varmora tiles industry-bba-mba project report
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A
PROJECTREPORT
ON
VARMORAVITRIFIED TILES
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Sr. Particulars PageNo.
1 GeneralInformation
7-16
2 ProductionDepartment
17-28
3 PersonnelDepartment
29-47
4 MarketingDepartment
48-62
5 FinanceDepartment
63-78
6 SWOT Analysis 79-80
7 Future Plans 81-82
8 Suggestion 83-84
9 Conclusion 85-86
10 Bibliography 87-88
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Sr. Particulars PageNo.
1 Bio Data of Company 9
2 History & Development of Organisation
10
3 Organisation Chart 124 Size of the firm 13
5 Form of Organisation 14
6 Location and site preference 15
7 Time Keeping System 16
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BIO DATA OF COMPANY
Name of the Firm Varmora Granite Pvt.Ltd.
Year ofEstablishment
2002
Form ofOrganisation
Private Limited
Size of Organisat ion Medium Scale
Location of Office Priya DarshiniComplex,Office No. 415,Savsar Plot,Morbi 363 641
Location of Factory Varmora Granite Pvt.Ltd.8/A, NationalHighway,
DhuvaPhone NumberOffice
02822 220213,227171
Phone NumberFactory
08282 287500-700-900
Fax Number 02822 287558E-Mail [email protected] Site www.varmora.comRegistered
Certificate No.
U26914GJ2002 PPC
43194Sales Tax No. 0922008001CST No. 99984063Excise RegistrationNo.
AABCV7523MXM001
Product Vitrified TilesNo. of Employees 107Bankers SBS Main Branch,
Morbi
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mailto:[email protected]://www.varmora.com/mailto:[email protected]://www.varmora.com/ -
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products in Village Sara. It is established in 1984.
They started a unit of manufacturing of roofing tiles
under name and sty le M/s. Sunshine Tiles and
potteries at Morbi. They have secured mill from
SBS Main Branch, Morbi.
In 1987, they have organised another roofing tiles
unit at Lilapur Road, Morbi under the name and
style of M/s. Jaystar Industries. The workers are
very familiar to work in this industry.
In 1991, they have organised another unit of
manufacture of nuts and bolts of MS and SS at
Vadhwan GIDC under the name and style of
Sunshine Fasteners.
In 1994, they have started the other products.
They manufacture of ceramic glazed wal l t iles
under the name and style of M/s. Sunshine
Ceramics. In 1998, they have also started another
industry, under the name and style of M/s. Jayson
Ceramics
Looking to the demand of ceramic floor tiles
experience in this l ine is most important and the
group has more than 60 dealers network, which is
necessary to business. So, they have also started
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another industry, under the name and style of M/s.
Sunhill Ceramics Pvt. Ltd.
In 2002, they have also started another industry,
under the name and style of M/s. Varmora Granite
Pvt. Ltd. This industrys product is to manufacture
vitrified tiles only.
It is good for them that they dont have to f ind
another young team because i t is already wel l
equipped with the family members.
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ORGANISATION CHART
ChairmanChairman
Production
DepartmentProduction
Department
Marketing
DepartmentMarketing
Department
Finance
DepartmentFinance
Department
Production
Manager
Production
Manager
Laboratory
TestingLaboratory
Testing
Supervision
ManagerSupervision
Manager
WorkersWorkers
Marketing
Manager
Marketing
Manager
State Marketing
Manager
State Marketing
Manager
Marketing
OfficerMarketing
Officer
Dispatch
ExecutiveDispatch
Executive
ClerkClerk
Marketing
OfficeMarketing
Office
SalesSales
Finance
Administrative
Finance
Administrative
Chief
AccountantChief
Accountant
AccountantAccountant
PeonPeon
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SIZE OF THE FIRM
According to the definition given by Government of
India, the size of the industry can be divided into
three main types.
Small Scale Organisation
Medium Scale Organisation
Large Scale Organisation
If companys investment in plant and machinery is
more than 3 crores, it is called large scale
organisation.
The investment of Varmora Granito Pvt. Ltd. in
fixed assets is of Rs. 140100000. Therefore, it is
coming under the category of large scale
organisation. It also uses manpower, electronic
machinery and having more than 1700 workers.
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FORM OF ORGANISATION
According to the form of organisation, the
organisation can be divided as follows:
Private sector unit
Public sector unit
Joint sector unit
In this firm, it is a private limited firm.
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LOCATION ANDSITE PREFERENCE
The site of this unit is located at 8/A National
Highway, at Dhuva, which is only 18 Kms. away
from Morbi City. It is in ceramic zone with numbers
of other ceramic units. It is a main and most
important part of industry has chosen very simple
and suitable locat ion. It p lays a vital role for
location.
Land
In Dhuva at Morbi, land and labour are found very
cheap, so Varmora Vitri fied t iles started at this
place.
Labour
In big city labour cost is very high, but in Dhuva at
Morbi provide cheap and educated skil led labour
because of the ceramic zone is situated.
Transport
In Dhuva at Morbi is situated in ceramic zone, so
transportation facilities are also available.
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TIME KEEPING SYSTEM
Time keeping system is very important as all the
workers should arrive at reporting time and start
their work immediately. If they are irregular than
there would be less outcome and expected target
will not be achieved. Therefore, the workers are
given cards in which their arrival and departure
time is written regularly and therefore punctuality
is maintained.
Industry
This industry is running for continuous process i.e.
24 hours. It is working in 3 shifts. They are:
08:00 AM to 04:00 PM
04:00 PM to 12:00 Midnight
12:00 Midnight to 08:00 AM
Office
Office hours for industry are as under.08:00 AM to 12:00 Noon
02:00 PM to 06:00 PM
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Sr. Particulars PageNo.
1 Introduction 19
2 Raw Material Availability 20
3 Raw Material Used 21
4 Inspection of rawmaterial
22
5 Types of machines 23
6 Process of production 25
7 About products 27
8 Quality Management 28
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INTRODUCTION
The product ion of a fi rm is concerned with the
creation of a product or services required to satisfy
customer needs. In any business, suppliers are
needed for product or service, it is quite obvious
that activities of production system must be related
to the customer demand or reflected in the
continuous flow of order.
It is the most important department amongst the
other departments of an organisation. Personnel
department, finance department, marketing
department are very much depended on production
department.
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RAW MATERIALAVAILABILITY
Raw materials are the basic requirement for any
industry. Raw materials are converted into finished
goods after various processes on it.
Raw materials are available with help of roadways
if purchased from the country. If the materials are
purchased from other countries than it is available
with help of railways.
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RAW MATERIAL USED
List of raw materials used for production of vitrified
tiles
RawMaterial
Place where it isobtained
Potsfeldspar
Rajasthan
Sodafeldspar Rajasthan
Quartz RajasthanBall Clay RajasthanAshapura
ClayKutch
KadappaClay
Andhra Pradesh
China Clay Gujarat
UkraineClay Import from Europe
STPP Import from ChinaBody Stain Import from Italy
SolubleSalts
Import from China
LPG Madhya PradeshGujarat
Zircon Import from Australia
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INSPECTIONOF RAW MATERIAL
Raw materials are inspected and checked before
they are sent to product ion department. I t is
maintained in Varmora as per guidelines of ISO-
9002.
Flow chart for inspection of raw material can be
showed as follows.
Sampling from truck
MC% content
Grinding
Drying
Powder preparation
MC% addition
Pressing
Drying
Firing
Loss on ignition
Fired colour
Water absorption
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TYPES OF MACHINES
90% of machineries used in Varmora Vitrified Tiles
are imported from Japan.
List of Machineries
Weighing hopper
Conveyor
Wader
Ball mill
Stirrer
Blunger
Spray drier
Slip pump
Silos
Vibrator with magnet
Elevator
Hydraulic press (h600 mt)
Chilling plant
Loading machine
Horizontal dryer cooler box
Glaze line
Unloading machine
Screen printing machine
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Compensator
Head polishing line
Fast single layer roller kiln
Chamfering line
Souring line
Plastic strapping machine
Fork lift
Air compressor
Vertical drier
Generators
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PROCESS OF PRODUCTION
Production process is very important process as the
product manufactured in the company should
satisfy the need of the customer. The quality is
also to be maintained and the given target should
be achieved in the given time period. The following
are the main production stages.
Processing of raw material
The first and foremost step to manufacture vitrified
tiles is batching i.e. feeding the box with different
types of clay according to the percentage decided.
Batching includes following types of clay.
Ukraine Clay 16%
Ball Clay 5%
China Clay 20%
Soda Feldspar 19%
Potash Feldspar 35%
Quartz 5%
Formation of tile body and drying
The powder is taken from the silos and after sieving
on a vibrator f itted with a magnet, i t is fed into
hoppers of the hydraulic press where the powder is
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pressed in the shape of a tile of specific size as per
the cavity of the die. Green tiles coming out of the
press are sent to the horizontal roller dryer where
they are heated to a specified temperature to
remove the moisture.
Preparation of designs and screen printing of
tiles
In the glaze line and printing section, various types
of designs are prepared and printed on the dried
tiles by applying colours on the screen printing
machine.
Firing
The t iles thereafter are fed into the fast single
layer roller kiln in which the tiles are fired. The
kiln has different temperatures ranging from 5000C
to 15000C in different zones.
Polishing
The baked tiles are subjected to polishing by using
32 head pol ishing l ine. The t iles are also side
chamfered. Multi finish tiles do not need polishing
operation.
Sorting and packing
The polished tiles are subjected to quality checking
and sorting, where an operation marks out t iles
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with defects and different grades quality. Different
grades of finished tiles are then packed into
different types of packing box which are marked
accordingly.
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ABOUT PRODUCTS
Varmora Vitrified Tiles are manufacturing vitrified
tiles having various categories and sizes. They
manufacture tiles of different plain colours like:
Terry cotton
Mushroom
Ruby pink
Jaisalmer
Dove gray
Ivory
Jet black
White
Aqua marina, etc.
In marble series, they are having following range.
Vogue
Venice
Valerie
Vixen
Volcano
Virgin
Vital
Allun
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Arktic,Venus, etc.
QUALITY MANAGEMENT
Quality control means checking the quality, size,
shape, capacity and usefulness of some of the
samples selected from lot of the finished product.
I f any variations are there than they are to be
corrected or that useless product is send to scrap
yard. A well defined quality management system
satisfying ISO 9001-2000 quality standard and
continual improved.
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Sr. Particulars PageNo.
1 Introduction 312 Organisation Chart 32
3 Recruitment and Selection 33
4 Human Resource Planning 35
5 Placement & Induction 36
6 Training of Employee 37
7 Performance AppraisalSystem
38
8 Wage & SalaryAdministration 39
9 Trade Union 40
10 Collective Bargaining 41
11 Record Keeping System 42
12 Employee Benefits 43
13 Provident Fund Scheme 44
14 Promotion & Transfer 45
15 Grievance Handling System 4616 Industrial Relation 47
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INTRODUCTION
Personnel management has a vital importance in
modern industrial organisation. Personneldepartment is the part of management, which is
primarily concerned with establishment and
maintenance of personnel relations.
In this company, there is a separate personnel
department, where all the decision regarding thepersonnels is taken by personnel manager. He has
the final authority. The personnel manager of this
firm is Shri Pramodkumar P. Patel.
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ORGANISATION CHART
In Varmora Vitrified Tiles Pvt. Ltd., separate
department for personnel for the achievement ofgoals and the personnel manager has authority and
higher status in the organisation in his own
department.
Board of Director
Managing Director
Executive Director
Personnel Director
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RECRUITMENTAND SELECTION
Recruitment
Every firm or company needs persons to perform
dif ferent works. In this shi ft ing process only
manpower have been determined, recruitment is
next logical step. It is a l inking activity bringing
together those with job and those seeking job.
According to one author, Recruitment is the
process of finding and attracting capable applicants
for employment. The process begins when new
results are sought and ends when their applications
are submitted. The result is a pool of applicants
from which new employees are selected.
Selection
Selection is a process of careful ly choosing the
candidates who offer themselves for appointment.
In selection many processes applies on raw
material but unit wants few persons. This is one of
the most important responsibilities. In selection,
the person who is having knowledge as wel l as
experience is selected.
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According to one author, It is the process of
d ifferentiating between applicants in order to
identify those with a greater livelihood of success
in a job.
Here in case of Varmora Granito, the co-selection
process includes basic four main steps.
Preliminary searching interview
Checking of reference
Comprehensive interview
Final employment decision.
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HUMANRESOURCE PLANNING
Human resource planning is understood as the
process of forecasting an organisat ions future
demand for and supply of the right type of people
in the right number. It is only after this that the
human resource department can initiate a
recruitment and selection process. Human
resource planning is a sub-system in the total
organisational planning. Organisational planning
includes management activities that set the
companys objectives for the future and determine
the appropriate means for achieving those
objectives. Human resource planning facilitates
the capitalisation of the companys objectives by
providing the right type and right number of
personnel. Human resource planning is like
mater ia l p lanning that estimate the type and
annuity of the materials and supplies needed to
facil itate the manufacturing activit ies of the
organisation. Human resource planning is variously
called manpower planning or employment planning.
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In case of this industry, human resource planning is
done as per the need.
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PLACEMENT & INDUCTION
An applicant who has cleared all the hurdles in the
selection procedure is offered a job. The main
problem after f inal selection is to place him on
some suitable job. The out of offering the job to a
finally selecting candidate is called placement. The
select ion procedure comes with placement of
workers on the job.
Induction is a technique by which a new employee
is rehabituated into the changed surrounding and
introduced to the practices, policies and purpose of
the organisation. In other words, induction means
introducing or orienting a new employee to the
organisation and to follow up for his adjustment in
the organisation.
In this industry, when a new employee is selected,
he is kept under the supervision of his superiorwhere he is trained. The new employee is provided
with the operational knowledge that is specific to
the position and location.
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TRAINING OF EMPLOYEE
Training refers to the imparting of specific skills
abilities and knowledge to an employee.
I t is any attempt to improve current or future
employees performance by increasing an
employees abi li ty to perform through learning,
usual ly by changing the employees att itude or
increasing his/her skills and knowledge. The need
for training is determined by the employees
performance deficiency.
At present training of workers is necessary because
many jobs have assumed highly technological
character and under automation. We require highly
skilled operatives. In Varmora Granito, the workers
who need training are kept under their supervisors
who give them training whi le training for staff
members or managerial level is given on the job.
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PERFORMANCEAPPRAISAL SYSTEM
Performance appraisal is the assessment of an
individuals performance in a systematic way. The
performance being measured against such factors
as job knowledge, quality and quantity of output,
initiative, leadership abilities, supervision,
dependability, co-operation, judgement, versatility,
health and like assessment should not be confined
to past performance alone. Potentials of the
employee for future performance must also be
assessed.
In Varmora Granito, the supervisor sees the
employees ability to do work properly and
efficiently, whether he understand his responsibility
or not, how is his behaviour towards his colleagues,
etc.
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WAGE & SALARYADMINISTRATION
Wage and Salary Administration refers to the
establishment and implementation of sound policies
and practices of employee compensation.
Wages are the economic compensation paid to the
workers for services derived by them. It can be
divided into two types i .e. piece wage and time
wage. In Varmora, there is time wage system and
it is paid on monthly basis . There wages are
calculated as per monthly wage rate according to
the minimum wages act of government. Salaries
are paid on monthly basis and its amount is by the
company according to working eff iciency of the
employee.
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TRADE UNION
Trade union means the union of the workers who
are permanent or temporary in the unit, where they
are working.
In Varmora Granito, there is no special trade union.
The purpose to make these unions is maintaining
the interest of workers and management. These
unions do not disturb without any special problem
and interfere in routine work. They always try to
maintain relations between employees and
management staff.
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COLLECTIVE BARGAINING
Collective bargaining means the process in which
conditions of employment are determined by
agreement between representative of the union on
one hand and those of the employer on the other
hand. It is called collective because both the
employer and employee act as a group rather than
individuals. It is described as bargaining because
the method of reaching an agreement involves
proposals and counter proposals, offers and
counter offers. In the highly industrialized
democratic societies of the west, more than 90% of
the disputes are between labour and management
which are settled through col lective bargaining
process.
In Varmora Granito, management is having
agreement with the employees regarding wage,
working conditions, promotion, transfer and otherfacilities like medical facility, etc.
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RECORD KEEPING SYSTEM
It is very much necessary for an organisation to
keep the reward of i ts workers and many other
details related to it.
The reward contains personnel as well as on the job
efficiency information of an employers or workers.
In Varmora Granito, the supervisor sees the
employee ability to do work properly and
effectively whether he understand his responsibility
or not, how is his behaviour towards his colleagues,
etc.
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EMPLOYEE BENEFITS
Now a day, most of the firms provide the provident
fund scheme or other facilities to their workers. It
is important as it is one kind of security of a
worker.
Varmora Granito provides various monitory and non
monitory benefits and services like:
Bonus 10% extra bonus is paid to workers.
Allowances Various types of allowances are
given to workers. Varmora provides two wheeler
facilities (Honda & Splendor) and 100% expense
of petrol.
Statutory Welfare Measures Under this, the
company provides f irst aid facil ity, cold water
facility, company distributes sweets and other
eatables on the festivals l ike Dashera, Diwali,
etc.
Loan Facility Loan is provided to employees
when in need. They are not charging any type of
interest on the loan. It is repaid in installments.
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PROVIDENT FUND SCHEME
Provident fund scheme is facility provided to every
employee may be at high post or low post. In this
scheme, a certain percent of employees salary is
oriented by the firm and on that 12% of interest is
paid and employee adds very certain fixed percent
to it, the interest is paid on both employee and
employers amount.
This industry has adopted this scheme. They are
putting 12% salary as Provident Fund, which is
refundable after the ret irement of employee or
when he is going abroad for permanent settlement
or when he is going for another job.
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PROMOTION & TRANSFER
Promotion
The promotion means to do upliftment within the
organisation. At this stage employees wage and
salary status, prestige moves towards the top level.
Their thinking is also increasing up in his duties
and responsibilities.
Therefore, a promotion is a vertical upward
movement in rank & responsibility.
Transfer
The transfer is a process of planning the employees
in the posit ion where they are l ikely to be more
effective, or where they are likely to get more job
satisfaction or it is movement of an employee from
one job to another without involving any
substantial changes in his duties, responsibil ity,
status, etc.
Therefore, transfer is exchange in job where new
job is substantial ly equal to old in terms of pay,
status and responsibilities.
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This company is only 2 years old, so there is no
such policy and programs formulated for promotion
as well as transfer.
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GRIEVANCEHANDLING SYSTEM
Grievance is any discount or dissatisfaction,
whether expressed or not, whether val id or not,
arising out of anything connected with the
company, which an employee thinks or believes or
even feels to be unfair, unjust or inequitable.
In case of Varmora Granito, most of employees are
satisfied and management always tries to satisfy
needs of employees as quickly as possible. If any
problem arises than related manager wil l try to
solve it.
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INDUSTRIAL RELATION
Industrial relation refers to the relation of
management with the employees. This is one
important factor, which affects the success of any
industry. The relation between management and
workers should be namely so as to run the industry
smoothly.
Internal Relation
Varmora Granito Industry is concerned with the
management and workers share breathing
relations. They are united and consider their unit
as a second family.
External Relation
External relation means the relation of unit
members of external society like other industries,
government, customers, etc. Varmora Granito has
good external relations.
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Sr. Particulars PageNo.
1 Introduction 50
2 Organisation Chart 51
3 Market Size 52
4 Market Segmentation 535 Pricing 54
6 Advertisement 55
7 Channel of Distribution 56
8 Market Research 57
9 Credit Facility 58
10 Sales Promotion 59
11 Export potential 60
12 Competitors 6113 Consumer problem
handling62
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INTRODUCTION
Market is the place where buying and sel ling is
carried out by buyers and sellers i.e. trading
activity are carried out.
Marketing is a social and management process that
involves identifying unsatisfied needs or wants of
the consumers, producing goods or services to
satisfy those needs or wants, determining
appropriate price, promotion and distributing and
maintaining relation with the market.
In todays modern area each and every firm gives
priority to have a different marketing department.
Marketing involves the activities such as
advertising, publishing, market research,
distribution aspect, sales promotion, etc.
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ORGANISATION CHART
Board of Director
Chairman
Managing Director
Marketing Manager
Assistant Manager
Regional Manager
District Manager
Area Manager
Salesman
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MARKET SIZE
As per SAKET INDUSTRIAL DIGEST, JUNE 1996, size
of Vitrified tiles is as under.
The vitrified tiles market size is established at Rs.
525 Crores, where as floor tiles segment is Rs. 300
Crores. The demand for this tile is growing at pace
of 30%. The production capacity is expected to
bulge by nearly 5.35 Lacs tones by 1997-98.
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MARKET SEGMENTATION
Market segmentat ion is based upon the market
oriented strategies and philosophy segmentation
gives special emphasis on the demand size of the
market.
Market segmentation is a method of achieving
maximum market response from limited marketing
resources by the markets for to identify the target
customer. Generally, there are two types of market
segmentation.
People oriented approach
Consumer demand or product oriented approach.
In case of Varmora, there is no need for market
segmentation. Their market is fixed, so they think
that there is no need of market segmentat ion.
They produce the item according to orders they
receive.
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PRICING
Price is the amount charged for the product or
service including any warranties or guarantees,
delivery, discounts, services or other items that are
paid of the conditions of sale and are not paid for
separately. To the buyer price is a package or
expectations and satisfactions.
Pricing is an important decision that every company
has to take high price or low price may create a
bad reputation of company. The price of a product
is a crucial decision.
In Varmora Granito, pricing policy is cost + profit.
Whatever expenses have incurred during the
manufacturing of product is considered + profit is
too included. Competitors price are also
considered, their pr ices are higher than their
competitors.
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ADVERTISEMENT
Now a day, marketing plays an important role for
the entire organisation. Marketing is very much
necessary for all the products as without marketing
the consumer wil l have lack of information about
the products. Thus, to make the consumers aware
of the product, marketing is done.
Varmora advertise their products on very large
scale. They advertise their products on television
and also do wall paintings all over India. They also
distribute pamphlets for the same.
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CHANNELOF DISTRIBUTION
The word Channel has its origin to the French
word used for Canal. Thus, channel is route
through which goods passes from one end to
another. In other words, the route through which
goods move from the place of production to the
place of consumption is called Channel
Distribution. Channel of d istribution is the
pathway or route through which goods are
transferred from the hands of producer to the
consumers or from the seller to the buyer.
According to one author, A channel of distribution
for a product is the route taken by the title to the
goods as they move from the producer to ultimate
consumer.
In this industry, the distribution channel is
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There are about 300 dealers in all states of
country.
MARKET RESEARCH
Market research is the systematic and intelligentinvestigation or study of the who, what, where,
when, why and how of actual and potential buyers.
It is the systematic gathering rewarding and
analyzing of data about problems connected with
the market place. It is the scientific and controlledprocess of gathering of non routine market ing
information helping management to solve
marketing problems. It acts as the investigative
aims of marketing manager and management tool
in planning control cycle.
Manufacturing
Of Company
Dealers
Consumers
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In this industry, first of all they study about
customers requirements. They try to introduce
good facil it ies every time, they have a marketing
research team which goes all over country.
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CREDIT FACILITY
To run the business smoothly and regular cash
f low, company gives some credit faci li ty to the
buyers.
Varmora also does the same thing. They sell those
products in the market on cash and credit basis.
They give 3 crores credit facility to the buyers.
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SALES PROMOTION
Sales promotion consists of short term incentives to
encourage purchase or sales of a product or
service. It is demand stimulating devices designed
to supplement advertising and facil itate personal
sell ing. It is a direct inducement which offers an
extra value and incentive for the product to and
sales force distributors to ultimate customers.
In this industry, they do not adopt any technique
because of potentia l marketing and potential
customers.
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EXPORT POTENTIAL
With major market operating up and gap of
technological advancement in the manufacturing
being narrowed the market for products will grow.
However, in mainly depend upon the conformity to
develop countries strict standards shall determine
growth. The increased production capacities shall
see the companies moving towards developed
export market. Indian ceramic industry in spite of
advantages according out of low labour costs is
wrought with the problem of quality and design
companies are fortifying their R&D designs.
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COMPETITORS
It is rightly said that, Without competitors market
does not survive.
Varmora is also starving in to sale its products in
the competitive market by continuous development
of a product finding new areas of consumption.
Their competitors are
Kajaria
Bell
H R Johnson, etc.
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CONSUMERPROBLEM HANDLING
Customer is the king of the market, is a very
attractive slogan. Consumers generally never face
any problem for Varmora but in spite of this, if any
problem arises than following hierarchies of
problem handling is followed.
Problem of GovernmentProblem of Government
AgentAgent
Marketing PeopleMarketing People
Experts of CompanyExperts of Company
DiscussionDiscussion
SolutionSolution
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Sr. Particulars PageNo.
1 Introduction 65
2 Organisation Chart 66
3 Capital Structure 67
4 Accounting Policy 685 Means of Finance 69
6 Working capitalrequirement
70
7 Sources of funds 71
8 Financial Planning 72
9 Project cost 73
10 Highlights of profitability 74
11 Ratio Analysis 7512 Leverage Analysis 77
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INTRODUCTION
Finance plays a very important role in any type of
the firm. From the initial stage awards money is
needed for the information registration of the firms,
l isting of the firm. Finance is needed for making
necessary documents.
Finance consists of procuring funds, managing and
utilizing them efficiently in order to maximize the
profit, which is ultimate goal of any organisation.
In Varmora Tiles, the capital is procured by issuing
equity shares. The secured loan of this industry is
94000000 and the unsecured loan of 2007-08 is
deposi ts from relatives of directors i.e. of Rs.
10000000.
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ORGANISATION CHART
Finance Cum Account
Department
Finance Manager
And Accountant
Assistant Account
Computer Section
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CAPITAL STRUCTURE
Procurement of capita l is the most important
process of an organisation. Capital can be of two
types i.e. ownership capital and borrowed capital.
Ownership capita l can be procured by issuing
equity shares and sometimes preference shares
and borrowed capital can be procured by issuing
debentures, bank loan, etc.
The capital structure of Varmora is very simple as it
has issued desirable equity debt ration of 1:2.
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ACCOUNTING POLICY
Accounting policy of Varmora Granito as under:
The company maintains its accounts on historical
cost basis. The current assets, loans, and
advances, l iabi li ties are approximately of value
stated if realised in ordinary course of business.
The company follows the accrual method of
accounting and all claims, receivables and
liabilities are provided on that basis.
Depreciation is provided during year at prevailing
rates prescribed by companys act 1956.
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MEANS OF FINANCE
The project is to be funded through promoters
equity funds. Term loan as also working capital
facilities form bank and unsecured loans from the
relatives of promoters.
Sr. Particulars Amount(Lacs)
1 Directors equityShareholdersequity
70455
Total Equity 5252 Term Loan 9363 Unsecured Loan 98
Total 1559
I t is proposed that unsecured loan will not be
repaid t il l repayment period of term loan is not
over.
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WORKINGCAPITAL REQUIREMENT
Working capital requirement means it is necessary
to maintain stocks of raw materials and to finance
the funds blocked in goods in process, finished
goods, overheads, etc. Total working capital
requirement for f irst year has been estimated at
Rs. 458 Lacs. The working capital is proposed to be
through Bank finance to the tune Rs. 2300 Lacs and
promotions funds at Rs. 160 Lacs.
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SOURCES OF FUNDS
A manufacturing company requires capital for these
purposes.
To achieve or create fixed assets
Working capital for financing day to day
manufacturing and marketing operations.
Capital for expansion, modernization, etc.
A company has two main sources of capital
Internal sources
External sources
Varmora Granito Pvt. Ltd. is having internal source
of finance. The company has its own share capital
and have taken loan from the bank.
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FINANCIAL PLANNING
Financial management also requires managing for
effective management of finance as it is the part of
management. Financial planning means decisions
to be taken to achieve basic objectives of the firm.
The basic objective of finance planning is to raise
the necessary funds as and when needed. At
minimum cost cash should be controlled properly.
There are three types of financial planning.
Short term planning
Medium term planning
Long term planning
In Varmora Granito Pvt. Ltd. there is long term
financial planning.
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PROJECT COST
Sr.
Particulars Amount(Lacs)
1 Land 1.002 Factory Building 248.003 Imported Machinery New 559.004 Indigenous Machineries 438.005 Electrical Installations 54.00
6 Tools 4.007 Installations 3.008 Bank Guarantee for EPG 7.009 GEB Deposit 40.0010
Computers 3.00
11
Furniture 4.00
1
2
Other Miscellaneous Assets 2.00
13
Preliminary and pre-operativeexpenses
20.00
14
Provision for contingencies 20.00
15
Total capital cost of project 1401.00
16
Margin money for workingcapital
158.00
Total Project Cost 1559.00
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HIGHLIGHTSOF PROFITABILITY
Sr.
Particulars Year2007-08
1 Total Income 22452 Raw material and
packing cost930
3 Power cost 2164 Fuel cost 3245 Gross profit 3976 Total interest 1377 Net profit before tax 1628 Tax 399 Net profit after tax (net
cash)122
1
0
Accruals 319
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RATIO ANALYSIS
Ratio analysis is an audibly useful for f inancial
analysis. It is defined as systematic use of ratio to
interpret the financial statements, so that strength
and weakness of a f irm as wel l as i ts historical
performance and current f inancial conditions can
be determined. The following are ratio of Varmora
Granito as follows.
Current Ratio
= Current Assets / Current Liabilities
= 73642000 / 49670000
= 1.48%
Gross Profit Ratio
= Gross Profit / Net Sales x 100
= 11200000 / 49643000 x 100
= 22.56%
Operating Ratio
= (Cost of goods sold + Operating expenses) / Net
Sales x 100
= (31500000 + 2500000) / 49643000 x 100
= 68.49%
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Liquid Ratio
= Liquid Assets / Liquid Liabilities
= (Current Assets Stocks) / (Current Liabilities
Bank BOD)
= (73642000 19748000) / (49670000 960000)
= 53894000 / 48710000
= 1.10%
Debtors Ratio
= Credit Sales / Average Debtors
= 11300000 / 8100000
= 1.40%
Fixed Assets Ratio
= Sales / Fixed Assets
= 49643000 / 85000000
= 0.58%
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LEVERAGE ANALYSIS
Leverage means using f ixed charge sources and
getting returns by using sources eff iciently and
effectively. It i s an important aspect as the
organisation may need long term and short term
loan and they have dif ferent alternatives from
which organisation has to take the right decision.
To take this design it takes the help of leverage.
Operating Leverage
Fixed operating assets are giving the most cost
than the fixed and variable costs are called
operating leverage. Any amount borrowed for
investing in fixed assets, so the leverage
associated with the investment activities is known
as operating leverage. The degree of operating
leverage is given by
Degree of Operating Leverage= Sales Variable Cost / EBIT
= 29972000 10908000 / 12100000
= 19064000 / 12100000
= 1.58%
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Financial Leverage
Leverage is a criterion for determining operating
profit or loss. Financial leverage is a charge to
magnify the effect on the charge or operating profit
and loss.
Finance leverage is selected with finance position
between EBIT and EBT. The degree of f inance
leverage is,
Degree of Finance Leverage
= EBIT / EBT
= 12100000 / 9900000
= 1.22%
Combined Leverage
Operating leverage affects a firms operating
leverage (EBIT), while f inancial leverage affects
profit after tax or earning per share. The combined
effect of two leverages can be quite significant for
earnings available to the equity shareholders.
Degree of Combined Leverage
= DOL x DFL
= 1.58 x 1.22
= 1.92
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SWOT ANALYSIS
SWOT Analysis means the analysis of
S Strength
W Weakness
O Opportunity
T Threat
Strength
Varmora Granito Pvt. Ltd. is giving employment
around 200 employees.
Strong market presence
Develop rural area to reach at the global
position.
Weakness
Irregularity in time cost.
Varmora industry entered late in the market
Opportunity
Rapidly and continuous growth in the market, so
company will th ink about expansion.
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Threat
Highly competit ive market against imported
vitrified tiles.
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FUTURE PLAN
Future plan of Varmora Granito is to become
leading companies in the Vitrified tiles all over the
world.
They wil l be install ing new latest machines for
increasing product ion and various designs and
ranges to meet the upcoming market needs. Also,
they wanted to try serving backward class by giving
them services.
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SUGGESTION
Actually, we are just students. It is not our
capacity to give suggestions. Varmora Granito Pvt.
Ltd. is having smooth relation, nice organisation
and sincere workers.
There is no requirement to give any kind of
suggestion, but as a part of study it is necessary to
give suggestions, which are as under:
Having a wide market itself in India, only little is
exported. Instead of if they increase their export
and step into wide international market tocompete their quality, through this profit
increases.
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CONCLUSION
From this unit, I learn as many things, I am very
much happy to visit the company. Deep study of
Varmora Granito Pvt. Ltd, I came to give my
conclusion that its future is very bright and they
will progress well.
The co-operation of the employees is good. The
management is also effective and efficient. All the
departments are also handled by authorised person
who have great experience and i t is one of the
response of success of the firm.
So, I wish the company makes more and more
profi t, ful fi ll the future plans and get good and
global market.
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BIBLIOGRAPHY
Financial Management Khan & Jain
Principles of Marketing Philip Kotler
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