CHAPTER – I

INTRODUCTION

1.1 Background of TVS Auto e

All of the activities include in production and sale of good and service
may classify as business. It is activities related to trade, commerce, profession,
occupation, and industry ried out to make profit. A business is an Enterprise
engaged in production and distribution of goods for sale in market or sending of
service to make profit through customer satisfaction.
The Small business is an organization engaged in production, distribution
and marketing. The small business owner establishes and manages the business
to attain personal objectives and businesses can also extension of owners need. It
is small in term of size, capital base and employees.
The definition of small business varies between different forms of
business activities, such as manufacturing and non-manufacturing, employees,
and countries.
“- In USA, Manufacturing firms employing up to 500 employees are
regarded small. For wholesale, retail and service firms, the annual sale should not
exceed US$ 3.5 million.
- In UK, manufacturing firms employing up to 200 employees and
constructing/mining/ quarrying firms employing up to 25 employees are regarded
small.
-In Japan, its is less than 300 employees for manufacturing, less than 100
employees in wholesaling and less than 50 for retail/service.
- In India, it is capital assets up to Rs. 10 million (original value of Plant
and machinery only).
- In Nepal, it is fixed assets up to Rs. 30 million for small industry. Fixed
assets also include specified movable and immovable assets.

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 -UNDP defines small business as one that employees 20 to 100
employees.” -Dr. Govind Ram Agrawal, 2007 th edition, ‘Entrepreneurship and
Small Business in Nepal’ B.B.S. 3rd year, page no.23
“A small business is one that is independently operated and not dominant
in its field of operation.” –U.S., Small Business Act 1953.
The researcher visited a small business shop named as TVS Auto e on the
date of 2070/02/21. It is situated at Lalbandi, Sarlahi. The owner or Entrepreneur
of the firm Mr. Sushil Ale Magar has started this new business with initial
revenue of Rs 1200000. Mr. Sushil Ale Magar has registered this business with
the PAN No. of 500078415 on date 2058/2/5. It is like Wholesaler/ retailer of the
Spare Parts and also repairs the spare parts of motor cycles. There are 14 workers
who are engaged in operating this business activity, which includes Sales
Persons, Mechanical engineers, Accountant, and the owner himself as manager
of firm.
In Nepal Small business are backbone of Nepalese economy and its focus
on running over a long period of time. The growths of small business have been a
continuous process in Nepal. Small business dominates the Nepalese economy.
They are located all over the country. Industries with the fixed assets consist of
specific movable and immovable, not exceeding Rs. 30 million are defined as
small business in Nepal.
TVS Auto e is Automobiles Spares parts shop which was established by
Mr. Sushil Ale Magar with an initial cost of Rs 1200000 as small business. It is
based on Proprietors name Mr. Sushil Ale Magar as TVS Auto e. It is stituated in
Lalbandi, Sarlahi, where there is number of other competitors. He was inspired to
established this business by his own experienced and Skills. He had degree in
Mechanical engineering and also worked for Star Automobiles as a repairing
person for more than 4 years. After gaining the work experience, mechanical
information of Vehicles and having good educational degree of Mechanical
engineering he then decides to start his own business. Entrepreneur started this
business with help of his family member. At the beginning stage he employed the
family member and relatives to operate this business. He had employed as a Sales

2
representatives and Miss Karuna Shrestha as Manager/Accountant. While after
running of business he added repair service of auto mobiles and also hired 5
mechanical employees to expand the business and business activities. Currently,
there are 6 workers who are engaged in operating business, which includes Sales
Persons, Mechanical engineers, Sales Representatives, Accountant, and the
owner himself as manager of firm.
“Small Business demands new idea, new location, new plant, new
machinery, inventory and new personnel” –Dr. Govind Ram Agrawal,
‘Entrepreneurship and Small Business Management in Nepal’ page no.59
The initial stage of business for the Entrepreneur is not profit
maximization or increased Sales volume rather than sustain the business in
society. However it is not much difficult for TVS Auto e at the initial stage
because good location, small number of competitors in the beginning year and
besides it deals with the necessary Spare parts of Automobiles and facilitates to
Transportation system by providing repairing service. Now days, there are
increasing numbers of other competitors had established the auto mobiles shop
which creates high competition in economy. It has been estimated that current
there are nearly about 30 other Auto Shop has established in the Dillibazaar. It
was his skilled, experience and education in Automobiles which makes him
success in launching and operating the Auto shop.
“Entrepreneur is people who have the ability to see and evaluate business
opportunities, together with the necessary resources to take advantage of them
and to ensure appropriate action to ensure success.”- ILO (International Labour
Organization).
The major functions performing by the TVS Auto e is supplying of spare
parts and equipment to customers or other small auto shop at reasonable price.
Mostly small retailer send the bulk order for purchasing Spare parts and
equipment of vehicles for resale and consumer used to buy in unit as per their
requirement. At the starting age, the Selling activity of firms is only limited
within the Kathmandu area but now it has been successful to expand his business
activities to other location because of good business and Promotion tool. The

3
spare parts and equipment of the Vehicles are sold to smaller retailers or
customer mostly in Lalbandi, Nawalpur, Hariwon, Bayalbash , and other places.
Besides that it also provides repairing service to the customer and builds the
relationship with the customers. During collecting information, the researcher has
made an enquiry with Mr. Sushil Ale Magar personally about the difficulties or
problem of the business activities facing by firm from the beginning.
Entrepreneur provides the information about the difficulties or problem that TVS
Auto e facing while operating business.
“Since, Nepal is least developed country. Country cannot produce the
required raw materials itself like Mechanical equipment and spare parts of the
Vehicles. So, the firm uses the imported materials from other countries which
have been seen as very difficult for any business in country because of Price
fluctuation, Quality Product, Country laws, rules and regulation, tariff,
transportation, Shortage of goods, etc. On the other hand, the country economic
situation is very poor and weak due to Political situation, transportation, Inflation
of price which results as Nepal Band, shortage of goods etc which has been seen
as major difficulty for any business within the country. All these negative
situation of the country affects heavily in operation of business.” – Statement of
Sushil Ale Magar (Owner), Managing director, Lalbandi, Sarlahi.

1.2 Objectives of the Study

 To Supply the quality and imported Spare part and equipment of
Automobiles for customer need at reasonable Price. (Spare Parts are
Indian and Chinese Product)

 To Provide Repairing and Servicing services of Automobiles like motor

Bike, s.
 To increased Selling activities of business to wide area. Any firm is
engaged in selling activities whether it is Big or small.

 To Increased in Sales Volume and Profit of the year.

4
  To continue the operation for long period of time.
1.3 Services or Facilities of TVS Auto e
 To provide after sales service to its customers.
 To provide repairing and Servicing services to its customers
 To provide Credit services for regular customer.
 To Supply of International spare part and equipment to customer
for their needs and uses without any difficulties.

1.4 Literature Survey

The Small business owner establishes and manages the business to attain
personal objectives. The business is an extension of the owner’s needs, objectives
and personality. The business growth is not a primary objective. The aim is to
continue operation over along period of time.
“A small business is independently owned, operated, and financed, has
fewer than 100 employees, and has relatively little impact on its industry.”–
Timothy Hatten (Source: Dr. Govind Ram Agrawal, ‘Entrepreneurship and Small
Business Management in Nepal’ page no.23)
Many Entrepreneurs starts a new business form scratch with new idea,
new location, new plant, new machinery and new personnel. Similarly, Mr.
Sushil Ale Magarh as established TVS Auto e workshop as small business after
gaining experience, skill and through his education knowledge. He is the owner
or entrepreneur of the firm whereas taking a risk of failure of business. The
location of the firm is at Lalbandi, Sarlahi near by the road. He has started his
new business with an initial cost of Rs 1200000 as small business with support of
his family and other relatives. After running the business he employed another 5
mechanical engineer for providing repairing and Servicing service of vehicles.
Currently there are 14 employees operating the business activities. The objective
of firms is to supply the spare parts and equipment for customers. The starting of
business cover the selling activities only limiting with the Kathmandu area but
later it expand the business activities with other area by proper planning, and
using promotion mix.

5
 “The Promotion mix is the combination of advertising, Publicity, public
relations, sales promotion and personal selling”- -Dr. Govind Ram Agrawal,
2005h edition, ‘Fundamentals Of Marketing’ BBS 2 nd yr, page no.284. Today in
Nepalese market, there are numerous Auto shop had established and operating,
where there is cutthroat competition in market and complex business
environment. It seems that TVS Auto e is successfully running the business
besides facing its own business difficulties and uncertainties situation of country.
The firm has continuously success in supplying the materials to customer and
earning profit.

1.5 Methodology
The purpose of this research or field work is to collect the financial data of
the three year. In general, basic purpose is to analyze the Total Sales, Net profit
and Investment cost on total purchasing of TVS Auto e.

1.5.1 Method of Data Collection

The research is conducted on the basis of both primary and secondary
source. The researcher has selected the TVS Auto e as a sample out of Population
for the statistical inquiry. The purpose of Selecting this Auto e Shop is that it falls
under the category small business which is one of leading Auto shop in
Dillibazaar with a strong growth over past few years. Most of data is collected
directly by face to face conversations with Mr. Sushil Ale Magar and Miss Bina
Nakarmi about Firm Sales, Profit, and Stock. Data of Sales, Purchase, Profit and
stocks are collected from Annual statement of profit and loss of the firm. And
other secondary source is collected from firms Boucher’s and magazines which
are published by the Auto shop. During colleting of the data, primary data are
concern with original information presented in this report whereas secondary
source are second hand information which may contain some errors.

1.6. Rationale of the Study

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 Since this study has been conducted on the topics for meeting the requirement of
partial fulfillment of BBS level, it constitutes the following importance.
 It will help to complete BBS level.
 It will be useful for concerned company as the study has provided suggestions.
 This study may serve as the guideline for future researchers.
 It will also be useful for library use for general readers.

1.7 Limitations of the Study

This study has been conducted with certain limitations. The main limitations and
constraints are as follows:
 The scope of this study is limited on the activities of concerned subject.
 This study covers only five years data.
 Most of data used are secondary but limited primary data in terms of opinion
survey have been considered.
 Due to company's secrecy report is prepared on the basis of provided data only.
 Total time period was found to be quite limited for the comprehensive study.

1.8 Organization of the Study

The study covers in three chapters. The arrangement of the report is summarized as
follows.

 The first chapter concentrates introductory parts of the study. It deals with the
general background of the study, literature review, statement of the problem,
scope of the study, object of the study, limitation of the study, research
methodology, chapter plan etc.
 The second chapter concentrates on data presentation and analysis.
 The final or third chapter deals with summery, conclusions and recommendations
of the study.
 Bibliography and annexes are at last.

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 CHAPTER –II

PRESENTATIONS AND ANALYSIS OF DATA

2.1 Presentations of Total Sales, Total Purchases and Net Profit

Presentation and Analysis of data are presented on the basis of primary
source which are originally collected from TVS Auto e account department for
analysis of Total Sales, Total Purchase of Spare parts and Profit of the year. The
researcher has collected a three year financial data of the firm. Data Presentation
is done below by using Table (Profit and Loss Statement method) and through
the help of Chart Presentation.

Table 1
Statement of Profit and Loss for the year ended
30 chaitra, 2074/75

Particulars Rs. Rs.

Sales   7440000
Add:    
Closing Stock 508500 508500
    7948500
Less:    
Opening Stock 650000  
Purchase 5350000 6000000
Gross Profit   1948500
     
Add:    
Servicing 60000  
Repairing 24000  
Other Incomes 25800 109800
     
Less:    
Salaries to Employees 564000  
Rent 300000  
Transportation Exp. 47500  
Repair And Maintenances 43500  
Insurance 25000  
Loss by Damage 42500  
Other Operating Exp. 38050  

8
Tax Paid 100355 1160905
     
Net Profit for the Year   897395
The above statement of profit and loss account shows the Total Net profit
of the year of 2074/75B.S. The statement clearly shows the Total Sales, Net
profit, Total Purchase, Firms Stocks, Income and Expenses during a year.
In 2074/75B.S. TVS Auto e had Opening Stock of Rs. 650000, which is
closing stock of previous year that has been transferred as Opening Stock for this
year. The Sales of spare parts during the year is Rs. 7440000 which has been
identified as major source of income for Auto e. Beside that another source also
generates the income level By Repairing and servicing of auto mobiles and other
incomes. (i.e.: Rs 109800). A firm purchase spare part of auto costing
Rs.5350000 and Other Expense during the year is Rs. 1205060. Net Profit for the
year is Rs 897395 which is calculated by adding accessible income and
subtracting expenses from the Gross profit.
Table 2
Statement of Profit and Loss for the year ended
30 chaitra, 2075/76

Particulars Rs. Rs.

Sales   7720000
Add:    
Closing Stock 512500 512500
    8232500
Less:    
Opening Stock 508500  
Purchase 5605000 6113500
Gross Profit   2119000
     
Add:    
Servicing 48000  
Repairing 19200  
Other Incomes 23500 90700
     
Less:    
Salaries to Employees 584000  
Rent 300000  
Transportation Exp. 65500  
Repair And Maintenances 50800  
Insurance 25000  
Loss by Damage 25800  
Other Operating Exp. 43500  
Tax Paid 110460 1205060

9
     
Net Profit for the Year   1004640
In year 2075/76 B.S. Sales of Company and Purchase has been increased
than the year 2074/75B.S. The reason for increasing the purchasing Cost of the
firm is due to increased in Price level of Spare Parts and Equipments. The firm
has transferred the previous year Stock (Rs 508500) as Opening stock for year
2075/76. Similarly, Profit is also increased in compare to previous year (i.e.: Rs
897395 to Rs 1004640)

Table 3
Statement of Profit and Loss for the year ended
30 chaitra, 2076/77

Particulars Rs Rs
Sales   8305000
Add:    
Closing Stock 405000 405000
    8710000
Less:    
Opening stock 512500  
Purchase 5800500 6313000
Gross Profit   2397000
     
Add:    
Servicing 49500  
Repairing 24700  
Other Incomes 30000 104200
     
Less:    
Salaries to employees 605000  
Rent 300000  
Transportation Exp. 72550  
Repair and Maintenances 58000  
Insurance 25000  
Loss by Damage 42800  
Other Operating Exp. 31500  
Tax Paid 113485 1248335
   
Net Profit for the year   1252865

In the year 2076/77 B.S. the Sales of TVS Auto e has increased in higher
ratio because increased in Price level and good Sales in business. Price level is
changing in increasing rate because of economic condition of Nepal and

10
Uncertainty situation of the country. Opening Stock and Closing Stock of the
year is Rs 512500 and Rs. 405000 for the year 2076/77 B.S. The firms Purchase
Cost is also high than that of previous year (i.e.: Rs. 5800500). The Net Profit
earned in year 2076/77 is Rs 1252865, which is much better than Last two year
(i.e.: 2074/75B.S and 2075/76 B.S).
Table 4
Presentation of total sales and net profit per year of TVS Auto e in three years
Year Total Sales Increased Net profit Increased in
B.S. In Rs. in % In Rs. %
2074/7 7440000 ---- 897395 ----
5
2075/7 7720000 3.76 1004640 11
6
2076/7 8305000 7.6 1252865 24.4
7
Source: Annual Report of BAC

Figure 1: Chart Presentation of total sales and net profit per year

11
 Presentation of Total Sales and Net Profit
Total Sales in Rs
Net profit in Rs

9000000
8000000
7000000
6000000
Rs.

5000000
4000000
3000000
2000000
1000000
0
2074/75 2075/76 2076/77
Years

Table 5
Presentation of Total Purchase and Total Sales of TVS Auto e in three year
Year Total Purchase Increased Total Sales Increased in
B.S. In Rs. in % In Rs. %
2074/75 5350000 ---- 7440000 ----

2075/76 5605000 4.76 7720000 3.76

2076/77 5800500 3.48 8305000 7.6

Source: Annual Report of BAC

Figure No 2: Line Presentation of Total Purchase and Total Sales

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 Presentation of Total Purchase and Total Sales

9000000 8305000
7720000
7440000
7500000
6000000 5350000 5605000 5800500

4500000
Rs

3000000
1500000
0
2074/75 2075/76 2076/77
Years

Total Purchase in Rs Total Sales in Rs

2.2 Analysis of Total Sales, Total Purchase and Net Profit

Since the major source of income for the firm is the sales of spare parts
and equipment of automobiles. The firm is quite successful in these three year
business because of continuous increased in term of Sales and Profit. The annual
Sale per year is about Rs 7.8 million. In year 2074/75the firms sales is Rs
7440000 whereas firms Invested Rs. 5350000 for purchase of materials. The
firms Sales the Spare parts and equipment of automobiles adding the small profit
margin to Original cost. The net profit earned in this year (2074/75B.S) is Rs
897395. In year 2075/76 B.S the Sales of the firm has been increased (i.e.: Rs.
7440000 to 7720000), which is about 3.76% and the Net profit for the year
2075/76 B.S is Rs 1004640 which is also increased by nearly 11% than previous
year Profit. Since purchasing Cost is higher by 4.76% in year 2075/76 B.S than

13
previous year because of Price Inflation and uncertainty situation of country, the
firm took it as the same Sale turnover as that of the previous year Sale. However
the firm has increased the Sale ratio in year 2075/76 B.S in comparing to
previous Sales and Profit. The Noticeable year for the TVS Auto e is the year
2076/77 B.S because the firms earn the higher Profit in both Sales and Net profit.
The firm has Sales value of Rs 8305000, which has been increased 7.6% than
previous year Sales (Rs 7720000) due to good Sales of Spare parts and
equipment of auto mobiles. The profit earned by the firm in the year 2076/77 B.S
(Rs 1252865) is greater in shape than the year 2074/75B.S and 2075/76 B.S (i.e.:
Rs897395 and Rs 1004640). Similarly, the profit margin is also increased by
24.4% than previous profit because of good sales during the business. Although
the firms purchasing cost is still higher but at decreasing ratio than previous year
by 3.48%

In these three years, TVS Auto e had successfully operated the business in
term of Sales and Profit even some factors like Price level is affecting due to
Price Inflation and economic Uncertainties of Nation. The growth ratio of Total
Sales and Net Profit is increasing every year. The above Table: 4 and Table: 5
clearly show the increasing turnover in the business activities of the Auto Shop.
Analyzing these three year Statement, the firms has Better Sales ratio in year
2076/77 B.S in compare of any two year( i.e.: 2074/75And 2075/76 B.S). In year
2076/77 B.S the Sales ratio is increased by 7.6% and Profit ratio is by 24.4%.
Purchasing ratio is also increasing but at the decreasing ratio of 3.48% than
previous purchase ratio. (i.e. 4.76%).

2.3 Findings
TVS Auto e is Automobiles spare parts Shop which is established by
Sushil Ale Magaras small business. The major function of the Auto e is to supply
the spare parts of the Automobiles for the customer at reasonable price over
along period of time.

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 The study was performed to have a clear picture of the total sales, total
purchase and net profit of TVS Auto e. Necessary information for this
presentation was collected in the form of Primary and Secondary data. The above
data clears that TVS Auto e is successful in operating the business in these three
year. TVS Auto e is currently supplying the imported spare Parts of auto mobiles
mainly Indian and Chinese Product. Sale and profit of the firm is continuously
increasing in each year. In 2074/75B.S Auto shop earned Rs 897395 as Net profit
and Sales Values of Rs. 7440000. The firm also Purchase spare part for Rs
5350000. In year 2075/76 B.S Auto shop has increased ratio of profit and Total
sales which seem to be good business in the year. Auto shop Sales the spare part
of auto mobile in this year is Rs 7720000, which has been increased by 3.76%
than previous year sales. Increased in Total Sales in year result as increased in
net profit in compare to previous year by 11%. Profit earned after deducting the
Tax (Rs 113485) is Rs 1004640. The firm Purchase ratio has also increased by
4.76 %. Since, the Sales and Net profit of the year is high in compare to the year
2074/75because of Price inflation of spare part, In the mean time firm is able to
sale it stock of previous year. Since the Spare parts of the Auto mobiles are
imported from other countries so the price level of these Spare Parts are
determined by Manufacturers (India and China). Another Noticeable year for
auto shop is 2076/77 B.S where firm is able to turn higher sale and Net Profit
than previous year. There has increasing rate of sales than previous year sales by
7.6 % and same year due to better sales and good business the firm has earned
Profit of Rs 1252865, which is 24.4 % more than year 2075/76. So the firm has
best earning in term of Sale and profit in year 2076/77 which has been consider
as most profitable as previous two year. Since Price Inflation of spare parts
causes the higher purchasing cost by 3.48% which less in term Previous year
purchasing ratio (i.e:4.76%).

15
 CHAPTER- III

SUMMARY, CONCLUSION AND RECOMMENDATIONS

3.1 Summary
Small businesses are backbone of Nepalese economy and its focus on
running over a long period of time. The growth of small business has been a
continuous process in Nepal. Industries with the fixed assets consist of specific
movable and immovable, not exceeding Rs. 30 million are defined as small
business in Nepal.

TVS Auto e functions as a Wholesaler/ retailer and also repairs the spare
parts and equipment of , motor cycles, and their equipment for customers. It deals
with the necessary Spare parts and equipment for vehicles and facilitates
Transportation system by providing repairing service. The objective of firms is to
supply the spare parts and equipment for customers. The spare parts and
equipment of the Vehicles are sold to smaller retailers or customer mostly in
Lalbandi, Nawalpur, Hariwon, Bayalbash , and other places. Besides that it also
provides repairing service to the customer automobile and builds the relationship
with the customers. Now days, there are increasing numerous numbers of other
competitors had established the auto mobiles shop which creates cutthroats
competition in economy. However, the business is highly affected by the
uncertainties situation of the country, which creates major difficulties in business.

3.2 Conclusion
The Performance of TVS Auto e has been increasing a lot since its
establishment. Though the growth rate in term of profit and Sale is increasing in
continuous rate it is not going well due to economic situation of country, which
has been affecting the Sales volume of the firm. However, the firm is successful
in selling the spare parts at increasing rate of Profit in every year. Similarly a sale

16
has also increased in higher rate than previous year because of increased in Price
of Spare parts during 2074/75and 2075/76 B.S. It means they are providing their
service by supplying the imported spare parts to the customer of different
Location by the help of Promotion tool of marketing. On the other hand, the firm
also suffers from uncertain loss while purchasing of spare part due to damages in
transportations, improper maintenance in Warehousing, loss by over supplying
than order received.

It has been seen in this study the TVS Auto e has grown and achieving the
Optimum Profit every year which we can see in table: 4 and Chart Presentation
of data. The firm has it highest Sales and profit in year 2075/76 which has been
increased by 7.6% and 24.4% respectively. In the entire report the researcher had
found that TVS Auto e is ever growing and have been successfully business
activities in the environment.

3.3 Recommendations
The researcher has also observed the difficulties in operating the business
activities for the auto shop which are currently facing by each and every small or
large business of the Nation. It has been highly affecting the Sales and Purchase
of imported spare parts. Major problem facing by auto shop has been seen as
economic and uncertainties situation of the country. Like Price inflation, Nepal
Band, transportations problem, Shortage of Spare parts, etc. which are negatively
affecting to turn down the sales and operation of business activities. These
external problems cannot be controlled or reduce by the firm, however the
internal problem must be proper planned and implement by the Firm or
Entrepreneur for better result in the future.

17