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HERITAGE SHIRTS
BASIS AND PRESUMPTION
Land to be leased from SICOP at Industrial Estate, Gangyal, Jammu. Working hours: Single shift of 10 hours, for 300 working days in a year. Capacity Utilization: 60% during the 1st year 75%, in the 2nd year and 90% in 3rd year
and onwards. Salary and wages: Monthly basis. Power tariff: Rs. 2.90 per unit(Prevailing) No local Competition as of now Sale of the product in the State of J&K only
LEGAL REQUIREMENTS
The requirements for starting a new manufacturing business include getting the approvals from various Government agencies and fulfilling the necessary legal formalities. The requirements are as follows:
Leased land from SICOP Pollution Control Board’s NOC Labor Registration Certificate Tax. No. and Certificate from Sales Tax Department. Water Supply Connection form Power sanction Partnership agreement Project report Approval of site plan by the Municipality i.e. JMC. Approval of JMC for working in night Health Safety Certificate & License from JMC
STAFF REQUIREMENTS
The staff requirements to effectively manufacture, package and sell is as follows:
Manager: 1 No.s
Expert Cutter: 1 No.s
Tailors: 4 No.s
Sales and Marketing: 1 No.s
Watchman: 1 No.s
PRODUCTION PROCESS FLOW CHART
Technical Skills Involve:
Packing
Stitching
Dying/Processing
Cutting
Shipment
Finishing
In the stitching unit basically work will done in three phases. These phases and technical skills
required in each phase are given in detail.
Technical Skills for Cutting:
Before sewing can begin, pattern pieces must be made, layouts determined, and fabric cut. This
is very technical work and high expertise requires for this job because a small mistake during
fabric cutting can be cause of rejection of whole shipment. The main technical skill required for
cutting fabric is that the cutter should have to avoid wastage as much as possible. Some other
important technical skills that required for cutting dept are given below:
1. Fabric planning
Fabric planning is very important skill for cutting department. In this phase cutting master plan
the fabric that how much required for the specific order and what type of fabric will use. Fabric
planning decision is very critical because if proper fabric planning has not done then the whole
shipment can be refused.
2. Marker making
In marker making cutting master outline the fabric which will be used for the cutting on
spreading table. Marker making is very technical thing because if this done not properly then
wastage of fabric can be increase. In this way company has to face loss and so marker making
should be done carefully.
3. Spreading
Lay man spread the fabric pieces on the spreading table. For spreading the layers of fabric should
be regular manners and should not overlap on each other.
4. Cutting
The cutting of garment parts should accurately and economically and in sufficient volume to
keep the sewing room supplied with work.
The three processes involved are:
A. The planning, and if appropriate the drawing and reproduction of the marker
B. The cutting of the fabric.
C. Preparation for sewing
Technical Skills for Stitching:
After fabric receives from cutting dept now the work of stitching dept starts. The main skills
required for stitching are given below:
Machine operating skills
Operator should have control on machine because the speed of machine running should be
according to stitch per length. To operate the computerized machine the operators should have
proper knowledge and experience.
Inspection skills
The inspection staff needs very good experience to find out the very narrow faults to increase the
quality and to get proper work from operators.
Management skills
This means six things:
a. Checking the suitability of raw materials
b. Checking the manufacturing capability of the production undertaking
c. Monitoring production; feeding back information; responding to that information; and
removed at source
d. Reduction of the fault rate
e. Saving costs
f. Maintenance of product consistency
Technical Skills for Packing:
All these materials required for packing and the finished material is packed in bales and it is
defined by the buyer and all the garments are packed according to the specification given by the
buyer. For export packing the packer labor should have special expertise because it has lot of
difference between local and export packing.
Area Required for Unit: Total Area 2 Kanals (10880 sq. ft.)
Fabric and Inventory room
Stitching Room
Packing finishing and Inspection Room
Finished Garments Store
Management Block
1400
5000
1400
1200
1000
Total Area Required 10000
COST ANALYSIS
PLANT & MACHINERY
S.No Description No. Rate Amount
1. Power operated cutting machine 1 35,000 35000
2. Power operated SNLS Stiching Machine 8 10000 80000
3. Overlock Motor stiching Machine 1 10000 10000
4. Garment Washing machine (15kg) 1 35000 35000
5. Tumbler Dryer (15kg) 1 25000 25000
6. Potable Steam Press 1 20000 20000
7. Other Miscellaneous Items 20000 20000
Total Rs. 2,25,000
SALARIES
Designation No. Per Month Annual
Manager: 1 15000 180000
Expert Cutter: 1 7000 84000
Tailors: 4 5000 240000
Sales and Marketing: 1 10000 120000
Watchman: 1 3000 36000
Total Rs. 6,60,000
Cost of the project
S. No.Items Total cost (in Rs.)
1. Building (200 sq ft rented) Rented
2. Plant and machinery (Including installation) 2,25,000.00
3. Misc. Fixed Assets(Dummies, Scissors, Presses, Scales etc.) 10,000.00
4. Furniture and fixtures (including office equipments) 10,000.00
5. Preliminary and pre-operative expenses 4,000.00
6. Contingencies (including cost escalation) 2,000.00
7. Working capital 200,000.00
8. Salaries 6,60,000.00
10. utilities 25,600
11 Raw material (including Packing material) 6,00,000.00
12 Stores & Spares 16,000.00
13 Rent 25,000.00
14 Transportation/Freight 12,000.00
15 Selling expenses
(including advertising distribution cost, commission and rebates)15,000.00
16 Repair and Maintenance 25,000.00
17 Interest 6,000.00
TOTAL 18,35,600
Utilities (per annum)
S. No. Items Total cost (in Rs.)
1.Power 22,000.00
2.Water 3,600.00
TOTAL 25,600.00
Raw material requirement(per annum)
S. No. Items Qty.(mtr) Rates (Rs.) Value (Rs.)
1.Cotton/synthetic plain & printed
fabric of various colours andshades. 5000 40 per mtr. 20,0000.00
2.Cotton printed fabric in different
colours and shades 5000 30 per mtr. 15,0000.00
3.Terry cot fabric in different colours
and Shades 500 60 per mtr 3,0000.00
4.Misc. items like sewing threads
cotton yarn button, hook, laces,
packing material etc. LS 12,0000.00
TOTAL 50,0000.00
Working capital requirement
S. No. ItemsPeriod (Month) Amount (in Rs.)
1.Raw Material 1/2 25,000.00
2.Stores & spares ¼ 500.00
3.Stock in process ½ 12,000.00
4.Finished Goods ½ 15,000.00
5.Receivable/debtors 1 5,500.00
6.Other Current assets 1 2,000.00
TOTAL 60,000.00
Cash profit ---- 6500 total shirts and 1800 per shirt
Which is 11700000
Depreciation @ 15% of fixed assets costs5,100.00
Profit before tax 45,300.00
Taxes-
Profit after tax 45,300.00
12.Viability indicators
S. No.Particulars Amount
1.Repayment per annum (period -5 years) 20,000.00
2.Return on Investment 45.30%
3.Debt Service Coverage Ratio 2.17%
FUNDING OF CAPITAL EXPENDITURE
The total investment cost of the project is estimated at Rs.18 Lakhs, which
shall be financed for term loan as per the projections made in the report subject to furnishing of latest cost comparative quotations from the authorized dealers besides contribution from the promoters during the implementation of the project, the specific details interalia as:
S.no Particulars Amt.(Lacs)
1 Promoters contribution 8 (2 lacs each )
2 Seed Capital 4.00
2 Long term borrowings 6
A: Equity
The share capital of the unit has been fixed at Rs.12 Lakhs comprising 66.6 % of
the total project cost. The unit has to raise share capital within this limit. The promoter shall arrange equity from the ancestral resources and from the Seed Capital.
B: Term loan
Term loan requirement to the extent of Rs. 6Lakhs for the purpose of purchases of plant &
machinery and misc. fixed assets shall be made available from the financial institutions or commercial banks well operating in the valley on the basis that the unit being proven technically feasible and financially viable. As the policies are liberal for such type of ventures to avail packages/incentives to encourage the entrepreneurs to promote industrial culture in the backward area of the country. The state Govt. is equally eager to give all possible support to the development of industry in the area, where the unit is being established more so when the promoter share is about 35% of the capital formulation, which is higher than the normal requirement of funding, insisted upon by the bankers.
INTEREST CALCULATION
It is proposed to raise the sum of Rs 6 lacs as long term loans from financial institutions to meet the capital cost of the project. For the purpose of calculating the interest on long-term loans an interest rate of 9.00 % per annum is taken into consideration in the project report.
A: Interest on long term loan
S.no Particulars amt (lacs)
01. Long term borrowings 6
02. Rate of interest 9.00%
03. Installment .65 lacs + int
04. Repayment schedule 7 yrs
05 Moratorium Period 12 months
MARKET ANALYSIS AND STRATEGY
MARKET CHARACTERRISTICS
6.2 MARKET OBJECTIVES
It determines where the company should place its product, how to promote the product, how the product can be marketed itself, and how to price the product effectively.
Puts emphasis either on the product’s benefits, what value it has for customers, or how it is different from a competing brand.
The distribution and pricing objectives would depend on the target segment the firm is going after.
The promotional medium would also depend on the target segment but the basic mediums are local T.V., radio, billboards, magazines, and the internet.
6.3 TARGET MARKET
Our company mainly focuses on:
6.4 SWOT ANALYSIS
STRENGTHS The managers and workers are natives of Jammu & Kashmir,
have strong ties to the community Products are also available online Offering delivery service to suppliers Providing high quality products at reasonable rates
WEAKNESSES New entrant in the state People are not aware of this brand and have to be made aware High Promotional cost
Dealing in only shirts.
OPPORTUNITIES Lack of competition in local area as there is no other
company Rural market tapping Tie-ups with local garment retailers and wholesalers
THREATS Low differentiation of goods Consumers tastes and preferences Rapid growth and no barriers to entry in this sector. Thus,
new firms can enter with different exciting offers
PORTER’S 5 FORCE MODEL
THREATS FROM COMPETITORS
Fortunately we will have very limited local competition since there are no manufacturers of shirts in our state. Our competitors will be international and national brands who enjoy a great deal of trust and respect from customers because of their decades long relationships with the market.
CUSTOMER BARGAINING POWER
Customers don’t have that much of bargaining power as we are already providing high quality product at reasonable rates. Thus, customer’s bargaining power is low.
SUPPLIERS BARGAINING POWER
The term suppliers comprise all sources for inputs that are needed in order to provide goods and services. Suppliers bargaining power is likely to be high when:
The market is dominated by a few large suppliers rather than a fragmented source of supply
The switching cost from one supplier to another is high
THREATS OF SUBSTITUTES
A threat from substitute exists if there are alternate products with lower prices of better performance parameters for the same purpose. Threat of
substitutes is determined by factors like brand loyalty of customers and close customers relationships. Thus, threat of substitutes is high as customers have a very readily available source of other brands.
THREAT OF NEW ENTRANT
Threat of new entrant is high as there are no barriers to entry in this sector.