Msme Project

7/27/2019 Msme Project

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MSME PROJECT

ON

GENTS SHIRTS AND TROUSERS

PREPARED BY

DEBADUTTA PANIGRAHI (12DM085)

RASHMI RANJAN BIHARI (12DM086)

MOHAMMED IMRAN (12DM087)

JYOTI RANJAN SAHOO(12DM088)

FURRY AGARWAL (12DM089)


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INTRODUCTION

Manufacturing of Shirts and Trousers are under the category of readymade

Garment industry. Readymade garment industry has occupied a unique place in

the industrial scenario of our country by generating substantial export earningsand creating lot of employment. Its contribution to industrial production,

employment and export earnings are very significant. This industry provides one

of the basic necessities of life. The employment provided by it is a source of

livelihood for millions of people. It also provides maximum employment with

minimum capital investment. Since this industry is highly labour-intensive, it is

ideally suited to Indian condition. This project report is prepared for the

manufacture of gents shirts, gents trousers as they find wide acceptance in local

and international markets. Any person having the knowledge of cutting and

stitching operations can easily set up such establishments.

MARKET POTENTIAL

Readymade garments are the choice of urban people. It is also gaining wider

acceptance in semi-urban and rural areas. The huge charges made by tailors and

delay in delivery has made people to switch over to readymade garments. In

domestic market and export market, it has made spectacular progress in the last

decade. This industry is becoming very vibrant and lot of foreign investment

pouring in this industry because of low risk and high earning nature of this

industry. As these products are fashion oriented, entrepreneurs should always

keep in mind the changing fashion styles. Considering its advantageous position, it

is assumed that there will be no constraint in marketing of gents readymadegarments.


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BASIS AND PRESUMPTIONS

1. This project is based on single shift basis and 300 working days in a year.

2. Since this industry is labour-intensive, the working efficiency is considered at

75%.

3. Costs of machinery and equipment/ material indicated refer to a particular

make and approximately to those prevailing at the time of preparation of this

project.

4. Installation and electrification cost is taken @ 10% of cost of machinery and

equipment.

5. Non-refundable deposits, project report cost, trial production, security deposits

with Electricity Board are taken under pre-operative expenses.

6-Straight Line Depreciation method has been considered on Land,Building and

Plant and Machinery @ 10%.

7. Interest on capital investment has been taken @ 15% per annum and interest

on Short-Term Borrowing has been considered @14% per annum.

IMPLEMENTATION SCHEDULE

Implementation period in months for executing this project in stage-wise is given

below:

Sl.no. Activity Period

1 Selection of site/working shed 1 Month

2 Formation of company (ownership/partnership) 1 Month

3 Preparation of feasibility report 1 Month

4 Registration with commissioner of Industries/DIC 1 Month

5 Arrangement of finance (Term loan and working capital) 3 Month

6 Procurement of machinery and equipment 1 Month

7 Plant erection and electrification 2 Weeks8 Arrangement of raw material including packaging material etc. 1 Month

9 Recruitment of manpower 1 Month

10 Selection of market channel 1 Month

11 Miscellaneous works like power/water connection etc. 2 Month


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TECHNICAL ASPECTS

Process of Manufacture: The manufacturing process involves the following steps:

Procurement of Fabric: Dyed/bleached/printed cotton/synthetic fabrics as perdemand are to be procured from the open market. The fabric will be inspected by

laying on the inspection table against light before cutting so that unevenness in

colour/shade or any other fault, if any visible in the fabric are eliminated.

Cutting and Stitching: The inspected fabric is placed on the cutting table in layers

and then the different parts of the respective garments are demarked by a chalk

as per different sizes. Cutting is carried out by the cutting machine. Stitching is

carried out for individual portion of the garments by skilled workers with the help

of over-lock, lock stitch machines etc.

Washing, Checking, Pressing and Packing: All garments are charged into washing

machine containing mild detergent and washed for 4 hours in order to remove

dirt and stains acquired during the manufacturing process. After washing, the

garments are hydro extracted to remove excess water and after this, these

garments are dried in tumbler dryer. Final checking is done before pressing and

packing on the checking table so that any fault in the piece may be removed and

protruding threads eliminated. The individual pieces are pressed by steam presses

to remove any wrinkle marks and packed in the carton boxes.

QUALITY CONTROL & STANDARD

The quality of garments mainly depends on quality of fabric used. Therefore, caremust be taken while purchasing fabrics to ensure good colour fastness properties,

uniformity in shade etc. Generally garments are made as per customer's

specification in respect of size, design and fashion.


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MOTIVE POWER REQUIRED:

Total 30 HP is required to run this unit at installed capacity.

POLLUTION CONTROL:The process of manufacture does not generate pollution. Also we have contacted

State Pollution Control Board for necessary guidance.

ENERGY CONSERVATION:

Maximum care is taken while selecting the machinery and other electrical

equipments so as to ensure minimum power consumption.

FINANCIAL ASPECTS

1-PROJECT COST

PROJECT COSTS AMOUNT (IN RS.)

Land 1200000

Building 2400000

Plant and Machinery 3500000

Preliminary expenses 600000

Preoperative expenses 600000

Contingency expenses 300000

Working Capital Margin 600000

TOTAL PROJECT COST 92,00,000


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2-ANNUAL SALES AND WORKING CAPITAL ASSESSMENT

1ST YEAR 2ND YEAR 3RD YEAR 4TH YEAR 5TH YEAR

Annual Sales 9200000 9660000 10143000 10650150 11182658Total Working

Capital 2300000 2415000 2535750 2662537.5 2795664

Short-Term

Borrowings 1700000 1800000 1900000 2000000 2100000

Cost of sales 3680000 3864000 4057200 4260060 4473063

3-means of financing

DEBT 6000000

EQUITY 3200000

4-FIVE YEAR PROJECTED INCOME STATEMENT


Annual Sales 9200000 9660000 10143000 10650150 11182657.5

Cost of sales 3680000 3864000 4057200 4260060 4473063

Preliminary expenses (Written off) 120000 120000 120000 120000 120000

Depreciation @ 10% 670000 670000 670000 670000 670000

Interest on Term Loan @ 15% 900000 900000 900000 900000 900000

Interest on STB @ 14% 238000 252000 266000 280000 294000

Profit Before Tax (PBT) 3592000 3854000 4129800 4420090 4725594.5

Tax @ 30% 1077600 1156200 1238940 1326027 1417678.35

Profit After Tax (PAT) 25,14,400 26,97,800 28,90,860 30,94,063 33,07,916.15


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5-FIVE YEARS PROJECTED BALANCE SHEET


LIABILITIES

1-Equity Capital 3200000 3200000 3200000 3200000 32000

2-Debt 6000000 6000000 6000000 6000000 60000

3-Reserves and

Surplus 2514400 5212200 8103060 11197123 14505039.

4-STB 1700000 1800000 1900000 2000000 21000

5-TOTAL 1,34,14,400 1,62,12,200 1,92,03,060 2,23,97,123 2,58,05,039.

ASSETS

1-Fixed Assets 8000000 7330000 6660000 5990000 53200

2-Depreciation 670000 670000 670000 670000 6700

3-Net Fixed Assets 7330000 6660000 5990000 5320000 46500

4-Current Assets 2300000 2415000 2535750 2662537.5 2795664.3

5-Preliminary

Expenses 480000 360000 240000 120000

TOTAL 1,01,10,000 94,35,000 87,65,750 81,02,537.5 74,45,664.3

Cash in Hand 33,04,400 67,77,200 1,04,37,310 1,42,94,585.5 1,83,59,374.


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6- FIVE YEAR CASH FLOW Statement

Preoperative

year 1ST YEAR 2ND YEAR 3RD YEAR 4TH YEAR 5TH YEA

CASH INFLOW

-PAT 2514400 2697800 2890860 3094063 33079

-DEPRECIATION 670000 670000 670000 670000 6

-PRELIMINARY EXPENSES 120000 120000 120000 120000 1

-EQUITY 3200000

-TERM LOAN 6000000

-STB 1700000 100000 100000 100000 1

OTAL 92,00,000 50,04,400 35,87,800 37,80,860 39,84,063 41,97,9

CASH OUTFLOW

-FIXED ASSET 8000000

-PRELIMINARY EXPENSES 600000

-INCREASE IN WORKING

APITAL 2300000 115000 120750 126787.5 13312

OTAL 86,00,000 27,04,400 34,72,800 36,60,110 38,57,275.5 40,64,78

ASH BALANCE IN HAND 6,00,000 33,04,400 67,77,200 1,04,37,310 1,42,94,585.5 1,83,59,3

7-machinery and equipments

Machinery Description Qty.Nos. Rate (in Rs.) Value (in Rs.)

Single Needle Lock Stitch Machine with

motor. 70 25000 1750000

6 Power driven cloth cutting machine 1 60000 60000

2 Needle Overlock Safety Stitching Machine

with Trimmer 1 60000 60000

Double Needle Lock Stitch Machine 2 80000 160000

Button Hole making Machine 2 150000 300000Button Stitching Machine 2 80000 160000

Hot Fusing Press 1 70000 70000

Garment Washing Machine 25 Kg capacity 1 150000 150000

Hydro extractor 25 Kg capacity 1 75000 75000

Tumbler Dryer 25 Kg capacity 1 145000 145000


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Flat Bed Steam Iron Press with Vacuum Table 5 75000 375000

Zig Zag Embroidery Machine 1 45000 45000

Generator Set 30 KVA 1 100000 100000

Wash Room Trolleys 5 10000 50000

TOTAL 35,00,000

8-NPV FROM THE PROJECT POINT OF VIEW

Co=92,00,000

C1=41,01,000

C2=42,94,200

C3=44,97,060

C4=47,10,060

C5=1,15,83,716

Ke=0.086

Kd=0.097

Therefore cost of capital=Ke+Kd=18.3%

NPV = Present value of cash inflow Present value of cash outflow

= 1,66,42,341 92,00,000

=74,42,341

9-NPV FROM THE OWNERS POINT OF VIEW

Co=32,00,000

C1=33,04,400

C2=34,87,800

C3=36,80,860


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C4=38,84,063

C5=47,47,916

Therefore NPV=99,01,462-32,00,000

=67,01,462

10-DEBT SERVICE COVERAGE RATIO

1st

Year=4.67

2nd

Year=4.87

3

rd

Year=5.08

4th

Year=5.31

5th

Year=0.70

So the Average DSCR is 4.12

11-SENSITIVITY ANALYSIS

The annual sales is decreased by 10% and the cost of sales is increased

by 10%. The interest on Term Loan is increased to 16%.

So ,DSCR For 1st

Year=3.45

2nd

Year=3.60

3rd

Year=3.75

4th Year=3.90

5th

Year=0.54

So the Average DSCR is 3.04


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Msme Project

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