Business Plan For Leather Products

GlemKore International (opc) pvt ltd

www.glemkore.com

Assignment Of Entrepreneurship

SUBMITTED TO:
State Bank of India
SUBMITTED BY:Ujjwal deep sen

Business Plan For Leather Products

BUSINESS PLAN FOR LEATHER

PRODUCTS
Executive Summary
History of leather
Introduction
Company
information
Business Ownership

Mission
Marketing mix
Operations
management
Equipment
Product Design
Location
Supply Chain Management
Distribution
Chain Financial Projections
Profit & Loss Account
 Balance Sheet

Business Plan For Leather Products
BUSINESS PLAN OF LEATHER PRODUCTS

History Of Leather:
The second largest industry in regard to exports is the Leather Industry.
Contributing more than $5.69 billion in 2018-19 to the foreign exchange in
India. This industry has the potential of delivering more and providing a large
number of jobs by diversifying product range and improving quality.

The leather industry is bestowed with an affluence of raw materials as India is

endowed with 20% of world cattle & buffalo and 11% of world goat & sheep
population. Added to this are the strengths of skilled manpower, innovative
technology, increasing industry compliance to international environmental
standards, and the dedicated support of the allied industries.

The leather industry is an employment intensive sector, providing job to about

4.42 million people, mostly from the weaker sections of the society. Women
employment is predominant in leather products sector with about 30% share.

India is the second largest producer of footwear in the world, producing about
2.41 billion pairs (2017).

India is the second largest exporter of leather garments and third largest
exporter of Saddlery & Harness in the world.

The major production centers for footwear, leather and leather products in India
are located in the States of Tamil Nadu – Chennai, Ambur, Ranipet,
Vaniyambadi, Vellore, Pernambut, Trichy, Dindigul and Erode; West Bengal –
Kolkata; Uttar Pradesh – Kanpur, Agra, Noida, Saharanpur; Maharashtra –
Mumbai; Punjab – Jalandhar; Karnataka – Bengaluru; Telengana Hyderabad;
Haryana – Ambala, Gurgaon, Panchkula, Karnal and Faridabad; Delhi; Madhya
Pradesh – Dewas; Kerala – Kozhikode and Ernakulam / Cochin; Rajasthan;
Jaipur; Jammu & Kashmir; Srinagar.

Business Plan For Leather Products

The industry has been facing some challenges which have been slowing down
the production process.

 Energy crisis
 Environmental challenges
 Lack of proper training

Introduction Of Business:

The business which I want to start is of leather products namely leather jackets
,bags & wallets. Use of leather goods is increasing day by day. Now-a-days
fancy leather goods are being used by the people of even remotest area of our
country, because lifestyle has been changing very fast. Fancy leather products
are durable and beautiful to look at in comparison to other similar products.

Market Potential:

With the development in tanning technology, good quality leathers are coming
to market. Leather products have very high demand in domestic and
International market. The demand for leather products like hand bags, wallets,
purses & belts etc. is increasing gradually. It brings maximum unit value
realization as compared to other leather products. The main foreign markets for
leather products are Europe, Canada, Japan and USA. There is good scope for
expansion of the industry.

Target Market:

• United State of America

• Europe
• Middle East
• India

NAME OF BUSINESS:
The name of my business is “GlemKore International (opc) pvt ltd ” which
is indulged in the business of manufacturing leather jackets & Bags .

Business Plan For Leather Products

Mission:

“To become the premier manufacturing organization in the leather

industry, gaining market competitiveness and diversifying into value
added leather with clean, well maintained and friendly environment”.

Objectives:

• Our aim is to maximize business without compromising on quality.

• We are committed to meet the changing demands of an
evolving organization.
• We aspire to improve quality norms and enhance our product range.

Raw Materials:

• Leather
• Silk Cloth for lining
• Adhesives
• Solution, spirit, buckles, buttons etc.
• Satin
• Andlis

Business ownership

The name of business owner is Ujjwal Deep Sen.

The type of structures from which business can be started, which is as follow;

 Private limited Company

Business Plan For Leather Products

But for starting GlemKore International (opc) pvt ltd I will prefer Private
Limited company because is one of the least expensive business structures to
begin. There are some other factors for choosing this structure which are;
• Limited capital requirements
• Full control
• Full training
• Better knowledge of the market
• Simple accounting records

Total Capital Requirement:

The total capital requirement including fixed capital and working

capital is estimated at Rs: 10 lac.

Product Information:

Two types of leather products are offered;

• Leather Bags
• Leather Wallets
SIZE PRICE
• Wallets 9.5 -10 inches Rs:75 each pair
• Hand bags 14-16 inches Rs:2800 each pair

These are available in 3 different sizes in jackets;

• Small
• Medium
• Large
Prices of jackets ranging from Rs: 3000-12000

Business Plan For Leather Products

MARKET ANALYSIS

The Market Analysis section of a business plan shows the entrepreneur’s

knowledge and expertise about the particular business being started (or
currently running.)

This segment should have a full description of the business’s history, growth,
and trends. It must include a complete description of the needs, size, and unique
characteristics of the potential customers, clients, or patients.

It should also assess whether those needs are currently being met. If not, it must
explain how your business will meet them, including a projected estimated
market share to be acquired. In addition, this portion should reflect the
geographic location of your target market, pricing and gross margin levels, and
possible trends and/or changes that may impact all the above.

Market Trends

Market trends are the upward or downward movement of a market, during a

period of time. The market size is more difficult to estimate if one is starting
with something completely new. In this case, you will have to derive the figures
from the number of potential customers, or customer segments.
Market potential of leather products is considerably high in India as well as in
USA ,Europe and Middle East also.
Target Market
 Local market
• Labor
• Working class
• Youth
 • Children
 Foreign market

Business Plan For Leather Products

Competitive Analysis

Competitor analysis in marketing and strategic management is an assessment of

the strengths and weaknesses of current and potential competitors. This analysis
provides both an offensive and defensive strategic context to identify
opportunities and threats.
The market for leather products is highly competitive. Competitors are very
strong in this business. To give them tough competition I will adopt following
strategies.
 Cost-cut strategy
 Price skimming strategy
 Penetration strategy
 Positioning strategy
 Segmentation strategy

MARKETING MIX:
The marketing mix and the 4 Ps of marketing are often used as synonyms for
each other. In fact, they are not necessarily the same thing.

"Marketing mix" is a general phrase used to describe the different kinds of

choices organizations have to make in the whole process of bringing a product or
service to market. The 4 Ps is one way – probably the best-known way – of
defining the marketing mix, and was first expressed in 1960 by E J McCarthy.

The 4Ps are:

• Product (or Service)

• Place
• Price
• Promotion

Business Plan For Leather Products

Products Or Services

Product or service must meet customer requirements whatever these might be.
For example, an important aspect is function - products should do what they say
they can do and what they are expected to do. My company is offering leather
jackets ,bags & wallets.

Two types of leather products are offered;

• Leather jackets
• Leather bags and wallets

Place

Roughly one fifth of the cost of a product is spent getting it to consumers. Of

course, the actual figure varies widely from product to product but generally
distribution is a very important element in the marketing mix. Different
organizations use different approaches to reaching their customers.

I will distribute my products to different USA,European retailer’s local brands

who then sell these products in foreign markets.

Promotion

It is the process of communicating with customers? For marketing purposes,

communication of products and services contributes to the persuasion process
to encourage consumers to avail themselves of whatever is on offer. The key
processes involved in promotion, include:

• branding - creating a distinctive image and character to an

organization/and or its products and services
 • advertising - to inform and persuade the public
• packaging - presenting the product in a desirable and appropriate way
• public relations activities and other forms of publicity
• sponsorship
• Social Media Marketing

Business Plan For Leather Products

• Direct selling

Objectives Of Promotion

However, there are three basic objectives of promotion. These are as follows:

• To present information to consumers as well as others.

• To increase demand.
• To differentiate a product.

Following marketing technique is used for my business.

Direct Selling
For the promotion of my businesses I will use direct selling. Direct selling is a
type of sales channel where products are marketed directly to customers,
wholesalers and retailers eliminating the need for middlemen. I will conduct
Direct selling in one-on-one, in a group or party format, or online.

Developing A Promotional Strategy

The promotional strategy for Glemkore International (opc)pvt ltd is based
on following factors;

• Segmentation

Dividing the marketing into distinct groups?

 There are 3 segment of market if we consider customers .i.e.
• women
• Men
• Children

But when we consider then as professionals there are two classes:

• Working class
• HNI

Business Plan For Leather Products

 I will use following market research methods to identify target customer in
domestic market for
GlemKore Internation opc pvt ltd ;

 Sales analysis and buying patterns

 Questionnaires
 Focus groups
 Face-to-face interviews

 I will use above mentioned methods to know the;

• Potential customers
• Consumption habits of customers
• Disposable income
• Buying habits
• Expectations & expirations
• Priorities

• Targeting

Deciding which of these groups to communicate with, and how to talk to

them?
 GlemKore International (opc) pvt ltd is targeting young people and
women for jackets ,handbags and wallets .

• Positioning

For giving my competitors tough competition I will go for following

positioning strategies;

• Branding and messaging

• Corporate identity

Price
Price needs to be relevant to the product/service and the market. A
manufacturer should seek to provide to its customers with products at
affordable prices. A firm's pricing decision is often aimed at attracting a
particular market segment. The prices for my products are following;

Business Plan For Leather Products

SIZE PRICE
• Wallets 9.5 -10 inches Rs:75 each pair
• Hand bags 14-16 inches Rs:2800 each pair

These are available in 3 different sizes in jackets;

• Small
• Medium
• Large
Prices of jackets ranging from Rs: 3000-12000

Pricing Strategies
Pricing strategy is an important part of the marketing mix. The price of a
product should reflect its image and the need to give a consumer what they
want. I will use following pricing strategies for selling my products.

• Cost-Plus Pricing.
• Hour-Based Pricing
• Penetration Pricing
• Skimming

PRICING FACTORS:
Pricing factors are;

• manufacturing cost,
• market place,
• competition,
• market condition
• Quality of product.

Business Plan For Leather Products

OPERATIONS MANAGEMENT:
Operations management is an area of management concerned with
overseeing, designing, and controlling the process of production and
redesigning business operations in the production of goods or services. It
involves the responsibility of ensuring that business operations are
efficient in terms of using as few resources as needed, and effective in
terms of meeting customer requirements. It is concerned with managing
the process that converts inputs (in the forms of materials, labor, and
energy) into outputs (in the form of goods and/or services).

Manufacturing Process:

The proposed items are manufactured by units in different methods. The

main operations are pattern making, economical layout of patterns,
clicking of components, and skiving decoration by embossing machine or
hand, folding, coloring, assembling, stitching, fitting and finishing.

Personnel hiring:
I will hire people who can sew leather jackets ,handbags and wallets. For
hiring purposes, I will give add in newspaper and by printing banners? I
will hire 25 people for my business with special sewing skill vested in
them.

Equipment/ machinery:

1. Flatbed Ind. 2 x Rs 7500/- Rs 15,000

Sewing machine
Complete with motor
2.Cylinder bed 1 x Rs 35,000/- Rs
sewing machine 35,000/-
Complete with motor
3.Upper Leather skiving 1 x Rs 25,000/- Rs
machine 25,000/-
Complete with motor
4.Misc. tools & L.S Rs 15,000/-
equipment’s

Business Plan For Leather Products

Distribution Channels:

GlemKore International (opc)pvt ltd will distribute its products to

International retailers and local brands. After penetrating into the leather
market we will also start selling direct to customers by eliminating the use of
intermediary.
Supply Chain Management

Supply chain is the sequence of organizations facilities, functions and activities

that are involved in producing and delivering a product and service. It also
refers to movement of materials and information within a facility and outgoing
shipment of goods and materials in supply chain.

 Need for supply chain management

• Improve operations
• Increasing levels of outsourcing
• Increasing transportation cost
• Competitive pressures
• Manage inventories

 Benefits of supply chain

• Lower inventories
• Higher productivity
• Greater agility
• Shorter lead times
• Higher profits

The main supply chain members of Glemkore International are

Ahmed Enterprise and G.G Leather Arts and Creation, from
whom it purchases leather as a raw material.

Business Plan For Leather Products

Product Design:

Product design is one of the crucial stages in Operations Management. The

design of a product or a service is one of the most important steps. This will
definitely affect the earnings from the product.
 The basic limiting characteristics of the production system design are set during
the product design phase. In designing the product, or the item to be processed
in non manufacturing systems, the product designer specifies materials,
tolerances, basic configurations, methods of joining parts and the like, and
through these specifications sets the minimum possible production cost.

• First of all process begins with purchasing rough or unfinished leather.

• This leather is put into a boiler of wood containing high quantity of
concentrated chemicals to convert it into soft material for 3-4 hours.
• Then the leather is dried and pressed, after that cutting is performed of
different designs.

Raw Materials:

 Leather
 Silk Cloth for lining
 Adhesives
 Solution, spirit, buckles, buttons etc.
 Satin
 Andlis

Proposed Capacity
My business capacity is greatly dependent on the market size and the number
of potential client or no: of export orders one can attract/get. Leather products
will be designed and stitched by master craftsmen. On average, my business
having variety of design made by our craftsman and we also prepare orders
according to customers demand and requirements. The expected number of
orders we receive will be 5-12 orders. Each order consisted of;
 Bags 350
 Jackets 150


Business Plan For Leather Products

Location Of Production Facilities

The production activity should be located where a firm can be most

productive and yield the highest revenues per unit of investment.

A Highly Productive Business Unit:

 Is one that is near to the market, so that the demand for units of
output is high relative to costs of making that input?

 Is one that is close to a skilled labor force? The easier it is for the
firm to attract labor with appropriate skills the more likely it is to
produce high value outputs and low costs per unit of output.

 One that locates close to high value raw materials. The further
materials have to travel the lower the productivity of the plant will
be.

For Glemkore International (opc)pvt ltd the location is 12 Nabagram Jhil

Road kolkata 700152. I am choosing this location because of many factors;

• Electricity rates in that area are cheaper

• Rail Connectivity (workers can easliy reach the Factory )

Business Plan For Leather Products

FINANCIAL PLAN:

Financial planning is the task of determining how a business will afford to

achieve its strategic goals and objectives. Usually, a company creates a
Financial Plan immediately after the vision and objectives have been set. It
describes about the activities, resources, equipment and materials that
are needed to achieve these objectives, as well as the timeframes
involved.
Basically, the financial plan section of the business plan consists of three
financial statements, the income statement, the cash flow projection and
the balance sheet and a brief explanation/analysis of these three
statements

The expenses which I incurred before opening of the shop are:-

• Initial investment

• Machines &equipment’s= 90,000

• Furniture= 20,000
• Storage cabinets & stools= 20,000
• Cartons= 20,000
• Stationary materials=

1,000 Salary of the

employees:-

• Full-time workers= 8,000 per month

• Part-time workers=4,000 per mon

Profit And Loss Analysis

I have assumes the profits and losses which will be incurred by me in the
running course of business. I have estimated the profits and losses for
these years.

Business Plan For Leather Products

Profit & loss account:

Rs:
 Sales 5,90,000
C.G.S 3,70,000
Gross margin 2,20,000
Expenses
Depreciation 4,000
Start-up-cost 50,000
Workmen’s compensation 5,500
Packing material 5,000
Telephone 2,000
Utilities 15,000
Salaries 50,000
Repairs 1,000
operating expenses 2,550
Profit before interest 84,950
Tax expenses 2,000
Interest expenses 1,500
Net profit 81,450

Balance sheet

CAPITAL & LIABILITIES ASSETS Rs:

Borrowings 63,550 Furniture 20,000
Long term liability 2,50,000 Land & building 4,00,000
Total liability 3,00,000 Machines 90,000
Capital 9,00,000 Cash 2,00,000
Net profit 81,450 Inventory 5 ,00,000
Preliminary 60,000
expenses
Accumulated dep: 25,000
Total Liabilities & Capital Total Assets 12,95,000
12,95,000
 Business Plan For Leather Products

SWOT ANALYSIS

Strength
 High quality leather is used as raw material
 Fashionable and wearable Exclusive and unique print designs
 Specialized product range
 Efficient use of colors and lining material
 Quick response to Changing consumer needs and demand
 Having large variety of quality products in all sizes
 Offers products at affordable prices
Weaknesses

 Lower profit margins to compete with already existing leather

businesses.
 Limited capital for marketing.
 Start-up establishment which will take time to implement
systems and policies.

Opportunities
  Raise brand profile/ customer awareness through
advertising and connections to Foriegn retailers & local
brands
 Increase product range
 Explore and expand designs

Business Plan For Leather Products
 Use innovative stitching methods
 Incorporate sustainable elements into designs
 Location advantage.
Threats

 Time required penetrating market of established clothes boutique

 Competition from other leaders in market
 Market saturation
 Economic recession