DAYANANDASAGAR COLLEGE OF ENGINEERING

ECE DEPARTMENT

VISVESVARAYA TECHNOLOGICAL UNIVERSITY

Jnanasangama, Macche, Santibastwada Road, Belagavi-590018, Karnataka

REPORT
on
ENGINEERING ECONOMICS

Submitted in partial fulfillment of the requirement for the degree of

Bachelor of Engineering
in
Electronics & Communications Engineering

by

KESAVA REDDY POREDDY

VI semester
USN: 1DS19EC061

Under the
guidance of

Prof. M N Pradeep
Associate Professor, ECE Dept., DSCE, Bengaluru

Department of Electronics & Communication

Engineering Dayananda Sagar College of Engineering
(An Autonomous College affiliated to VTU Belgaum & accredited by NBA/NAAC)
Shavige Malleshwara Hills, Kumaraswamy
Layout, Banashankari, Bengaluru-560078,
Karnataka
 DAYANANDASAGAR COLLEGE OF ENGINEERING
ECE DEPARTMENT

ENGINEERING ECONOMICS ASSIGNMENT – JUNE-2022

DISPLAY DATE: 15-06-2022 SUBMISSION DATE:25-06-2022

Q1. Apply Break even analysis to Law of demand and supply, Hence prove
how company’s make profit even after dumping (with numerical example)

Marks 20

Q2 . Justify how GDP of country increases and profit of the company’s Incase of
productivity linked incentive scheme of Government of India in the following
industries

a. Telecom & Networking products

b. Electronics /Technology products
c. High –efficiency solar P.V.
Marks 30
 DAYANANDASAGAR COLLEGE OF ENGINEERING
ECE DEPARTMENT

ANS 1:

Break-even analysis is an essential economic tool that helps to determine the point
beyond which a company earns a profit. It helps businesses calculate the volume
of products that need to be sold so that a company overcomes all the initial cost of
investment. Reaching this break-even pointmeans that a company is no more in a
state of loss.

In a business scenario, the break-even point is a perimeter at which the total

expenses of the enterprise equals the total revenue generated. Reaching this point
indicates that a business has overcome all the expenses and no more in a state of
loss.

To understand this further, we will consider this formula:

Break-even point = Fixed Cost / (Price per cost - Variable cost) = Fixed Cost /
Gross Profit Margin
Where,
• Fixed cost refers to the cost incurred in a business unit, which doesn’tdepend
upon the volume of production. For example, rent, loans, insurance
premiums, etc. comes under fixed cost.
• Variable cost is the cost to produce one unit of product.
 DAYANANDASAGAR COLLEGE OF ENGINEERING
ECE DEPARTMENT

Example
A factory ABC Enterprises produces a particular kind of good wherein the total
fixed costs stands at Rs.50,000 and variable cost to produce a good is Rs.30. The
company sold these goods with a sale price per unit of Rs.50.
In this case,
Break-even point = 50,000/ (50-30) = 2500 units
So, from the above break-even analysis, it is evident that BEP (break-even point)
for ABC enterprises stands at 2500. This means a company will have to sell at least
2500 units of the product to overcome these fixed and variable costs incurred for
production.

This can further help companies in determining the total sales achieved by the
company then. They need to multiply the break-even point with the sale price per
unit to do so. In this case, the value of total sales made by the company at their
break-even point will be equal to (2500*50) Rs.1,25,000.

Supply can simply be defined as an economic concept, which refers to the total
amount of goods and services that are available to the general consumers.
It is a basic representation of the goods and services that are produced by the
company, for the purposes of reselling to their customers.

Demand is an economic term that refers to the willingness and ability of the
consumers to buy a certain product at a certain price. This is basically a denotation
that the customers are willing and ready to buy those goods andservices at the
stipulated price. Hence, this demand is rudimentary to establish a basic
understanding of what needs to be undertaken.

Equilibrium is defined as the common midpoint between supply and demand. This
is ideally the price and the quantity at which both the supplier, as well as the
consumer of goods and services is happy to operate. Equilibrium is mainly
identified using market signalling forces between both the supplier, as well as the
producer of goods and services.

In the mathematical graph, the intersection of demand and supply functionis the
point of equilibrium.
 DAYANANDASAGAR COLLEGE OF ENGINEERING
ECE DEPARTMENT

Fig: Break even analysis of demand and supply

Break-Even Analysis Formula

Break-even point = Fixed cost/-Price per cost – Variable cost

• Dumping in the financial world occurs when a company or a country exports

its products at a price lower than its domestic price.
• Exporters dump to compete with the producers and sellers in the importing
country.
• Dumping enables consumers in the importing country to obtain access to
goods at an affordable price.
• However, it can also destroy the local market of the importing country, which
can result in layoffs and the closure of businesses.
• Dumping can also take place in the exporter’s home market.
• If the product can be priced at a higher cost abroad, the company can sell at a
lower priceat home.
• The majority of multinational companies (MNC) practice international price
differentiation.
• They price a certain item depending on what each nation’s customer can
afford.
• For example, Tide detergent in China is sold for less than one-fifth of the
U.S. price. However, if a particular country is willing to pay more for a
product, the MNC will price the product at a higher cost.
 DAYANANDASAGAR COLLEGE OF ENGINEERING
ECE DEPARTMENT

• Reverse dumping happens when the demand for the product in the foreign
market is less elastic.
• It means that price changes do not impact demand. Therefore, the company
can charge a higher price in the foreign market and a lower price in the local
market.

Example of Break-Even Analysis

Suppose a company is selling a pen. The company first determines the fixed costs
(lease, property tax, and salaries) which sums up to ₹1,00,000. The variable cost
determined by the company for one pen is ₹2 per unit. And, the pen is sold at a price
of ₹10.
Therefore, to determine the break-even point of Company, the pen will be: Break-
even point = Fixed cost/Price per cost – Variable cost
= ₹1,00,000/ (₹12 – ₹2)
= 1,00,000/10
= 10,000
Therefore, with the given variable costs, fixed costs, and selling price of the pen,
the company would need to sell 10,000 units of pens to break-even.
 DAYANANDASAGAR COLLEGE OF ENGINEERING
ECE DEPARTMENT

ANS 2:

a. Telecom & Networking products

Production Linked Incentive (PLI) Scheme for Promoting Telecom andNetworking

Products Manufacturing in India

The PLI Scheme is being launched by DoT with the objective to boost domestic
manufacturing in the telecom and networking products by incentivising
incremental investments and turnover with total outlay of ₹ 12,195 crore. The
scheme is effective from 1st April, 2021. Investment made by successful applicants
in India from 1st April, 2021 onwards and upto FY 2024-25 shall be eligible,
subject to qualifying incremental annual thresholds. The support under the Scheme
shall be provided for a period offive (5) years, i.e. from FY 2021-22 to FY 2025-
26.

As per Scheme and Scheme Guidelines, a total of 31 companies, comprising of

16 MSMEs and 15 Non-MSMEs (8 Domestic and 7 Global companies) have
been found eligible and are being given approval underProduction linked
Incentive (PLI) Scheme of Department of Telecommunications (DoT), Ministry
of Communications.

The eligible MSME companies are:

Coral Telecom Limited

Ehoome IoT Private Limited

Elcom Innovations Private Limited

Frog Cellsat Limited

GDN Enterprises Private Limited

GX India Private Limited

Lekha Wireless Solutions Pvt Ltd

Panache Digilife Limited

 DAYANANDASAGAR COLLEGE OF ENGINEERING
ECE DEPARTMENT
Priyaraj Electronics Limited

Sixth Energy Technologies Private Limited

Skyquad Electronics and Appliances Private LimitedSTL

Networks Limited

Surbhi Satcom Private Limited

Synegra Ems Limited

Systrome Technologies Private Limited

Tianyin Worldtech India Private Limited

As per commitments given by applicants, these 31 applicants are expectedto invest

₹ 3345 crore in the next 4 years and generate incremental employment of more
than 40,000 people with expected an incremental production of around ₹ 1.82
Lakh Crore over the scheme period. The scheme is expected to boost domestic
Research & Development of new products on which 15% of the committed
investment could be invested.

The enthusiastic response to the scheme by domestic and global manufacturers

indicates strong confidence in the “Atmanirbhar Bharat” -Make in India and
achievement of scheme objective of creating global champions out of India
who have the potential to grow in size and scaleusing cutting edge technology
and thereby penetrate the global value chains. Telecom products play an
important role in the larger vision of “Digital India”.

b.Electronics /Technology products

The domestic electronics hardware manufacturing sector faces lack of a level

playing field vis-à-vis competing nations. The sector suffers disabilityof around
8.5% to 11% on account of lack of adequate infrastructure, domestic supply
chain and logistics; high cost of finance; inadequate availability of quality power;
limited design capabilities and focus on R&D by the industry; and inadequacies
in skill development.
 DAYANANDASAGAR COLLEGE OF ENGINEERING
ECE DEPARTMENT

The vision of National Policy on Electronics 2019 (NPE 2019) is to positionIndia

as a global hub for Electronics System Design and Manufacturing (ESDM) by
encouraging and driving capabilities in the country for developing core
components and creating an enabling environment for theindustry to compete
globally.

Production Linked Incentive Scheme (PLI) for Large Scale Electronics

Manufacturing notified vide Gazette Notification No.CG-DL-E-01042020-
218990 dated April 01, 2020 offers a production linked incentive to boost
domestic manufacturing and attract large investments in mobile phone
manufacturing and specified electronic components, including Assembly, Testing,
Marking and Packaging (ATMP) units. The Scheme would tremendously boost
the electronics manufacturing landscape and establishIndia at the global level in
electronics sector.

The scheme shall extend an incentive of 4% to 6% on incremental sales (over base

year) of goods manufactured in India and covered under targetsegments, to
eligible companies, for a period of five (5) years subsequent to the base year as
defined.

The Scheme is open for applications for a period of 4 months initially which may
be extended. Support under the Scheme shall be provided for a period of five (5)
years subsequent to the base year

The Scheme will be implemented through a Nodal Agency which shall act as a
Project Management Agency (PMA) and be responsible for providingsecretarial,
managerial and implementation support and carrying out otherresponsibilities as
assigned by MeitY from time to time.

Second Round of the Production Linked Incentive Scheme (PLI) for LargeScale
Electronics Manufacturing gif-image

After the success of the First Round of Production Linked Incentive Scheme in
attracting investments in mobile phone and electronic component manufacturing,
the proposal for accepting applications underSecond Round of the PLI Scheme
has been approved by the CompetentAuthority. The target segment for the purpose
of this round shall be Specified Electronic Components.
 DAYANANDASAGAR COLLEGE OF ENGINEERING
ECE DEPARTMENT

Under the Second Round, incentives of 5% to 3% shall be extended on

incremental sales (over base year i.e. 2019-20) of goods manufactured inIndia
and covered under the target segment, to eligible companies, for a period of four
(4) years.

The Application Window shall be open until 31.03.2021 initially and may be
extended and / or reopened based on response from the industry.
Incentives under the Second Round of PLI Scheme shall be applicablefrom
01.04.2021.

c. High –efficiency solar P.V.

Major achievements in PLI being implemented by Department/Ministry:

Presently, solar capacity addition in the country depends largely upon imported
solar PV cells and modules as the domestic manufacturing industry has limited
operational capacities of solar PV cells and modules.Major achievement of this
PLI Schemefor High Efficiency Solar PV Modules is the likely reduction of
import dependence in a strategic sectorlike electricity.

Response of major industry leaders for products under PLI: Industry stakeholders,
consulted at the preparation stage of this Scheme, have shown overwhelming
response, and are willing to set-up large, vertically integrated manufacturing
capacitieswhich will help to achieve economies ofscale, thereby becoming globally
competitive.

How to undertake global reach:In order to undertake global reach of this Scheme,
MNRE will again interact with global industry leaders, write to various solar
manufacturer’s associations, as well as requesting the variousIndian embassies
abroad to inform the potential investors in their respective countries.

What kind of value addition will be brought in by the PLI – new types of
industries, encouragement to MSMEs/ancillarisation etc.:Manufacturers willbe
incentivized for higher efficiencies of solar PV modules and also for
 DAYANANDASAGAR COLLEGE OF ENGINEERING
ECE DEPARTMENT
sourcing their material from the domestic market. Thus, the PLI Scheme will help
not only in setting up of domestic manufacturing capacities in upstream stages of
solar PV manufacturing, like polysilicon and wafers which are presently absent in
the country, but is likely to augment the entiresolar PV manufacturing ecosystem,
including boost to ancillary units and MSMEs.

Expected outcomes in terms of increase in investment, production, exportsand

employment: The outcomes/ benefits expected from the scheme are - Additional
10,000 MW capacity of integrated solar PV manufacturing plants.; Direct
investment of around 17,200 crore in setting up solar PV manufacturing projects;
Direct employment of about 30,000 and Indirect employment of about 1,20,000
persons; Import substitution of around 17,500 crore every year; Demand of 17,500
crore over 5 years for 'Balanceof Materials' such as, Solar Glass, EVA, Back sheet,
Junction Box, Ribbon etc. will lead to development of new types of industries
where MSMEs will play a major role; Provide impetus to Research &
Development to achieve
higher efficiency in solar PV modules.