Denim Jeans Stitching Unit

EXECUTIVE SUMMARY
The proposed Denim Jeans Stitching unit is a project of the Textile Sector, producing standard five pocket jeans trouser. The unit will cater to the local as well as export denim market. The jeans produced will be of export, high quality fabric. Through the use of high-tech equipment and modern techniques the company can produce jeans of latest trends without compromising on quality. The process flow includes purchase of raw material, cutting, stitching, washing, finishing, pressing and packing. Quality control checks will be taken care of through out the process. Pakistan has become denim hub in the region in less than a decade and is considered as one of the leading supplier of quality denim fabric to the world's known brands. Pakistan's denim is second to none. There has been a phenomenal increase in the production capacity of denim mills in Pakistan and at present numerous denim mills are in operation. The denim industry is contributing substantially towards exports creating job opportunities and has invested billions in the denim sector. The denim industry is not only fully catering to the needs of the local apparel industry but is also catering to the foreign market and earning valuable foreign exchange for the country. This particular stitching unit is proposed to have an installed capacity for producing 1000 denim jeans per day. The units initial capacity utilization is kept at 70%, which eventually goes up to 90% in the fifth year. A Denim Garment Stitching Unit with an installed capacity to produce 1,000 pieces per day needs an investment estimated at Rs. 14.150 million. The project is financed through 50% debt and 50% equity. Projected IRR, Net Present Value and Payback of this project are 71.11%, Rs. 165.680 million and 3.71 years respectively. The legal business status of this project is proposed as Sole Proprietorship

Denim Jeans Stitching Unit

CRUCIAL FACTORS AND STEPS IN DECISION MAKING

Strengths
There is a ready made market for this product. Relatively low labour costs Ample available work force. Well-situated industrial estate with all major facilities available.

Weaknesses
The requirement of credit and/or delay of payments from customer side might cause disturbance in the cash cycles. Very small base of available skilled machinists. Lack of trained technicians and line / middle management. Uncertain investment climate

Opportunities
WAPDA/KESC will provide off peak hour rates and bulk rates for industrial consumers to lower the electricity cost of manufacturing. Manufacturers-cum-exporters are allowed to import samples of each kind or quality having value up to US$ 100 at zero duty rates. Two special export zones focusing on textile sector particularly in dyeing, processing and finishing sectors will be established at Karachi and in one of the industrial cities of Punjab.

Threats
Skilled operators in the denim garments are quite unorganized. Stitching expertise is not available at the best possible level. This restricts the industry to the basic garments and only limits the entry into the manufacturing of high quality garments. Cost of doing business may increase as the energy, raw material prices, wages and mark up rates may rise.

Denim Jeans Stitching Unit

PROJECT PROFILE
During the last decade, the usage of denim garments, especially denim jeans, has been on a rise in the international as well as the local markets. This has led to a rise in the demand of denim garments. The competitive edge of Pakistan in this field stems from the ready availability of cotton yarn required to weave denim fabric i.e NE 7/1 to NE 14/11. During the past few years, the denim fabric manufacturing capacity has also been enhanced that has provided the opportunity to industry to strengthen. The export of denim garments from Pakistan has also been on a rise.

Project Brief
The proposed project presents an investment opportunity in manufacturing of denim jeans. The project profile has been prepared for a standard five pocket jeans trouser. The proposed stitching unit will be having the potential for its own manufacturing and supply for the local market as well as for the export market. However washing will be outsourced.

Proposed Capacity
The proposed capacity of the unit is 1000 garments per day.

Total Project Cost

The cost of project has been estimated as Rs.14.150 million including machinery and office equipment.

Proposed Location
The proposed locations for a garment manufacturing unit will be Lahore Karachi Faisalabad Hyderabad Sialkot Gujranwala

Denim Jeans Stitching Unit

Key Success Factors

he total commercial viability of this proposed stitching unit depends on the regular orders for the purchase of the finished product. This requires aggressive marketing efforts at the entrepreneur's end. Following are other key points that are important for the successful operation of the proposed stitching unit. Surety of high consistent quality Surety of on time delivery Competitive rates Cost efficiency Better services to the customer. Better communication development with customers

Denim Jeans Stitching Unit

CURRENT INDUSTRY ANALYSIS

Export Market
Pakistans export of denim jeans is increasing over the years. Pakistans denim exports increased rapidly in the last years, due to a series of advantages including a falling currency, cotton fibre and yarn availability, modern equipment and strong incentives from the government. The country has progressively built a wealthy denim industry, allowing progressive denim apparel production and direct denim fabric exports to other Asian countries and to Turkey.

MARKET ANALYSIS
Major concentration of the denim garment stitching industry is in Karachi and Lahore. Other important hubs are Sialkot, Faisalabad and Gujranwala. The average production capacity of majority of small and medium sized jeans manufacturing units is about 1,000 jeans per day. However, large size manufacturers are producing as much as 30,000 jean trousers per day.

Domestic Market
Almost all the established manufacturers are catering solely to the export market. Only the BClass products are sold in the domestic market. The size of the manufacturers, whose primary market is domestic, is quite small.

Target Customers
In case of direct exports, the customers are retail chain stores, direct distributors and wholesalers. The export can either be through buying houses and/or through direct customers

Denim Jeans Stitching Unit

PRODUCTION PROCESS FLOW

The proposed business is stitching denim jeans. The process will involve purchasing of raw material from the market i.e. denim fabric, which will be put through the process. Washing of the fabric will be outsourced as washing in house requires a plant which is expensive and will greatly increase the project cost. Therefore, it is

Denim Jeans Stitching Unit

Packing Cost
Packing cost includes one poly bag and one small carton for the packing of each finished garment. Total cost of packing for one piece is taken as Rs. 15

Denim Jeans Stitching Unit

HUMAN RESOURCE REQUIREMENTS

For a garment-stitching unit of 32 stitching machines, following manpower is required

Denim Jeans Stitching Unit

MACHINERY AND EQUIPMENT DETAILS

Machinery List
Following combination of stitching machines is required for manufacturing 1,000 denim jeans per day. Approximate prices for Japanese origin machinery are given below

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LAND & BUILDING

Land/Building Requirement
Approximately, 4,900 square feet of total covered area is required to establish the proposed stitching unit with a management building. The allocation of the space requirement is as follows

Utilities Requirements
It is assumed that the following utilities will already be available at the proposed building to be rented out: Electricity Water Gas Telephone Fax

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