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 Boards 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: Expert Cutter: Tailors: Sales and Marketing: Watchman: 1 No.s 1 No.s 4 No.s 1 No.s 1 No.s

PRODUCTION PROCESS FLOW CHART

Dying/Processing

Cutting

Stitching

Packing

Finishing

Shipment

Technical Skills Involve: 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 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. information; and

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 Total Area Required 1400 5000 1400 1200 1000 10000

COST ANALYSIS PLANT & MACHINERY

S.No Description 1. 2. 3. 4. 5. 6. 7. Power operated cutting machine

No.

Rate 1 8 1 1 1 1

Amount 35,000 10000 10000 35000 25000 20000 20000 35000 80000 10000 35000 25000 20000 20000

Power operated SNLS Stiching Machine Overlock Motor stiching Machine Garment Washing machine (15kg) Tumbler Dryer (15kg) Potable Steam Press Other Miscellaneous Items

Total

Rs. 2,25,000

SALARIES

Designation Manager: Expert Cutter: Tailors: Sales and Marketing: Watchman: Total

No. 1 1 4 1 1

Per Month Annual 15000 7000 5000 10000 3000 180000 84000 240000 120000 36000 Rs. 6,60,000

Cost of the project S. No. Items 1. Building (200 sq ft rented) 2. Plant and machinery (Including installation) 3. Misc. Fixed Assets(Dummies, Scissors, Presses, Scales etc.) 4. Furniture and fixtures (including office equipments) 5. Preliminary and pre-operative expenses Total cost (in Rs.) Rented 2,25,000.00 10,000.00 10,000.00 4,000.00

6. Contingencies (including cost escalation) 7. Working capital 8. Salaries 10. utilities 11 Raw material (including Packing material) 12 Stores & Spares 13 Rent 14 Transportation/Freight 15 Selling expenses

2,000.00 200,000.00 6,60,000.00 25,600 6,00,000.00 16,000.00 25,000.00 12,000.00

(including advertising distribution cost, commission and rebates) 15,000.00 16 Repair and Maintenance 17 Interest TOTAL Utilities (per annum) S. No. 1.Power 2.Water TOTAL Items Total cost (in Rs.) 22,000.00 3,600.00 25,600.00 25,000.00 6,000.00 18,35,600

Raw material requirement(per annum) S. No. Value (Rs.) 1.Cotton/synthetic plain & printed Items Qty.(mtr) Rates (Rs.)

fabric of various colours andshades. 2.Cotton printed fabric in different colours and shades 5000

5000

40 per mtr.

20,0000.00

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. TOTAL LS 12,0000.00 50,0000.00

Working capital requirement S. No. 1.Raw Material 2.Stores & spares 3.Stock in process 4.Finished Goods 5.Receivable/debtors 6.Other Current assets TOTAL 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 1 1 ItemsPeriod (Month) 1/2 Amount (in Rs.) 25,000.00 500.00 12,000.00 15,000.00 5,500.00 2,000.00 60,000.00

TaxesProfit after tax 12.Viability indicators S. No. Particulars 1.Repayment per annum (period -5 years) 2.Return on Investment 3.Debt Service Coverage Ratio Amount 20,000.00 45.30% 2.17% 45,300.00

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 2 2 Promoters contribution Seed Capital 4.00 6 8 (2 lacs each )

Long term borrowings

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 01. Long term borrowings amt (lacs) 6

02. Rate of interest 03. Installment 04. Repayment schedule 05 Moratorium Period 7 yrs

9.00% .65 lacs + int

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 products 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

PORTERS 5 FORCE MODEL

Customer Bargaining Power

Threat of New Entrants

Threat from Competition

Threat of Substitutes

Supplier Bargaining Power

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 dont have that much of bargaining power as we are already providing high quality product at reasonable rates. Thus, customers 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.