A Project Reporton ED

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ACKNOWLEDMENT

At the very outset, I would like to thank the management of M/sDilany Leathers for giving me the opportunity to carry out my assigned project in a proper manner. I owe, my sincere gratitude to Mr. SamanayBaruah, Faculty NERIM and Mr.Dilip Kr Das, Proprietor, M/s DilanyLeathers for their expert guidance and inspiration without which, it wouldnot have been possible to conduct my project work.

My sincere thanks are due to all those employees who have co-operated with me by making themselves available for consultationsdespite all odds.

Finally and by no means least, I express my indebt ness to my parents and my friends for their support and help in preparing the projectreport.

Place: Dipankar ChakrabortyDate: NERIM, Guwahati



CONTENTS

Chapter I: The enterprise and the entrepreneur.

Chapter II: Economic viability and marketability.

Chapter III: Technical Feasibility.

Chapter IV: Financial projections.

Chapter V: Names and addresses of the suppliers.Chapter VI: Remarks.

Annexure.1. Bibliography.



PROJECT AT A GLANCE

Project title: Establishment of a new venture at your locality.Organization: M/S. Dilany Leathers.

Organizational Guide: Sri Dilip Kumar Das,Proprietor M/S. Dilany Leathers.

Institutional Guide: Mr. Samannoy Baruah,Lecturer of Business Administration, NERIM

Locality of study: Vill: KeotkuchiP.O. KeotkuchiP.S BarpetaDist. Barpeta (Assam).

Duration of Study: 1 st March 2010-31 st March 2010.



CHAPTER-I



Chapter I: The Enterprise and the Entrepreneur:

Project report for the manufacture of:i) Name of the Item/items: Manufacturing unit of leather goods.

ii) Name of the unit and address: M/S. SUPREME LEATHERS.Vill. Arabari.P.O. Sonapur.P.S. KhetriDist: Kamrup (Assam).

iii) Telephone no, if any,Office: N/A.

Factory: N/A.

iv) Name of the promoters.Sri Dipankar ChakrabortyH-no.4, Harabala path, Bora Service,Ulubari, Ghy-22.

v) Constitution of the firm: Proprietary.

vi) Qualification of the entrepreneur.

Educational Qualification: BBA from NERIM in 2009.

Other Qualifications:



Completed the ‘New Enterprise Creation Programme onLeather Products, Conducted by IIE, Guwahati in2007.

vii) Production/work experience: N/A.

viii) Family Background: Sri B.P. Chakraborty.

ix) Location/proposed location:

Vill. Arabari.P.O. Sonapur.P.S. KhetriDist: Kamrup (Assam).

x) Name and address of your banker:Mr. Debashish DuttaBranch Manager,Allahabad Bank,Ulubari,Guwahati-22.



CHAPTER-II



Chapter II: Economic viability and marketability.

i) Introduction and scope:M/S SUPREME LEATHERS is a manufacturing unit of leather goods. At the very beginning it proposed to manufacturing of ladies

bags and school bags. But it will manufacture belts, purse, hand gloves.In near future which are also very demandable in the market.

ii) Marketability:

In Assam, the market for leather goods exists in Guwahati, which being cosmopolitan in nature. Apart from Guwahati, other places areJorhat, Tezpur, Silchar, etc. are the places where significant market existsfor leather goods. These are being sold in central market places. On aaverage annually 1.2 lakhs pieces if ladies bags, 0.50 lakh pieces of ladiesshopping purses and 15 lakh pieces of belts are used in Assam.



CHAPTER III



CHAPTER III: THECHNICAL FEASIBILITY:

i) Manufacturing process:

Sequence of operation (leather goods)

CUTTING

NUMBERING

SKIVING/SPLITING

PASTING

STICHING

BUTTONING

FINISHING

PACKING

ii) Specifications: ISI Mark.

ii) Components to be purchased from outside:It consists of varieties of finished materials aroused in the goods in

industry. Same of the most commonly using materials are:

a) Leathers: Cow, Buffalo, Sheep and Goat.i) Mappa finishing.ii) Snade finishing.iii) Split finishing.

b) Rexin: Banion, Foam, Rubberriesed, arylon.c) Jean.d) Woole) Jute



f) Interlining-

i) Cotton fabric.

ii) Polyester fabric.iii) Satin fabric.iv) Jacquard fabric.v) Synthetic fabric.

g) Trimmings: A variety of zippers, fasteners, buttons, buckets,etc. used in manufacturing certain types of bags using foam,

paper, card board, plastic moulding, etc.h) Installed capacity: 100%

i) Proposed capacity to be utilized:1st year – 50%2nd year – 55%3rd year – 60%4th year – 65%5th year – 70%

j) Motive power requirement (approx) : 2.31 KW



CHAPTER IV



CHAPTER IV: FINANCIAL PROJECTIONS:Fixed Capital:1. Land And building.a) Advance for ten years

(Rent p.m. 1000/- 1000sq. [email protected] ) Rs.36,000/- b) Development cost Rs.14,000/-Total Rs.50,000/-

2) Details of machinery and equipment.a) Details of machinery:

Sl.No. Name of

Machine

Qty Rate Amount

(Rs.)1 Cylinder Bedsingle needleJUKIDDL.245

1 1,50,000 1,50,000

2 Flat Bedsingle needleJUKI-5530

1 37,000 37,000

3 Skyving(Taking)

MachineT.K-801

1 37,000 37,000

4 Flat Bedsingle needle(Localdomestic)

1 6,000 6,000

TOTAL 2,30,000Eraction 5% 11,000

G.total 2,41,000

mailto:[email protected]

mailto:[email protected]



b) Plant Expenditure:

i) Preliminary and pre-operative.a) Preliminary of project - Rs.3000

b) Traveling expenses (initial) - Rs.2000c) Technician advance - Rs.5000d) Training (self) - Rs.3000e) Sample development - Rs.3000f) Trial room expenses - Rs.2000g) Deposit with various authority - Rs.1500(SSI, DRDA, electricity, telephone, insurance)

ii) Electrification - Rs.5000

Total -Rs.38000

c) Other fixed Assets:i) Ceiling Fan 3 Nos. @ Rs.1200 -Rs.3600ii) Tube Set 4 Nos. @ Rs.250 -Rs.1000iii) Filter (water) 1 Nos. @ Rs.600 -Rs. 600

Total -Rs.5200

d) Furniture- Rs.26540

Details of furnitureSl.no. Particulars Qty Rate Amount (Rs.)1 Pattern Making

Table (6’x4’x4’)2 2670 5340

2 Cuttung Table(4’x4’x3’)

2 1450 2900

3 Pasting Table

(4’x4’x4’)

4 1650 6600

4 Stool (16’x20’) 10 400 40005 Office Table

(30’x48’)2 2600 5200

6 Chair (Plastic) 10 250 2500Total 26540



e) Tools and Equipments:

Sl.No. Particulars Qty Rate Amount

1 Plastic Container 6 300 1800

2 Punch Hole set 4 200 8003 Dies set 4 150 600

4 Acritic Sheet 3 50 150

5 Cutting Plier (big/small) 2 75 150

6 Iron box 1 500 500

7 Plastic Tray 12 100 1200

8 Cutting knife 6 10 60

9 Sharpening Stone 3 250 750

10 Measuring Tape 10 10 10011 Steel Scale 2”, 1” 2 75 150

12 Thread cutter 3 25 75

13 Scissor 10 80 800

14 Hammer 10 50 500

15 Gin Sheet 8 ½”, 4” 2 75 150

16 Set square 1 15 15

17 Marking Wheel 1 15 15

18 Stitch remover 6 15 9019 Dust Bin 6 25 150

20 Cudappa Stone (Marble) 3 100 300

Total 8390

3. Total fixed capital:



i) Land & building - Rs.50000ii) Machinery - Rs.241500iii) Plant Expenditure - Rs.38000iv) Other fixed assets - Rs.5200v) Furniture - Rs.26540

vi) Tools & equipments - Rs.8390Total - Rs.369630

4. Working Capital:

a) Utility (per month)i) Power:

Total connected load -1.86 KWLighting (Motor) - 2.5 HP

Monthly power consumption in unit12.23 kw X 8hrsX 25days = 446 units

Monthly power consumption bill446 units X Rs.4.40 = Rs.1962.42

ii) Fuel:Machine Oil (Approximate) = Rs.50

Total utility Rs.1962.40+Rs.50 = Rs.2012.40

b) Miscellaneous Expenditure (Per month):

Sl.No. Item Amount (Rs)

1 Rent of house 1000

2 Repair and renewal(Machine & Equipment)

500

3 Postal and communication(with telephone)

2500

4 Internal Travel 1000

5 Insurance (per year Rs.3000) 250

6 Publicity & Advertisement 1000

7 Contingency( @10% of the above mentioned amount)

625

Total 6875

C) Man Power:



Sl.no Process Skilled Semi-skilled Un-skilled Total1 Cutting/Stitching 1 2 0 32 Numbering 0 0 1 13 Skyning/Splitting 1 0 0 14 Pasting 0 1 2 35 Buttoning 0 1 0 16 Finishing/Packing 0 0 1 1

Total 2 4 4 10

Monthly Salary Wages (per month):

Sl.No. Type of worker Qty Rate Amount (Rs)1 Skilled worker 2 2000 40002 Semi-skilled 4 1500 60003 Un-skilled 4 1000 40004 Marketing person (self) 1 2000 2000

Total 11 16000

d) Raw material (per month):

Target of production 300 unit per month

Average materials cost 168 per unitTotal Raw material cost 300 X 168 = Rs.50400

Requirement of raw materials for ladies bag (leather) per unit:



Sl.No. Name of materials Qty Rate Amount (Rs)

1 Cow Nappa printed 359 ft 40 120

2 Lining (Satin fabric) ¾ mtr 40 30

3 Mill Board ¼ board 16 44 Piping (plastic mould) 2 mtrs 1.5 3

5 Zip no: 3 Nylon ½ mtr 3 1.5

6 Piping tube 2 mtr 1 2

7 Foam (0.5 mm) ¼ mtr 20 5

8 D’ring (4cm) 2pcs 0.50 1

9 Square ring (4 cm) 2pcs 1.50 3

10 Thread Nylon(1000 mtr) 400 mtr 40 16

11 Paste(rubber white 1 litre)

100 ml 20 2

12 Button (nag netic) 1 set 15 15

Total 202.50

Transportation 10% 20.25

G.Total 222.75

Requirement of raw materials for School bags (Rexin with leather patch) perunit:



Sl.NO. Name of Materials Qty Rate Amount (Rs.)1 Rexin Rubberised ¼ mtr 60 452 Leather cow mappa

printed¼ sq. ft 40 10

3 Liming (polyester fabric) ½ mtr 30 154 Piping tube (1” Nylon) 3 mtr 1 35 Handle (plastic moulding) 1 pcs 5 56 Buckle (plastic moulding) 1 set 2 27 Velcro ( 1” ) 10cm 10 18 Zip No.5 (Nylon) 1 mtr 5 59 Runner No.5 (silver

metallic)4pcs 0.75 3

10 Thread Nylon (1000 mtr) 300 mtr 40 1211 Paste ( white rubber 1 mtr) 50 ml 20 112 Chart paper ¼ paper 4 1

Total 103.00Transportation 10% 10.30

G. total 113.30

Material Cost of article 1 =Rs.228Material cost of Article 2 =Rs.113

Average Material cost =Rs.336÷2=Rs.168

5) Total working Capital (per months):

a) Utility = Rs.2010.40 b) Misc. expenditure = Rs.6875.00c) Manpower = Rs.16000.00d) Raw materials = Rs.50400.00

Total =Rs.75287.40

6) Working Capital requirements:



Sl.No. Item Stock period Amount (Rs.)1 Raw material 1 month 504002 Work-in-process 10 days 95633 Stock of finished product 10 days 297234 Bills Receivable 20 days 59446

Total 149132

7) Total Investment:

i) Fixed capital - Rs.369630ii) Working Capital Requirement - Rs.149132

Total - Rs.518762

8) Means of Finance:

Own Contribution (15%) =Rs.77814.30Loan from NEDFI (60%) =Rs.311257.20

National Equity Fund (25%) =Rs.129690.00Total = Rs.518762.00

9) Cost of production:

i) Raw material (MONTHLY 50400) =Rs.604800.00ii) Manpower (Monthly 16000) =Rs.192000.00iii) Misc. Expenditure (monthly 6875) =Rs.82500.00iv) Utilities (monthly 2012.40) =Rs.24148.80v) Depreciation =Rs.28163.00vi) Interest =Rs.45521.00

NEDF’S – 43576.00 NEF’S - 1945.00

Total =Rs.977132.00

Cost of production of each average unit =Rs.977132.00÷3600=Rs.271.42

Increase in other expenses @ 59.61%

Cost of production Article 1:Material cost+59.61% of material cost 222.75+132.78=355.53

Cost of production Article 2:Material cost+59.61% of material cost 113+67.35 = 180.35

10) Selling price



Article 1: Cost of production 16%, 355.53+56.88=Rs.412.41Article 2: Cost of production 16%, 180.35+28.85=Rs.209.20

11) Sales realization:

Article 1 : Unit 1800Unit rate : 412.41Total sales : 412.41X1800=742338.00

Article 2 : Unit 1800Unit rate : 209.20Total sales : 209.20X1800=376560.00Total sales : 742338.00+376560.00=1118898.00

12) Profitability Statement:



Year 10 11 12 13 14CapacityUtilization

50% 55% 60% 65% 70%

Unit 3600 3960 4320 4680 5040A. Sales 1118808 1292306 1480248 1683770 1904011B. Expenditurei) Raw materialsii) Manpower iii) Other expenditure

604800192000

94872

698544201600

99616

800150211680104597

911570222264109827

1029168233377115318

Total of ‘B’ 891672 999762 1116421 1243661 1377863C. OperatingProfit

227226 295546 363821 440109 526148

D. Depreciation 28163 25446 22802 20531 18447

E. Profit After depreciation 199063 267200 341009 419578 507671

F. Interest 44521 36450 27320 18210 9100G. Profit After interest

153542 230750 313689 401368 498575

H. Marketingexpense (2%on sale)

22378 25896 29605 33675 38080

I. Net profit 131164 204904 284084 367693 460401

13. Repayment Schedule:

NEDEF LOAN (Rs. In thousand):



Year 10 11 12 13 14Opening 311.26 249.01 186.76 124.50 62.25Principal repaid 62.25 62.25 62.25 62.25 62.25

Interest repaid 43.57 34.86 26.15 17.43 8.71Closing 249.01 186.76 124.51 62.51 0.00

NEF LOAN (Rs. In thousand):

Year 10 11 12 13 14Opening 129.69 103.75 77.81 51.87 25.93Principal repaid 25.94 25.94 25.94 25.94 25.93

Interest repaid 1.95 1.56 1.17 0.78 0.39Closing 103.75 77.81 51.87 25.93 0.00

14. BREAK EVEN POINT:

A. Fixed cost:



i) Interest - Rs.45521.00ii) Depreciation - Rs.28163.00iii) 40% Man power - Rs.76800.00iv) 40% Misc. expenses - Rs.33000.00

Total - Rs.183484.00

B. Net profit - Rs.131164.00

B.E.P A X 100÷A+B

B.E.P = (Fixed cost/ selling) ÷variable cost= 18348400/ 314648= 58.31%

Returns:

i) Incase = Net profit X 100/sales= 131164 X 100/118898= 11.72%

ii) On total investment = Net profit X 100/ Total investment= 131164 X 100/518762.00= 25.28%



CHAPTER-V

Chapter- V: Names and Addresses of Suppliers:



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A Project Reporton ED