CHAPTER - 1

PROJECT AT A GLANCE

1.1

Introduction:

The Indian mens apparel industry is expected to burgeon at a CAGR of 14.86% from 2008 to 2010, according to new research report "Booming Men Apparel Market in India" by RNCOS. The report gives an insight into the expanding mens apparel industry in India. Mens apparel industry will increase at a CAGR of 14.86% during the two-year period from 2008 to 2010. The demand for ready-made garments in rural India will surge at a CAGR of 16.50% to reach Rs. 42918 Crore by 2010.Increasing at a CAGR of 24%, branded apparel industry for men will cross Rs. 25,000 Crore by 2010. Per capita GDP spending on apparel increased to 5.8% in 2006 from 4.9% in 2003. In 2007, mens apparel industry was mainly dominated by shirts (in value terms) accounting for 36.5% of total mens segment. The Indian fashion industry is expected to rise at a surprising pace of 22.67% through 2012 from 2007. Thus the positive atmosphere in the apparel industry of India attracts us to enter into apparel market and reap the profit. Also the data by socio economic review Gujarat contribution in to the whole Indian textiles production is 6.9% in total 14.9 %. This project presents the basic elements of marketing, technical, and financial feasibility for manufacturing Cotton pent wear Aspects like general information, promoters details, production processes, estimated financial picture, etc., are covered under this detailed report. The report also covers detailed financial projections for a period of 5 years. The purpose of this project report is to aid the financial institution/bank while appraising the techno-economic viability and credit worthiness of the applicant.

Opportunity Rationale
The main competitive advantage of this industry is the availability of fine quality organic fiber of Pakistan, mainly, the cotton and wool, besides the synthetic. The apparel segment is the highest value added link in the entire textile value chain. The trade in the sector accounts for 53% of the total value of global textiles trade and has been consistently growing since the last two decades. According to WTO estimates, with the elimination of quotas in the year 2005, the
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total trade of textiles and clothing will exceed the US $500 billion mark, and this growth will be driven primarily by the clothing sector, which will constitute almost 70% of the total trade. Readymade garments industry of Pakistan enjoys active demand in the foreign as well as domestic markets. Besides being a potential source of foreign exchange earnings, it provides an important means of diversification within textile industry, by allowing conversion of domestically made cloth into a higher value added production in the form of garments. This industry also provides an employment opportunity for skilled and semi-skilled labor, which is easily available in the areas where the clusters of this industry exist. Needless to say that import of one industrial sewing machine valued at about US $500 creates 3 jobs and earns US $27,000 per year in the shape of foreign exchange. The development of this industry not only offers attractive return on capital but is also advantageous to the economy as its exports maximize value addition to raw cotton. According to statistics, the global textile market possesses a worth of more than $400 billions presently. In a more globalize environment, the industry has faced high competition as well as opportunities. It is predicted that Global textile production will grow by 25 percent between 2002 and 2010 and Asian region will largely contribute in this regard. The world trade organization (WTO) has taken so many steps for uplifting this sector. In the year 1995, WTO had renewed its MFA and adopted Agreement on Textiles and Clothing (ATC), which states that all quotas on textile and clothing will be removed among WTO member countries. However the level of exports in textiles from developing countries is increasing even if in the presence of high tariffs and quantitative restrictions by economically developed countries. Moreover the role of multifunctional textiles, eco-textiles, e-textiles and customized textiles are considered as the future of textile industry. Because this project is 100% export oriented, the Government of Pakistan has exempted on the import of machinery by an exporter from custom duty, sales tax and income tax. The export of trousers are zero rated (sales tax rate zero percent) and the whole input sales tax is refundable. This unit can be established with low investment and industrial technological complications and provides better returns on investments, which are the main deriving force of medium type industries.

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CHAPTER 2
OVERVIEW OF THE COMPANY
2.1 Name of the Company: Trendy cotton Pvt Ltd. 2.2 Date of Incorporation: The Company will be incorporated on 14th April, 2008, with
registration number.

2.3 Addresses:
Regd. Office 203, second floor, Prerana Acrade, Opp.Girish cold drinks, C.G. Road, Ahmedabad-3804409 Factory G- 203,204,205, Himatnagar GIDC National Highway-08, Boriya, Ta- Himatnagar Dist: Sabarkantha.

Table2.1 ORGANIZATION STRUCTURE: NAME Kaushik Patel Hardik Patel Yogesh Nayi Janak Patel DESIGNATION Chairman Executive Director Executive Director Executive Director CONTACT 9427074089 9428504884 9879759023 9879919819

CHIEF ACCOUNTANT PLANT MANAGER PRODUCTION MANAGER TERRITORY MANAGER

Maulik Patel Dipak Dholu Bhavnesh Patel Tejas Patel

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CHAPTER 3
PROJECT BACKGROUND
3.1 Project Concept:
Trendy cotton Pvt Ltd. is being promoted by a cohesive team of four enthusiastic Kaushik Patel, Janak Patel, Hardik Patel, Yogesh Nayi. The promoters of the company are well educated and command experience of the diversified areas in their projects. The company will be incorporate to set up Cotton pent wear manufacturing facilities. Since Gujarat is one of the fastest growing apparel market and Ahmedabad has the lowest labor costs amongst the major cities in India, with a labor costs less than 50% of those in Delhi and 40% below those in Pune. The promoters have a considerable knowledge in the field of current market trend in apparel market. Besides having technical and marketing set up, the promoters are financially sound to set up a project of this scale. All these factors combined together resulted into making this organization a reality.

3.2 Proposed Capacity:

The proposed unit is able to stitch approximately 800 pieces per day with 40 stitching machines. During the first two years, the unit will provide CMT services with 40 stitching machines. This will help to establish harmonized system flow and synergies, which will lead to better productivity and efficiency. In the third and forth year, it will start its own manufacturing and export by utilizing 50% of its capacity, remaining 50% will continued to be used for CMT. In the fifth year, the unit will utilize 100% of its capacity for own manufacture and export.

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3.3 Cost of the Project:

Table 3.1: cost of project Particulars Land Site development Building Stitching machine Cutting machine Electrification Misc. Fixed assets Preliminary & preoperative expenses Provision for contingencies Working capital margin Total Rs. In lakhs 12 2 21 7.5 2.25 4.5 3 3 6 20 81.25

Table3.2: Scheme of Finance

Particulars Promoters contribution Loan from IDBI Total Rs. In lakhs 31.25 50 81.25

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3.4

Schedule of Implementation:
Table no 3.3: schedule of Implementation
Particulars of Activity Aug. Sep. Oct. Nov. Dec.

1. Incorporation of Company 2. Acquisition of Land 3. Civil works - factory building

- machinery foundation 4. Plant and machinery - Placement of order - Delivery at site. 5. Arrangement for Power 6. Erection of equipment & commissioning 7. Initial Procurement of raw materials 8. Training of personnel 9. Trial runs 10. Commercial production

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CHAPTER 4
MARKET AND DEMAND ANAYLSIS
4.1 Industry Prospects:
The Indian mens apparel industry is expected to burgeon at a CAGR of 14.86% from 2008 to 2010, according to new research report "Booming Men Apparel Market in India" by RNCOS. The report gives an insight into the expanding mens apparel industry in India. Mens apparel industry will increase at a CAGR of 14.86% during the two-year period from 2008 to 2010. The demand for ready-made garments in rural India will surge at a CAGR of 16.50% to reach Rs. 42918 Crore by 2010.Increasing at a CAGR of 24%, branded apparel industry for men will cross Rs. 25,000 Crore by 2010. Per capita GDP spending on apparel increased to 5.8% in 2006 from 4.9% in 2003. In 2007, mens apparel industry was mainly dominated by shirts (in value terms) accounting for 36.5% of total mens segment. The Indian fashion industry is expected to rise at a stupendous pace of 22.67% through 2012 from 2007. 4.2 MARKET ANALYSIS: Survey method Sampling Sampling Area ANALYSIS:As per the analysis of interviewed respondent, 67% of the respondent preferred cotton pant where as 33% respondent reply with negatively. 42% of the respondents prefer cotton pent because of design where as 36% preferred style or pattern of pant, 22% answered with durability, this shows their tendency of save money. On the consumer purchasing time, 44% of the respondent interviewed preferred to purchase cotton pent occasionally, 31% six monthly, 20% monthly and 5% yearly. It shows most of consumer purchase cotton pant occasionally. 35% respondent like design of cotton pent, 26% respondents are price conscious, 24% preferred style or pattern of cotton pant and 15% respondent preferred durability of cotton pant. : : : Questionnaires. stratified random sampling. Visnagar town.

No. of respondents : 50

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Through this we found that majority of consumer preferred cotton pant with attractive design, style and low price. On purchasing decision effecting criteria, 33% respondent go with price, 18% preferred scheme on cotton pant, 16% respondent preferred design, 7% consumer are vote with brand preferred, 12% are preferred discount, and 14% infancies because of advertisement. On the basis of that Price is once again become most important factor on respondent purchasing decision 31% respondent preferred cotton pant in black color like wise 22% preferred white, 21% blue, 16% grey and 9% other. It shows that consumer preferred all color verity in cotton pant. 52% respondent preferred cotton pent in formal pattern, 18% preferred cotton pent with graphics, 19% with lining, and 11% with embroidery design on cotton pant. Most of respodnt preferred formal cotton pant. Purchasing place of consumer of cotton pant, 38% respondent preferred showroom of cotton pant, 36% purchase from shopping mall and d26% respondent purchase cotton pant from retail outlets. It indicates that every respondent purchase cotton pant from this three place equally. 45% respondent ready to spend 500-1000 Rs. On cotton pant, 32% purchase between 1000-1500Rs and 23% preferred above rang of 1500 Rs. Price become once again more effective and important aspect of cotton pant purchasing decision. On the response of additional feature of cotton pant respondent reply with A pent with more pattern Good finishing work Good cotton material Good fitting and quality.

As per the analysis of all the criteria, factors and consumers purchasing decisions we founds that cotton pant is still become more popular among the city as well as small town people. Its more preferable for working class people, student and common man also. A common man can spent on a cotton pant and purchase easily with preferred design, style and price. A rich man can also purchase a cotton pant of high rang. All criteria which required for the best trousers or pent should easily available in cotton category product.

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4.3 Marketing Strategy

Target Market
Initial market for the Trendy cotton pvt ltd. will be the Gujarat. The cities like Ahmedabad, Vadodara, Surat, Anand , Rajkot , Palanpur , Mehsana, Patan, Himatnagar and other potential markets of Gujarat.

Target Segment:
The target segment for the product is only males. Age Group: 16-35 yrs. Especially school boys, college going males, initial jobber at higher post.

Distribution Network:
The company has selected three level distribution channels for cotton wear products.

Manufacturer

Dealer

Retailer

Consumer

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Table no 4.1: City Wise Dealers Network: City Ahmedabad Baroda Surat Rajkot Aanand Palanpur Bhavnagar Mehasana Himmatnagar Patan Gandhinagar No. Of Dealers 15 10 10 10 10 5 3 3 3 2 5

Above table shows that the no. of dealers in each city is responsible for supply around the local areas of their city.

Advertising & Promotion:

Advertisement is one of the very important tools of promotion mix. Advertising is nothings but a paid form of non-personal presentation or promotion of idea, goods & services by an identified sponsor. Our selling is increasing most of in august, because of festival & summer vacation. We give our advertisement through Print media, Outdoor media and on Radio. Such as Print ads in Gujarat Samachar, Sandesh, Divyabhaskar Hordings and Signboards at City Bus Stop, Near colleges, Snack bar & food restaurant, Picnic points. Radio Ad on Radio Mirchi & Radio city.

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Promotion:
At initial level our business success is depending on good relation with the dealers. So initially we offer high commission and rebates to dealers and some promotion scheme for retailers.

Price and Quality:

The company has formulated a strategy which specifically focuses on style and fashion, Current market trend and quality material. Product will be at reasonable price. Since the good quality fabric will be converted into stylish Cotton pent of different pattern such as, Straight Cotton, Cargo Cotton, Denim Cotton, Six Pocket cotton in our manufacture unit and end users will receive better quality product.

Competitive Advantage:
Experienced and qualified promoters having good grasp of the business specially apparel market. Strong distribution network and skilled designers are main strength of the company. The company has negotiated favorable terms with Dealers to maintain relationship for Distribution network. Good quality product at reasonable price.

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CHAPTER 5
TECHANICAL ANALYSIS
5.1 Material Inputs and Utilities:
Raw Materials:
The basic raw material for the manufacturing of Cotton pent is dyed woven fabric with different sorts of finishes on it. The woven fabric that is used in the manufacturing of dress trousers is made of cotton, or polyester/cotton (P/C), wool and other blends of man-made fibers. The weight of these fabrics normally varies from 200-240 grams/sq. m (for the light qualities of P/C 65:35 fabrics) and from 240-300 gram/sq. m (for heavy qualities of P/C 65:35 fabrics). In case of 100% cotton, light quality fabric weight should be at least 180 grams/ sq. m. For the fabric of blended 50/50 polyester/cotton, the weight varies from 100 grams/ sq. m (plain) to 215 gram sq. m (twill). The weight of the finish is not included in these figures. Prices of these fabrics range from Rs. 60 to Rs. 3000 per meter. During the last few years, the Dyeing and Finishing Industry has performed remarkably. Traditionally, the griege fabric was being exported and the dyed fabric was then imported at a higher price. But due to the installation of new dyeing plants, production of high quality dyed finished fabric has increased. This has helped in the reduction of the cost of finished fabric. The industry uses both locally produced and imported raw materials, but it mainly uses locally produced raw material. Some exporters however, prefer to purchase yarn, and process it by paying service charges according to their own requirement and buyers specification. This strategy also further reduces the cost of fabric. Besides fabric, other raw materials used in manufacturing of mens formal wear are listed below: Table 5.1: Raw materials used in Manufacturing Cotton fabric Cotton embroidery fabric Belt loops Waist band Back panels 40.00%

40.00% 1.00% 3.00% 1.00%

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Zippers Buttons Rivets Threads Needles Cardboard label Canvas sticker&

2.00% 2.00% 3.00% 5.00% 1.00%

1.00% 1.00%

All the required raw materials sourced from different suppliers around the Gujarat and out of Gujarat. Fabric suppliers are Arvind mills, Vimal textiles; miscellanies raw materials are easily available like rivets. Buttons, threads, etc.

5.2 Machinery Details:

The industrial sewing machines are mainly imported from Japan and are capable of working at high speed up to 4,500 stitches per minute. These are especially suitable for assembly line operation and are mostly used by the organized sector. Besides industrial sewing machines, household sewing machines along with parts and electric irons etc. are also being imported. Imports of sewing machines and their parts are given in Table. The other important machine used by the ready-made garment industry is the over locking, which is used to trim the edges of cut cloth. In addition, specialized machines are used for cutting, making button holes and stitching of buttons. According to an estimate, one specialized machine is required for very five sewing Machines. The company has placed the order for a semi-automatic composite plant from Export sewing Machine Ltd, Baroda. The company supplies stitching machines and cutting machine for apparel producers and also provide free service for machinery.

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Table 5.2: Details of machinery Unit Price Types of Machine (In Rs.) stitching machine cutting machine Total Table 5.3: Other Equipments Furniture and fixture Woodon stool for labor Trolleys for stitching Department Cutting table Finishing table Others Table no 5.4 Office Equipments Description Fax, Telephone etc Air conditioner Computer Tube lights Office furniture 25000 15000 Machine 30 15 (In Rs.) 750000 225000 975000 No of Total Cost

5.3 Land And Building:

Project should be located where skilled manpower is within reach, and where electricity gas water and public transport are easily available. Easy access to the normal public transport is must for a success of any garment factory; otherwise the workers will have to be provided transport in company arranged buses. Potential industrial locations in Pakistan for setting up the unit include Karachi, Hyderabad, Sukkur, Rawalpindi, Lahore, Faislabad, Multan, Chounia, Lasbella, Hattar, Gadoon Amazai, Islamabad, etc. Karachi, Lahore and Faisalabad are comparatively better and recommended locations because necessary technical and skilled

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manpower is easily available. Secondly good quality and sufficient quantity of raw material at competitive prices is easily available. Since this industry is export oriented, so Karachi has the advantage of being near to seaport. However, final selection of site will depend upon investors own choice and convenience. For manufacturing unit with installation of the above said machines, approximately 5,300 sq. ft. area is required which includes space for admin office, stitching unit and stores. It is recommended that the machinery unit may be established in a rented building, which can be easily found in the industrial zones. The rent has been taken as Rs. 65,000 per month. Table no 5.5: Construction of the company Particulars Area (Sq. Mt) 750 Type of Construction Rate (Rs/sq.mtr) 1900 Amount (Rs in lakhs) 1425000

Factory Shed Office building (at manufacture unit) Office building ( Head office) Worker quarters warehouse Total Built up area Open area Total Plot Area Compound wall Total

Brick Masonry with Galv. sheets roofing Brick Masonry with RCC slabs Brick Masonry with RCC slabs Brick Masonry with RCC slabs Brick Masonry with RCC slabs

30 50 45 110 985 400 1385

2300 2500 1800 1700

69000 125000 81000 187000

213000 2100000

5.4 Manpower Requirement:

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In order to achieve high degree of value addition, as in the apparel and textile madeups sector, the engine of export growth, the skilled labor has a pivotal role in labor intensive processes like stitching. This sector normally follows piecework system under trolley system (division of labor) in which one garment is prepared by different persons during different stages of process. Normally there are 25-30 different processes involved in dress trouser manufacturing. Each process has its separate predetermined piece rate. The company proposes to employ total of 119 persons in Factory and Administrative Department. Table no 5.6: Staff salary plan

PRODUCTION STAFF
Particulars Plant in charge Asst. In charge Designers Stitching machine worker Cutting machine worker Gate keeper Mechanical Supervisor Clerk Peon No of employed 1 1 5 60 30 2 2 5 2 2 110 335500 Total Salary per employee 20000 10000 15000 2500 1500 2000 3000 3500 2500 1500 Total salary (in Rs.) 20000 10000 75000 150000 45000 4000 6000 17500 5000 3000

OFFICE STAFF
Particulars No of employed Salary per employee Total salary (in Rs.)
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General manager Asst. Manager Clerk Receptionist Peon Total Overall total

1 2 3 1 2 9 119

25000 15000 2500 3000 1500

25000 30000 7500 3000 3000 68500 404000

Utilities:
Mainly one utilitypoweris required to operate the plant. a) Power Requirement b) Arrangement made c) Source of Power : : : 125 HP Applied Industrial feeder

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5.5 Production process flow chart:

Procurement of Finished Fabric Designing & Cutting

Stitching

Pressing

Labeling & packaging

Dispatch/shipment

Designing & Cutting:

First of all fabric are cutting as free size & regular size with the help of cutting machine with the help of size frames. Then the skilled designers first of all design the fabric as per the different size and shapes of the cotton trousers and cutting them.

Stitching:
Then stitching is done by the skilled labors. Stitching includes sewing with west bands, Belt loops, stitching rivets and buttons, and finishes the product.

Pressing:
Press is done on clothes (remove wrinkles on it) and make ready for further process.

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Labeling & packaging:

After finishing the product labeling and packaging are done by the labours.

Product Mix:
The company prepares mainly Cotton pent are as under Straight pent Cargo pent Denim pent Six Pocket pent

Available Size:
Waist Size 26 28 30 32 34 36 38

Manufactured Capacity:
Table no 5.6: Manufacturing capacity Shift 1 2 Particulars 30 machines * 10 Unit 30 machines * 10 Unit TOTAL Daily Production Unit 300 300 600

Installed machine & manual capacity is 600 trousers per day.

Technical Know-how
The plant being installed is a semi-automatic plant. Some of the functions will be done manually e.g. Sewing machines are assisted by skilled labors, packaging and labeling etc.
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The other functions are done automatically in the plant such as stitching the button and rivets, cutting as pre the shape & size. The company has made all arrangements to recruit necessary technical personnel. Skilled and unskilled workers are available from Ahmadabad. The technical person who will be looking after the activities relating to setting up of machines for desirable cutting and stitching. Other technical personnel, who will be handling smooth functioning of the plant after it becomes operational, is working with arvind mills, His experience of more than 10 years will ensure not only proper plant functions but also quality control and purchasing of raw materials. The spare parts and other complimentary items for the plant are easily available in Ahmedabad and Baroda.

5.6 Location & Site

The plant is located at Himatnagar GIDC, G- 203, 204, 205, National Highway 08, Boriya, Ta- Himatnagar Dist: Sabarkantha. The location is on the National Highway. The area enjoys all infrastructural facilities like transportation, electricity, water, telecommunication, trained manpower etc. Raw material market centersAhmedabad, Mehsana, Gandhinagar, Modasa are close by.

a) Power:
There is 24 hrs. Power supply to the industries located in Himatnagar. The company has made an application for a power connection of 125 HP. By mid novenber-2008 the connection is expected to be made available.

b) Communication:
The registered office of the company is situated in Ahmedabad one of the largest business centers in the Gujarat, and factory is situated at Boriya which is one of the developed industrial areas of Sabarkantha district. Various communication facilities are readily available at and around the unit.

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c) Transportation:
The plant is located at Boriya is 3 km far from Himatnagar. Himatnagar Railway junction is about to 2 km from the manufacturing plant, The location is on the National Highway. All types of transportation facilities are available here. There are many transport companies available nearer city Himatnagar. d) Labor: The Labors both skilled as well as unskilled are sufficiently available from the area in and around the factory site. As already mentioned, the site is one of the main industrial areas here which ensures that required labor would be easily available. The prevailing atmosphere of the relations with the labor is also cordial.

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CHAPTER 6
FIANANCIAL PROJECTION
Capital Outlay and Means of Finance: 6.1. Cost of Project:
The total outlay on the project works out to Rs. 56.58 lakhs and the margin money for working capital required to be brought in is Rs. 11.97 lakhs. Thus, the total cost of project works out to Rs. 68.55 lakhs, the details of which are given in the Annexure-I of the Report. A brief break-up of the cost of project is as under Table no 6.1: Cost of project Particulars Land Site Development Building stitching machine cutting machine Electrification Misc. Fixed Assets Preliminary & Preoperative Expenses Provision for contingencies Working Capital Margin TOTAL Rs. In Lakhs 12 2 21 7.5 2.25 4.5 3 3 6 20 81.25

The working of the various major components of the cost estimates are based upon suppliers cost. The preliminary and pre-operative expenses are taken on estimated basis. Provision has been made for contingencies as the project will be implemented in a short period
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of two three years. The working capital margin is worked out keeping in mind the various working capital requirements of the Company.

Means of Finance:
It is proposed to finance the project with a judicious mix of equity and loan funds. For this purpose, it is proposed that the promoters will bring in Rs. 31.25 lakh equity capital, and the balance of Rs. 50.00 lakhs is proposed to be financed from Term Loan repayable in 5 years from IDBI. This capital structure gives a debt equity ratio of 1.24 which is seemingly comfortable for any lender. The details of the means of finance are given in Annexure-I. Table no 6.2: Source of finance Particulars Promoters contribution loan from IDBI TOTAL Rs. In Lakhs 31.25 50 81.25

6.2 Working Capital Requirements

The complete computation of assessment of working capital requirement for the project is given below. The assessment is based on the following assumptions: -

CURRENT ASSETS:
Raw-material Levels:The raw materials will be purchased from various local suppliers such as cotton fabric & embroidery fabric from Vimal And arvind mill and other raw material such as rivets, buttons etc available in local market. It is proposed to keep local raw material stock at an average level of 15 days because the raw material is normally easily available from various sources which are located nearby.

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Stock-in-process:
The manufacturing process consists of daily 600 units of trousers. Per Trousers required fabric is approximately 1.5 meters .So on that assumption one day requirement of fabric is 1.5* 600= 900 meter. So we will order for raw fabric before 30 days stock out. Stock: 1.5* 600= 900 meters per day *30 days=27000 meters

Finished Goods:
To maintain a proper service level and meet any urgent requirements of its customers, at least 10days stock of finished goods will be maintained.

Receivables:
The credit period offered in this industry depends on factors like price offered quality of the product etc. Many of the established companies which offer better quality products sell on cash basis the company may extend credit up to 30 days for first year, 20 days for second year and 10 days forever to its dealers.

Other Current Assets:

Current expenses are estimated at about 0.5 month level. The current expenses are various prepaid expenses/advances. Other current assets may either be in form of current investments, cash or it may be considered as cushion if at all the ideal projected levels of inventories or receivables are slightly deflected. They may also consist of various statutory and other types of deposits to be made and miscellaneous loans and advances required to be made to staff and others, which are taken on an estimated lump sum basis.

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CURRENT LIABILITIES:
Since raw materials are to be acquired on cash basis for 1st year than after credit basis, sundry creditors for raw-materials are estimated at a level of zero days for 1st year, 10 days for 2nd year and 20 days for next 3 year. The raw materials are to be purchased from direct contacts with the actual suppliers. The liabilities for current expenses are estimated at about 15 days. Other than that there are no major current liabilities except the installments of Term Loans given in Annexure III to the Report.

AGGREGATE WORKING CAPITAL AND NET WORKING CAPITAL: As per the projections given below the gross working capital required for the first year of production, i.e., 2003-04 and the break up of current assets and liabilities and net working capital will be as following : Table no 6.3: Working Capital Particular/years Current assets Raw material Stock in progress Finished goods Receivables ( debtors) Total working capital Less: Current liabilities Current expenses Net working capital Available bank finance Margin money 985158 4316925 1804217 2512708 675000 93750 1200000 3333333 5302083 2010

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Table no 6.4: Working capital Requirement

Particular/Years current assets Raw Material Stock in Progress Finished Goods Receivables ( Debtors) Total Working Capital Less: Current liabilities Current Expenses Net Working Capital Available Bank Finance Margin Money 985158 4316925 2316925 2000000 510000 800040 3787877 1140000 879394 2034356 1260000 1001505 2241411 1380000 1149361 2388278 675000 93750 1200000 3333333 5302083 765000 106250 1448889 2777778 5097917 855000 118750 1580000 1500000 4053750 945000 131250 1760000 1666667 4502917 1035000 143750 1933333 1805556 4917639 2010 2011 2012 2013 2014

1687877 134355.6 241411.4 188277.9 2100000 1900000 2000000 2200000

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6.3 Assumptions:
Salessingle peace of trouser @ Rs. 200 Approximately 16% increase in capacity utilization every year. Interest-10% p.a. with quarterly rests for Term Loan.

6.4 Other Financial Projections:

The other financial projections including the profitability projections for the next 5 years, the statement of sources and disposition of funds and the projected Balance Sheet for the next 5 years along with the detailed working of each of the components of cost taken for projection & ratio are given below

Table no 6.5: P& L Account

Particular/years Sales Less: cogs Opening stock Raw material Finished goods Add: raw material purchase Less: closing stock Raw material Finished goods Total cogs Gross profit Less: operating expenses Marketing expense Salary 7500000 4848000 580000 5160000 470000 5472000 360000 6697200 260000 7066800 1125000 3200000 11875000 28125000 1275000 2160000 19930000 30070000 1425000 2880000 26934000 27066000 1575000 3360000 27862000 32138000 1725000 4600000 25214000 39786000 0 0 16200000 1125000 3880000 18360000 1275000 9444000 20520000 1425000 8692000 22680000 1575000 5124000 24840000 2010 40000000 2011 50000000 2012 54000000 2013 60000000 2014 65000000

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Electricity expense Transportation expense Dealers commission Repairs expenses & maintenance

5832000 600000 4000000 18800 432000 202000 211000 23643800 4481200 736220 100000 3644980 560000 3084980 1079743 2005237

6765120 720000 5000000 18057 489600 234000 234180 19200957 10869043 1428506 100000 9340537 300000 9040537 3164188 5876349

7712237 840000 5400000 132691.5 547200 271161 260177.2 21105467 5960533 1985406 100000 3875128 100000 3775128 1321295 2453833

8637705 960000 6000000 172734.1 604800 314332.3 289353.7 24036125 8101875 2513853

9501475 2700000 6500000 207363.46 662400 364505.99 322119.81 27584664 12201336 3007512

Packaging expenses Other manufacturing expenses Administration expenses Total operating exps. PBDIT Less: depreciation P & p exp. Slm 3 years w/up PBIT Less: interest 10% PBT Less: taxes 35% PAT

5588021

9193823.8

5588021 1955807 3632214

9193823.8 3217838.3 5975985.5

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Table no 6.6: Assets

Assets Fixed assets Gross block. Less: depreciation 736220 to date. Net block.... Current assets Stock Receivables ( debtors) P & p exp. Slm for 3 years Cash & bank Balance Total 4325000 3333333.3 200000 70515.333 12411229 3435000 2777777.8 100000 3494050.5 14022222 3000 9891974 4000 10586857 332241.73 12376180 4305000 1500000 4935000 1666666.7 6325000 1805555.6 4482380 4215394 4083974.2 3981190.2 3913382.5 1428506 1985405.8 2513853.4 3007512 5218600 5643900 6069380 6495043.6 6920894.5 2010 2011 2012 2013 2014

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NSVKMS MBA College, Visnagar

Table no 6.7: Liabilities

Liabilities Capital Profit/loss Net capital Reserve fund IDBI loan Misc. Loan Current liabilities Creditor Outstanding exp Provision for 600000 contingencies Bod total 12411228.7 14022222 563747 9891974.22 818971 10586857 12376180 600000 600000 600000 600000 1080991.67 510000 910873.21 1140000 1009394.44 1260000 1150671.9 1380000 1295194.3 5000000 600000 3000000 1000000 2010 3125000 2005237 5130237 2011 3125000 5876349.1 9001349.1 2012 3125000 2453832.99 5578832.99 2013 3125000 3632213.9 6757213.9 2014 3125000 5975985.5 9100985.5

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NSVKMS MBA College, Visnagar

Table no 6.8: Depreciation

Particular/years Building wdv 10% Misc. Expe wdv 20% Site development slm 3 years Electrification wdv 20% Land wdv 15% Machine wdv 10% Total P & P Exp. SLM 3 YEARS 2010 210000 58720 100000 90000 180000 97500 736220 100000 2011 427500 105956 200000 163800 333000 198250 1428506 100000 2012 651750 144004.8 200000 224676 463050 301925 1985406 100000 2013 882075 174703.8 200000 275249.5 573592.5 408232.5 2513853 2014 1117868 199263.1 200000 317618.5 667553.6 505209.3 3007512

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NSVKMS MBA College, Visnagar

Table no 6.9: Raw materials

Particular/years Opening stock Ra material Finished products Purchase Closing stock Ra material Finished products 1125000 3200000 1275000 2160000 1425000 2880000 1575000 3360000 1725000 4600000 0 0 16200000 1125000 3200000 18360000 1275000 2160000 20520000 1425000 2880000 1575000 3360000 2010 2011 2012 2013 2014

22680000 24840000

Table no 6.10 Salary

Production staff salary

Particulars/years Plant in charge Asst. Incharge Designers Stitching machine worker Cutting machine worker Gate keeper Mechanical Supervisor Cleark Peon 2010 20000 10000 75000 150000 45000 4000 6000 17500 5000 3000 2011 20000 10000 75000 170000 51000 4000 6000 17500 5000 3000 2012 20000 10000 75000 190000 57000 4000 6000 17500 5000 3000 2013 22000 12000 85000 252000 71400 4600 7000 19000 5400 3600 2014 22000 12000 85000 276000 78200 4600 7000 19000 5400 3600

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NSVKMS MBA College, Visnagar

Total

335500

361500

387500

482000

512800

Office staff salary

Particulars/years General manager Asst. Manager Cleark Receptionist Peon Total Total salary Total salary yearly 2010 25000 30000 7500 3000 3000 68500 404000 4848000 2011 25000 30000 7500 3000 3000 68500 430000 5160000 2012 25000 30000 7500 3000 3000 68500 456000 5472000 2013 27000 34000 8100 3400 3600 76100 558100 6697200 2014 27000 34000 8100 3400 3600 76100 588900 7066800

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NSVKMS MBA College, Visnagar

Table no 6.11: Power consumption

Statement of Power and Electricity Year 2010 2011 2012 2013 2014 No of Wrk. Hrs. 16 16 16 16 16 Total Unit 1296000 1503360 1713830 1919490 2111439 Rate per Unit 4.5 4.5 4.5 4.5 4.5 Amount 5832000 6765120 7712236.8 8637705.216 9501475.738

Table no 6.12: Statement of Marketing Expenses In Rs. particulars Radio Print Outdoor media Total 2010 2300000 4000000 1200000 6300000 2011 180000 300000 100000 480000 2012 140000 250000 80000 390000 2013 100000 200000 60000 300000 2014 70000 150000 40000 220000

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NSVKMS MBA College, Visnagar

Table no 6.13: Machine cost

Types of machine/year Stitching machine Cutting machine Total 2010 750000 225000 975000 2011 850000 255000 1105000 2012 950000 285000 1235000 2013 1050000 315000 1365000 2014 1150000 345000 1495000

Table no 6.14: Administrative Expenses

Particular/years Office rent, rates & taxes Legal & professional Postage, telegraph & telephones Bank charges & commission Printing & stationery Misc. Administrative expenses Total 2010 25000 35000 48000 50000 22000 31000 211000 2011 27500 39200 50400 57500 24860 34720 234180 2012 30250 43904 52920 66125 28091.8 38886.4 260177.2 2013 33275 49172.48 55566 76043.75 31743.73 43552.77 289353.7 2014 36602.5 55073.18 58344.3 87450.31 35870.42 48779.1 322119.8

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NSVKMS MBA College, Visnagar

Table no 6.15: Manufacturing Expenses

Particular/years Insurance charges Factory rates & taxes Misc. Manufacturing Expenses Total 2010 126000 41000 35000 202000 2011 144900 49200 39900 234000 2012 166635 59040 45486 271161 2013 191630.3 70848 51854.04 314332.3 2014 220374.8 85017.6 59113.61 364506

Table no 6.16: Repair & Maintenance Expenses

Particular/years Buildings Factory building Office building Machines Misc. Fixed assets Electrification etc. Total 12000 3300 3500 18800 18057 13800 4257 25000 5491.53 4200 132691.5 98000 112700 21000 28750 7084.074 3200 172734.1 129605 23100 42000 9138.455 3520 207363.5 2010 2011 2012 2013 2014

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NSVKMS MBA College, Visnagar

Table no 6.17: Packaging Expenses

Particular/Years Boxes Pouch Total 2010 324000 108000 432000 2011 367200 122400 489600 2012 410400 136800 547200 2013 453600 151200 604800 2014 496800 165600 662400

Table no 6.18: Building Cost

Particular/Years Factory Shed Office building(at manufacture unit) Office building( Head office) Worker quarters Warehouse Compound wall Total 2010 1425000 69000 125000 81000 187000 213000 2100000 2011 1710000 69000 125000 81000 187000 213000 2385000 2012 1995000 69000 125000 81000 187000 213000 2670000 2013 2280000 69000 125000 81000 187000 213000 2955000 2014 2565000 69000 125000 81000 187000 213000 3240000

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NSVKMS MBA College, Visnagar

Table no 6.19: Miscellaneous Assets cost

PARTICULAR/YEARS Scissors Irons furniture & fixture Computer Total 2010 5000 3600 210000 75000 293600 2011 5100 4800 210000 75000 294900 2012 5200 6000 210000 75000 296200 2013 5300 7200 210000 75000 297500 2014 5400 8400 210000 75000 298800

Electrification Cost PARTICULAR/YEARS Electrification 2010 450000 2011 459000 2012 468180 2013 477543.6 2014 487094.5

Table no 6.20: P& P Expenses

Particulars/Years Preliminary & Preoperative Expenses 2010 300000 2011 200000 2012 100000

Table no 6.21: Site development

Particulars/Years Site Development

2010 200000

2011 100000

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NSVKMS MBA College, Visnagar

Table no 6.22: Land cost Particulars/Years Land 2010 1200000 2011 1200000 2012 1200000 2013 1200000 2014 1200000

Table no 6.23: RATIO

Years Profit margin ratio Operating profit margin Return on assets Current ratio Total asset turnover 2010 5.01% 9.11% 16.16% 4.597791 3.222888 2011 11.75% 18.68% 41.91% 4.803284 3.565769 2012 4.54% 7.18% 24.81% 1.753019 5.458971 2013 6.05% 9.31% 34.31% 1.724878 5.667404 2014 9.19% 14.14% 48.29% 2.5839069 5.2520245

Years Sales growth rates Net operating growth rates Operating expenses growth rates

2011 25.00%

2012 8.00%

2013 11.11%

2014 8.33%

193.05%

-58.24%

48.02%

64.53%

-18.79%

9.92%

13.89%

14.76%

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NSVKMS MBA College, Visnagar

CHEPTER-7
KEY SUCCESS FACTORS & THREATS
7.1 Key Success Factors
The changing global trade patterns offer more opportunities than it poses threats. The apparel export product mix from Pakistan is heavily tilted towards men's wear and knitted garments. As the global market demand characteristics are changing, woven segment of the garments is a much larger market than the knit garments and offers higher price realizations. The following are the main key success factors: Strong marketing skills/knowledge is required from entrepreneur Assurance of high consistent quality Assurance of on time delivery Competitive rates Cost efficiency Better services to the customer i.e. claim settlement etc. Better communication development with customers

7.2 Threats and Weakness of the Business

One major threat that garments manufacturers and exporters from developing countries like Pakistan will have to face is the introduction of non-tariff trade barriers. While the free trade regime is increasingly gaining foothold in the international export arena, developed countries are becoming increasingly selective in their import preferences. Issues like compliance to environmental standards and self-defined working environment can severely restrict exports from the developing countries. The main threats and weakness of the business are as follows: Continuous increase in utility rates Non friendly attitudes of Government agencies Less productive labor due to lack of education and training Lack of market research especially in prospective markets Growing demand for International Standards Certifications Lack of financial and human resources to attain immediate certification.

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NSVKMS MBA College, Visnagar

ANNUXER

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NSVKMS MBA College, Visnagar

QUESTIONNAIRE
Respected Sir/Madam, We are the students of NSVKMS MBA College, Visnagar. In accordance to the subject of Management course we have undergone the project of Entrepreneur Management Innovation. So we kindly urge you to provide your views for the following questions in partial fulfillment of our studies.

1. Are you prefer cotton pent?

Yes 2. Why are you prefer cotton pent? A. B. Durability Style

No

C. Design D. Any other .

3. On which time you purchase cotton pent? A. B. Occasionally Six monthly C. Monthly D. Yearly

4. Which features do you like most in cotton pent? A. Durability B. Style C. Design D. Price

5. Which criteria do you consider when you are going to purchase cotton pent? A. Advertisement B. Discount C. Brand D. Scheme E. Price F. Design

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NSVKMS MBA College, Visnagar

6. Which color do you like most in cotton pent? A. Blue B. White C. Other . 7. Are you prefer cotton pent with A. Graphics B. Formal C. Lining D. Embroidery D. Black E. Grey

8. From where you purchase cotton pent? A. Shopping mall B. Showroom 9. How much money you are ready to spend on cotton pent? A. 500 to 1000 B. 1000 to 1500 10. Which additional features you want in cotton pent? __________________________________________________________________ 11. Your unique suggestion for our product. __________________________________________________________________ Name:- _______________________________ Address:- ____________________________________________________________ Age:- ______ Occupation:- _____________________ Monthly income:- __________________ C. More than 1500 C. Retail outlets

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NSVKMS MBA College, Visnagar