VALUE ADDITION

ASSUMPTION ALL OPERATIONS CARRIED OUT IN HOUSE NO TRANSPORTATION COST INVOLVED RAW MATERIAL

COTTON WITH SEED COST Rs. 3200 PER QUINTAL i.e. 100 Kg
COST PER Kg Rs. 32 3 Kg COTTON WITH SEED = 1 Kg COTTON WITHOUT SEED COST OF 1 KG GINNED COTTON = 32x3 = Rs. 96

GINNING COST OF GINNING = Rs. 1.5 PER Kg GINNING COST 1.5x3 = Rs. 4.5 PER Kg COST OF COVERSION OF 1Kg OF GINNED COTTON TO 1 Kg ROVING = Rs. 30

COST OF CONVERSION OF 1 Kg ROVING INTO 1 Kg YARN = Rs. 60 (30 HANKS OF 30s COUNT IN 1 Kg. Rs. 2 PER HANK SPINNING WAGES) TOTAL COST OF CONVERSION OF 1 KG YARN COST OF GINNED COTTON + GINNING COST + ROVING CONVERSION COST + YARN CONVERSION COST Rs. 96 + 4.5 + 30 + 60 = 190.5 i.e Rs. 190

YARN SELLING COST Rs. 240 PER Kg.

PROFIT ON 1 Kg YARN Rs. 240 190 = Rs. 50 THIS MEANS PROFIT ON 3 Kg UNGINNED COTTON = Rs. 50 PROFIT ON 1 Kg UNGINNED COTTON = 50/3 = Rs. 16 SALE PRICE OF UNGINNED COTTON 32 + 16 = Rs. 48 COST OF 1 QUINTAL COTTON INCREASE TO 48x100 = Rs. 4800

CONVERSION OF YARN TO GREY FABRIC

FROM 1 KG YARN IT IS POSSIBLE TO WEAVE 8 METERS OF GREY FABRIC WEAVING CHARGES = Rs. 10 PER METER

CHARGES FOR WEAVING 8 METER FABRIC 10x8 = Rs.80

SELLING COST OF GREY FABRIC Rs. 50 PER METER TOTAL COST OF FABRIC 8x50 = Rs 400

PROFIT ON 8 METER FABRIC

SELLING COST OF GREY FABRIC (YARN CONVERSION COST + FABRIC CONVERSION COST) = 400 (190+80) = Rs. 130 PROFIT ON 3 Kg UNGINNED COTTON = Rs.130

PROFIT ON 1 Kg UNGINNED COTTON = 130/3 = 43

SALE PRICE OF 1Kg COTTON AFTER CONVERSION TO GREY FABRIC 32 + 43 = 75 SALE PRICE OF 1 QUINTAL COTTON 75x100 = 7500

CONVERSION OF GREY FABRIC TO FINISHED WHITE FABRIC

COST OF DESIZING, SCOURING AND BLEACHING Rs. 5 PER METER

TOTAL PROCESSING COST 8x5 = Rs. 40

SELLING PRICE OF WHITE FINISHED FABRIC = Rs. 70 PER METER PRICE OF 8 METERS WHITE FABRIC 70x8 = Rs. 560

PROFIT ON WHITE FABRIC 560 40 = Rs. 520

COST OF 3 Kg UNGINNED COTTON = Rs. 520 COST OF 1 Kg UNGINNED COTTON 520/3 = Rs. 173 SELL PRICE OF 1 Kg UNGINNED COTTON 32 + 173 = Rs. 205 SELL PRICE OF 1 QUINTAL COTTON = Rs. 20,500

CONVERSION OF WHITE FABRIC TO GARMENTS

FROM 8 METERS FABRIC ONE CAN STITCH 4 HALF SHIRTS

STITCHING CHARGES Rs. 70 PER GARMENT

STITCHING CHARGES OF 4 GARMENTS = 4x60 = Rs. 240 SELLING PRICE OF EACH GARMENT Rs. 225 TOTAL SELLING PRICE 225x4 = Rs. 900 PROFIT ON 4 GARMENTS 900 240 = Rs. 660 PRICE OF 3 Kg. UNGINNED COTTON INCREASED TO RS. 660 PRICE OF 1 Kg UNGINNED COTTON 660/3 = Rs. 220 SELL PRICE OF 1 Kg. COTTON BECOMES 32 + 220 = Rs. 252 SELL PRICE OF 1 QUINTAL COTTON 252x100 = Rs. 25200

PRICE APPRECIATION SUMMARY

SELLING PRICE PER QUINTAL (Rs.)

RAW COTTON YARN GREY FABRIC WHITE FABRIC GARMENT

3200 4800 7500 20,500 25,200