A Project ReportOn

Garments factory

Submitted to:

“Javeed Iqbal Sb.

Submitted by:

Hassan Raza 60

Shahid Abbas 47

Momal Javeed 26

M.s.c A/F (Afternoon) 3rd semester

Session: 2008-10

Department of Commerce

In the Name of Allah, the Most Merciful, the Most Beneficent

DedicatedTo

Our Lovers

Whose endless support and kindness is beyond expressions and words may not just be enough to express our gratitude.

Preface

First of all, all thanks to Almighty Allah who gave us the strength,

Patience and inspiration needed to complete this report.

Knowledge is power and knowledge comes through studying and

thinking but practical knowledge comes through observing

things closely and working practically.

For improving our practical skill the Commerce department

has given a chance to explore the knowledge in different projects.

This practice will be beneficial in future while working in any organization

So for this purpose we selected project on GARMENTS FACTORY..

Acknowledgement

We bow our head, before ALLAH Almighty, who blessed us with

Potential and stamina to complete our report.

First of all we would like to pay our special regards and thanks to Respected Sir

“Javeed Iqbal Sb.” who provides us guidance at each and every step, in

completion of this report.

TABLE OF CONTENTS

EXECUTIVE SUMMERY:Name of projectLocation & site selectionOrganizational Profile:Technical studyEstimated cost of the projectImplementation ScheduleFinancial RatiosIntroduction:PROJECT PROFILELegal statusAdvantagesProject briefName of promotersMarket AnalysisTarget CustomersExports of PakistanMarket DemandMarket supplyINDUSTRY GROWTH:Ex- Factory priceRetail priceDistribution ChannelTechnical StudyFinancial Analysis:

ANNAXTURE:Estimated cost of landEstimated cost of Machinery and office equipment

Estimated cost of Building and civil workEstimated cost of salaries and wagesEstimated cost of furniture and fixtureEstimated Depreciation of assetsCapacity:Product mix table

i) At 60% capacityii) At 70% capacityiii) At 80% capacity

Assumption for calculation:Raw material volumeDetail of pricesPower and FuelInsuranceStore and SappersManufacturing and Selling ExpensesSWOT Analysis:

References:

Name of Project:

Garments industry

Named

HMS men’s garments

Project Location:

The proposed location of men’s garments is located near NRSP university road Bahawalpur.

Location & Site Selection:

Location Study:

Selection of proper site is an important step, some of the basic considerations in selecting site are:

Soil characteristics Cost of land Approach to site for transportation of raw material, finished products,

employees, etc. Sources and availability of water Availability of power Availability of skilled manpower Social amenities in the area Availability of tax incentive, if any Facilities for drainage and effluent disposal Acceptance of the project by the local population

Office Location

Men’s ready made garment office is situated at university road near NRSP office Bhawalpur

Pakistan.

Organizational Profile:

The organization is a partnership entity comprising 3 equal partners. Partners are equally liable. All the partners belong to Bahawalpur. Following are the partners:

1. Hassan Raza

2. Momal javeed

3. Shahid Abbas

Business has its operational plant 3 KM from “Islamia university new campus BAHAWALPUR”

Product Market Survey:

The product of the organization has much demand because of the large number of consumers.

These days overall garments industries grooming so the demand of the product is increasing.

Also the product has its demand outside the country. Politically the garment industry has much

importance and government also wants to promote the industry

Raw material Survey:

The raw material survey confirms that adequate material will be available to supports the project. Raw material may available in fabric form. The managers has great experience to purchase the raw material i.e. fabric. Raw martial which we use we purchase from “Nishat textile mill” Faislaabad.

Technical Study:

Technically the project is totally feasible. Machinery and equipment needed to run operations

is locally available.

Machinery

Flat lock

Over lock

Stitching machine

Products

Unit is producing different types of Readymade Garments which includes i.e.

T-Shirt Dress Shirt Dress Pent

Human resource requirement

70 employees work as a

Stitching 3 security guard

1 driver

8 staff members

Installed Capacity Of project:

The initial stage the capacity of the ready made garment is 60% . our machine capacity is very

much outstanding but the labor is not available whiles the 100% capacity of the machinery is

500 per day.

Estimated cost of the Project: The estimated cost of the project is R.s 25 Million. Project cost would include Fixed cost and working capital requirements. Fixed cost would normally include cost of:

Land Building and civil works Machinery and equipment and its installation Office equipment and furniture Office vehicles Pre-operative expenses Working capital

Project Investment:

Description Total Cost

(Rs. in Millions)

Years 2010 2011 2012Estimated capacity

60% 70% 80%

Fixed Investment 24.233816Working Capital 0.766184Total Investment 25

Means of finance:

Equity 40%Debt 60%

Name of Lenders:

Project will take long term finance from National Bank of Pakistan to finance its fixed cost.

Terms for Financing Source Expenditure to be Financed

Long-term financing Loan from NATIONAL BANK OF PAKISTAN

Fixed cost and Working Capital

Name of Machinery Suppliers:

“Citizen machinery suppliers” sargodha road, Faislaabad.

Implementation Schedule:

Start completion Start finish

Establishment of local machinery Engineering studies and designing of civil works 1 sep 2009 31st Dec 2009

Order for local machinery 1 Sep 2009

Arrival of local machinery at site 2 Oct 2009

Construction of a building and civil works 15 Sep 2009 30 Nov 2009

Erection and installation of machinery 5th Nov 2009 20 Nov 2009

Order for raw material 20 Nov 2009 30 Nov 2009

Trail runs 1st Dec 2009 31st Dec 2009

Start of commercial production 1st Jan 2010

Financial Ratios:

years 2010 2011 2012Net profit margin 9.49 14.47 24.52

Current Ratio 57% 59% 61%

Debt equity Ratio 40:60 - -

Gross margin 32.48 31.12 36.66

EPS 0.02 0.03 0.06

Interest coverage 1.76 2.82 6.14

Sponsor Stake 40 - -

INTRODUCTION

The cost of the project has been estimated RS. 25 million in which includes machinery cost of building staff salaries furniture and fixtures are included in the cost of the project of ready made men’s garments which is located at NRSP near university road Bahawalpur. This study provides information and guidelines about the investment opportunities in stitching unit for dress shirts and pent for men. The production of this unit will be utilized for meeting the countries requirements and earn the revenue. There is vast Varity in dress pants in relation to quality of the fabric used , style, stitching techniques etc. This project will start its operations on commercial bases

Production Process Flow:

Cutting

Stitching

Trimming

Procurement ofFinished Fabric

Final Inspection

Pressing

Packing & Dispatch

Advantages:

Advantages of the project are as follows. 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

Project Brief:

Name of project promoters:

HASSAN RAZA MOMAL JAVAID SHAHID ABBAS

Market Analysis

For formulating strategies for marketing in the local markets, the following shouldBe considered: A market opportunity analysis to determine suitable sales market(s) and suitableSales channels.1. Selection of target markets to identify suitable markets for selling trousers dress shirts and T-shirts. As we know that the scope of the ready made garments is every where.beacuse such products are useable in every where like offices schools colleges’ universities etc.

Target customers:

Our target is upper middle and lower level of the people because our mission is to provide standard quality of the product at cheaper prices and to capture the market.

EXPORTS:

Pakistan’s Export (Means, boys suits, jackets, trousers etc knit orcrochet-2003-2006)

Reporting Countries Trade Value in $Millions

USA 27.794484United Kingdom 4.204848Spain 2.241756Italy 2.373816Germany 1.947852

MARKET DEMAND

At present there is high demand of GARMENTS because of increasing in demand of made ups. Due to increasing trend of made ups demand of garments is increased. This trend has led to enhancing the confidence in the minds of the general public regarding the wearing of fashionable made ups. The location of project plays pivotal role, towards its successful running. Therefore, the location of the above project is prime.

Market Supply

There are many ready made garments units are working in Pakistan but they are unable to meet the demand of the customers .we are confident that to meet the local market .and we know that there is no even one stitching. Unit in Bahawalpur

INDUSTRY GROWTH

There has been a tremendous growth in this sector over the years. The total numbers of garments industries are increasing to fulfill the demand of market. So, in coming years

demand of garments must increase because population is increasing. Overall industry growth is good.

Ex factory price

Description Prices (Rs.)Dress Shirts 180T-shirts 150Pants 220

Annually 5 % increase in prices.

Retail Price:

Ref: geo garment .B.W.P

Description prices (Rs.)

All types of shirts 550350250

All types of pants 800600550350

Technical Study:

Technically the project is totally feasible. Machinery and equipment needed to run operations is locally available.

List of Machinery:

Flat lock

Over lock

Stitching machine

Materials and inputs:

Finishing fabric Yarn Button Zip Hooks Needle Sewing thread Labels fusing {buckram} Packing material Buckles

Personal Analysis

For the success of the project skilled and unskilled workers are hire. Such workers are available at project place at cheaper prices so we are decided to provide the training to unskilled labors for future need also.

Financial Analysis

The cost of the project is RS. 25 million Which is included machinery which included over

lock, karal mayors machine. which are included.60% capacity of our debt and remaining 40%

is equity.

“Estimated cost of land”

Sr. No Description Rs. In (000)

1 3 Kanals land (@ 110000 /Marla)

6600

2 Transfer charges(@ 5% of cost of land)

330

3 Development charges(@ 5% of cost of land)

330

Total cost of land 7260

HMS Men’s ready made garment industry

“Estimated cost of Machinery and office Equipment”

Sr. No Description Quantity Per unit cost

Total cost(Rs in 000).

1 flat lock 25 25000 625

2 Stitching machine

25 12000 300

3 Over lock machine

10 23000 230

4 seizer 100 100 10

6 grantor 1 1000000 1000

7 telephone 3 1000 3

8 printer 1 10000 10

9 Air condition

2 32500 65

10 Room cooler

5 10000 50

11 Security cameras

3 6000 18

12 computers 2 10000 20

13 Fax machine 1 9400 9.4

14 scanner 1 5500 5.5

Total 2345.9

“Estimated cost for salaries and wages

Designation No of employees Wage rate Amount(Rs. In 000)

CEO 1 30000 30

Managers 1 18000 18

Supervisors 3 10000 30

Accountants 1 15000 15

Skilled labour 60 20+40 187.2

Non-Skilled labour

10 5000 50

Guards 3 5000 15

Derivers 1 5000 5

Office boys 2 4000 8

Total 82 358.2

Monthly salaries & wages Rs. 358200

Annually salaries & wages Rs. 358200*12= 4298400

Assuming annually increase in salary 2%

Estimated cost for furniture & fixture

Sr. No Description Quantity Per unit cost Total cost(Rs. In 000)

1 Wooden stool

70 170 11.9

2 trolleys 3 7000 213 Cutting

+finishing tables

7 4000 28

4 racks 2 1800 3.65 Mirror tables 2 12000 246 Office chairs 6 6000+1500 187 Visitors sofa 1 10000 108 Common

chairs20 450

Total cost 116.5

Estimated depreciation of Asset

Items Values Rate Amount

Machinery 2165000 10% 216500

Building 12729600 10% 1272960

Office equipment

Computers etc

180900 20% 36180

Furniture &

fixture

116500 10% 11650

Total 1537290

“Capacity”

At 100% capacity we can produce 500 dress shirts, T-shirt and pant daily

Monthly 13000{500*26}

Ready made garments Quantity Produced per

Month

Product Mix

Dress shirt 5200 40%

T-shirt 5200 40%

Dress pent 2600 20%

Total 13000 100%

At 60% capacity:

Daily Monthly Annually

300 7800 93600

Annul Inventory 10% of production 9360

At 70% Capacity:

Daily Monthly Annually

350 9100 109200

Annul Inventory 10% of production 10920

At 80% Capacity:

Daily Monthly Annually

400 10400 124800

Annul Inventory 10% of production 12480

Assumptions for Calculation :

1. Operation time 1 shift/day2. Production period 312/year3. Capacity utilization 60% 1st year

70% 2nd year80% 3rd year

4. At 100% capacity

Per day production 500 unitsPer year production 156000 units

Raw material volume: (in meters)

Year 1st 2nd 3rdCapacity utilize

60% 70% 80%

Finished fabrics

75000 87500 283500

Detail of Prices: Rs. per meter

Fabrics (55+85+105) 245/{1.5meetr} 2% Increase in prices for each year is projected.

Power & Fuel

Fixed energy charges for electric connection of 25kv 100000Estimated variable energy charges are @ 6.50/ unit produce. Because the energy cost is less compare to day charges. we are also purchase generator for emergency.

Insurance:

2%. Of production building 2% of office furniture

Stores and sappers:

Year 1st 2nd 3rdAmount 20000 25000 30000

“Manufacturing admin & selling Expenses”

Year 1st 2nd 3rd

Capacity utilization

60% 70% 80%

Fixed:Power 100000 100000 100000Insurance:Building 87584 87584 87584Depreciation:Building 1272960 1272960 1272960Machinery 216500 216500 216500Variable exp:Power 608400 709800 811200Wages & salaries 2846400 2903328 2961395

Store & spares 20000 25000 30000Total manufacturing exp

5151844 5315172 5479639

Admin & Selling Exp:Salaries 1452000 1481040 1510660Postages & telegram

30000 32000 34000

Printing & Stationary

40000 42000 44000

Advertisement 100000 105000 110000Depreciation:Office equipment 36180 36180 36180

Furniture & Fixture

11650 11650 11650

Insurance:Furniture & Fixture

2330 2330 2330

Total 1672160 1710200 1748820

SWOT Analysis1 Strengths

Raw material available locally Infrastructure available Excess install capacity2 Weaknesses

Four times less productivity by use of local made old technology Non conformity of standard Semi skilled labor No technical training institute for Ginning IndustryCluster Development Program AreaCluster Profile Cotton Ginning Area 1 2 No testing laboratory for staple and fiber testing Contaminated cotton High rate of contamination Lack of online market facility to access international buyers No warehouses and cotton lint storage facilities3 Opportunities

Introduction of latest modern ginning technology being used in developedcountries Export of cotton to other countries Possibilities to achieve premium for best quality that government hadannounced on the basis of grade Access to international markets through online market Ginning Training Institute4 Threats

Shifting trend from cotton fiber to polyester fiber Government regulations i.e. lot of taxes on the industry Fluctuation in international market price Global Competition Pest diseases on cotton crop result in low production of cotton lint Import of cotton WTO

References

Three star multan Mr. ameen manager

Mr. Rizwan faisalabad masood textile mills faisalabad

Geo garments Bahawalpur

Huzaifa property dealers one unit chowk Bahawalpur

Wood works D.I.G chowk Bahawalpur

Sajid computer university chowk Bahawalpur

Citizen machinery works Faisalabad

National Bank Pakistan