Sie sind auf Seite 1von 14

Woodland Furniture’s

CRUCIAL FACTORS
Manufacturing of wooden furniture requires the basic knowledge of wood quality.
Wood is the main raw material and the entire finished product depends on quality of wood.
The information and technical know how about the quality of wood and use of seasoned (dry)
plays a vital role in the manufacturing of good quality furniture. Moreover, establishment of
factory in the vicinity of Lahore, Chiniot or Gujrat gives the added advantage of easy
availability of skilled labor. Strong competition exists in the international and domestic
market. Manufacturing of high quality trendy designs and aggressive marketing is essential to
get a permanent place in the market.

PROJECT PROFILE
Project brief:
We are going to manufacture and sale wooden furniture. The unit will be capable of
integrated manufacturing of wooden furniture starting from cutting of wood to retailing of
product to the customer. Auxiliary processes like carving will be met through sub
contracting.

Opportunity analysis:
The demand for wooden furniture is increasing in the domestic market as well as in
the international market due to its traditional appeal and durability despite the introduction of
new materials in furniture manufacturing.
Furniture, which is given as dowry, forms the major portion of sales of wooden
furniture in Pakistan. As a result, the demand for household furniture increases substantially
in winter and spring season due to weddings.
With the rapid increase in the development of new housing schemes, the increased
demand of wooden furniture is also anticipated. According to the National Housing Policy
2001, the annual additional requirement is estimated around 570,000 housing units whereas
the annual production is estimated around 300,000 housing units resulting in a recurring
backlog of 270,000 housing units annually. The household size is 6.6 persons and the
occupancy per room is 3.3 persons1. Furthermore, introduction of new schemes by different
banks for house and consumer financing have also raised the purchasing power of public. In
the international market, demand for wooden furniture is increasing for its unique style and
aristocratic and elegant appearance. The demand of wooden furniture

Market entering time:


We will enter in the market in the month of Ramadan. Because demand for gold
jewelry is high from Ramadan to Zilhajj, due to weeding season. The demand for the
furniture almost doubles during this period. Hence, the prime time to enter into market is start
of August.

Proposed legal status:


It will be a partnership business, including five partners as this does not involve heavy
investment. Moreover, less complications and costs are involved in forming, administrating
and running the sole proprietorship or partnership business.

1
Woodland Furniture’s

Proposed capacity and rationale:


We will manufacture the complete range of wooden furniture and other allied
products to meet the demand of domestic market. Show room will work on 11 hours a day for
300 days, while factory will work on 8 hours shift for 300 days.

Investment:
10 million rupees.
Proposed Product Mix:
We will produce different sort of wooden furniture.

 Bed Set: Which includes Bed, side tables, dressing table, dressing stool.
 Sofa Set: Which includes standard sofa set of three seats, two seats and one seat
 Dining Set: Which includes Glass top dining table with eight chairs.
 Misc. Furniture Set: A part of Sofa Set but not sold along with it. It includes glass
top centre table along with two end tables for the Sofa Set.
 Office Furniture Set: Which includes an office table along with side table for
computer with one executive and two visitors chairs.

Location:
Local Furniture demand is directly related to the population living in a locality.
Therefore, the demand for wooden furniture is higher in heavily populated cities of Pakistan
like Lahore, Multan, Karachi, Peshawar etc. & developed cities like Rawalpindi, Islamabad.
Our manufacturing unit will exit in neighboring areas of Lahore and show room will
establish in Lahore City.

KEY SUCCESS FACTORS


• We will select wood properly as wood is the major raw material and it plays an
important role in achieving good quality finished product. Properly seasoned (Dry)
wood ensures high quality furniture.
• We will make sure that the labour will bw qualified and skilled as it can improve
quality of finished product by better craftsmanship & lower wastage. Hence,
specialized labor should be used for the particular design and product, which will give
high quality furniture at lower cost.
• New designs and styles can build brand equity for the business. As there is high
competition in the market, to make the project commercially viable, creation of new
designs and styles and setting new trends is vital.
• Reasonable number hiring of permanent labor is important to maintain lower
overhead cost, as the business is labor intensive and skilled labor is readily available
in the local industry.
• While selecting the location for production, proximity to raw material and availability
of skilled labor should be taken into account, as this will reduce cost of production.

2
Woodland Furniture’s

SWOT ANALYSIS

Strengths

SWOT
Opportunities ANALY Threats
SIS

Weaknesses

Strengths
 Skilled Labor Force
 Wood seasoning facility centre is available
 Suppliers of raw material are available
 Local tools available
 Strong historical background of craftsmen
 Many big cities are link-up with this cluster including Lahore, Islamabad, Sargohha,
Jhang, Faisalabad and Gujranwala etc.
Weaknesses
 High cost of production due to high rate of raw material
 Lack of educated, certified and professionally trained work force
 Unavailability of ready to use raw material
 No Designing and R&D facilities available
 Unawareness of Social compliance and Environmental issues
 Unawareness of any quality control and standards
 Unavailability of ready-to use seasoned wood
 Constraint of Technology
 Fluctuating prices of the raw material.
Opportunities
 Technical up gradation
 Networking & linkages of cluster players/stakeholders
 Development of consortiums with specified objectives
Threats
 Migration of trained work forces from the sector

3
Woodland Furniture’s

 Raw material cost increase (shortage in the stock of Sheesham wood at any stage
because no further plantation as required)
 Import of low price articles from China and India
 Instable political set up of the country.

CURRENT INDUSTRY STRUCTURE


At present there are two main clusters of small furniture manufacturers in Karachi, i.e.
Manzoor Colony and Akhtar Colony. There are some 1200 – 1300 units in these clusters that
have employed almost 6000 – 7500 people. One small unit covers an area of 720 to 1000
square feet. The machinery used includes four basic tools/machines for furniture making. The
average wood requirement of each of these units is around 150 -200 cubic feet per month.
Wood is purchased by unit owners and seasoned naturally.
The Lahore cluster is basically based on the traders of wooden furniture. There are
more than 1500 retail shops in Lahore in different locations which basically trade in MDF
furniture, office furniture, and bedroom and living room furniture. However in the last decade
this market has diversified its product range to all kinds of furniture articles. These traders
usually purchase furniture in semi-finished form from Chiniot and polish and upholster it in
their workshops. There profit margins are quite high as all the value addition is done in
Lahore according to the requirement of the customers.
However, there are around 100-200 small cottage sized workshops in Lahore which
are engaged in wooden furniture manufacturing. Majority of these manufacturing facilities
use low-tech machinery which are either locally assembled or are second hand imported
machines. There is only a hand full of furniture manufacturers which have established a
production line based on new modern machinery and seasoning kiln facilities. On average
each manufacturing facilities employs 5-20 workers depending on its scope of work.
Although wooden furniture industry Chiniot is approximately 150-200 years old, but still
exists on a cottage sized scale. There are almost 3000-4000 manufacturing units in Chiniot,
which use primitive technology and techniques for manufacturing. Around 40,000 people are
directly employed by this industry. The stakeholders can be categorized into manufacturers,
craftsmen, raders, timber merchants, exporters, transporters and financial institutions.

MARKET INFORMATION
In local market, the requirement for wooden furniture can be categorized into four
namely:
1. for newly built house;
2. for dowry;
3. for renovation;
4. for Institutional buyer;
5. for offices (public & private sector)
The majority of customers in the domestic market belong to first and second category.
Thesecustomers require furniture for their newly built houses and usually buy range of
products like bed sets, dining sets and sofa sets with other decorative material for their entire
house. In Pakistani society, Furniture is given as dowry. Therefore, its demand increases in
the spring and winter season due to weddings. Basic requirement of these customers is bed
set of new designs and styles. These types of customers also buy sofa set or dining set along
with bed set. Initially entrepreneur should target these customers to establish the business and
to increase the customer base. These potential customers can play a dominating role in the
successful break through of the business. With the flourishing of tourism and hotel industry,

4
Woodland Furniture’s

considerable scope emerges for wooden furniture in this sector. Large orders can be secured
to supply wooden furniture to these hotels and resorts.

PRODUCTION PROCESS

5
Woodland Furniture’s

Wood comes to Wood comes at


Machine Man Shaper Machine

Carpenter shape the


Furniture Designing
wood into Furniture

Wood Seasoning Molding Machine

Wood comes in Furniture comes to


Factory Carver for Carving

Wood Cutting at Carpenter assembles


Trolley the Furniture

Inspection before
Purchase of Wood
finishing

Furniture goes to Store or for Polishing

6
Woodland Furniture’s

Purchase of Wood
Wood is purchased after Quality inspection. In determining quality following points are
considered:
 Age of Wood
 Dryness of wood
 Its surface, which should be plane without holes etc

Cutting of Wood
When purchased, the wood of natural form, this wood after purchase is cut into
different sizes of blocks and slabs.

Seasoning/Drying of Wood
Season wood is higher in price than the fresh wood, so if the wood purchased is not properly
dried wood than these blocks/slices are seasoned through different processes, namely:
 Condensation
 Boiler System
 Vacuum System
 Seasoning through putting the wood slices under normal environmental temperature
for considerable duration.

Selection of Design
Before start of manufacturing of any furniture product a desired design is selected.
Selection of elegant design is important to ensure attractive finished product.

Cutting into Slices


The seasoned wood blocks are cut into desired shape and slices according to the
requirement of design.

Molding
The slices of wood are molded into the desired shape according to the design.

Carving
Carving means different elegant pattern carved in the wood. Quality of carving
depends on the skills of the labor.

Assembly/Fitting
Once the different pieces are carved & molded than these parts/pieces are assembled
or fixed together to give the shape to the final product.

Finishing (Paint/Polishing)
Assembled product is grind to make the surface smooth. Once the surface is smooth,
finishing material is applied to make the surface ready for paint or polish. After the base is
prepared final finishing is applied depending on requirement in term of paint/polish.
Upholstery of fabric is carried out according requirement of design.

MACHINERY REQUIREMENT
7
Woodland Furniture’s

Imported and locally manufactured machinery is available in the local market. As this
project is labor intensive, not much based on technical machinery and technological
advancement, therefore technology has less impact on the business. Imported machinery and
plants are available for seasoning, cutting, molding, finishing, etc.

Supplier of Machinery
Some of suppliers of furniture manufacturing machinery are:
 Asim Engineering Works, near National Bank, Gondalanwala Road, Gujranwala.
 M/s Wazir Ali Industries, Badami Bagh, Lahore.

Machinery Detail Unit Unit Price Total Cost

Saw 18" 1 37,000 37,000

Saw 28" 1 45,000 45,000

Saw 32" 1 57,000 57,000

Compressor 2 10,000 20,000

Guage 16" 1 50,000 50,000

Gauge 18" 1 62,000 62,000

Shaper 12" 1 2,500 2,500

Spindle Moulder Machine 2 40,000 80,000

Drill machine 5 2,200 11,000

Grinder 2 7,500 15,000

Chapaka 2 12,000 24,000

Cutter sliding 1 15,000 15,000

Cutter round 1 13,000 13,000

Miscellaneous Tools - 30,000 30,000

Total Machinery and Equipment 461500

Factory and Office Equipment and Fixtures

Factory Equipment Details No. Unit cost Total Cost

8
Woodland Furniture’s

Office Table Set for CAD Operator 1 15,000 15,000


Table & Chair set for admin, store
6 7,000 42,000
& production
Visitors Chairs 4 1,500 6,000
Computers 1 15,000 15,000
Printers 1 8,000 8,000
Telephone Sets 2 1,500 3,000
Fax Machine 1 1,000 1,000
UPS 1 5,000 5,000
Total Furniture & Fixtures 95,000

Factory Equipment Details No. Unit Cost Total Cost


Office Table Set 1 15,000 15,000
Chair for Staff 8 2,000 16,000
Visitors Chairs 6 1,500 9,000
Office Table Set for staff 3 7,000 21,000
Computers 3 15,000 45,000
Printer 1 8,000 8,000
Telephone Sets 3 1,500 4,500
Fax Machine 1 1,000 1,000
UPS 3 5,000 15,000
Air conditioner 4 35,000 140,000
Total Furniture & Fixtures 274,000

LAND & BUILDING REQUIREMENT


The land sufficient for setting up the proposed wooden furniture manufacturing unit is
approximately 3 kanal13 (13,500 sq. ft) production area (Factory area), while the covered
area of furniture depends on area available & financial resources available. For the proposed
project 1 kanal showroom area is assumed which will not be on lease. For such kind of
business it is recommended to have own showroom which will be opened in year-6 when the
business is enough liquid.

RAW MATERIAL REQUIRMENT


The basic raw materials for manufacturing of furniture is wood. Wood obtained from
the forest isof prime quality. Therefore, it is recommended to use dry wood from the forests

9
Woodland Furniture’s

for anufacturing of quality wooden furniture. Forest wood is easily available in the market.
Frniture manufacturing units in Pakistan mostly use sheesham wood. Other types of woods
used in manufacturing furniture are:

 Teak wood
 Walnut wood
 Keekar wood
Besides this, substitute material like lasani, winboard are also used in the manufacturing
of furniture.
Raw material wood is easily available from the forest reserves like Changa manga,
Pakhowal, Kundian, Chicha watni, Bahawalpur and other natural forests. Changa manga
forest is the major source of wood for furniture. Other material used in the furniture
manufacturing process are nails, screws, glue/solution, spirit, lakh, thiner, lacquer, sealer,
hardener, etc. These raw materials are easily available in the market.

HUMAN RESOURCE REQUIREMENT


The labor required for manufacturing process is easily available on daily wages, per
unit basis and permanently employed. It is recommended that selective highly skilled labor
should be employed permanently and other labor should be hired as and when required.
Following permanent human resource is required both at factory and show room.

Annual Salary Total Annual


Description No.
(Rs) Salary (Rs)

Production supervisor 1 180,000 180,000

Carpenter 5 96,000 480,000

Machine man 1 120,000 120,000

Polish man 2 102,000 204,000

Carving 1 96,000 96,000

Helpers 1 48,000 48,000

Draftsman / CAD Operator 1 96,000 96,000

Purchaser/Store Officer 1 144,000 144,000

Gate Keeper 1 72,000 72,000

Total Production Staff 22 -- 1,440,000

PROJECT ECONOMICS
Project Cost Details

10
Woodland Furniture’s

Description Amount
Land for factory 2,000,000
Building for Factory 2,500,000
Showroom 4,000,000
Machinery for Factory 461,500
Furniture and Fixtures for Factory 95,000
Furniture and Fixtures for Showroom 274,000
Pre-operating Cost 100,000
Total Capital Cost 9,430,500

Project Financing Details

Details Percentage Amount Rs.


Equity 60% 6,000,000
Debt 40% 4,000,000
Total 100% 10,000,000

Depreciation Rate

Details Rate %
Building 1%
Machinery 10%
Furniture 10%

11
Woodland Furniture’s

PROJECTED FINANCIAL STATEMENTS


Projected Income Statement Rs.
Description Year 1 Year 2 Year 3 Year 4 Year 5
Revenue 7,500,000 8,250,000 9,075,000 10,436,250 12,001,687
Cost of Goods Sold
(+) Raw Materiel Opening -- 250,000 275,000 295,000 315,000
(+) Raw Materirl Purchase 3,000,000 3,450,000 3,900,000 4,350,000 4,800,000
(+) Labour Cost 1,440,000 1,451,000 1,462,000 1,473,000 1,484,000
(+) FOH 20,000 23,000 29,000 40,000 45,000
(-) Raw Materiel Ending 250,000 275,000 295,000 315,000 305,000
(-) Total Cost of Sales 4,210,000 4,899,000 5,371,000 5,843,000 6,339,000

Gross Profit 3,290,000 3,351,000 3,704,000 4,593,250 5,662,687


Operating Expenses
(+) Administration Expense 200,000 210,000 220,000 240,000 260,000
(+) Electricity Expenses 350,000 350,000 375,000 400,000 425,000
(+) Communication Expenses 30,000 35,000 36,000 39,000 37,000
(+) Transportation Expenses 250,000 275,000 280,000 290,000 295,000
(+) Office Equipment 25,000 20,000 18,000 19,000 17,000
(+) Depreciation Expenses 45,000 90,000 135,000 180,000 225,000
(-) Total Operating Expenses 900,000 630,000 1,064,000 1,168,000 1,259,000

Operating Profit 2,390,000 2,721,000 2,640,000 3,425,250 4,403,687


(-) Interest 600,000 600,000 600,000 600,000 600,000
Net Profit 1,790,000 2,121,000 2,040,000 2,825,250 3,803,687

12
Woodland Furniture’s

Projected Balance Sheet Rs.


Assets
Current assets
Cash in hand 669,500 2,254,500 2,733,550 2,805,600 3,743,900 4,905,387
Ending Inventory ~ 250,000 275,000 295,000 315,000 305,000
Total Current Assets 669,500 2,504,500 3,008,550 3,100,600 4,058,900 5,210,387
Fixed assets
Land 4,000,000 4,000,000 4,000,000 4,000,000 4,000,000 4,000,000
Building 4,500,000 4,455,000 4,410,000 4,365,000 4,320,000 4,275,000
Machinery & equipment 461,500 415,350 369,200 323,050 276,900 230,750
Furniture & fixtures 369,000 332,100 295,200 258,300 221,400 184,500
Total Fixed Assets 9,330,500 9,202,450 9,074,400 8,946,350 8,818,300 8,690,250
TOTAL ASSETS 10,000,000 11,706,950 12,082,950 12,046,950 12,877,200 13,900,637

Liabilities & Shareholders' Equity


Long Term Liabilities
Bank Loan 4,000,000 4,000,000 4,000,000 4,000,000 4,000,000 4,000,000
Shareholders' equity
Paid-up capital 6,000,000 6,000,000 6,000,000 6,000,000 6,000,000 6,000,000
Retained earnings - 1,706,950 2,082,950 2,046,950 2,877,200 3,900,637
Total Equity 10,000,000 7,706,950 8,082,950 8,046,950 8,877,200 9,900,637
TOTAL CAPITAL AND
10,000,000 11,706,950 12,082,950 12,046,950 12,877,200 13,900,637
LIABILITIES

13
Woodland Furniture’s

Thank You…!!!

14