'Neela Detergent Soap',

for those who

On January 1, 2022 National Small Industries Corporation (NSIC) organised a Camp
which could be
wanted to start a small business. The NSIC displayed 1500 small business projects
product ion
started with an investm ent of Rs.200,000. The NSIC also promised to buy the entire
It also had
of the first year. It promised to supply the required machinery at very subsidized rates.
of people
a scheme to give loans upto 50% of the working capital requirement. A large number
visited the camp. There were project demonstrations by the NSIC advisers and experts.
on Detergent
Neela was very impressed by the demonstration of the small business project
ly succeed
Powder. The project was economically viable. She was convinced that she will definite
to supply
_in carrying out the project. She entered into an agreement with the NSIC who agreed
open space
. ~e necessary plant for Rs. 60,000 (GST @ 18%) on turnkey basis. She had sufficient
Rs. 20,800 was
at her residence in a village. She got the machine fixed, and the down paymen t of
through the
made. The balance was to be paid. equally over a period of five years. She went
materials. She
literatur e provided by the NSIC to know the addresses of the suppliers of the raw
operate the
placed necessary orders for the raw material and arranged for workers who will
and decided
machine and do other necessary product ion work. She set up a small workabl e office
to do all office work herself. All supplies were on a credit for two weeks.
on the very
She formally inaugurated the product ion on April 1, 202.2 She invited all the villagers
much lower
first day. Neela Detergent powder was very reasonably priced. The price was very
She told the
than other brands in the market. She visited ten other villages around her village.
Her product
people there, as to how her deterge nt powder is better and cheaper than others.
, she could sell
was really good and was accepted by all those who used it. Within two months
whatever she produced every week.
 Her initial investment wasfs80,000 out of which she paid the first instalment
(down payment) of plant on
April 1, 202J..She opened a Bank Account with Rs. 49,200 on the same date.
She had an old scooter worth
20,000 which s~e decided to ~~e in her business. She also purchased furnitur
e fof\2,0 00 (GST@ 12% ).
Thus, her total investment wa's!J.,00,000. The payments to suppliers were made
on the 1s"and the 30~of
each month. The salaries and wages were paid only on the Jtb.of each month.
The Sales were mostly for
. Cash. The Cash Sale was deposited in the Bank the next day. The sale to local
customers was on credit for
one week. All the customers were honest and paid the amount as and when
due. The following expenses
were incurred and revenue realised during the year ended March 31, 202~

1. Raw material purchased on credit (GST@ 12%)

12,00,000
2. Cash paid to the (suppliers) creditors
11,24,000
/:J. Cash Sales ~GST@ 18%)
5,00,000
4. Credit Sales (GST@ 18%)
16,00,000
S. Cash received from customers
15,25,000
6. Wages paid for eleven months
2,31,000
7. Office expenses 19,000
8. Power bills paid 25,000
9. Packing expenses (GST@ 12%) 10,000
· 10. Drawings 2,52,000

Other balances as on March 31, 2023were as follow: 25,000

(i) Closing Stock 60,000

(ii) Plant
12,000
(iii) Furniture
(iv) Debtors 75,000
(v) Scooter
20,000
Depreciation was charged @ 10% p.a. on both plant and furniture and @ 20%
on Scooter. Wages are
outstanding for one month. ·

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