A

Project Report for

Stitching & Embroidery Work Unit

M/s. Kishvar Parveen

Prop. Mrs. Kishvar Parveen
Jabalpur

Prepared By

7th March, 2019

I have only compiled the data on the basis of information & explanation given by the Prop. and do not
vouch for the accuracy of the projection and data contained therein.

1
 Table of Contents

Section No. Title Page No.

1 Summary of Project 3

2 Market Potentiality 4

3 Constitutions 5

4 Project at a Glance 6

5 Financials 7

6 Financial Aspects 12

7 Loan Repayment Schedule 15

8 Depreciation 15

9 Profitability Statement 16

10 Balance Sheet 17

11 Structural Ratios 18

12 Break Even Point 19

13 Assumptions 20

14 Conclusions & Recommendations 21

2
 Section 1: Summary of the Project

The objective of the pre-feasibility study is primarily to facilitate potential

entrepreneurs in Project identification for investment. The project pre-feasibility may form
the basis of an important investment decision in order to serve this objectives, the
document/study covers various aspects of project development, start-up, and production,
finance and business management.

The present proposal outlines the details of setting up a Stitching and Embroidery
work unit at 479/1, Near Madina Masjid, Dr. Jakir Hussain Ward, Jabalpur (M.P.).
Considering that the prime driver for manufacturing unit is cost advantage, demand &
supply ratio & presence of competition in the market, envisaging a model where small
capital is used to finance some tested ideas for producing such items which though have a
big market are not easily accessible is one of the most appropriate ways of presenting such
a low cost advantage to the customers.

The total cost of project has been estimated at Rs. 2.00 Lac out of which the Margin
cum Govt. Subsidy will be 0.60 Lac, Bank will finance 1.40 Lac Term Loan. The project
viability drawn by using the conservative projection shows that the unit will generate enough
cash to reply the entire Term loan along with interest within stipulated time duration.

3
 Section 2: Market Potentiality

Embroidery is becoming a fashion trend in outerwear’s shirts, Pyjamas, Petticoats,

Blouses, Baby dresses, Shawls and ladies dresses etc. Embroidery is a method of
decorating a fabric by stitching a design on it with a needle and thread. Earlier it was done
by hand or by the zigzag action of power operated embroidery machine but with the
changing industrial scenario and change in the people for quality product computerised
embroidery is in great demand. The embroidery is done on the fabric in different motifs like
names, trees, flowers and figures with different colours of embroidery threads. The
embroidery work in fabric is an advantage in sale of the fabric. Now a day, most of the
outerwear’s are available with embroidery designs.

Embroidery is a fashion work on outerwears for attracting people to buy the fabrics.
In now days, almost all the outerwear’s used by the youngsters are coming in the market
with some embroidery work. Embroidery is a work on the plain fabric, which create new
designs and new look of the fabrics. The customers are sending their material for
embroidery work on Job work basis also. Embroidery on pillow covers, cushions, tablemats,
ladies suits and a children wear has become a fashion, there is no market problem on job
work basis.

4
 Section 3: Constitutions

The unit is a proprietorship concern formed with the objective to Start Stitching &

Embroidery Work Unit at 479/1, Near Madina Masjid, Dr. Jakir Hussain Ward, Jabalpur

(M.P.).

The promoter of this unit is Mrs. Kishvar Parveen W/o Mr. Riyazuddin Ansari aged

about 39 years, permanent resident of 479/1, Near Madina Masjid, Dr. Jakir Hussain Ward,

Jabalpur (M.P.). She has very good knowledge about Stitching & Embroidery Work Unit

and also knows about the intricacies of running such a unit.

She has acquired adequate technical & business experience as well as conversant

with technological and marketing aspect of proposed unit.

5
 Section 4: Project at a Glance

Business Name : M/s Kishvar Parveen

Name of the Promoter : Mr. Kishvar Parveen

Address : 479/1, Near Madina Masjid, Dr. Jakir Hussain Ward,

Jabalpur (M.P.).

Age : About 39 Years

Project Description : Stitching & Embroidery Work

Project Total Cost : 2.00 Lac

Cost Break-up

Machinery & Equipments : 0.70 Lac

Raw Material : 1.30 Lac

Finance Break-up

Govt. Subsidy : 0.60 Lac

Bank Term Loan : 1.40 Lac

6
 Section 5: Financials

The overall capital cost of the project is estimated to be Rupees Seventy Thousands. A table
showing the cost estimates is given below.

Schedule 1: Cost Estimate of different Infrastructure items.

Sr. No. Description Amount

1 Sewing Machine (10000 X 3) 0.30

2 Embroidery Machine (20000 X 2) 0.40

Total 0.70

Note: Cost of Machineries are taken as per quotations provided by the promoter

7
 RECURRING EXPENDITURE
Schedule 2(a): Year-wise Recurring Costs (Rs. In Lac) –

Particulars 1 2 3 4 5 6 7 Total

Raw Materials 0.70 0.77 0.85 0.93 1.02 1.13 1.24 6.64

Pay & Allowance 1.68 1.85 2.03 2.24 2.46 2.71 2.98 15.94

Utility Expenses 0.40 0.44 0.48 0.53 0.59 0.64 0.71 3.79

Administrative &
1.28 1.41 1.55 1.70 1.87 2.06 2.27 12.14
Other Cost

Total 4.06 4.47 4.91 5.40 5.94 6.54 7.19 38.52

8
Schedule 2(b) : Year-wise Breakup of Raw Material (Rs. In Lac)

Description 1 2 3 4 5 6 7 Total
Clothes
Cloths Required 0.60 0.66 0.73 0.80 0.88 0.97 1.06

Thread Required 0.10 0.11 0.12 0.13 0.15 0.16 0.18

Total (in Lac) (A) 0.70 0.77 0.85 0.93 1.02 1.13 1.24 6.64

Schedule 2(c): Year-wise Breakup of Personnel Cost (Rs. In Lac)

Description Nos. 1 2 3 4 5 6 7 Total

Skilled Workers 2 1.20 1.32 1.45 1.60 1.76 1.93 2.13 11.38

Unskilled Workers 1 0.48 0.53 0.58 0.64 0.70 0.77 0.85 4.55

Total 1.68 1.85 2.03 2.24 2.46 2.71 2.98 15.94

Schedule 2(d) : Year-wise Breakup of Utilities (Rs. In Lac)

Description 1 2 3 4 5 6 7 Total

Electricity 0.30 0.33 0.36 0.40 0.44 0.48 0.53 2.85

Water 0.10 0.11 0.12 0.13 0.15 0.16 0.18 0.95

Total 0.40 0.44 0.48 0.53 0.59 0.64 0.71 3.79

9
Schedule 2(e): Year-wise Breakup of Administrative & Other Costs (Rs. In Lac)

Description 1 2 3 4 5 6 7 Total
Repair &
0.10 0.11 0.12 0.13 0.15 0.16 0.18 0.95
Maintinance

Insurance 0.12 0.13 0.15 0.16 0.18 0.19 0.21 1.14

Telephone Exp 0.06 0.07 0.07 0.08 0.09 0.10 0.11 0.57

Conveyance 0.30 0.33 0.36 0.40 0.44 0.48 0.53 2.85

Audit & Legal

0.10 0.11 0.12 0.13 0.15 0.16 0.18 0.95
Fees

General Exp. 0.60 0.66 0.73 0.80 0.88 0.97 1.06 5.69

Total 1.28 1.41 1.55 1.70 1.87 2.06 2.27 12.14

10
 Section 6: Financial Aspects

An estimation of the project financing is given below.

Schedule 3(a) : Project Cost Bifurcation

S. No. Description Amount

1 Capital Infrastructure 0.70

( As per Schedule 1)

2 Raw Material 1.30

(Cost of Recirring Expenditure of 2 Month Apx.)

Total Project Cost 2.00

Schedule 3(b) : Project Financing Bifurcation

The Loan is applied under Mukhya Mantri Swarojgar Yojna where the Margin
Money cum Govt. Subsidy will be 30% of the project cost and Bank will finance balance 70%
of the Project cost.

S. No. Description Amount

1 Govt. Subsidy cum Margin Money 0.60

(30% of the Total Project Cost)

2 Banks Term Loan 1.40

(70% of the Total Project Cost)

Total Finance 2.00

12
 Annual Revenue
Schedule 4: Year-wise Revenue (Amount in Rs. Lac)

Description 1 2 3 4 5 6 7 Total

Capacity Utilisation 70% 75% 80% 85% 90% 95% 100%

Stiching &
Embroidery

Revenue (per Day) 0.03 0.03 0.04 0.04 0.04 0.05 0.05

No. of Days 300.00 300 300 300 300 300 300

Gross Revanue
9.00 9.90 10.89 11.98 13.18 14.49 15.94 85.38
Total Revenue @
6.30 7.43 8.71 10.18 11.86 13.77 15.94 74.19
Capacity
Utilasation

13
 Annual Costs
Schedule 5: Year-wise Total Costs (Amount in Rs. Lac)

Description 1 2 3 4 5 6 7 Total

Recurring Costs 4.06 4.47 4.91 5.40 5.94 6.54 7.19 38.52

Interest on Bank
0.16 0.133 0.109 0.085 0.061 0.037 0.013 0.59
Term Loan @ 12%

Total Depreciation 0.11 0.09 0.08 0.06 0.05 0.05 0.04 0.48

Total Annual Cost 4.32 4.69 5.10 5.55 6.06 6.62 7.25 39.59

Statement of Profit & Loss

Schedule 6: Year-wise Statement of Profit & Loss (Amount in Rs. Lac)

Description 1 2 3 4 5 6 7 Total

Annual Revenue 6.30 7.43 8.71 10.18 11.86 13.77 15.94 74.19

Annual Costs 4.32 4.69 5.10 5.55 6.06 6.62 7.25 39.59

Income Tax 0.59 0.82 1.08 1.39 1.74 2.14 2.61 10.38

Annual Profit / (Loss) 1.38 1.92 2.53 3.24 4.06 5.00 6.09 24.22

Profit % 22% 26% 29% 32% 34% 36% 38% 33%

14
 Section 7: Loan Repayment Schedule

Repayment of total loan Rs. 1.40 Lac will be repayable in 7 years with 84 installments.
The rate of interest has been calculated @ 12% per annum. Interest subsidy @5% per annum is
available for the project but is not considered for the calculation purpose. However the rate of interest
might vary during the course of the project.

Particulars 1 2 3 4 5 6 7

Months 12 12 12 12 12 12 12

Principle 1.40 1.20 1.00 0.80 0.60 0.40 0.20

Installments 0.36 0.33 0.31 0.29 0.26 0.24 0.21

Total Interest 0.16 0.13 0.11 0.08 0.06 0.04 0.01

Principle Repayment 0.20 0.20 0.20 0.20 0.20 0.20 0.20

Section 8: Depreciation
Depreciation has been calculated @ written down value method for the period for Machineries @ 15%
per annum..

Schedule 8: Year-wise Depreciation Schedule (Amount in Rs. Lac)

Particulars 1 2 3 4 5 6 7 Total

Machineries 0.70 0.60 0.51 0.43 0.37 0.31 0.26

Depreciation 0.11 0.09 0.08 0.06 0.05 0.05 0.04 0.48

Total Depreciation 0.11 0.09 0.08 0.06 0.05 0.05 0.04 0.48

15
 Section 9: Profitability Statement
Schedule 9: Year-wise Profitability Statement (Amount in Rs. Lac)

S. No. Particulars 1 2 3 4 5 6 7

1 Revenue (A) 6.30 7.43 8.71 10.18 11.86 13.77 15.94

2 Raw Materials 0.70 0.77 0.85 0.93 1.02 1.13 1.24

3 Pay & Allowance 1.68 1.85 2.03 2.24 2.46 2.71 2.98

4 Other Expenses 1.68 1.85 2.03 2.24 2.46 2.71 2.98

5 Depreciation 0.11 0.09 0.08 0.06 0.05 0.05 0.04

6 Interest on Term Loan 0.16 0.13 0.11 0.08 0.06 0.04 0.01

7 Total ( 2 to 7) – (B) 4.32 4.69 5.10 5.55 6.06 6.62 7.25

Profit / (Loss) before Tax

8 1.98 2.74 3.61 4.63 5.80 7.15 8.70
(C = A – B)
Tax Provision
9 0.59 0.82 1.08 1.39 1.74 2.14 2.61
@ 30% (D)
Profit after Tax
10 1.38 1.92 2.53 3.24 4.06 5.00 6.09
(E = C – D)
Less – Repayment of
11 0.20 0.20 0.20 0.20 0.20 0.20 0.20
Loan (F)
Add – Depreciation
12 0.11 0.09 0.08 0.06 0.05 0.05 0.04
(Non Cash Exp.) (G)
Cash Accrual
13 1.29 1.80 2.41 3.10 3.91 4.85 5.93
(H = E – F + G)

16
 Section 10: Balance Sheet
Schedule 10: Year-wise Projected Balance Sheet (Amount in Rs. Lac)

S. No. Particulars 1 2 3 4 5 6 7

A Liabilities

Margin cum
1 0.60 0.60 0.60 0.60 0.60 0.60 0.60
Government Subsidy

2 Reserves & Surplus

Opening Balance 0 0.69 1.65 2.92 4.54 6.57 9.07

Net Profit/(Loss) after

1.38 1.92 2.53 3.24 4.06 5.00 6.09
Tax

Less : Withdrawals 0.69 0.96 1.27 1.62 2.03 2.50 3.04

Closing Bal. of
0.69 1.65 2.92 4.54 6.57 9.07 12.11
Reserve

3 Term Loan 1.2 1.00 0.8 0.6 0.4 0.20 0

Total (A) 2.49 3.25 4.32 5.74 7.57 9.87 12.71

B Assets

1 Fixed Assets

Gross Block 0.70 0.60 0.51 0.43 0.37 0.31 0.26

Less : Depreciation 0.11 0.09 0.08 0.06 0.05 0.05 0.04

Net Block 0.60 0.51 0.43 0.37 0.31 0.26 0.22

Current Assets
2 1.90 2.74 3.89 5.37 7.25 9.60 12.49
(incl. Cash & Bank)

Total (B) 2.49 3.25 4.32 5.74 7.57 9.87 12.71

17
 Section 11: Structural Ratios
Schedule 11: Important Ratios

S. No. Particulars 1 2 3 4 5 6 7

1 Net Profit after Tax 1.38 1.92 2.53 3.24 4.06 5.00 6.09

Add:

2 Depreciation 0.11 0.09 0.08 0.06 0.05 0.05 0.04

3 Interest on Term Loan 0.16 0.13 0.11 0.08 0.06 0.04 0.01

Total Funds Available

1.65 2.14 2.72 3.39 4.18 5.09 6.14
(A)
Repayment along with
4 0.36 0.33 0.31 0.29 0.26 0.24 0.21
Interest
Total Financial
0.36 0.33 0.31 0.29 0.26 0.24 0.21
Obligation to Bank (B)

5 DSCR (A/B) 4.61 6.42 8.79 11.89 16.00 21.46 28.83

Average DSCR 14.00

6 Debt Equity Ratio 0.93 0.44 0.23 0.12 0.06 0.02 0.00

Average Debt Equity

0.26
Ratio

18
 Section 12: Break Even Point (BEP)
Schedule 12: Year-wise BEP Calculations (Amount in Rs. Lac)

S. No. Particulars 1 2 3 4 5 6 7

1 Revenue (A) 6.30 7.43 8.71 10.18 11.86 13.77 15.94

Variable Expenses

Raw Material
2 0.70 0.77 0.85 0.93 1.02 1.13 1.24
(100% Variable)
Pay & Allowance
3 1.01 1.11 1.22 1.34 1.48 1.62 1.79
(60% Variable)
Other Expenses
4 0.84 0.92 1.02 1.12 1.23 1.35 1.49
(50% Variable)
Total Variable
2.55 2.80 3.08 3.39 3.73 4.10 4.51
Expenses (B)
Contribution
3.75 4.62 5.63 6.79 8.13 9.67 11.43
(C = A-B)

Fixed Expenses

Pay & Allowance

5 0.67 0.74 0.81 0.89 0.98 1.08 1.19
(40% Fixed)
Other Expenses
6 0.84 0.92 1.02 1.12 1.23 1.35 1.49
(50% Fixed)

7 Depreciation 0.11 0.09 0.08 0.06 0.05 0.05 0.04

Interest on Term
8 0.16 0.13 0.11 0.08 0.06 0.04 0.01
Loan
Total Fixed
1.77 1.89 2.01 2.16 2.33 2.52 2.73
Expenses (D)
BEP (In %) (E =
47% 41% 36% 32% 29% 26% 24%
D/C)

Average BEP 33%

19
 Section 13: Assumptions

The cost and profitability of the project for its first seven operating years is

calculated which is presented above. The various assumptions made for the calculation

of cost of production and profitability is listed below:

1. The unit will work for all 300 days.

2. The revenue rate is assumed on the conservative side based on prevailing

market rate.

3. The details of manpower and wages are on the basis of industry practice.
4. The interest on term loan has been taken @ 12.00% per year.

5. Operational year means year of operation.

20
 Section 14: Conclusions & Recommendations

M/s. Kishvar Parveen is a newly formed unit, which has been established to setup a

Manufacturing of Stitching & Embroidery Work Unit at 479/1, Near Madina Masjid, Dr.

Jakir Hussain Ward, Jabalpur (M.P.). Considering the fact that the demand for such

facilities is growing with a fast pace, there is adequate market available for such unit.

The promoter of the unit has requisite qualification and has gained enough experience,

therefore; it is possible for him to run the unit economically & successfully as per quality

standard.

The other benefits occurring from the project will be in form of generation of employment

opportunity in the city as well as surrounding rural areas. Considering all the above facts

like technical feasibility, economic & commercial viability of the project, the consultant

recommend viability support from the financial institutions & Banks.

20