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8/10/2019 50732563 22849287 Business Plan to Open a Handicraft Work
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PROMOTERS IDEA
"he idea of handicraft manufacturing #as concei%ed by loo&ing the aptitude + 'ualifications
of the concei%er /myself0!
Qualifications:
1 MBA in Mar!tin" # $R
% BCA
long #ith the abo%e 'ualification belongingness to a Busin!ss& fa'il( #ill support my
project!
"he idea #as generated as my $ncle is a manufacturer and exporter of #ooden
handicraft! o this project #ould pro%ide me an in1depth &no#ledge to set up a
handicraft1manufacturing mill in Jhunjhunu!
"he Indian Handicraft Industry is sho#ing continuous gro#th rate of .23 e%ery year!
"he profitability #ith #hich the current firms are running nationally as #ell as
internationally is also one of the factors for concei%ing the idea of handicraft
manufacturing mill!
"hus, ta&ing all of the abo%e factors into account the idea of setting up a handicraft1
manufacturing mill #as established!
4
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$A*DICRA)T
Intro-uction4start5
Handicrafts are uni'ue expressions and represent a culture, tradition and heritage of a
country! "he Handicraft Industry is one of the important producti%e sectors! 8arious
attempts ha%e been made to define this broad and di%ersified industry! "he follo#ing
definition stri%es to co%er di%ersity and complexity of Handicraft Industry!
D!finin" $an-icrafts:
6efinition ccording to $nited 9ations :ducational, cientific and Cultural
Organi;ation
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2
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In-ustr( Anal(sis
India is a country of rich culture, history and traditions! India is one of the major
producer and supplier of Handicrafts products in the #orld! India has been major
producer and supplier of handicrafts products since %ery long time! Before the industrial
de%elopment, this art and industry #as a potential economic ad%antage for the country!
6uring recent years, the importance of handicrafts has been surged due to their cultural
and financial %alues! "he small1scale industries including handicrafts can play a major
role in the de%elopment of the economy of both de%eloped and the de%eloping countries
e'ually! "he @A1@23 of the total industrial products of the #orld is produced in small
#or&shops run by less than .AA people! or instance, Japan, #hich is at the pea& of the
economic de%elopment, has considered ?3 of its industries as small and medium scale
industries! In countries such as India and China, handicrafts are as high as the
mechani;ed products in 'uality and %olume, and are a major source of their foreign
earnings! "hese countries are focusing on the de%elopment of handicraft industry, in
order to strengthen the economy!
"he Indian handicrafts industry is highly labour intensi%e, cottage based and
decentrali;ed industry! "he industry is spread all o%er the country mainly in rural and
urban areas! Most of the manufacturing units are located in rural and small to#ns, and
there is huge mar&et potential in all Indian cities and abroad! Handicraft industry is a
major source of income for rural communities employing o%er six million artisans
including a large number of #omen and people belonging to the #ea&er sections of the
society!
"he Handicraft sector is highly creati%e sector and produces large %ariety of craftsproducts! "his industry is locali;ed segment of the domestic and international mar&et! In
India the production of craft products are done on both large and small scale! Because of
lo# capital in%estment people can start their business on small scale! "hrough this
flexibility the demand and supply can be managed Hough Indian Handicraft industry is
considered a cottage industry, but it has e%ol%ed as one of the major re%enue generator
o%er the years! "here has been consistent gro#th of .23 o%er fe# years and the industry
has e%ol%ed as one of the major contributor for export and foreign re%enue generation!
D
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"here is huge demand for the Indian Handicraft products in both national and
international mar&et! "o match the demand and supply #ith 'uality, there is need to ha%e
greater technological support and inno%ati%eness #ith the uni'ueness in industry!
;!( )acts of In-ian $an-icrafts In-ustr(
India5s rich cultural di%ersity and heritage pro%ides a uni'ue and huge resource for
de%eloping craft products!
"he Indian Handicraft Industry is sho#ing continuous gro#th rate of .23 e%ery year!
Handicrafts industry is one of the important segments of decentrali;ed sector in India!
Major parts of industry operates in rural and semi urban areas throughout the country
and has potential Indian and International mar&et #ith around DEAAA exporters to tap
the mar&et!
ccording to the national census of handicrafts, underta&en by the 9ational Council
for pplied :conomic Research the %alue of handicrafts produced last year #ere of
Rs 4D, 4.) Crores!
"his Industry pro%ides huge employment opportunities to artisans that include #omen
and people belonging to bacard and #ea&er society! "his is one of the major
sources of income there!
India5s contribution in #orld mar&et is .!43
"he total exports of crafts items7 1 Rs! .)?.4@!4 millions!
Industry5s share in IndiaFs exports71 .!2. 3
In spite of ha%ing di%ersified products, some part of Indian mar&et are still untapped
and mar&et is price sensiti%e!
Groducts are high priced in big and metro cities, #hich are beyond, reach of people
belonging middle and lo#er middle class!
Craft producers ha%e to compete on price, 'uality and deli%ery for different segments!
"here is poor promotion for craft products in national mar&et!
E
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"here is lac& of a#areness about ne# traditions and among craftsmen and there is
need of technological support and training!
Classification:
Handicrafts industry comprises di%ersified products portfolio and there is large %ariety
a%ailable in mar&et! Handicrafts products can be distinguished into follo#ing7
Metal #are, (ood #are, Hand printed textiles, :mbroidered and crocheted goods,
ha#ls, Carpets, Bamboo products, ari goods, Imitation je#ellery, Gaintings,
:arthen#are, Jute products, Marble culpture, Bron;e culpture, *eather Groducts and
other /are u going to produce all these 0 miscellaneous handicrafts!
S *ac& of infrastructure and communication facilities!
$na#areness about international re'uirements and mar&et!
*ac& of co1ordination bet#een go%ernment bodies and pri%ate players!
Inade'uate information of ne# technology!
Inade'uate information of current mar&et trends! *ess interest of young people in craft industry!
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*ac& of s&illed labour!
till confined to rural areas and small cities and untapped mar&et!
*ac& of promotion of products!
O22ortuniti!s:
Rising demand for handicraft products in de%eloped countries such as $, Canada,
Britain, rance, ermany, Italy etc!
6e%eloping fashion industry re'uires handicrafts products!
6e%elopment of sectors li&e Retail, Real :state that offers great re'uirements of
handicrafts products!
6e%elopment of domestic and international tourism sector!
:1Commerce and Internet are emerged as promissory distribution channels to mar&et
and sell the craft products!
T+r!ats:
Competition in domestic mar&et!
uality products produced by competing countries li&e China, outh frica!
Better "rade terms offered by competing countries!
Increased and better technological support and R and 6 facility in competing
countries!
=i'itations of $an-icraft In-ustr(4last 2oint5
Inspite of ha%ing di%ersified products, some part of Indian mar&et is still untapped and
mar&et is price sensiti%e!
Groducts are high priced in big and metro cities, #hich are beyond the reach of people
belonging middle and lo#er middle class!
Craft producers ha%e to compete on price, 'uality and deli%ery for different segments!
"here is poor promotion for craft products in national mar&et!
"here is lac& of a#areness about ne# traditions and among craftsmen!
It is difficult to balance the cultural and commercial %alue of handicraft products!
Inade'uate supply chain management and distribution reduces the sector5s
commercial %iability and economic sustainability!
*ac& of "echnological support and training!
@
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*ac& of Research and de%elopment for &ey handicraft sectors li&e, ceramics, paper
ma&ing etc!
"here is shortage of s&illed craftsmen and labour to match the competition!
*ac& of ability to produce in large scale and create economies of scale! Inade'uate material testing and performance measurement!
Inappropriate energy supplies to rural and sub1urban areas!
$ntapped and inaccessible mar&et due to poor transportation infrastructure!
"here are inade'uate training centres to de%elop s&illed craftsmen!
Possi6l! Initiati1!s s+oul- 6! ta!n to o1!rco'! t+! li'itations of
in-ustr(4last 2oint5
"he primary objecti%e is to create an en%ironment that helps the industry to compete
on the global basis!
"o build the en%ironment that #ill focus on7 (ealth Creation, Infrastructure
6e%elopment, "raining, "echnological 6e%elopment, and Go%erty lle%iation etc! to
enhance the sector performance!
#areness should be increased among craftsmen and customers through "rade
:%ents, eminars, Craft orums and ad%ertisements!
More training centres should be opened to pro%ide proper training to craft persons!
"here should be more trade sho#s to facilitate craft producers to access the mar&et!
"ransportation infrastructure should be impro%ed to access the untapped mar&et that
#ould be beneficial to reduce the transportation cost!
Gromotion of cultural tradition and heritage!
Gromotion of Indian "ourism to attract the foreign customers!
6e%eloping technologies to recycle natural resources to produce ne# products and
ensure #aste minimi;ation, product durability and reliability!
Gromoting Gartnership and collaboration #ith pri%ate sector!
"here should be mar&et platform for craft producers belonging to rural areas to
mar&et their products!
6e%elopment of electronic platform by using internet to pro%ide information,
database, and mar&eting and distribution solution!
Increased Gri%ate participation in industry!
.A
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"here should be optimi;ed distribution net#or& and supply chain management!
"hrough impro%ing labour producti%ity in a high labour intensi%e and price
competiti%e mar&et!
"here should be proper balance bet#een cultural and commercial %alue of craftproducts to sustain business opportunities!
"hrough using lo# cost production methods the sustainability of small business can
be impro%ed!
Valu! A--ition Mo-!l
"he performance of Handicraft Industry can be impro%ed and the greater %alue addition
can be done by implementing follo#ing model7
Identify the Gotential Mar&et
Ma&ing :ffecti%e Business Glan and Refinement in existing business
"est Mar&eting to test the initial potential of ne# products in mar&et
:ffecti%e Operational and "echnological $p gradation
Hiring s&illed manpo#er, pro%ide training and a#areness about latest technology and
mar&et trends and effecti%e management! Hiring s&illed manpo#er, pro%ide training and a#areness about latest technology and
mar&et trends!
Cost :ffecti%e Groduction- Maintain uality tandards, and Gac&aging!
et the Costing and Gricing #ith uality ta&en to be consideration
Cost :ffecti%e 6istribution 6e%elopment using both Ghysical and :lectronic
6istribution Channels /Internet, e1Commerce0
Both 9ational and International Mar&et 6e%elopment for better :xport and oreign
Re%enue!
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handicrafts reflect unmatched #or&manship, fine designs, and subtle elegance! "his ma&es
India one of the chief exporters of #ooden handicrafts in the #orld mar&et!
ccording to the classification of Indian industries, a small scale industry is defined as an
industry that is7
9ot registered under the actory ct!
In%estment in fixed assets does not exceed Rs DA la&hs!
mall scale industries are classified into t#o categories7
Modern small scale industries li&e po#er looms etc!
"raditional industries li&e handlooms, sericulture, &hadi, coir, and handicrafts!
(ooden handicrafts fall in the category of small scale traditional industries!
Rol! in In-ian Econo'(
"he #ooden handicrafts industry plays an important role in the Indian economy! "his
industry re'uires lo# capital in%estment and other resources! "he #ooden handicraft sector
pro%ides a high ratio of %alue addition, and has emerged as one of the major sources of
foreign exchange earnings for India!
Indian #ooden handicrafts are much sought after the #orld o%er, and form an important
export commodity of India! lthough IndiaFs handicraft exports sho# a consistent increase offifteen percent e%ery year, its share in the international mar&et is not more than t#o percent!
"he Indian #ooden handicraft sector is the second largest employment pro%ider /after
agriculture0! It employs about six million artisans! (omen constitute a large section of the
handicrafts industry, including people belonging to the #ea&er sections of society!
Conclusion:
"he Indian Handicraft Industry stands a uni'ue place among all other industries! It represents
the rich culture, tradition and heritage of India! India5s rich cultural di%ersity and heritage
pro%ides a uni'ue and huge resource for de%eloping craft products! "he Indian Handicraft
Industry is sho#ing continuous gro#th rate of .23 e%ery year and it is one of the most
important segment of decentrali;ed sector in India!
Most of the part of industry operates in rural and semi urban areas throughout the country
and ha%e large and potential in Indian + International mar&et! Indian Handicraft Industry
pro%ides #ide range of products because of country5s di%ersified culture, traditions and
.4
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heritage! "here is huge demand of Indian Handicraft products in international mar&et!
Industry pro%ides ample opportunities for employment to people belonging to bacard
and #ea&er classes of society! Ho#e%er, Indian Handicraft Industry has the status of
cottage industry in India, but it has sho#n promising gro#th and e%ol%ed as one of the
major re%enue generator o%er the years! It has sho#n continuous gro#th at the rate of .21
4A3 o%er the years and contributes major role for export and foreign earnings!
*o# capital in%estment, Cheap and s&illed labour, 6i%ersified product portfolio, lexible
Groduction are fe# important features of Indian Handicraft Industry! Ho#e%er, *ac& of
Infrastructure + "echnological support, *ac& of a#areness of international and ne# trends
and Goor Gromotional campaigns are a fe# dra#bac&s of industry #hich needs to be
o%ercome! It is estimated that Handicraft Industry in India is all set to gro# #ith rapid rate infuture and contribute its share to#ards economic de%elopment handsomely!
"H: GRO6$C" "O B: M9C"$R:6 (I** B: (OO6:9 H96ICR"
6:COR"I8: I":M /oogle small names0
.)
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MAR;ET A*A=YSIS
3!o"ra2+ical Ar!a
Jhunjhunu /RIICO Industrial rea0
O6/!cti1! of t+! sur1!(
"o &no# about the mar&et potential for the handicraft
"o analy;e the handicraft manufacturing, its competition, customer preferences and
their satisfaction le%el!
"o find out the major players in the mar&et
Sourc! of Infor'ation
Grimary /Mar&et ur%ey0 and econdary data
M!t+o-olo"( A-o2t!-:
Research plan #as de%eloped through conclusi%e research design using descripti%e research
analysis methods by sur%ey as detailed belo#7
R!s!arc+ A22roac+:
.! Grimary data for gathering information regarding manufacturing re'uirements and
facilities a%ailable at he&ha#ati region #as collected by personal inter%ie# #ithdifferent manufacturers selected on the basis of random sampling sur%ey method!
4! econdary data regarding #orld demand and supply positions, Indian Handicraft
status and other rele%ant information #ere gathered from different #ebsites!
R!s!arc+ Instru'!nts: uestionnaire /ee nnexure I0 #as used to collect the data on
both the sensiti%ity of demand and supply, customer preferences and to &no# the mar&et
potential and future gro#th!
fter deciding the research approach and instruments, sampling plan #as prepared!
.?
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Sa'2lin" Proc!-ur!7 imple random sampling method #as used for sur%ey on
representati%e basis!
Sa'2l! Si>!:4A handicraft units
Contact M!t+o-: Gersonal inter%ie# #ith each of the manufacturer and ra# material
suppliers #as conducted!
Infor'ation coll!ct!- fro' Manufactur!rs Qu!stionnair! ,is!
!. 8ariety of handicraft item you manufactureK
/a0 Chairs
/b0 "ables
/c0 Boo& shel%es
/d0 6ecorati%e items
/e0 ll of the abo%e
Chairs A
"ables A
Boo& shel%es A
6ecorati%e items 4
ll of the abo%e .
.2
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s the abo%e analysis sho#s that @A3 manufacturer are manufacturing all the major items
li&e chairs, tables, boo&shel%es etc!
!4 rom #here you ac'uire the ra# material for #ooden handicraftK
/a0 Bihar
/b0 $!G!
/c0 ujarat
/d0 ll of the abo%e
/e0 Import from other countries, if yes specify
Bihar 2
$!G! 4
ujarat 2
ll of the abo%e 11
Import from other
countries 1
"he ra# material is ac'uired from all the places li&e Bihar , $!G! , ujarat etc! but the
analysis sho#s that most the #ood is purchased from $!G! some part of ra# is also a%ailable
in Rajasthan!
!) Lour Re1 order point
/a0 (ee&ly
.D
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/b0 ortnightly
/c0 Monthly
/d0 s re'uired
s the analysis sho#s that most of the manufacturers &eep in%entory as per the re'uirement!
?! Order si;e
/a0 ?AA 2AA units
/b0 2AA EAA units
/c0 EAA .AAA units
/d0 .AAA and abo%e
400-500 units 2
500-700 units 15
700-1000 units 2
.E
Weekly 3
Fortnightly 0
Monthly 4
As required 13
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1000 units and above 1
s the abo%e analysis sho#s that most of the manufacturer gets the a%g! order 2AA1EAA units
per month! "here are only 4A3 manufacturers #ho get the orders abo%e EAA units per month
or .AAA units per month!
!2! (ho bears the transportation costK
/a0 upplier
/b0 Lourself
u!!liers 4
"oursel# 1$
.
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n analysis sho# that mostly cases manufacturer bears the transportation cost!
!D (hich type of handicraft item is more in demandK
/a0 (ooden
/b0 lass made
/c0 Metal made
Wooden %
&lass 'ade 4
Metal 'ade 7
(ooden items are more in demand because ?23 of respondent said that #ooden item is more
in demand!
!E (hich type of #ood is more in demand in manufacturingK
/a0 Babul
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(abul 7
hisha' %
)ine 1*eak 1
Mango 2
In ans#er of this 'uestion ?23 respondent said that shisham is more in demand after
shisham, babul made handicraft is more in demand!
! #hat le%el of In%entory you &eepK
/a0 .2 days
/b0 )A days
/c0 4 months
/d0 ? months15 +ays 1
30 +ays 1$
2 Months 3
4 Months 0
4A
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"he analysis sho#s that most of manufacturer &eep )A days in%entory! ome manufacturer
also &eep 41month in%entory!
!@ rom #here you get the s&illed #or&ersK
/a0 aharanpur
/b0 Barmer
/c0 jaisalmer
/d0 *ocally
aharan!ur 4
(ar'er 1
,aisal'er 1
o.ally 14
4.
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"he analysis of this 'uestion sho#s that mostly s&illed are locally a%ailable! ome part of
labour comes from aharanpur also!
!.A On #hich basis you appoint the #or&ersK
/a0 Contractual basis
/b0 Monthly basis
/ontra.tual basis 14
Monthly basis $
44
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Most of manufacturer appoints #or&ers on contractual basis!
!.. (hat type of facility you pro%ide to the #or&er to retain themK
/a0 Housing
/b0 Canteen
/c0 Bonus
/d0 Medical
ousing 5
/anteen 1
(onus 12
Medi.al 2
In the ans#er of this 'uestion respondent said that they pro%ide mainly bonus to their
employees to retain them some manufacturer pro%ide housing facility also to their #or&ers!
"here are only fe# manufacturer #ho pro%ide medical and canteen facility to their
employees!
!.4 (hat mode of selling of handicraft you useK
4)
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/a0 "hrough exhibition
/b0 6irect selling through retailer
/c0 :xport
*hrough hibition 1
+ire.t elling through etailers 2
!ort 17
Mainly the mode of selling is through export! Most of manufacturers go for direct export
as per the data! s per analysis 23 respondents said that they are direct exporting their
product!
!.) Ho# much margin you get #hile going for exportK
/a0 A3 1 23
/b0 23 1 .A3
/c0 .A3 1 .23
/d0 .23 1 4A3
0 - 5 0
4?
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5 - 10 0
10 - 15 2
15 - 20 1
If the manufacturer is going for export then the profit margin is .214A3 as per the analysis!
@A3 manufacturers are in fa%our of this! Only .A3 said that they get only .A1.23 profit
margin if they go for export!
!.? Ho# much margin you get #hile going for local sellingK
/a0 A3123
/b0 231.A3
/c0 .A31.23
/d0 .23 14A3
0 - 5 3
5 - 10 17
10 - 15 0
42
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15 - 20 0
If the manufacturer is going for local selling then they get 21.A3 profit margin!
D!'an- Anal(sis
fter conducting the mar&et sur%ey in the form of 'uestionnaire and inter%ie# of themanufacturers, the next step is to estimate the effecti%e demand in the past and the present!
s per the secondary data the demand of #ooden handicraft is as follo#s7
"otal 6emand in units N @4AAAAAunits
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Su22l(:
Ar!a Manufactur!r Su22l(4units0'ont+5
Siar . ?AA
.+un/+unu 2 4,?.A
.ai2ur .A 2,D2A
Mun-,a ? 4,.AA
"otal supply by these
4A manufacturer
.A,2DAunits
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capacity #ill be DA3 for .styear + than #ill gro# accordingly! "he plant #ill run only in one
shift!
"he production and capacity related data #ill be7
Y!ar O2!ratin"
ca2acit(
*o of s+ifts
4In G+rs0-a(5
Total Pro-uction
4Units 0(!ar5
4AA@ DA3 . E4AA
4A.A D23 . EAA
4A.. EA3 . ?AA
4A.4 ED3 . @.4A
4A.) 43 . @?A
4A.? @3 . .ADA
4A.2 @E3 . ..D?A
Mar!tin" C+ann!l
Most producers do not sell their goods directly to the final users- bet#een them stands a set ofintermediaries performing a %ariety of functions! "hese intermediaries constitute a mar&eting
channel! "he mar&eting channels just not only ser%e the mar&ets but they also ma&e mar&ets!
(ill be selling through exhibitions ,
Currently, the existing mar&eting channel of the #ooden handicraft manufacturers is as
follo#s7
4
Manufactur!rs
Distri6utors
En- Us!rs
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Strat!"ic Mar!tin" Plan:
(ooden handicraft is being an unbranded commodity, so as such the manufacturers incur no
promotional expenditure! ometimes they just increase the commissions or the margins of
these, if the targets are achie%ed enormously!
But in order to differentiate the product and capture the existing mar&et and to de%elop strong
customer base, some strategic mar&eting plan is necessary to be designed and implemented!
8arious strat!"i!sthat #ill be used being a ne# entrant are71
teady supply #ith timely deli%ery to fulfil the demand of the domestic area as #ell
as outside area and good 'uality #ould be one of the strategic strength of the
mar&eting plan!
part from good 'uality good designs are an important factor! "hese designs #ill be
based on traditional pattern so that it can impress foreign customer!
Besides from these efforts e1commerce is also a promotional tool for mar&eting of this
product! o I #ill do online selling also in order to promote my product!
o orders #ill also be ta&en online apart from fax and telephonically!
4@
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T!c+nical Anal(sis
Proc!ss in1ol1! in 'anufacturin" of ,oo-!n +an-icraft:
lot of s&ill and hard #or& goes into e%ery piece of Indian #ooden handicraft! It mirrors
Indian culture, and each handicraft is a masterpiece in its o#n right! *etFs ta&e a pee& at the
actual process #hich goes into creating a piece of #ooden handicraft!
Ra# #ood a%ailable in the form of logs is cut into plan&s of desired thic&ness and
length!
"he piece of #ood is then s!ason!- to obtain a texture #hich is fa%ourable for
car%ing!
6ecorati%e patterns are first -ra,non the #ood #ith a pencil!
"he design is then car1!-into the #ood #ith a car%ing tool!
Craftsmen inla(the #ooden handicraft #ith metal, bone, or #ood #hich gi%es off a
contrast effect, enhancing the intricacies of the car%ed design!
6ifferent pieces of car%ed #ood are /oin!- together to ma&e complete, functional
objects!
protecti%e coating is applied #ith a suitable #ood finis+!
Pro-uction Ti'!
(ood car%ing is a time consuming process! "he time needed by Indian craftsmen to create
car%ed #ooden handicrafts may range any#here from a #ee& /for small items0 to a fe#
months /for large items #hich re'uire elaborate car%ing techni'ues!
Pro-uction Tools
Indian craftsmen ha%e a #ide range of tools at their disposal, depending on the stage of
production! ome of them are as follo#s7
Sa,s: Go#ered by an electric motor, Ban- sa,s are used to cut off scrap #ood
effortlessly! C+ain sa,sare used to cut logs for large car%ings!
Drillsare primarily used to drill holes, and they are a%ailable #ith se%eral attachments
to perform sanding, sa#ing, mixing paint etc!
)A
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=at+!s are used to turn #ood! "hey are used to ma&e spherical, cylindrical or round
objects! "hey are handy #hile ma&ing %ases, bo#ls, and plates!
Grimarily used for #hittling and chip car%ing, Car1in" ni1!s are also used to ma&e
the surface of the #ood smooth!
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"hese machines #ill be purchased from *udhiana as many manufacturers are ma&ing these
machines! "herefore, these are a%ailable at competiti%e prices!
=ocation an- sit! -!1!lo2'!nt
"he area for setting up a handicraft manufacturing unit is decided after sur%eying all
the potential areas! "he location of plant #ill be in RIICO industrial area in
Jhunjhunu district!
"he rate of land is Rs 2AAs' meters /one side road plot0, of area 4,AAAs' meters or 4.24@s' ft!
Structur! an- Ci1il ,ors:
S *o Particulars Si>! Ar!a Rat! A'ount
. actory shed )A>DA> .AA 4AA ),DA,AAA
4 4 stoc& room .>4A> )DA 4AA E4AAA
) uard room >.A> A 4AA .DAAA
? Go#er room >.A> A 4AA .DAAA
2 Boundary #all 44AAAAD (ashroom D>> ? 4AA @DAA
H la6our uart!rs %
E Room .4>.A> .4A 4AA 4?AAA2N.4AAAA
(ashrooms D>> ? 4AA @DAA2N?AAA
@! Office room .2>.4> .A 4AA )DAAA
.A! ire fitting )@4AA
Total @,)D,AA
Utiliti!s
"he important utility used in handicraft manufacturing is po#er!
Other necessary utilities used in plant are7 1
ans 4
"ubelights14A
)4
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Computer #ith laser printer
urniture comprise of office table, cello chairs!
Mat!rials
Ba6ool0Aaas+i(a7 "his is a%ailable in Rajasthan and some part of ujarat! "he rates of
babool are Rs!4A < s' ft
S+is+a':Most of #ooden handicraft is made of shisham #ood! "he highest demand is of
shisham made #ooden handicraft! "his is a%ailable in ujarat, $!G! + Bihar! "his is made
a%ailable by local #holesale timber merchant! "he rates are Rs! )A
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Strat!"( to a22oint # r!tain !'2lo(!!s
On time payment is a best retention strategy! o I #ill gi%e on time payments to retain
my s&illed #or&er!
Medical facility to all #or&er and employees!
Occasional bonus to s&illed #or&ers!
Housing facility7 I #ill pro%ide labour 'uarter to s&illed #or&er #ho are not from
local areas!
I #ill pro%ide employment to their spouses based upon their ability!
)?
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)I*A*CIA= A*A=YSIS
Cost of Pro/!ct
Particulars Cost in Rs
*and + ite de%elopment .A,D),DAA
Building @,)D,AA
Glant + Machinery @,D,2AA
Other ixed ssets 4,)A,AAA
Greoperati%e :xpenses 4,E.,@@2
Greliminary :xpenses .,@?,44
Gro%ision for Contingency .,@?,44
(C Margin 4D,.@
"otal ),2,D?
M!ans of )inanc!
Particulars Cost in Rs
GromoterFs Capital .4,@2,4A)
*ong< medium "erm *oan from Ban&s 42,@A,??2
"otal ),2,D?
Basic Assu'2tions un-!rl(in" )inancial Pro/!ctions
"he profitability and other projections may be prepared on the basis of follo#ing
assumptions71
.!0 "he construction period #ill last for one year!
4!0 "he company #ould #or& for )DA days per year on a . shift basis! "he installed
capacity on this basis #or&s out to .4AAA!
)2
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)!0 "he company #ill start commercial production on July ., of year .! "he expected
capacity utili;ation #ill be DA3 in first year, D23 in the second year, and EA3 for the
third year and so on!
?!0 (ages and salaries are expected to be Rs @.AAA!
2!0 actory o%erheads expenses #ill be Rs )4A for the first year!
D!0 dministration expenses #ill be Rs )DAAAA per annum!
E!0 "he term loan #ill be repaid in .? e'ual half1yearly instalments, #ith the first
instalment due at the end starting of first operating year! "he interest rate on the
outstanding term loan #ill be .43!
!0 "he ban& finance for #or&ing capital #ill cost .43 interest rate!
@!0 "he depreciation rates for company la# purposes are as follo#s7
Building 7 )!)?3
Glant and Machinery 7 3
Miscellaneous ixed assets 7 23
..! "he depreciation rates for the income tax purposes are as follo#s, under the #ritten do#n
%alue method7
Building 7 .A3
Glant + Machinery + Miscellaneous ixed assets7 ))!))3
.4! "he income tax rate applicable is )A3! urther .A3 of ross "otal income #ill be
allo#ed as deduction for ne#ly set up industrial underta&ing under sec! AI for .A years
from the initial year!
.)!0 "he current assets re'uirements are expected to be as follo#s71
Ra# materials 7 )A days
toc&1in1process 7 . day
inished goods 7 ? day
Boo& debt 7 E days
.?!0 "he suppliers of ra# material #ill pro%ide trade credit for .2 days!
.2!0 "he sal%age %alue is assumed to be 23 of ixed ssets!
.D!0 "he corporate tax rate is )A3 p!a!
)D
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SA=ES )ORECASTI*3
SA=ES )ORECAST
Y!ar @8 @7 @77
Sal!s @GG H@ G
)E
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Bi6lio"ra2+(
,,,in-ian+an-icraft!?2ort!rco'
,,,"oo"l!coin
,,,,ii2!-iaco'
,,,(a+ooco'
,,,orinicin
,,,ans,!rsco'
,,,+an-icraft-2r+t'
)
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Ann!?ur!: 7
Qu!stionnair! 4Manufactur!r5
*a'! Co'2an( na'!
Ar!a of 2ro-uctionJJJJJJJJJJJJJJJJJ Y!ar of Esta6lis+'!nt
.0 8ariety of handicraft item you manufactureK
a0 Chairs c0 6ecorati%e items
b0 "ables d0 ny other
40 rom #here you ac'uire the ra# material for #ooden handicraftK
a0 Bihar c0 ujarat
b0 $!G! d0 Import from other countries
)0 t #hat fre'uency do you order the ra# material stoc&K
a0 (ee&ly c0 Monthly
b0 ortnightly d0 s re'uired
?0 Order si;e
a0 ?AA12AA units c0 EAA1.AAA units
b0 2AA1EAA units d0 .AAA units and abo%e
20 (ho bears the transportation costK
a0 upplier
b0 Lourself
D0 (hich type of handicraft item is more in demand K
a0 (ooden
b0 lass made
c0 Metal made
E0 (hich type of #ood is maximum in demand for manufacturingK
)@
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a0 Babul
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Ann!?ur!: @
Int!r!st T!r' =oan
7K Eual Instal'!nts L 7@ 2!r annu'
Y!ar
=oan O0S
at t+!
6!"innin"
=oan O0S at
t+! !n- of 7st
+alf (!ar
=oan O0S at
t+! !n- of @n-
+alf (!ar
Int!r!st
for t+!
7st +alf
(!ar
Int!r!st
for t+!
@n- +alf
(!ar
Total
int!r!st
for t+!
t!r' loan
. 42@A??2 4?A2?.) 444A). .22?4D .??)4? 4@@E2A
4 444A). 4A)2)?@ .2A).E .))444 .44.4A 422)?4
) .2A).E .DD242 .?A42) ...A.@ @@@.E 4.A@)D
? .?A42) .4@244. ...A.@ .2 EEE.) .DD24
2 ...A.@ @42.2E E?A.42 DDD.. 222A@ .44.4A
D E?A.42 222A@) )EAAD. ???A )))AD EEE.?
E )EAAD. .2A4@ A 444A? ...A4 )))AD
*ot!: t!r' loan of @H& 8&KKH ,ill 6! 2ai-
Ann!?ur!:
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Ann!?ur!: K
D!2r!ciation
A Ass!t Valuation for -!2r!ciation 2ur2os!
Ass!t !?2!ns!s Basic cost
S+ar! of
Pr!o2!rati1!
cost
S+ar! of
Conti"!nc(
'ar"in Total
*and .AD)DAA @A?)2 D?2@D .4.D).
Building @)DAA E@D22 2D@D .AE))2.
Glant + machinery @D2AA 4)?@ 24. 44@.@4
Miscellaneous fixed
assets 4)AAAA .@22D .)@D@ 4D)242
"otal ).@@AA 4E.@@2 .@?44 )DD2.EE
B D!2r!ciation sc+!-ul! for co'2an( la, 2ur2os!s 4S=M5
Building )!)?3 ?AEA4
Glant + machinery 3 2D
Miscellaneous fixed assets 23 ..?2@@
Annual -!2r!ciation 7K @K778
C D!2r!ciation sc+!-ul! for inco'! ta? 2ur2os!s 4
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Ann!?ur!: H
Profita6ilit( Esti'at!s 4Esti'at!s of
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Ann!?ur!:
Ta? Calculation
7st (r @n- (r r- (r
Grofit< *oss Before "ax .E@@. @@.)4 ..D2DEAdd7 6epreciation for company la#
purposes 4?..D@ 4?..D@ 4?..D@
Total 7H87 7@7 7KG8
*ess7 6epreciation for "ax purposes 8H8GH KK KHHK
ross "otal Income .AAAE2 2D2) @?.)A2
Total Inco'! 79H HGHG 8K7H
Income "ax S )A3 of "otal Income )AA44!2A .EA2D.!?A 44)@.!2A
Ann!?ur!: 9
Pro/!ct!- Balanc! S+!!t
Construction
P!rio- En- 7st (r @n- (r r- (r
=ia6iliti!s
hare Capital .4@24A) .4@24A) .4@24A) .4@24A)
Reser%e + urplus EE@D!2A .DA@4) [email protected]
"erm *oans 42@A??2 444A). .2A).E .?A42)
(C d% .DAD .E?A .E?D
Current *iabilities +
Gro%isions .)D2?@E!2A .222E)@ .E?24E)
"rade Credit D42AA DEEA [email protected]
Total GGH7 HGH77 @987G 9@H
Ass!ts
ixed ssets
ross Bloc& )DD2.EE )DD2.EE )DD2.EE )DD2.EE
*ess7 ccumulated
6eprecition 4?..D@ ?4)) E4)2AE
9et )DD2.EE )?4?AA ).4)@ 4@?.DEA
Current sset *oans + d%
Ra# Materials D42AA DEEA [email protected]
toc& in Grocess .)E .@@A 4.?)
inished oods .?D@ .2@4) .E.?
Boo& 6ebts 42E44 4EDD )AAA@
Cash + Ban& Balances @7G8 @H8@@H 7H8@ 8G778
Greliminary :xpenses .@?44 @E.?. @E.?.
Total GGHKG HGH77 @987G 9@H
??
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Ann!?ur!: G
Pro/!ct!- Cas+ )lo,
Construction
P!rio- 7st (r @n- (r r- (r
Sourc!s of )un-s
hare Issue .4@24A)
GB" #ith Interest dded
Bac& ...@DD@ .4?@4D4 .)E22
6epreciation 4?..D@ 4?..D@ 4?..D@
Greliminary :xpenses (
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Ann!?ur!: 8
O2!ratin" Cas+ flo,s
(r 7st (r @n- (r r- (r
"otal funds )2D?
B Re%enues )4AAA )2D4AAA ))DAAA
C Operating Costs .E)4A .EE4E 4A4.D@)
6 6epreciation @2@A2 DD??D) ?D22)?!AAA
:
Interest on #or&ing capital
ad%ance .@4 4A 44?@
Interest on term loan 4@@E2A 422)?4 4.A@)D
H Grofit before tax 4@?)2E ED44A ..)22
I "ax )AA44!2A .EA2D.!?A 44)@.!2A
J Grofit after tax 4D?))?!2A 2@442!DA 2).@D!2A* 9et sal%age %alue of fixed assets
M 9et sal%age %alue of current assets
9 Initial in%estment )2D?
G Operating cash flo#s .?)?2@? .?)D@44!DA .?DE@DA
"erminal cash flo#
R 9et cash flo# )2D? .?)?2@? .?)D@44!DA .?DE@DA
?D
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Ann!?ur!: 7
BREA; EVE* POI*T )OR T$E PRO.ECT
A'ount A'ount A'ount
A Sal!s R!alisation @GG H@ G
B Varia6l! Costs
Ra# Materials E2AAAA .42AA E2AAA
Interest On (or&ing Capital .@4 4A 44?@
Go#er + (ater DAAAA D2AAA EAAAA
elling + 6istribution :xpenses 2AAAA 2?.DE 2)))
Total G78@G 89HH 7HHG@
C )i?!- Cost
(ages nd alaries ?AAAA
Repairs nd Maintainance .AAAA 6epriciation 4?..D@
dministrati%e :xpenses )DAAAA
Interest On "erm *oan 4@@E2A
Total 78878 78878 78878
D Contri6ution4A%B5 @K@9@ @@G@KH @GK7G
201 ratio 99GHK
Br!a E1!n Point In T!r's Of Volu'!s Of Sal!s 7GGHG7
Br!a E1!n Point In T!r's Of Install!- Ca2acit( H9@7K
?E
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"A 200% 2010 2011
)i?!- cost 78878 78878 78878
total cost @@H@GK923246
74
23965
01
Sales Realisation @GG H@ G
Br!a E1!n Point In T!r's Of Volu'!s Of Sal!s 7GGHG718850
81
18850
81