CHAPTER I

INTRODUCTION

CHAPTER–1

INTRODUCTION

oday Indian economy is growing along with the growth and development of

business and industries rather than agriculture and others. Business is a complex process

even though it is becoming inevitable today, for the economic development of the

country. Many people are now interested in doing business, because it is an easy means of

earning profit and publicity. So today most of the people are doing business both in small

scale and large scale.

The term business can be simply state that “a state of being busy”. There it may

refers to all the economic activities which are concerned with the production and

distribution of goods and services.

As a complex process it should be very careful and active in order to success in

this field. Continuous effort and observations of the surroundings are also essential in

there is fields. To any kind of business it is very challenging and risky to survive

successfully in the market place whether it is a small scale or large scale undertaking.

The report consists of my experience and a detailed account of the various

activities of “KRK GROUP OF COMPANIES.” It is a small scale unit, established in the

year 1999, for the manufacture of pillows and processing of fibers. Further, the concern

gives due importance to efficient performance, hard work, and quality maintenance.

DESIGN OF YHE STUDY

OBJECTIVES OF THE STUDY

To know the production process.

To be familiar with each and every activities of the business unit.

To know about the quantity, quality and prices of all the products manufactured

by the business unit.

To ascertain the problems faced by the business unit and to suggest solutions.

Details regarding the utilization of human resources.

To know about the structure of the business unit.

SCOPE AND IMPORTANCE OF THE STUDY

The main aim of the placement training is to ascertain the overall activities of the

business unit. The study is concentrated on the major areas of production, marketing and

administration.

The findings of such studies will enable to arrive at a final conclusion and to make

valuable suggestions for improvement.

METHODOLOGY

In writing the report, the following methods have been relied on:

A Primary data

Information was collected from the Manager and also from the workers of the

factory by means of personal interview.

B Secondary data

Information was collected from registers, annual reports and financial statements

prepared and maintained by the concern.

PERIOD OF STUDY

For this purpose, the study dates for a period of four years from 2005 to 2008 .The

working and the progress of the concern is evaluated based on the data of four years.

LIMITATIONS OF THE STUDY

The time allowed for the study is limited. Hence, it isn’t sufficient to make an

intensive study on the working and growth of the organization.

The major limitation was the time constraints. The time allowed for the study is

only few weeks it was not sufficient to make an intensive study on the working and

growth of the unit. It is also not possible to make a comparative analysis with other firms

with in the limits. Another major limitation is that the company documents and financial

statements are not easily available.

CHAPTER – 2

COMPANY PROFILE

CHAPTER 2

COMPANY PROFILE

The KRK GROUP OF COMPANIES has got three branches namely KRK

DISTRIBUTORS, KRK MARKETING, & KRK INDUSTRIES.

It is a partnership firm, started in the year 1999, for processing fibers and,

manufacturing of cushions, pillows etc.The effort and hard work put by the company has

significantly made it grow to greater heights within a short span of time. The concern had

attained a remarkable position. These days, the concern is highly concentrating in quality

of the mattress, pillows and fibers. This was certified by the “RELIANCE

INDUSTRIES”.

The partners are Shri. V. HARIDAS, Shri. K.S.VIJAY KUMAR, Shri.K.

MOHAN KUMAR & Shri. K. KANNADASAN.

At the initial stages, the business was carried on by Mr. Haridas and Mr. Vijay

Kumar under the name and style of KRK Industries, after that Mr. K. Mohan Kumar and

Mr. Kannadasan had been admitted to the benefits of partnership. After their admission,

they have decided to change the constitution.

OBJECT OF THE PARTNERSHIP

The object of the partnership is to carry on the business of manufacturing and

trading of sleeping products such as cushions, beds and polyester fiber materials and other

products of cotton and silk. The firm has also decided to carry its business which is

incidentally or ancillary to the main business.

LOCATION OF THE BUSINESS

The KRK GROUP OF COMPANIES is situated at the KUDALLUR Gramam;

PALLAVUR at Door No. 9/107, PALAKKAD.The firm carries its business at other

places for wider circulation of their products and service.

FACTORS AFFECTING LOCATION

The choice of location is influenced by number of factors:

Nearest to Raw-materials

The concern makes use of important raw-materials like cotton, fiber etc. The easy

availability of raw materials is one of the factors which forced the partners to establish the

firm at this place. Any delay for transportation of raw materials has led to production

blockage.

Government Policies

In the case of Public Section, Project location is decided by the government

whereas in the case of private section project location is influenced by certain government

restrictions and inducements.

As the concern is established in rural area, it enjoys all the benefits of the

government. The government provides number of incentives to the firm which is situated

in backward areas. Government inducements like sales tax exemption and has availed

subsidies in investment in fixed assets.

Transporting and communication facilities

For transporting the input of the project and distributing the output of the project

to the firm, transport facility is required. The firm is located in a place wherein

transportation facilities are well-connected.

Availability of Human Resources

The person residing mostly in this area includes middle income and lower income

group. The firm employs labour intensive method. This means that labour investment

ratio is high. Accordingly, this will enable to generate more employment opportunities.

The firm provides employment to artisans, technically qualified persons and

professionals. Thus it provides employment to the people in and around the firm.

Industrial Atmosphere

KRK Group of Companies is functioning in a good atmosphere. The pollution at

the time of production process is controlled to an extent with proper control measures.

MANAGING PARTNER

ACCOUNTANT MARKETING DESPATCH PURCHASE

ACCOUNT’S ASSISTANT

SALES REPRESENTATIVE

PURCHASE OFFICER

STOREKEEPER

COMPUTER

ASSISTANT

WORKERS

ORGANISATIONALCHART

CAPITAL INVESTMENTS

PRODUCTION

GM

SUPERVISOR

The firm was established in the year 1999. The capital of the firm at the beginning

was Rs 4 Lakhs.

1. V. Haridas Rs 1 lakh

2. P. Kannadasan Rs 1 lakh

3. K.S. Vijay Kumar Rs 1 lakh

4. K. Mohan Kumar Rs 1 lakh

Loans

The firm borrows loans from banks and other financial institutions. The firm had

borrowed funds for its working. The firm secured loans of about 10 lakhs from South

Indian Bank, Nemmara.

Fixed Assets

The fixed assets of the unit include land, building, plant and machinery, furniture

etc. the concern uses its own machinery for production. The size of the building includes

the store room and plant.

Current Assets

Cash in hand and inventories are the main current assets. The firm also makes sales

to meet debtors are an apart of current assets.

Liabilities

The liability of the company is limited.

CHAPTER – 3

DEPARTMENTAL ANALYSIS

CHAPTER-3

DEPARTMENTAL ANALYSIS

The main departments functioning under this firm are:

Production Department

Stores Department

Purchase Department

Finance Department

Marketing Department

Administration Department

PRODUCTION DEPARTMENT

The production manager is in-charge of the production department. Production

manager experience and efficient feedback system maintains to produce quality fiber,

cushions, from the factory. The store-in-charge houses again the helpers under him.

The works in-charge under the production manager allots the works in accordance

with the instructions from the production manager. The production supervisor controls

and supervises the skilled workers and semi-skilled workers. Several other helpers are

also helping under his efficient supervision. The emergency repair of the machine and

maintenance of machines are handled by the foremen.

MAIN RAW MATERIALS USED FOR PRODUCTION

Polyester fiber is the main raw material used by the concern. The fiber is

purchased from Reliance Company in bale form. There are two types of fibers used

namely: Hollow Non Silk Niced (HNS) and Hollow Silk Niced (HSN).

These two fibers are of different in its quality. Hollow Non Silk Niced (HNS) is

the low quality fiber but more quantity of this fiber is used for the production. Hollow

Silk Niced (HSN) is a high quality fiber but less quantity is needed for the production.

The price of this fiber is comparatively higher than HNS.

These two fibers are used for the production and processed for the purpose of

exporting. The processed fiber is later used for manufacturing pillows, cushions; mattress

etc. RECRON certified fibers and cotton is used for the production.

DETAILS OF INFRASTRUCTURE TO BE POSSESSED

1. Opening Machine

Type: single cylinder with spikes for mild opening action.

Condition: No blunt or damage spikes

2. Carding Machine

Type: Roller type of flat type with drum attached in front of doffer.

Condition of card wines: No blunt or damaged wires.

In this type of machine, the fiber is first put in the feed roller. From this feed

roller, the fiber round in the drum and through card wheel and then it is delivered from

the delivery drum.

3. Cutting Machine

Cutting machine is used in this firm for cutting the cotton clothes.100 pieces are

cut at a time.

4. Stitching Machine

This is used for stitching the clothes.

5. Heat sealing Equipment

Sealing is done by using this machine.

6. Testing equipment

Balance to weigh up to 2 kg with an accuracy level of 5 Gms.

7. 2500 pillow/cushions and to store raw materials required for producing 10000

pillows/ cushions.

INFRASTRUCTURE TO BE PROCESSED

Cutting Machine

Cutting Machine

Stitching Machine

Heat Sealing Machine

Testing Equipment

Final Product

Fiber (Bale form)

Opening Machine

Card Machine

PRODUCTION PROCESS OF CUSHION & PILLOW

Size (Inches) 16 X 16

Type of fiber to be usedRecron – Merge F6HQIP

[hollow silicon zed]

Filling quality (gms) 350 gms +/- 5 gms

Form of filling fiber

Cared we opened or roller type or

flat type card and wound on a drum

or lattice

Type of pillow fabric

Type and source is identified by

Ril fabric specification enclosed

Separately.

Type of sewing thread3/50 S or 3/5 45 100% polyester

Spun yarn

Stitch density

[No. of stitches per head]8-10

Piping thread [Dori] TBD

Positioning of a labelType and source as specified by

Ril 4” away from corner

Carry bag Type and source as specified by Ril

PROCEDURE TO MAKE PILLOW

1. Mix the fiber from 5 bales in a sandwich layer from and condition for 4-5 hours.

2. Open the fiber on a mild opening machine.

3. Card the fiber on a roller or flat type of card. The web to be even without holes, neaps

etc.

4. The carded web to be wound on a rotating drum in front of the card.

5. The batting (carded web wound on drum) spread evenly on a clean plastic sheet

spread on the floor.

6. Width of the batting to be trimmed down for insertion into one side of pillow i.e. 27”

or 24”

7. Roll the web evenly to get the required weight and insert into the pillow tick.

Templates may be used for inserting the roll into the tick fabric.

8. Close the opening of the pillow with same stitch as other three sides.

STORES DEPARTMENT

There exists a stores department for storing the materials in the firm. The store

department should be very near to the receiving department, so that the transportation

charges are at minimum. This is very important for bulky and heavy stocks in order to

minimize the labour and transportation charges. The building of stores department should

be properly constructed from the point of view of avoiding loss due to damage.

The stores department gives careful consideration. The stock should be divided

into racks and stored into small spaces. All these spaces are known as Bins. At times for

heavy materials, a big hall can be treated as one bin.

A bin card is a record of the receipt and issue of materials and is maintained for

each item. The quantity of stores received is entered in the receipt column and quantity of

stores issued is recorded in the issue column of the bin card and a balance of the quantity

of stores is taken after every receipt on issue. These cards are maintained by store keeper

and the he is answerable for any difference between the physical stock and the balance

shown in bin card. By seeing the bin card, the store keeper can send the material

acquisition for the purchase of materials on time.

STORES CONTROL

To further strengthen the material control, purchase control must be matched by

equally effective store control to avoid losses from misappropriation, damage and

carelessness. Materials that turn to cash on sale of a finished product represent an

equivalent amount of cash. So it is desirable to have an efficient and well equipped stores

department to exercise an effective material control.

Special attention must be paid for storage of materials which are liable to leakage or

deterioration.

STORAGE POLICY

The concern adopts a minimum level of stock of materials. It maintains adequate

level of stock of raw materials, packaging materials and other supplies to ensure the

smooth functioning of the production process, distribution and to avoid delay in

manufacturing.

Purchases of material are usually based upon the stock. The concern does not

invest further capital in inventories by purchasing and storing bulk quantities of materials.

The unit can minimize the blockage of working capital in inventories.

PURCHASE DEPARTMENT

Purchasing is one of the vital functions of material management. The head of the

department is known as Purchase Manager. The responsibility for publishing the

materials should be entrusted to this department. Some of the vital factors concerned with

the manufacture, quality, cost, efficiency and prompt delivery of goods to customers are

performed by the purchase department.

This company follows a centralized purchasing system. In this type of purchasing

system, the purchase function is routed through one department; herby avoiding

duplication and overlapping of transactions. To perform the function effectively, purchase

department follows the following procedures.

PURCHASE PROCEDURE

Purchase procedure is not based on any systematic calculations. It is purely based

on experience. The unit has fixed minimum level and recording level for its raw

materials. There is a separate department existing for the purchase of raw materials that

is, purchase department. These are the following procedures performed by the purchase

department.

a) Receiving purchase requisition.

b) Exploring the source of supply and choosing the supplier.

c) Preparation of purchase order.

d) Receiving and inspecting materials.

e) Checking and passing of bill for payment.

RECEIVING PURCHASE REQUISITION

With the help of purchase requisition, the Purchase Officer comes to know the

types of materials needed by the firm. A purchase requisition is a form used as a formal

request to the purchasing department to purchase materials. The concern’s purchase

department employs a purchase office and a storekeeper. For the purchase of fiber and

other raw materials, the firm prepares a requisition form. It is known as purchase

requisition. The form is prepared by the storekeeper. Here the requisition is generally

prepared in triplicate. The original copy is sent to the purchase department, the duplicate

is kept by the store keeper.

EXPLORING THE SOURCE OF SUPPLY AND CHOOSING

SUPPLIER

The purchase department usually maintains a list of supplier’s name and address

for every group of product. The quotations may be invited from these suppliers, a

comparative statement of various quotations received is prepared and desirable supplier is

selected.

PURCHASE ORDER

After choosing the supplier the purchase department prepares a purchase order for

the supply of stores. The order is the written authorization to the supplier to supply the

particular material or materials. Purchase Order is a document which gives the authority

to the receiving department to receive the materials ordered for and to the accounts

department to accept the bill from the supplier for payment. Three to five copies of

purchase order are prepared depending upon the size of the firm. As it is a small scale

unit, it prepares only three copies.

a) The original copy is send to the supplier.

b) One copy is send to the receiving department.

c) One copy is send to the person who initiated the purchase requisition.

RECEIVING AND INSPECTION MATERIALS

A KRK Group of company is a small concern; the work of receiving the goods

may be entrusted to the storekeeper.

Goods received note is a document on the basis of which purchases are verified

and payment is made to the supplier.

CHECKING AND PASSING OF BILL FOR PAYMENT

When the invoice is received from the supplier, it is send to the store section to

check the authencity as well as arithmetical accuracy. The quantity and price mentioned

in the invoice are checked worth reference to stores received note and purchase order

respectively.

THE SPECIMEN OF PURCHASE REQUISITION OF

KRK GROUP OF COMPANY

KRK DISTRIBUTORS & MARKETING

Date………….……..….….

Date by which materials are

Required......……………....

No. Regular

Special

Serial No: Description of

article

Store Code No: Quantity

Required

Remarks

Required by……………………. Approved by……………….

For used in purchase Dept.

Quotation invited on

From 1…………………………. Purchase Officer

2………………………….

3………………………….

THE SPECIMEN FOR SOURCE OF SUPPLY AND CHOOSING

SUPPLIER OF

KRK GROUP OF COMPANY

Tender form

Indent No. Tender No……….……

Date: ……………........

Dear Sir,

Please let us have your best offer for the supply of following items. The tender

classes on date……………..so and so.

Yours faithfully

For KRK Distribution & Marketing

Purchase Officer

Serial

No:

Description

of items

Quality Quantity Price Terms of

deliveryOther

items

THE SPECIMEN OF PURCHASE ORDER

KRK DISTRIBUTORS AND MARKETING

Purchase order

No. Dated…………… Purchase Requisition no.

To (suppliers)

Your quotation number …………… dated …………… has been

accepted. Please supply the following items in accordance with the instruction.

Serial

No Description Qty Rate

Total

cost Delivery Date Remarks

Terms of Delivery

Terms of Payment Purchase Officer

Discount Allowed

MARKETING DEPARTMENT

Marketing manager controls the entire marketing activities. Marketing manager

with active marketing executive and sales executive under him handles the department to

obtain the objectives.

Marketing department also maintain information regarding the competition and

their products comparative studies made. The department does yearly view of the sales

and it helps in introduction of new production line in the market. In order to attain the

desired sale, proper sale, forecasting is done.

MARKETING PER YEAR

YEARS AMOUNT(Rs)

2004-2005 10658000

2005-2006 10858000

2006-2007 16104597

ADMINISTRATION DEPARTMENT

The department is managed by manager. The manager controls the account

section, EDP and communication section, the personnel and purchasing section. The

secretary performs all secretarial duties.

ACCOUNTS SECTION

Double entry system is followed in the concern to have a clear view of Profit and

Loss account and Balance sheet.

1. Cash Book with Bank Column

Cash book is maintained to record all cash transactions. The firm maintains cash

book with bank column. This means the contra entries are recorded easily i.e., both

transaction are recorded in cash and bank column simultaneously.

2. General Ledger

Ledgers are set of book to record transactions of a business. All transactions are

recorded in general ledger.

3. Debtors Ledger

Debtors are assets of the firm, it is a current asset. Debtors are those we owe

money from them. The firm maintains debtor’s ledger.

4. Creditors Ledger

Creditors are those we owe money to them. They are liabilities to the business. A

ledger is maintained for creditors by the firm.

5. Sales Register

Sales are the means of income to the business. If sales are more, more will be the

turnover. The firm maintains a sales register.

6. Purchase Register

Purchase department makes purchases. A purchases register is maintained by the

firm to record the transaction. Purchases are done on both credit as well as cash basis.

8. General Journal

Journal is the ‘Book of Origin’. A journal book is maintained by the firm.

EDP AND COMMUNICATION

Now-a-days, each and every concern is computerized for easy access of data and

better communication. The computerization in concern helps in each and every field. The

accounting officer finds it easy to perform and maintain the accounting works, clerical

work, document and other statements in most economical and easy manager.

PERSONNEL SECTION

The administrative department directly controls the personnel and purchasing

section. There are about 30 persons working in the factory. Necessary training is given to

the workers, supervisors and other executives. Workers’ training is essential.

As far as company is concerned, manpower is more important. As it is

manufacturing company and processing it needs skilled workers plays an important role.

A little carelessness on the part of the workers may lead to wastage.

LABOUR FORCE OF THE CONCERN

There are 90 laborers working in the firm. The working hours starts at 8.30 pm

and ends at 5.30 pm.

The concern spends lot of money to train fresh labours through systematic rotation

of job training.

WAGE PAYMENT

Wages are the means of providing income for the workers become the only source

of income which determines their economic Survival of the Society.

Wages are paid to the workers on weekly basis i.e., on every Saturday.

DESIGNATION BASIC SALARY

Supervisors Rs. 3000 and above

Skilled Workers Rs. 2500 and above

Semi skilled workers Rs. 2000 and above

Helpers Rs 50 per day

Trainee Rs 40 per day

TIME KEEPING

There are two methods of time keeping. They are manual method and mechanical

method. The choice of a particular method depends upon the requirement and policy of

the firm.

Here, the firm makes use of manual method i.e., Attendance Register method and

Metal Disc method.

Attendance Register Method

It is the oldest method of recording time. Under this method, an attendance

register is kept. The attendance register contains columns like name of the workmen and

the worker’s number. The time of arrival and departure is noted by an employee known as

time keeper.

Here employees affix the signature in the books. This method is simple and

inexpensive.

As it is a small firm, this method is affordable, more over it is suitable where

there is limited number of workers.

Metal Disc Method

Under this method, each worker is allotted a metal disc or a token. A board is kept

at the gate. The employees should hang their token at the board.

This method is simple and this method is suitable for the concern because most of

the workers are from backward areas and illiterate also.

This method is better than attendance register method when the number of

employees is not large.

BENEFITS AND INCENTIVES

Bonus

The concern pays bonus to its workers. Usually, this is given during Onam;

Vishnu etc.The bonus is given on the basis of seniority. Two hundred rupees is given to

the workers as their bonus.

Advances

Advances against wages are been provided to the workers on required time and

are not recorded in installments.

Paid Holidays

All the days in a week are working days except Sunday. However the concern

declares 13 days as yearly holidays i.e., 4 National holidays and 9 festival holidays.

QUALITY CONTROL

Quality Control is mainly about the detecting defective output rather than

preventing it. It is concerned with checking and reviewing work that has been done i.e. it

includes the inspection of products, their testing and sampling. It is very expensive

process

For controlling the quality the company has to perform various activities which

includes general methods such as accuracy, checking on data acquisition and calculations,

procedures for emission calculations, measurements, estimating uncertainties, and

gathering information and reporting.

This is a technical activity to measure and control the quality of the inventory as it

is being developed and provides routine and consistent checks to ensure data integrity,

correction and completeness, identifies the errors and omissions, document and archive

inventory material and records all quality control activities.

FINANCE DEPARTMENT

ANALYSIS OF FINANCIAL STATEMENTS

Financial Analysis refers to the analysis of financial statements. The preparation

of final accounts is the last step in the accounting cycle. The foremost objective of

accounting is to determine the Profit or Loss made by business during any accounting

period and to ascertain the financial position on a given date.

The financial statement consists of Trading and Profit and Loss account and

Balance Sheet. These statements provides necessary information to various interested

groups: shareholders, investors, creditors etc.All revenue(nominal)accounts are

transferred to Trading and Profit and Loss account and all non-revenue (real and

personal)accounts are transferred to the Balance Sheet. In other words, Profit and Loss

account is a nominal account where we debit all expenses and losses, credit all incomes

and gains and finally Balance Sheet is prepared to ascertain the financial position of the

business.

The Trading and Profit and Loss account for the year ended 31st March of four

consecutive years and Balance Sheet as on that date has been given in the following

pages.

RATIO ANALYSIS

Ratio Analysis is a widely used tool of financial analysis. Ratio analysis is the

systematic use of ratios to interpret the financial statements, so that the strength and

weakness of a firm as well as its historical performances and current financial conditions

can be determined. It is done to develop meaningful relationship between individual items

or group of items usually shown in the periodical financial statement published by the

concern. An accounting ratio shows the relationship between the two inter-related

accounting figures as gross profit to sales, current assets to current liabilities. They help in

giving us an idea of a concern. The efficiency of the firm becomes evident when analysis

is based on accounting ratios.

CURRENT RATIOS

Current ratio is defined as the ratio of current assets to current liabilities. It shows the

relationship between total current assets and total current liabilities. Current ratio is also

called working capital ratio or banker’s ratio. It is calculated as follows:

Current Ratio = Current Assets / Current Liabilities

YEAR CURRENT ASSETSCURRENT

LIABILITIESRATIO

2005 850908 97063 8.8%

2006 2169476 480193 4.5%

2007 739607 1196524 0.6%

2008 1475658 1858089 0.8%

2005 2006 2007 20080.00%1.00%2.00%3.00%4.00%5.00%6.00%7.00%8.00%9.00%

10.00%8.80%

4.50%

0.60%0.80%

ANALYSIS

The standard current ratio is 8.8%.It is clear indeed that the ratio in 2005 and 2006 is

higher than the ratio of 2007 and 2008.This indicates that the position of the creditors and

the financial stability of the concern are comfortable.

LIQUID RATIO OR QUICK RATIO

Liquid ratio is the ratio of liquid assets (quick assets) to current liabilities. It

establishes the relationship between quick assets and current liabilities. It is the measure

of the instant debt paying ability of the business enterprise. It is also called acid test ratio.

It is computed as follows:

Liquid Ratio = Liquid Assets / Current Liabilities

YEARQUICK ASSETS

CURRENT

LIABILITIESRATIO

2005 420379 97063 4.33%

2006 1391331 480193 2.88%

2007 142345 1196524 0.12%

2008 357158 1858089 0.19%

2005 2006 2007 20080

0.0050.010.0150.020.0250.030.0350.040.0450.05

0.00%

4.33%

2.88%

0.12% 0.19%

ANALYSIS

The percentage of quick assets to current liability decreased from 2005 to 2007 and

then a sight rise in the year 2008.The standard ratio is 100%.

GROSS PROFIT RATIO

This is the ratio of gross profit to sales expressed as a percentage. It is also known

as gross margin. It is calculated as follows:

Gross Profit Ratio = Gross Profit / Net Sales x 100

GROSS PROFIT

YEAR SALES RATIO

2005 17049441.04 1321845.93 7.75%

2006 10632298 824166 7.75%

2007 16104597 975754 6.05%

2008 18967577 822570 4.34%

ANALYSIS

The percentage of gross profit to sales of the company has increased in the year

2005 and 2006 compared to the other two years i.e. 2007 and 2008.The increase in gross

profit ratio was due to the reduction in cost of goods sold and increase in its turnover.

NET PROFIT RATIO

Net Profit ratio is the ratio of net profit earned by a business and its net sales. It

measures overall profitability. It is calculated as follows:

Net Profit Ratio = Net Profit / Net Sales x 100

YEAR SALES NET PROFIT RATIO

2005 17479970 31577 0.10%

2006 10632298 28628 0.26%

2007 16104597 73909 0.46%

2008 18967577 95583 0.50%

ANALYSIS

An increase in the ratio indicates improvement in the operational efficiency of the

concern. The percentage of net profit to sales of the company has increased in each year.

The increase was due to good control over the operating expenses and efficient utilization

of idle funds.

OBSERVATION

The profit or turnover of the firm is found to be declining i.e., margin of profits

show a declining trend. This may be due to-

1. Lack of skilled workers and supervisors

There is lack of skilled workers because most of the people come from backward

areas. There are no experts to train them properly.

2. Improper utilization of resources

One of the major drawbacks is the improper utilization of resources. If the

resources are not properly utilized, it may lead to wastage.

3. Increase in value of raw material

Fiber is the major raw-material used by the concern. This is a petroleum product

and henceforth an increase in the value of fiber may turn out to be a major obstacle for the

firm.

CHAPTER – 4

FINDINGS & SUGGESTIONS

CHAPTER 4

FINDINGS

The production department after consulting with general manager maintains a proper

production planning.

The production process involves several steps and there is minimum wastage of

materials.

Quality products are manufactured here.

For smooth functioning, proper books of accounts are maintained.

Working environment in the concern is peaceful and management maintains good

relations with employees.

Existence of fixed financial charges posses operating risk.

Increasing value of raw materials is a major problem.

Lack of skilled workers is another problem faced by the concern.

The stores department helps to control the loss due to damage.

Purchase department helps to avoid duplication, overlapping and the non-uniform

procurement.

SUGGESTIONS

Modern mechanical device should be introduced for time-keeping.

Skilled workers should be appointed or unskilled workers must be trained properly.

The company has to concentrate more on their relation with the employees to reduce

the chance of grievance and complaints.

Daily production targets should be fixed as an effective promotion measure.

Raw materials should be utilized fully

CHAPTER – 5

CONCLUSTION

CHAPTER 5

CONCLUSION

From the study within a short period of training, it is clear that KRK GROUP OF

COMPANIES is a small-scale industrial unit. The company is working in a systematic

manner and has a tremendous demand for its products. The products are durable,

washable and posses one year guarantee. All the departments in the unit are working

smoothly thereby providing maximum opportunity for its potential growth.

But the company faces difficulties in procuring raw materials & hence proper and

effective methods are to be developed. The well-built setup of the firm and the sincere

working of the personnel’s would contribute at large to the success of the unit.

APPENDIX

The Statement of Fixed Assets of the firm for the year 2005-2006

KRK DISTRIBUTORS, KUDALLUR, PALAKKAD

STATEMENT OF FIXED ASSETS

Particulars

WDV as

on 1.4.05 Addition Total Rate Dep.

WDV as

on 31.3.06

Block I land 0.00 170400 170400 0.00 170400.00

Block II

office

equipm

9450.0

0

788.00 1023

8.00

15

%

1023.0

0

9214.2

0

ent landBlock III

machinery 32594.25 0.00

32594.2

5 15% 4889.14 27705.11

Bare Motors 6403.00 0.00 6403.00 15% 960.40 5442.55

Motor cars 234576.32 0.00

234576.

3 15% 35186.45 199389.87

Cutting

machine

0.00 4500.00 4500.00 15% 675.00 3825.00

TOTAL 431778.9 291623.6 184746 476269.7 431778.9

TRADING AND PROFIT & LOSS ACCOUNT FOR THE YEAR

ENDED 31 st MARCH, 2005

Particulars Amount Amount Particulars Amount Amount

To Opening

Stock

576058.25 By Sales

Account

To Purchase 14459707.0

5

Sales @ 3% 9915323.77

To freight

Inward

328130.00 Sales @ 4% 40261.54

To Packing

Materials

345667.00 Sales @ 8% 6027936.00

To Unloading

charges

4247.00 Sales CST

10%

60586.2

16158124.3 Sales CST

4%

614479.15

To Wages 406092.00 Second

Sales

702370.73

To Gross 1321845.93 17360958.25

Profit

Less

Returns

311517.21

17049441.04

By closing

stock

430629.19 1747997

0.23

17479970.23 1747997

0.23

To

Management

and

administration

By Gross

profit bid

1321845.

93

Exps (sch IV) 470096.83 By AST

15%

115947.74

By CST

10%

6058.52

By CST 4% 17176.85

To selling and

distribution

By KGST

3%

295633.45

Exps (Sch

VII)

1543751.66 By KGST

4%

1610.47

To interest

and financial

charges

116125.00 By KGST

8%

477362.9

(Sch VIII) By Round

Off

8.4 913798.4

3

To

depreciation

(Sch III)

74193.83 2204067.32

To net profit 31577.04

TOTAL 2235644.36 TOTAL 2235644.

36

KRK DISTRIBUTORS, KUDALLUR, PALAKKAD

BALANCE SHEET AS ON 31 st MARCH, 2005

LIABILITIES Amount ASSETS Amount

Partners Capital (Sch-I) 700000.00 Fixed Assets 291523.6

Partners current

Account (Sch V)

345368 Current Assets ,

Loans & advances

850907.9

Secured Loan Nil

Unsecured loan Nil

Current Liabilities 97063.42

TOTAL 1142431.00 TOTAL 1142431.00

KRK DISTRIBUTORS, KUDALLUR, PALAKKAD

TRADING & PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED

31 st MARCH, 2006

PARTICULARS Amount PARTICULARS Amount

To Opening Stock Sch

(vi)

430529.2 By Sales Sch (viii) 18632298

To Purchase Sch (vii) 9850724.00 By Closing Stock

Sch (ix)

778145.1

To factory expenses

Sch (x)

305024.5

To gross profit 824166.00

TOTAL 11410444.00 TOTAL 11410444.00

To management &

administrative exp. Sch

(xi)

230965.1 By Gross Profit 824166.00

To interest & financial 270425.00

charges

Sch (xii) 201656

To depreciation to

partners

48000.00

To Net Profit 28628.43

TOTAL 824166.00 TOTAL 824166.00

KRK DISTRIBUTORS, KUDALLUR, PALAKKAD

BALANCE SHEET AS ON MARCH 31 st , 2006

DESCRIPTION AMOUNT

Sources of Funds :

Partner’s Capital A/c Sch (i) 700000.00

Partner’s Current Account 515786.44

Secured Loan :

South Indian Bank Ltd (Nemmara ) 908275.66

Sundry Creditors Sch(ii) 417736.00

Output tax payable 62457.00

TOTAL 2604255.1

Applications of Funds

Fixed assets 4317778.93

Sundry debtors Sch (iv) 1306312.85

Stock in trade 778145.11

Deposits 30000.00

Cash 3901.17

Bank A/c 32149.4

NSC(ST Security deposits) 5000.00

Duties and taxes 13967.64

TOTAL 2604255.1

KRK DISTRIBUTORS, KUDALLUR, PALAKKAD

PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31 st MARCH,

2007

PARTICULARS Amount PARTICULARS Amount

To opening stock 778145.1 By Sales 16104597.00

To polyester fiber &

materials

14296750.00 By closing Stock 597262.00

To Factory expenses 651210.00

To Gross Profit 975753.9

TOTAL 16701859.00 TOTAL 16701859.00

To management &

administrative expenses

226151.00 By Gross Profit d/d 975753.9

To interest & financial

charges

137633.00 By round off 601.55

To selling &

distribution expenses

360022.4 By CST collected 49218.27

To CST Paid 49229.00 By VAT Collected 612298.3

To VAT Paid 605472.00

To Input tax paid 6827.00

To depreciation 41856.02

To partners salary 136772.7

To Net profit 73908.99

TOTAL 1637872.00 TOTAL 1637872.00

KRK DISTRIBUTORS, KUDALLUR, PALAKKAD

BALANCE SHEET AS ON 31 st MARCH, 2007

SOURCES Amount APPLICATIONS Amount

Partner’s Capital

account

700000.00 Fixed Assets 441922.9

Partner’s current

Account

606468.1 Deposits &

Advances

80232.00

Secured Loan Sundry Debtors 1635614.00

South Indian Bank Ltd

(Nemmara)

3944383.7 Current Assets 739606.7

Sundry Creditors 1026685.00

Output tax payable 136908.00

CST Payable 3293.00

TOTAL 2897376.00 TOTAL 2897376.00

KRK DISTRIBUTORS, KUDALLUR, PALAKKAD

TRADING, PROFIT &LOSS ACCOUNT FOR THE YEAR ENDED

31st MARCH, 2008

Particulars Amount Particulars Amount

To Opening Stock 597,261.99 By Sales 16,104,597.31

To Purchases 18,194,142.80 By Closing Stock 597,261.99

To Factory Expenses 472,102.00

To Gross Profit 822,569.71

TOTAL 20,086,076.50 TOTAL 20,086,076.50

To Management &

Administrative

Expenses

203,842.00 By Gross Profit 822,569.71

To Interest & financial

Charges

115,026.50 By Discount

Received

17,416.00

To Selling &

Distribution Expenses

86,940.52 By CST Collected 34,596.00

To Round Off 33.08 By Output Tax 715,132.22

Collected

To CST Paid 34,597.00

To Output Tax Paid 714,168.00

To Input Tax Paid 951.17

To Depreciation 39,602.70

To partners salary 210,320.00

To Partners Interest 88,650.00

To Net Profit 95,582.99

TOTAL 1,589,713.96 TOTAL 1,589,713.96

KRK DISTRIBUTORS, KUDALLUR, PALAKKAD

BALANCE SHEET AS ON 31 st MARCH, 2008

Sources Schedule Amount

Partner’s Capital Account 1 700,000.00

Partner’s Current Account 2 871,021.12

Secured Loan

South Indian Bank Ltd (Nemmara) 504,346.66

Current Liabilities & Provisions

Sundry Creditors 3 1,667,823.65

Output Tax Payable 179,300.00

CST Payable 10,965.00

TOTAL 3,923,456.43

Applications Schedule Amount

Fixed Assets 1 402,320.11

Deposits and Advances 5 80,232.00

Sundry Debtors 6 1,975,245.75

Current Assets 7 1,475,658.47

TOTAL 3,933,456.43