is around Rs. 30.00 Lakhs.

Building:-

The building cost is estimated at Rs. 106.00 Lakhs. The building cost involves

building of industrial shed along with construction of boundary wall, necessary basic

electrification points, flooring, water tank for storing water . The layout of the

proposed unit is in form of 1+1 floors. The building works is to be undertaken by Mr.

Umang J Patel, a very well known Structural Designer of Ahmedabad.

Electrification :-

Total estimated cost for electrification is Rs. 69.30 Lakhs

Other Asset :-

Includes compressed piping works, fire fighting equipments, Furniture &

Fixtures, office furniture, weighing scale and D.G. Set of 700 KVA @ Rs. 1200 per

KVA.


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Erection & Commissiong Cost :-

The erection & Commisioning cost is appraised at Rs 20.31 Lakhs. This amount

of Rs 20.31 Lakhs includes Rs 16.69 Lakhs towards stores & spares which are essential

to install the plant and machinery. Rs. 3.62 are charges towards implementation of

project by M/s Texmech Project & Services.

Plant and Machinery :-

Imported:-

The machinery used for manufacturing or processing of yarn is imported.

Details of the machinery to be installed by the company is as mentioned.

Sr No Particulars

1 Blow Room LR Complete Line

M.B.O, Mono, ERM, Hopper, Scuther

2 6 DK 803 card and 1 DK 903 Card with chute and can

accessories3 4 Draw Frames


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4 2 Schalfhorts , SE-10,240 rotors machine with feeding cans

5 1 Schalfhorts, SE-10,240 rotors machine

6 1 Schalfhorts, SE-9,240 rotors with feeding can

7 1 Schalfhorts, SE-10,120 rotors with feeding can

8 2 Schalfhorts, SE-9, 216 rotors with feeding can

The plant and machinery is to be imported and hence 5% will be paid towards customs

duty to 831.79 Lakhs.

Indegenious accessories :-

List of accessories required is enclosed in quotation and will be supplied with

the machine. Apart from the accessories being supplied the company has to install auto

waste collection system, Autoclave, U. V. Room, D. G. Set and weighing scale from

outside.

Steaming Machine:-

The cost of steaming is appraised at Rs 2.64 Lakhs. The steaming machine is

used to condition the yarn before packing.

Auto waste Collection Plant:-

The cost of Autowaste collecting system is estimated at Rs. 13.25 lakhs. The

proposed work is to be undertaken by M/s Cosmos Engg. & Services.

U. V. Room :-

The charges for installation of U.V. Room are at Rs.0.40. This technique is

used to monitor the quality of yarn.

Humidification:-

The humidification plant is to be installed by M/s Cosmos Enng. & Servises at a

total cost of Rs. 31.24 The cost includes plant cost , ducting work and required false

ceiling for installation of plant.


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Manufacturing Process :-

The company has tied up with M/s Texmech project consultant who will

monitor the production process & productivity of the company. M/s Mextech will also

provide assistance in monitoring the quality of yarn produced by the company. The

company will also employ to required technical professionals to carryout the production

process smoothly and efficiently. The flow chart of the production process in brief is as

mentioned

Flow Chart

BLOW ROOM

CARDING

DRAWING

OPEN END SPINNING

(AUTOCORO)

CONDITIONING

(STEAMING)

U.V ROOM


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( QUALITY CONTROL)

PACKING

With 1512 rotors the total proposed installed capacity of the unit will be 15210 Kgs of yarn

per day. The machinery selected by the company possesses high level of process automation

from bale plucking to winding of yarn along with monitoring unit to monitor the quality of the

yarn. The various stages of yarn spinning are

Blow Room :-

Raw Material is cleaned and opened to a smaller size( Cotton Tuft) Blow Roomconsists of sequence of machineries .The purpose of Blow Room is to open the cotton

through beaters and remove cotton seeds, leaf particles etc. Sieger Contamination

Clearer installed in the Blow Room further cleans any residual contamination left by

hand cleaning process.

Carding :-

These cotton tufts are transformed into long strands of fiber, where fibers are

individualized. Purpose of carding is to individualize the fibers and to remove neps

and seed particles. Feed: Opened Cotton in mat form.

At most mills the opening of cotton bales is

fully automated. Lint from several bales is

mixed and blended together to provide a

uniform blend of fiber properties. To ensure

that the new high-speed automated feeding

equipment performs at peak efficiency andthat fiber properties are consistent,

computers group the bales for

production/feeding according to fiber

properties. The blended lint is blown by air

from the feeder through chutes to cleaning

and carding machines that separate and align the fibers into a thin web. Carding

machines can process cotton in excess of 100 pounds per hour. The web of

fibers at the front of the card is then drawn through a funnel-shaped device

called a trumpet, providing a soft, rope-like strand called a sliver (pronounced

SLY-ver).


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As many as eight strands of sliver are blended together in the drawing process.

Drawing speeds have increased tremendously over the past few years and now

can exceed 1,500 feet per minute.

Drawing :-

Short fibers are removed through and parallelization of fibres takes place in this

machine. Purpose of draw frame is to make the sliver uniform with the help of

auto leveler.

OPEN END SPINNING (Autocoro) :-

Open end spinning takes place by spinning yarn by imparting twist of required

thickness to the fibres bundle. Purpose is to convert yarn in smaller package to

large package also remove defects in the yarn with help of electronic yarn

clearers. Roving frames draw or draft the slivers out even more thinly and add a

gentle twist as the first step in ring spinning of yarn.

Ring spinning machines further draw the

roving and add twist making it tighter and

thinner until it reaches the yarn thickness or

count needed for weaving or knitting

fabric. The yarns can be twisted many

times per inch. Ring spinning frames

continue to play a role in this country, but

open-end spinning, with rotors that can spin

five to six times as fast as a ring spinning

machine, are becoming more widespread.In open-end spinning, yarn is produced

directly from sliver. The roving process is eliminated.

Other spinning systems have also eliminated the need for roving, as well as

addressing the key limitation of both ring and open-end spinning, which is

mechanical twisting. These systems, air jet and Vortex, use compressed air

currents to stabilize the yarn. By removing the mechanical twisting methods, air

jet and Vortex are faster and more productive than any other short-staple

spinning system.


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After spinning, the yarns are tightly wound around bobbins or tubes and are

ready for fabric forming. Ply yarns are two or more single yarns twisted

together. Cord is plied yarn twisted together.

Steaming :-

The output of autocoro is conditioned to give smooth finish to the yarn.

U.V Room :-

The conditioned yarn is passed through Ultra violet room to check the quality

of yarn produced and is sent for packing on paper cones.

Raw Material :-

Sourcing raw material for the manufacturing of the yarn is quite easy as the only rawmaterial required for manufacturing yarn is cotton which is easily available throughout the

year. The promoters of the company has very good contact with ginning mills from where

cotton can be sourced. The promoters at present exporting cotton to Singapore and china on a

large scale under in name and style of M/s Komal Amin Exports Pvt. Ltd. There are a number

of firms/ companies who are supplying raw cotton to the promoters various firms on priority

basis. List of suppliers are attached for your reference separately in Anneuure I. The average

price of cotton per kg is Rs. . 1 kg of yarn requires around 1.16 kg of cotton and hence the

average cost of raw material required for one kg of yarn is at Rs. 62.50.

Cotton remains the most miraculous fiber

under the sun, even after 8,000 years. No other

fiber comes close to duplicating all of the

desirable characteristics combined in cotton.

The fiber of a thousand faces and almost as

many uses, cotton is noted for its versatility,appearance, performance and above all, its

natural comfort. From all types of apparel,

including astronauts in-flight space suits, to

sheets and towels, and tarpaulins and tents,

cotton in todays fast-moving world is still

natures wonder fiber. It provides thousands of useful products and supports millions of jobs

as it moves from field to fabric.

The key raw material for manufacturing Cotton Yarn is Cotton, which is procured

from various cotton mandis through out Indian States namely Punjab, Maharashtra, Gujarat

and Madhya Pradesh. The Company uses the services of agents and cotton selectors. They

visit the mandi alongwith experienced, trained company officials to check the quality of


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cotton, negotiate the prices and purchase cotton on behalf of the Company from approved

ginners across the cotton belt from locations, stations and zones which are closest to the

factory premises for favourable logistical cost reasons. Further, to further cut down costs and

procure cleaner cotton, Company plans to source KAPAS from farmers in Mandis. Likewise,

PCL will tie up the supplies for the year during the cotton season beginning 2005-06. In

addition being a 100% EOU, the Company also exploits the benefit of importing best quality

cotton at lowest price without having to pay import duty from any cotton producing country in

the world without any restrictions whatsoever. In case non-availability of cotton in India this

option can also be utilized. The Company has been in the industry for more than eight years

and has ability to anticipate the price movements and hedge itself against any adverse price

trends, either domestically or internationally depending on price movements in accordance

with contemporary situations, as and when the same arise Our Company keeps adequate stock

of cotton to cover the existing order book position, which mitigates any adverse effect due to

price fluctuation.

Plant Utilities :-

Power :-

The power requirement after the proposed project implementation is estimated at

675 KVA. The company proposes to apply for the increase in the load to the maximum

requirement to the government and will be easily available. Further the company has

also decided to install a D.G.Set of 700 KVA as a stand by arrangement for exigencies.

The D.G Set will be second hand as it will be sufficient to meet the requirements ofmanufacturing process in the unit.

Water :-

The total requirement of the unit after commencement of the proposed plants

operations is estimated at 8000-10000 litres for processing yarn of 15210 kg per day.

Water is required for moisturizing cotton and for humidification plant, drinking and

sanitation purpose. The company is able to meet its water requirement from tubewell of

adjoining Industrial Plot having Survey no 3979. The company will not face anydifficulty in sourcing water which could be easily availed at monthly charges of around

Rs.10,000-12,000 per month from the neighbouring plot.

Manpower :-

Manpower to be employed by the company for the production of yarn and

administrative office is as per profitability statement attached in the financial

calculations of project report.

Waste Treatment :-


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The company will install necessary waste treatment plant at the site under the

guidelines of state pollution control board. The company will comply with legal and

other requirement s as applicable to its activities and product.

Government Approval :-

The company has already acquired necessary license from the government agency

and the local authorities namely:-

i) Income tax Number

ii) TD Number

iii) Import Export Code


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Introduction :-

Indias major markets for fabrics and cotton yarn, such as Korea, Hong Kong, and

Japan are themselves expected to face stiff competition in their garments exports from India,

China, Bangladesh, Sri Lanka, etc in the long term. The competitive trend in fabric exports

will be visible even in Indias made-ups exports. In the domestic market, the consumption of

cotton yarn is likely to rise due to the price competitiveness of cotton yarn vis--vis polyester

and the overall demand for textiles and garments will grow, fuelled by greater purchasing

power India to remain self sufficient in cotton.

In 2003-04, Indias cotton availability exceeded the actual cotton required toproduce the given demand for cotton yarn by over 7 per cent; in 2004-05, it went up to 18 per

cent. Going forward, CRIS INFAC believes that India will be self sufficient in meeting cotton

demand to produce the required cotton yarn, assuming normal monsoons and the historical

increase in yields and acreage. Yield improvement would be the key to attaining self

sufficiency. In next 5 years, CRIS INFAC expects cotton availability to exceed actual cotton

required by about 5-20 percent assuming imports of certain cotton varieties, such as Egyptian

cotton, which is primarily imported for the production of finer counts of yarn. Margin of

cotton yarn players expected to improve in 2005-06 On the financials front, the margins of

cotton yarn players are expected to improve in 2005-06 due to greater demand for cotton yarn,

better price competitiveness of cotton yarn vis--vis polyester and lower raw material costs(cotton) due to higher cotton production in 2004-05.

Cotton yarn expected to be price competitive versus polyester until 2005-06

Cotton yarn is expected to be price competitive in 2005-06 due to low cotton costs (on

accounts of higher cotton production in the 2004-05 cotton season) and high prices of

polyester (the closest competitor, due to shortage of feedstock supply). Polyester prices are

expected to remain high until 2005-06, as the tight supply situation of polyester feedstock

(PTA & MEG) - mainly on account of rapid growth in Chinas polyester capacities, which has

outpaced the growth of global feedstock capacities - is expected to ease only by the end of

2006. Raw material (cotton) costs of spinning companies are expected to soften in 2005-06

Cotton prices of a particular cotton season impact the raw material costs of spinning

companies in the subsequent financial year. Raw material costs of spinning companies are


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expected to ease in 2005-06 as cotton production is expected to be 20 per cent higher in the

2004-05 season. Medium to long term outlook on profitability The profitability of cotton yarn

players is largely influenced by the price competitiveness of cotton yarn, which is, in turn

determined primarily by the pricing flexibility of polyester, and cotton costs. However, the

prices of polyester feedstock (raw material for making polyester) are largely influenced by

crude oil prices. Given the volatility in crude prices, CRIS INFAC examined two scenarios to

study their impact on the margins and credit profile of cotton yarn players - One, a scenario

when crude prices to continue to rise from present levels, and two, when crude prices soften

from current levels.

Industry & Marketing :-

The spinning and textile industry in India is an important sector which

contributes significantly to industrial production , employment generation and foreign

exchange earnings. Currently it adds about 14% to industrial production and 4% to

GDP. It provides direct employment to about 35 million people and is second largest in

providing employment after agriculture. The industry is extremely complex and varied

with hand spun and hand woven sector at one end and capital intensive sophisticated

mills at other end. Cotton is one of the key raw material for this sector. The main

cotton producing states are Maharastra, Gujrat, Madhya Pradesh and Punjab. India also

has a competitive advantage in terms of labour cost.

The demand for yarn is expected to grow by around 4 per cent in 2006-07.

Cotton yarn exports are expected to grow even higher rate of 6% driven by strong off

take by China and other non quota markets which imports yarn and re exports other

value added fabrics and garments.

Marketing :-

M/s Patidar Cot- Spin Pvt. Ltd wants to establish itself as a high quality and

processing unit. The company plans to sell its produce to regions of Gujrat, Maharastra

in the initial stage of its production. Mr. Suresh Amin has been in trading and

manufacturing business of textile and hence has a very good contacts in the market. He

has traveled different places across the world and is well aware of both domestic and

international trading business. The company has also planned to appoint professional

marketing personnel for the marketing of companys product. Negotiations are going

for appointment of selling agents both in Gujrat and Maharastra. The companys

promoters has very good contacts in textile processing mills which uses cotton yarn as

input for their finished products as well as in the market. The company plans to export


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its produce to the existing customers of the group company and also tap new markets of

different countries abroad. Special care will be taken by the company for both domestic

as well as international customers. The company will focus on changing customer need.

Cost effective measures in various areas of operation will be adopted by the company toface the competition. The upgradation required will be done from time to time to suit to

changing requirement and trend from time to time by the company.

Demand Outlook :-

The Indian cotton yarn industry is expected to capitalize on the opportunities

arising in the global textile market. The Indian cotton yarn industry will also gain

higher demand for textiles and garments in the domestic market. Between 2004-05 and

2009-10, the overall demand for cotton yarn is expected grow at a CAGR of 6.8 per

cent, mainly driven by a CAGR of 10.2 per cent in the same period in derived export

demand for cotton yarn (which mainly consists of exports of readymade garments,

fabrics and made-ups). Among derived demand drivers, the growth is expected to be the

highest in readymade garments (RMG) - CAGR of 15 percent between 2004-05 and

2009-10. Share of end products in total production (2,271 million kg) of cotton yarn in2004-05.

Domestic demand :-

Domestic consumption of cotton yarns to grow at 6 per cent CAGR CRIS

INFAC believes that the domestic demand for cotton yarn will grow at a CAGR of 6 per

cent between 2004-05 and 2009-10, as the increased purchasing power of consumers

will result in greater purchases of garments. Consequently, demand for cotton textiles

and garments will also go up. Growing proportion of middle class to aid long termgrowth in garment demand. The demand for garments in the domestic market is

expected to rise in the long term due to increase in the middle class population and

higher disposable income. The rise in youth population and their share in total

population will boost the demand for garments. This is likely to help lift the demand for

cotton yarn, as the demand for cotton garments is expected rise, along with the spurt in

overall demand for garments. Indian spinning industry comparable with Chinese

counterparts China has the largest spindle age in the world, with 67 million spindles,

around 51.5 per cent of the spindles have been installed in the last 10 years. In

comparison, India has about 35.7 million spindles, far lower than China, and the

percentage of new spindles added in the last 10 years has been low at 23 per cent.

However, the Indian spinning industry is comparable with its Chinese counterparts, as


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China has added capacities only recently and , until, now, India had a fairly modernized

spinning industry. Besides, there is no difference in the quality of yarn

produced by India and China.

Competition :-

Company are mainly concerned with seasonality business. So, company has to

required a Dull business (marketing) is experienced every year during July/August and

December/January months. There is no dependence on any single supplier/customer.

The company has to developed a marketing strategy for sales promotion. Because,

Number of Spinning Units are producing yarn similar to the yarn manufactured by the

patidar Company and at the same time due to globalisation there is also competition

from international yarn manufacturers. With technological upgradation and captive

power generation, Yarn manufactured by the Companys Textile Division has found

increasing number of quality-conscious buyers in many overseas markets and the

exports have recorded substantial growth over the last few years.

Our Company is manufacturer of cotton yarns, which is an organized segment

of Indian Textile Industry. Textile being a global industry, we face competition from

various domestic and international manufacturers of cotton yarns. we have edge over

other small & medium size manufacturers in the country. Globally, we face stiff

competition from large size manufacturers in Indonesia, Korea, Pakistan, Bangladesh

etc. However, due to our quality commitment and timely delivery, we are in the market

for more than a decade and have grown in spite of strong competition. Approach To

Marketing & Proposed Marketing Setup We have set-up a separate full-fledged

marketing department to procure orders and contracts. The export marketing department

is headed by komal amin export pvt. Ltd. Our marketing strategy is based on the

products type and the end user segment. We adopt hybrid marketing module comprising

of direct customers approach and existing agents network. We have appointed various

agents in domestic as well as international market to obtain regular orders. Our

Company is also in regular interaction with garment and apparels manufacturers for

their requirement of fabrics for domestic and international markets.


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Business Strategy :-

In last two decades, the Multi Fibre Agreement (MFA) governed

international trade in textile in clothing. Post January 2005, the Agreement on Textiles

and Clothing to abolish MFA quotas marked a significant turn around in textile trade. In

this backdrop, Indian Textile companies have a place to occupy in the global trade. The

removal of quota has opened up 91 new avenues and opportunities for further growth.

Our Company proposes the following strategies for future growth. Continue to

build-up a professional organization, We have a team of professionals and technocrats

to look after various stages of production, commercial and marketing divisions of our

Company. We believe in transparency, flow of information, and commitment to the

work among our work force and with our valuable customers, suppliers, investors,

government authorities, banks, financial institutions etc. Over a period of time, we have

been able to build an image that can be matched with our peers. The philosophy of

professionalism is foundation stone of our business strategy and we wish to make it

more sound and strong in times to come. Enhancing Customer Base Our Company

intends to grow business continuously by adding new customers both in existing as well

as in the new countries. We aim to do this by effective leveraging of our marketing

skills & relationship and further enhancing customer satisfaction. Improving Product

Portfolio and Addition of New Products Our Company intends to extend existing range

of yarn to include a wider range of products by manufacturing finer count yarns and

compact yarn.

The customers will be benefited by procuring various products from onesupplier and our Company will be able to sell variety of products to our valued


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customers. Our multiproduct portfolio also allows us to sustain the cost of high level of

services we aim to give to our customers.

Quality Products :-

Our Company intends to produce among the best quality yarn which are

acceptable by customer. For that, our Company shall be deploying better technologies

in Production as well as R&D Departments. The Company strives always to create

quality value for our Customers and therefore is becoming exceedingly driven with the

Customer as the focal point. Every kilogram of cotton is hand opened andcontamination is removed before it is fed into Unifloc and again to double check the

cotton passes through sieger contamination removal system installed in the Blow Room.

Patidar Cotspin has permanently posted its experienced staff for selection and

procurement of best cotton from cotton growing areas and onward dispatch of the

selected cotton to the mill. Patidar Cotspin has come up with a Fully Automatic and

Computerized Spinning Plant run with an alert modern management. Centralized

Humidification and fully automotive control systems. The hi-tech machines installed by

Patidar Cotspin produce a wide variety of top quality knotless cotton yarn to meet

Standards having better regularity and superior cleanliness.


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Introduction :-

Company are required a efficient financial capability for smooth running

company activities, and it is also depends on government policy which are provided to

textile industries. The government announcement in the union budget 2005-06 are

favoring to textile business development. The define as under

Initiatives in the Recent Past to Grant Impetus to the Textile Industry :-A. To strengthen domestic textile industry for meeting the growing global

competition, the following important announcements have been made in the Union

Budget 2005-06 :

1. The allocation to TUFS has been enhanced to Rs. 43500 Lacs, along with an

additional capital subsidy of 10% for the processing sector; 30 items of textiles

products and hosiery have been identified for dereservation from items reserved for

Small Scale Industry.

2. Creation of a Special Purpose Vehicle (SPV) for improving infrastructure in

manufacturing with an investment of Rs. 10,000 Crores; Excise Duty on Polyester

Filament Yarn (PFY) and Polyester Texturised Yarn (PTY) reduced from 24% to

16%.

3. Duties on specified textile machinery items, raw materials and spare parts for

manufacture of such machinery brought down from 20% to 10%. The existing

concessional duty of 5% on some other machinery is being continued.

B. Announcement of National Textile Policy :-

One of the main objectives of the National Textile Policy announced in November

2000 is to facilitate the textile industry to attain and sustain a preeminent globalstanding in the manufacture and export of clothing. The policy endeavors to


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achieve the target of textile and apparel exports from the present level to USD 50

billion by 2010 of which the share of garments will be USD 25 billion.

C. Technology Up gradation Fund Scheme :-

In view of the urgent need for stepping up the process of modernization and

technology upgradation of the textile industry in India, Ministry of Textiles

launched a Technology Upgradation Fund Scheme (TUFS) for the textile and jute

industry for a five-year time frame from 01.04.1999 to 31.03.2004. The scheme has

since been extended till 31.03.2007. The scheme provides 5% interest

reimbursement in respect of loans availed there under from the concerned financial

institutions for investments in benchmarked technology for the sectors of the

Indian textile industry specified there under.

Promoters Contribution :-

The promoters contribution includes share capital to the tune of Rs. 100.00

Lakhs and unsecured loans raised from the directors and their relatives to the

tune of Rs. 519.94 Lakhs. Aggregating to Rs. 619.94 lakhs towards the

financing the unit.

Term Loan :-

The company plans to avail a term loan of Rs.706.15 Lakhs for financing of

plant and machinery and other cost of project which is estimated at Rs. 1113.53

Lakhs. The balance of Rs. 407.38 Lakhs will be contributed by the promoters by

way of share capital and unsecured loans from promoters and their relatives.

The company will repay the term loan in seven years i.e 84 equated monthly

installment with 9 months moratorium from the date of disbursement of term

Loan. The company will commence commercial production from 1st April 2007

and will start repaying the term loan from Oct07.

The finance sought for various components of term loan is as under :-

The company wants to avail letter of credit to the tune of Rs. 635 Lakes for days

required for import of machinery. Margin required for availing the non fund

based limit will be put in separately by the company. The company also seeks

forward sale contract to the tune of Letter of credit.

The company seeks finance of 65% from the bank for plant and machinery

since though the machine is second hand it is in excellent working condition

with a residual life of over 15 years. Chartered engineers certificate from


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both Pakistan & India is attached for your kind perusal certifying the

present condition of machine and its residual life span.

Working Capital :-

The working capital requirement for the company is Rs. 472.36 Lakhs which is

the working capital gap for the year 2007-08 i.e for first full year of its operation. The

company wants to avail cash credit working capital loan of Rs. 250.00 Lakhs. Balance

of Rs.222.36 Lakhs will be brought in by the promoters.

Schedule of Implementation :-

The company proposes to commence construction of civil works by February

2006. Order for machinery has been placed which is to be imported . The expected

dates of completion of projects are as under :-

Sr.

No

Activity Expected date of completion

1. Land Will be acquired by 1st Week of December 2006

2. Site Development Development work started

3. Construction of industrial shed

February 2007

4. Plant & Machinery

Placement of Order

Order has been Placed. 10% of the machinery cost

with total value of Rs. 1.365 euros has been paid as

advance by the company .

5. Arrival of Machines 1st week of March 2007

6. Installation 2nd week of March 2007

7. Trial Run 15th March onwards

8. Commercial Production April 2007


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Security Coverage:

The company is providing security in from of Prime Security and Collateral

Security.

Prime Security :-

The prime security offered by the company is hypothecation of book debts and

stock of cotton and yarn in addition to factory land, building and plant &

machinery of the company.

Collateral Security :-

The collateral security offered is as under

Name of the holder Address Present Marketable

Value

1) Mrs. Ashaben Patel Office no 103,104, 25.32 Lakhs

Shanti Arcade,

132 ft Ring Road,

Naranpura, Ahmedabad.

2) Mr. Bhanuben Borasiya 9, Uma Bunglows, 31.66 Lakhs

Near R. C. Technical,

Sola Road, Ahmedabad.

Total amount of collateral offered is Rs 56.98 Lakhs as valued by Shri M.M.

Patel, Panel valuer for Corporation Bank, as on 8th

November 2006.


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Profitability :-

The profitability projections covering the period of term loan repayments is

satisfactory. The debt-equity and current ratio are quite satisfactory. Average DSCR of

the company works out to be 1.80 indicating comfortable debt- servicing capability.

Guarantor :-

1) Personal Guarantee of all the directors.

2) In addition to personal guarantee the company is offering guarantee of

i) Mr. Rohitbhai Patel with estimated net worth of Rs. 93.20 Lakhs

Proprietor: M/s Shanti Developers

Director : M/s Divyam Real Estate Developers ( Fixed deposit with

Navrangpura branch to the tune of Rs 300.00 Lakhs)

Director : M/s Parth Developers Pvt. Ltd.

ii) Mr. Priteshbhai Patel with estimated net worth of Rs 27.88 Lakhs

iii) Mr. Jigneshbhai Patel with estimated networth of Rs.13.37 lakhs

Director of M/s Patidar Industries Pvt. Ltd.

iv)Mr. Jitendrabhai Borasiya with estimated networth of Rs.28.27 Lakhs

Director of M/s Patidar Industires Pvt. Ltd.

v) Mrs. Bhanuben Borasiya with estimated net worth of Rs. 31.66 Lakhs.

3) The company will offer corporate guarantee of M/s Komal Amin Exports Pvt.

Ltd and M/s Divyam Real Estate Pvt. Ltd.

Rate of Interest & Processing Fees :-

The Company has sought waiver of processing charges of the bank loan and has


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requested rate of interest at 10.50%.

COST OF PROJECT :-

(RS in lakhs)

SR.NO Particular Cost Margin Finance

Sought

A Land 5.45 50% 2.72

B Building 106.00 30% 74.20

C Plant & machinery 791.70 35% 514.61

D Duty & transportation cost 40.09 30% 28.06

E Steaming machines 2.64 50% 1.32

F Electrification 43.75 30% 35.29G Indigenious machines 50.41 30% 30.63

H GEB Deposit 25.55 100% 0.00

I Furniture & fixture 0.81 40% 0.49

J Office Equipment 1.62 40% 0.97

K Erection & commissioning

Strores & spares

3.65

16.69

50%

30%

1.81

11.68

L Miscellaneous

assets,weighing scale etc

8.75 50% 4.38

M Prellminary & pre-operative

Exp

16.46 100% 0.00

N Working capital Gap 472.36 250.00

TOTAL 1585.89 956.15

MEANS OF FINANCE:-


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SR.NO PARTICULAR AMOUNT

A Share Capital 100.00

B Unsecured loan 529.74

C Term loan 706.15D Working capital loan 250.00

TOTAL 1585.89

ESTIMATED PROFITABILITY STATEMENT:-

( Rs in lakhs) (Projected)PARTICULAR 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15

(A) Sales valueLess: excise duty

2955.770.00

2955.77

3140.510.00

3140.51

3325.240.00

3325.24

3325.240.00

3325.24

3325.240.00

3325.24

3325.240.00

3325.24

3325.240.00

3325.24

3325.240.00

3325.24

(B) Cost of

production1. Raw material

consumsionOpening Stock

Add: PurchaseLess: Closing Stock

0.00

2337.24269.69

2077.55

259.69

2223.63275.92

2207.40

275.92

2353.47292.16

2337.24

292.16

2337.24292.16

2337.24

292.16

2337.24292.16

2337.24

292.16

2337.24292.16

2337.24

292.16

2337.24292.16

2337.24

292.16

2337.24292.16

2337.24

2. Wages 25.34 26.86 29.55 32.51 35.11 38.62 42.48 44.60

3. Power & Fuel 210.29 221.20 236.58 236.58 236.58 236.58 236.58 236.58

4. Repairs&Maintaneance

39.68 42.16 44.64 44.64 49.10 51.33 55.80 55.80

5. Stories & Spares 62.35 65.32 67.93 67.93 69.89 70.54 70.54 70.54

6. Other manu.Expenses

39.68 41.31 44.64 44.64 44.64 44.64

44.64

44.64

7. Admi. & Sales

Expenses

96.07 102.00 109.33 111.83 114.88 119.01 123.54 126.04

8. Director

Remuneration

0.00 0.00 30.00 40.00 40.00 40.00 40.00 40.00

9. Preliminary

Expenses

3.29 3.29 3.29 3.29 3.29 0.00 0.00 0.00

TOTAL 2557.22 2709.55 2903.21 2918.66 2930.74 2937.96 2950.96 2955.44

Increase & Decrease InStock

57.34 8.81 1.67 0.07 0.00 0.00 0.00 0.00

(C) Operating Profit 455.89 439.77 423.71 406.66 394.51 387.28 374.42 369.80

(D) Interest 159.83 151.13 139.53 127.93 116.33 104.73 93.12 84.42

(E) Gross Profit 296.06 288.64 284.18 287.73 287.18 282.55 281.29 285.38

(F) Non OperatingIncome

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00


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(G) Depreciation 141.64 123.73 108.19 99.02 96.15 93.08 85.30 86.16

(H) Profit before tax 154.42 164.91 175.98 179.71 182.03 189.47 195.99 199.22

(I) Provision for tax 51.98 55.51 59.23 59.49 61.27 63.78 65.97 67.06

(J) Profit after tax 102.44 109.40 116.75 120.22 120.76 125.69 130.02 132.16

(K) Withdrawals 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

(L) Retained Profit 102.44 109.40 116.75 120.22 120.76 125.69 130.02 132.16

Profit & Sales Graph :-

(projected)

PARTICULAR 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15

SALES 2955.77 3140.51 3325.24 3325.24 3325.24 3325.24 3325.24 3325.24

PROFIT (PAT) 102.44 109.40 116.75 120.22 120.76 125.69 130.02 132.16

Sales :-

Profit :-


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PARTICULAR 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15

(1) SHAREHOLDERS FUNDS

(A) SHARE CAPITAL 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00(B) RESERVE & SURPLUS 102.31 211.58 328.19 448.28 568.90 694.46 824.46 956.38

SUB TOTAL A+B 202.31 311.58 428.19 548.28 668.90 794.46 924.35 1056.38

(2)BORROWED FUNDS

(A) TERN LOAN 655.71 554.83 453.95 353.07 252.20 151.32 50.44 0.00

(B) WORKING CAPITAL 250.00 250.00 250.00 250.00 250.00 250.00 250.00 250.00

SUB TOTAL A+B 905.71 804.83 703.95 603.07 502.20 401.32 300.44 250.00

(3) UNSECURED LOAN 527.74 527.74 527.74 527.74 527.74 527.74 527.74 527.74

GRAND TOTAL 1637.76 1646.15 1661.88 1681.09 1700.84 1725.52 1754.53 1838.12

(1)FIXED ASSET

(A) GROSS BLOCK 1071.52 1106.02 1115.02 1179.52 1269.52 1354.02 1436.52 1581.52

(B)DEPRICIATION 141.64 256.37 373.57 472.59 568.74 661.82 747.12 833.28

NET BLOCK 929.88 840.65 741.46 706.94 700.79 692.21 689.40 748.25

(2) INVESTMENTS 150.00 200.00 200.00 250.00 250.00 300.00 300.00 300.00

GEB DEPOSIT 25.55 25.55 25.55 25.55 25.55 25.55 25.55 25.55

(3) CURRENT ASSETS(A)INVENTORIES 322.48 347.62 365.64 365.70 365.87 365.92 365.92 365.92

(B)BOOK DEBTS 241.38 256.46 407.32 407.32 407.32 407.32 407.32 407.32

(C) LOAN & ADVANCES 10.00 10..00 10.00 10.00 10.00 10.00 10.00 10.00

(D) MISC. ASSETS 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00

(E) CASH&BANK BALANCE 48.60 65.69 21.78 29.14 58.77 42.69 75.26 98.43

TOTAL CURRENT ASSETS 624.46 681.77 806.73 814.17 843.95 827.93 860.50 883.67

(4)CURRENT LIABILITIES

(A) CREDITORS FOR GOOD 86.56 91.97 97.39 97.39 97.39 97.39 97.39 97.39

(B)CREDITORS FOR EXP. 18.73 19.72 21.05 21.47 22.06 22.77 23.53 23.95

TOTALCURRENTLIABILITE 105.30 111.70 118.44 118.85 119.44 120.16 120.91 121.33

NET CURRENT ASSET(3)-(4) 519.16 570.08 688.30 695.32 724.51 707.77 739.59 762.34

(5) PROFIT&LOSS A/C 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

(6) PRELIMINARY EXPS. 13.16 9.87 6.58 3.29 0.00 0.00 0.00 0.00

TOTAL ASSETS 1637.76 1646.15 1661.88 1681.09 1700.84 1725.52 1754.53 1836.12

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00


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(PROJECTED)

BALANCE SHEET :-

PARTICULAR BUDGETED ACTUAL

2007-08 2008-09 31/03/2007 31/03/2008

(1) SHAREHOLDERS FUNDS

(A) SHARE CAPITAL 100.00 100.00 100000 100000

(B) RESERVE & SURPLUS 102.31 211.58 0 48380000

SUB TOTAL A+B 202.31 311.58 100000 48390000

(2)BORROWED FUNDS

(A) TERN LOAN 655.71 554.83 62170707 90450383

(B) WORKING CAPITAL 250.00 250.00 0 0

SUB TOTAL A+B 905.71 804.83 62170707 90450383

(3) UNSECURED LOAN 527.74 527.74 48977981 37076124

GRAND TOTAL 1637.76 1646.15 111248688 176006507

(1)FIXED ASSET

(A) GROSS BLOCK 1071.52 1106.02 104279474 151134888

(B)DEPRICIATION 141.64 256.37 0 0

NET BLOCK 929.88 840.65 104297474 151134888

(2) INVESTMENTS 150.00 200.00 2315000 4286559

GEB DEPOSIT 25.55 25.55

(3) CURRENT ASSETS

(A)INVENTORIES 322.48 347.62 0 31079980

(B) DEBTORS 241.38 256.46 0 10360714

(C) LOAN & ADVANCES 10.00 10..00 1653809 5998363(D) MISC. ASSETS 2.00 2.00 0 0

(E) CASH&BANK BALANCE 48.60 65.69 20814363 1421464

TOTAL CURRENT ASSETS 624.46 681.77 22468172 48860521

(4)CURRENT LIABILITIES

(A) CREDITORS FOR GOOD 86.56 91.97 2393219 23918397

(B)CREDITORS FOR EXP. 18.73 19.72 0 3972697

(c) 0THER LIAB. & PROVI. 15432208 395837

TOTALCURRENTLIABILITE 105.30 111.70 17825427 28286931

NET CURRENT ASSET(3)-(4) 519.16 570.08 4642745 20573591

(5) PROFIT&LOSS A/C 0.00 0.00

(6) PRELIMINARY EXPS. 13.16 9.87 11470 11470

TOTAL ASSETS 1637.76 1646.15 111248688 176006507

0.00 0.00


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CASH IN FLOW STATEMENT:-

(Rs in lahk) (Projected)

CASH OUT FLOW STATEMENT :-

(Rs in lack ) (projected)

PARTICULAR 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15

(A)ADDITIONAL TO FIXED

ASSETS

1071.52 34.50 9.00 64.50 90.00 84.50 82.50 145.00

(B) INCREASE IN NET

CURRENT ASSETS

470.56 33.83 162.13 -0.35 -0.43 -0.66 -0.76 -0.42

(C) DECREASE IN TERMLOAN 50.44 100.88 100.88 100.88 100.88 100.88 100.88 50.44

(D) DECREASE IN

UNSECURED LOAN

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

(E) DECREASE IN WORKING

CAPITAL

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

(F)INCREASE IN

INVESTMENTS

175.55 50.0 0.00 50.00 0.00 50.00 0.00 0.00

(G) PROVISION FOR TAX 51.98 55.51 59.23 59.49 61.27 63.78 65.97 67.06

(H) WITHDRAWALS 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

(I) PRELIMINARY EXPENSE 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

TOTAL OUT FLOW 1820.05 274.72 331.24 274.52 251.72 298.49 248.59 262.08

PARTICULAR 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15

(A) CASH ACCRUAL 296.06 288.64 284.17 278.73 278.18 282.55 281.29 285.38

(B) INCREAS IN CAPITAL 100.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

(C) INCREAS IN TERN LOAN 706.15 0.00 0.00 0.00 0.00 0.00 0.00 0.00

(D)INCREAS IN STATE

SUBSIDY

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

(E) INCREAS IN WORKING

CAPITAL

250.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

(F) DECREASE IN

INVESTMENT

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

(G) INCREASE IN UNSECURED

LOAN

527.74 0.00 0.00 0.00 0.00 0.00 0.00 0.00

(H) DECREASE IN INTANIBLE

ASSETS

-13.16 3.29 3.29 3.29 3.29 0.00 0.00 0.00

TOTAL IN FLOW 1866.78 291.93 287.47 282.02 281.47 282.55 281.29 285.38


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OPENING CASH& BANKBALANCE

0.00 46.73 63.95 20.17 27.67 57.43 41.48 74.19

CLOSING CASH & BANK

BALANCE

46.73 63.95 20.17 27.67 57.43 41.48 74.19 97.49

ANALYSIS OF PROJECT :-

The cost of project of M/S Patidar cotspin pvt ltd is

RS 1585.8 Laks .

The detail of projects is as under:-

( Rs in lakhs)

SR.N0 PARTICULAR AMOUNT

1 Land 5.45

2 Building & sitedevelopment

106.00

3 Plant & machinery

Imported 831.79

Indigenious 53.05

4 Electrification 43.75

GEB Deposit 25.55

5 Furniture & fixture, office

equipment

2.43

6 Erectification &

commissioning

3.62

7 Stores & spares 16.69

8 Miscellaneous assets 8.75

9 Working capital gap 472.36

10 Preliminary & pre-

operative expense

16.46

TOTAL 1585.89

M/S Patidar Cotspin Pvt ltd financing its project through

following means of finance.

SR.NO. PARTICULAR AMOUNT

1 Share capital 100.00

2 Unsecured loans 529.74

3 Term loan 706.15

4 Working capital loan 250.00

TOTAL 1585.89


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To judge worth whileness of this project, There are various

investment criteria with the help of which we can see the

picture of this project.

Investment criteria

________________________________________________

Discounting criteria Non discounting criteria

_____________________________ ________________

Net present Profitability Internal Pay Back AccountingValue Index Rate Of Return Period Rate of Return

M/S patedar cotspin pvt ltd has following cost for financing its

project. These costs are referred to as cost of capital of project. It is

the minimum required rate of return on fund committed to the project

(A) Cost of Share Capital :-

M/S Patidar finance its project through share capital of Rs 100

lacks. It is equity finance.

Its cost of equity can be calculated as follows:-

M/S Patidar is not paying dividend to their shareholder. So

there is dividend payout ratio is Nil.

M/S Patidar has kept 100% of earning as retained profit

But there is growth (g) in the company which can be seen

each year.

This growth (g) can be calculated as follows.

Companys PAT is increasing year by year. Thus,we can find.

There is average growth is 4.14%

Cost of Equity :-

Ke = Div + g

Po

= 0 / 100 + 4.14 %


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Ke = 4.14 %

(B) Cost of Unsecured Loan :-

M/S patidar also uses unsecured loan to make finance its

project

M/S patidar takes unsecured loan of Rs 529.74 lacks with

interest rate of 10%

So, cost of unsecured loan is 10%

(C) Cost of Term Loan :-

M/S patidar takes term loan to support their project for

financing plant & machinery This term loan of Rs 706 Which is carrying interest rate

11.50%

cost of term loan is 11.50%

(D) Cost of Working Capital Loan :-

M/S patidar finance its working capital requirement through

cash credit.

M/S patidar avail cash credit working capital loan of Rs

250 lacks which has interest rateOf 11.50%

Thus, The companys cost of working capital is 11.50%

Thus, M/S Patidar overall cost of capital is equal to weighted

average cost of capital.

SOURCES AMOUNT

(LAKHS)

PROPORTION

(%)

COST

(%)

WEIGHTED

COST (%)

Share capital 100.00 6.30% 4.14% 0.26%

Unsecured loan 529.74 33.40% 10.00% 3.34%

Term loan 706.15 44.52% 11.50% 5.12%

Working

capital loan

250.00 15.76% 11.50% 1.81%

TOTAL 1585

.89

10.53

%

THUS, COMPANYS COST OF CAPITAL WILL BE 10.53%.


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NET PRESENT VALUE :-

Under this method, the present value of investment outlay is compare

with the present value of the expected cash flow of the project.

Under the Net Present Value Method, on the other hand, present

value of investment is deducted from the present value of the

expected cash inflow of the project.

NPV = CFAT CWhere,

CFAT = Present Value of the Cash Flow after Taxes

C = Present Value of Investment

NPV = Net Present Value

Net present value is one of most important investment criteria.

Net present value of project is the sum of the present value of

all cashflows that are expected to occur Over life of the project

NPV of project:-

NPV= Ct . _ Initial Investment

(1+r)

M/S patidars project NPV (Net present value) will be as

followes.

projects cost of capital is 10.53%

projects life is 7 years.

projects cashflow will be as under.


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CASHFLOW :-

( Rs in lakhs )YEAR PBDT DEP. PBT TAX PAT CASHFLOW

2007-08 296.06 141.64 154.42 51.98 102.44 244.08

2008-09 288.64 123.73 164.91 55.51 109.40 233.13

2009-10 284.18 108.19 175.98 59.23 116.75 224.94

2010-11 278.73 99.02 179.71 59.49 120.22 219.24

2011-12 278.18 96.15 182.03 61.27 120.76 216.91

2012-13 282.55 93.08 189.47 63.78 125.69 218.77

2013-14 281.29 85.30 195.99 65.97 130.02 215.32

CALCULATION OF NPV:-

(Rs in lakhs)

YEAR CASHFLOW PVIF(10.53%) PRESENT

VALUE

1 244.08 0.905 220.89

2 233.13 0.819 190.93

3 224.94 0.741 166.684 219.24 0.670 146.89

5 216.91 0.548 131.45

6 218.77 0.496 119.89

7 215.32 0.496 106.80

7 472.36 234.29

(Recover of

W.C )

1317.82

NPV = EPV Initial Investment

= 1317.82 -1585.89

= - 268.07

Conclusion :-

M/S patidar cotspin pvt ltd has negative net present value

(NPV). This project is not acceptable.The companys return is lower than

its cost.


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PROFITABILITY OF INDEX METHOD :-

This method is based on present value of cash

flow. It gives a proportion of present value of cash

inflow and present value of cash outflow. It is

sometimes known as Benefit Cost Ratio, as the

numerator shows the benefit and the denominator

shows the cost of the project.

If the index is greater than 1, the project

becomes acceptable, as it indicates that the presentvalue of cash inflow is more. The difference between

NPV and PI method is that in case of former method,

the present value of investment is deducted from the

present value of cash inflow, while in case of

profitability index, the present value of investment

becomes the devisor.

PI = PRESENT VALUE OF BENEFITSINVESTMENT

= 1317.82

1585.85

= 0.83

Conclusion :-

Profitability Index or Benefit cost Ratio of M/S patidar has

also lower than 1.

So, This project is not acceptable.


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PAYBACK PERIOD METHOD :-

This is one of the most popular and simplest methods of

evaluating investment proposals. It takes into account the time period

required to recover the original cash outlay invested in the projects.

In the words of Bierman, Pay-Back Period is defined as the

length of time require for the stream of cash proceeds produced by

investment to equal the original cash outlay require by the investment.

Generally, the management calculates the pay-back period in advanced

and this period is known as the cut-off period. If the pay-back period

of a project is longer than fixed by the management, it will be

rejected.

Payback period is the length of time required to recover the

initial cash outlay on the project.

YEAR CASH FLOW

1 244.08

2 233.13

3 224.94

4 219.24

5 216.91

6 218.77

7 215.32

W.C )7 472.36

As we can see M/S patidar has recovered its investment

amount amount of Rs 1585.89 in 7 years

So, M/S patidars payback period is 7 years


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ACCOUNTING RATE OF RETURN :-

Under this method, average income is divided by average

investment. Average income is obtained from the profit shown in the

profit and loss account. In other words, rate of return is assessed on

the basis of accounting profit and not cash flow. The depreciation

charge and taxes are deducted from profit, which than is divided by

the no.of years to get average income per year. This average annual

income is divided by average investment outlay. The scrap value ofthe assets is assumed to be zero. It scrap value is positive, it is

added to total investment outlay.

Average Rate of Return = Average Annual Profit After Tax

Average Investment

(Rs in lakhs)

YEAR PBDT DEP PBT TAX PAT

2007-08 296.06 141.64 154.42 51.98 102.442008-09 288.64 123.73 164.91 55.51 109.40

2009-10 284.18 108.19 175.98 59.23 116.75

2010-11 278.73 99.02 179.71 59.49 120.22

2011-12 278.18 96.15 182.03 61.27 120.76

2012-13 282.55 93.08 189.47 63.78 125.69

2013-14 281.29 85.30 195.99 65.97 130.02

AVG. PROFIT = _ PBT____

YEARS

= 8257

= 117.89 Lacks

AVG. INVESTMENT = PBDT..

2

= 1585.89

2


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= 792.945

ARR = AVERAGE PROFIT

AVG. INVESTMENT

= 117.89

792.945

= 0.1487 OR 14.87%

M/S patidar has not greater or higher accounting rate of return but

M/S patidar can take decision out this project with their out off

rate of return.


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Financial Analysis is a very important part of the any company. The whole

performance of the company is depend on the how well the company manage the cash

or finance, how well the company utilizes the finance for the purpose of the company.

From my survey I have found that overall company manages the finance very

well by efficient management of company. The company utilize the finance very

efficiently. But there is also chance of improvement in the finance management.

Company should try to reduce the amount of inventory or stock and also company

should improve the efficiency of collection department and as company has enough

amount of current assets so company can utilize it for the payment of sundry creditors

and cash can take advantage of the cash.

Overall the management of M/S Patidar Cotspin Pvt. Ltd. is very good but with

some improvement they can manage it more efficiently.


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patidar cotton

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