Index

[1]

Introduction

[2]

Project at Glance

[3]

Management Set Up

[4]

About the Partners

[5]

Proposed Location Justification

[6]

Location

[7]

Market Potential

[8]

Raw Materials

[9]

Names & Address of Suppliers

[10]

Manufacturing Process

[11]

Basis & Presumption

[12]

Implementation Schedule

[13]

Total Fixed Capital

- Land & Building
- Machinery & Equipments
- Pre Operative Expenses

[14]

Total Working Capital

- Personnel
- Raw Materials
- Utilities
- Other Contingencies Expenses

[15]

Total Investments

[16]

Cost of Production

[17]

Net Profit per Year

[18]

Net Profit Ratio

[19]

Rate of Return

[20]

Break Even Point

Introduction
As a part of practical training, I have selected to prepare a product project
report on Air Coolers. There are mainly two types of coolers;
1. Room Coolers.
2. Desert Coolers.
Evaporative type Air Coolers are used in peak summer season for cooling
of rooms, offices, hotels etc. In general Air Coolers are used for cooling similar
areas and desert coolers are used for larger area. Air Coolers basically consist of
body, fan, water pump and control switch etc.
An electric fan generally of exhaust fan type is mounted inside a louvered
housing and three vertical sides of the housing are fitted with filtered pads which
are kept wet with help of water pump. Rotation of fan mounted inside the body
draws air from all the three sides through wet pads. Thus, air gets cooled by
evaporation of water and which is blown into the room.
But this benefits are not enough reasons to pursue an entire project in
order to commence such a business, a business person has to check the
financial viability of the project also certain questions to be answered like,

How much capital is more required?

From where this capital will be procured?

What will be the cost of production?

What will break even point be reached?

What would be the profits and return on investments?

And the list is endless ..!!!!
A genuine attempt has been made to answer all these questions with

almost justification possible in the following pages.

Project at Glance

Name of the Unit:

Gaytri Air Coolers

Address For:

Gayatri Air Coolers

Plus Point 09
Opp. Haribhai Hall,
Dr. Yagnik Road,
Rajkot 360001.

Size of Unit:

Small Scale Industry

Form of Organisation:

Partenership Firm

Name of Partners:

Miss Pooja J. Vyas

Mr. Prakash P. Pathak

Name of the Product:

Air Coolers

SSI Registration No:

Applied For

Location of the Unit:

Gayatri Air Coolers

Shapar Industrial Zone,
Gondal Road,
National High-Way,
Village: Shapar,
Dis.:- Rajkot.

Management Set Up

Both the partners of the firm, viz,

Miss Pooja J. Vyas
Mr. Prakash P. Pathak
They will be the working partners of the firm whose capital contribution
and profit sharing ration will be as per the partnership deed.
While, Mr. Prakash P. Pathak on the basis of his business experience and
expertise will look after the factory work as well as some of the major
office work, Miss Pooja J. Vyas will take care of official work.
All stage and policy decisions shall be taken by the consent of all the
parties concerned.

About the Partners

(1)

About Mr. Abhijitsinh H. Jadeja

Name:

Mr. Abhijitsinh H. Jadeja

Address:

Osho app.
4, Vidhyanagar,
Vidhyanagar main road,
Rajkot 360002.

Age:

35 Years

Qualification:

Master in Science

Experience:

10 Years Experience in Similar

Business

Responsibility:

Factory Work Supervision and

Major Official Work.

(2)

About Mr. Zala Pratipalsinh K.

Name:

Mr. Zala Pratipalsinh K.

Address:

Ashutosh,
1, Brahamkunj Soci,
B/H Chandrapark,
150 ft Ring Road,
Rajkot- 360005

Age:

23 Years

Qualification:

Master in Business
Administration

Experience:

Fresh

Responsibility:

Official Work.

PROPOSED LOCATION JUSTIFICATION

Factory Location is the decision regarding geographical situation of the
plant. This decision is a very crucial one because it is not easily alterable and
involves a considerably huge amount of investment. The location of the factory
plays a very vital role in success of failure of the business. But this decision is
affected by many factors, which are to be kept in mind while selecting the
location.

The following site has been selected for work premises:Gayatri Air Coolers
Shapar Industrial Zone,
Gondal Road,
National High-Way,
Village: Shapar,
Dis.:- Rajkot.
The correctness of this decision can be justified on the full basis:
1.

Industry Choice:
Many other industries are situated in this locality, and hence
it is a common choice of all the entrepreneurs in this business.

2.

Nearness to the Registered Office:

As the registered office located at Dr. Yagnik Road, the
location of the factory is near to the administrative office and the
computer room which is useful in faster communication.

3.

Market Proximity:
The location also provides proximity to the market in the
sense that a direct sale from factory is also possible.

4.

Transportation Cost:
As the materials is loaded from railway boggy and it is
sprightly carried to factory such not transportation cost is incurred
and so far as finished goods are to be dispatched, Factory owns a
delivery van.

5.

Rapid Sales:
As the factory location is nearer to industrial area of shaper
as well as registered office locations are situated in the heart of the
city, sales are bound to increase at unimaginable rates.

Locations

Registered Office:
Gaytri Air Coolers
Plus Point 09
Opp. Haribhai Hall,
Dr. Yagnik Road,
Rajkot 360001.

Factory Office:
Gaytri Air Coolers
Nr. K. K. Chemicals,
Shaper.

MARKET POTENTIAL
As the construction of residential accommodation, office complex and the
standard of living is increasing day by day, demand for this item is also
increasing specially in the sections of society who are not able to afford air
conditioned. It is understood that during the period of last 10 years there is a rise
in demand for the item @ 60 % p.a. and this trend is likely to continue.

Raw Materials

The main raw materials required for manufacturing Air Cooler are as
follows:
1. GI Sheet
2. Cooler Motor
3. Pump Vertical
4. Wire Net
5. Filter Pad
6. Switches
7. Cable ( 3 core )
8. Hardware Items
9. Consumable Stores

Names and Addresses of Suppliers

[1]

M/S. Amar Sons,

57, Rani Jhansi Road,
New Delhi.

[2]

M/S. Prem Engineering Works,

Okhala Industrial Estate,
New Delhi.

[3]

M/S. K. G. Khosla & Co.

1, Deshbandhu Gupta Road,
New Delhi.

[4]

M/S. Jaymes Engg. Co. Pvt. Ltd.

M-block,
Connaught Place,
New Delhi.

[5]

M/S. Toshniwal Brothers Pvt. Ltd.

3E/8, Jhandewalan Extension,
New Delhi.

[6]

M/S. Philips India Ltd.,

68, Najafgarh Road,
New Delhi.

[7]

M/S. Balak Ram Banarasi Das & Sons,

37/19, The Mall,
Kanpur 208001.

[8]

M/S. Bazari Trading Co.,

129, Moti Street,
Fort,
Bombay 400001

[9]

M/S. Maruti Electricals,

123/286 A, Gaddarian Purwa,
Fazalganj, Kanpur.

Manufacturing Process
[1]

GI sheets are purchased from the local market and cut to size, louvers
made and bent for making the vertical sides, top cover and water pump.
Filter pads are fitted in the 3 vertical sides and electric fan and vertical
pump are mounted. On the grill is fixed through which cooled air is brown
out. Switches are provided in the front panel, vertical sides, top cover are
assembled together with screws/ nut and both assembled cooler is then
painted.

[2]

Assembled cooler is tested as per the requirement of ISO: 2000. The

basic requirements of the tests are as follows:
a)

Insulation Resistance Test :The insulation resistance between all electrical circuits when
measures at normal room temperature with measure of 500 V DC
should be not less then 1 Mega Ohm.

b)

High Voltage Test :The electrical insulation all electric circuits shall be able to
withstand high voltage tests of 1000 V rms for single phase motors
applied for not less then 2 seconds.

c)

Production Efficientcy Test :Cooling efficiency and air delivery for various capacities of air
coolers shall bee within the limits prescribed in relevant ISS.

[3]

Production Capacity:(a) Quantity 2500 nos. Air Coolers p.a.

(b) Value Rs. 1,00,00,000

[4]

Approximate Motive Power Requirement:5KW

[5]

Pollution Control Requirement:No Pollution control certificate is required for registration of the
units for manufacture of this item.

[6]

Energy Conservation Need:The design of the fan and electric pump should ensure minimum
iron losses and the cooler should be able to withstand cooling efficient and
air delivery tests as per ISO: 2000

Basis and Presumption

1.

The basis for calculation of production capacity is on single

shift basis, working of 25 days per month on 75% efficiency.

Time

required for achieving visualized capacity utilisation is assumed as one

year.
2.

BEP for the scheme has been calculated on full capacity

utilisation

3.

Rate of interest has been taken as 18% on an average. This

however, is likely to vary depending upon the financial outlay and the
location of unit.

4.

Labour wages have been taken on the basis of minimum

applicable. These are likely to change depending upon the location of the
unit.

5.

Rental Charges of Rs. 100/- per sq. meter per month has
been taken on an average. This figure is likely to vary depending upon
the location of the unit.

6.

Margin money requirement differs from project to project to

project and type of entrepreneurs such women, SC/ST, physically
handicapped etc. and the minimum margin money usually asked for by the
financial institutions and banks is 15%. Margin money upto 25% in some
cases is also asked for.

The entrepreneur may check up the margin

money requirement form financial institutions for the project.

7.

Terms of loan differ from one financial institution to another

and in generals minimum growth period is normally 6 months and it could
be 2 years. Maximum period for repayment of loan is 7 years including

growth period. The exact terms and conditions may be found by the
entrepreneurs from the concerned financial institutions.

8.

The costs of machinery and equipment as indicated in the

scheme are approximate to those ruling at the time of preparation of the
scheme.

The entrepreneur may check up the exact price for specific

make and model of the machine selected.

9.

Non-refundable deposits, cost of preparation of project report

etc. may be considered under pre-operative expenses.

10.

The provisions made in other respects viz; raw materials,

utilities, overheads etc. Are drawn on the basis of standard variations and
output. The costs indicated against each are approximate based on local
market conditions and observation. The entrepreneur may find out the
exact cost from the concerned sources.

11.

The operative period of this project is estimated to be about 10

years considering technology obsolescence.

Implementaion Schedule
The period required from the time of provisional registration with the
concerned District Industries Centre to commercial production is 6 months to 2
years.

This includes clearance from concerned agencies including financial

institutions etc.

Land & Building

Particulars
Land & Building
Construction

Amt Rs.
30,00,000
45,00,000
75,00,000

Machinery & Equipments

Particulars
Guillotine Shearing Machines
Power Press 20 tons capacity
Screw type break press
Air Compressor complete with motor spray
Gas welding set
Portable electric drill
Portable flexible shaft grinder
Double ended grinder
Merger
High voltage test set 3 KV
Control panel for measuring power input consisting
of ammeter, voltmeter, wattmeter etc.
Multimeter
Air flow & temperature measuring apparatus
Anemometer

Amt Rs.
7,50,000
9,00,000
4,50,000
3,00,000
3,00,000
90,000
90,000
1,20,000
3,00,000
1,65,000
1,80,000
60,000
1,50,000
1,50,000
40,05,000

Pre Operative Expenses

Particulars
Fees for preparation of project report, Deposit to
electricity boarded etc.
Total Pre Operative Expenses

Amt Rs.
1,00,000
1,00,000

Total Fixed Capital

Particulars
Land & Building
Machinery and Equipment
Pre Operative Expenses

Amt Rs.
75,00,000
40,05,000
1,00,000
1,16,05,000

Personnel

Designation

No.

Salary

Total

Works Manager

15,000

15,000

Accountant

10,000

10,000

Skilled fitter

2,500

7,500

Unskilled fitter
Store keeper

5
2

1500
1500

7,500
3000

Peon-cum-Watch man

1000

3000

Mechanic

5000

3000

Skilled fitter

5000

10000
56,000

Perquisites @ 20% of salary

Total Personnel

11,200
67,200

Raw Materials

Particulars

Qty

GI sheet

3 tons

Cooler Motor

Rate

Amount Rs.

20,000

60,000

100

800

80,000

Pump Vertical

100

200

20,000

Wire Net

L.S.

17,000

Filter Pad

200 kg

16/kg

3,200

Switches

200 kg

10/kg

2,000

Cable(3 core)

250 mtr

10/mtr

2,500

Hardware Items

L.S.

500

Consumable Stores

L.S.

3,000
1,88,200

Utilities

Particulars
Power (6000 Units)
Water
Total Utilities

Amt Rs.
75,000
25,000
1,00,000

Other Contingent Expenses

Particulars
Postage & Stationary
Telephone
Consumable stores
Repairs & maintenance
Transport Charges
Advertising and publicity
Miscellaneous expenses
Total Contingencies

Amt Rs.
10,000
15,000
12,000
4,500
5,000
2,000
4,500
53,000

Total Working Capital

Particulars

PARTICULARS
Personnel

Amt Rs.

AMOUNT
67,000

Raw Materials

1,88,200

Utilities

1,00,000

Other Contingencies Expenses

TOTAL RECURRING EXPENSES

TOTAL WORKING CAPITAL := 3,58,400 * 3

=10,75,200 /-

43,000
3,58,400

TOTAL INVESTMENTS
FIXED CAPITAL

80,00,500

WORKING CAPITAL

10,75,200

TOTAL CAPITAL
INVESTMENT

90,75,700

COST OF PRODUCTION
PARTICULARS

AMOUNT

Total recurring cost pre unit

43,00,800

Depreciation on building

@ 10 %

7,50,000

Depreciation on machinery and equipment @ 15 %

Interest on total capital investment @ 23 %
TOTAL COST OF PRODUCTION

60,075
17,49,265

68,60,140

TURNOVER
PARTICULARS
Desert Coolers Of
Assorted Capacity

QTY.

RATE
2,000

5,000

AMOUNT
1,00,00,000

NET PROFIT PER YEAR :-

= Turnover cost of production

= 1,00,00,000 68,60,140
= 31,39,860

NET PROFIT PER YEAR = Rs.31,39,860 /-

NET PROFIT RATIO :Net Profit Per Year x 100

Turnover Per Year

31,39,860 x 100
-----------------------1,00,00,000
31.40 %

NET PROFIT RATIO - 31.40 %

RATE OF RETURN :-

= Net Profit Per Year x 100

Total Investments
= 31,39,860 x 100
90,75,700
= 34.60%

RATE OF RETURN 34.60%

BREAK EVEN POINT

FIXED COST :[a] Depreciation on Building

7,50,000
[b] Depreciation on Machinery
60,075
[c] Interest on Total Investments
17,49,265
[d] 40 % Salary on Wages
3,22,560
[e] 40 % Other Contingency Expenses
2,06,400
TOTAL FIXED COST

NET PROFIT PER YEAR :B.E.P.

= Total Fixed Cost x 100

Total Fixed Cost + profit
=

30,88,300 x 100
.
30,88,300 + 31,39,860

30,88,30,000
62,28,160

49.58 %

BREAK EVEN POINT - 49.58 %

30,88,300