Professional Documents
Culture Documents
For
DEPARTMENT OF INDUSTRIES
MINISTRY OF ECONOMIC AFFAIRS
ROYAL GOVERNMENT OF BHUTAN
By
IDRG CONSULTANCY SERVICES
In Association with Sherpa Consultancy
February, 2009
CONTENTS
CHAPTER 1 PROJECT AT A GLANCE.3
CHAPTER 2 JUSTIFICATION OF THE PROJECT..6
CHAPTER 3 MARKET ANALYSIS..8
CHAPTER 4 RESOURCES20
CHAPTER 5 THE PLANT24
CHAPTER 6 PLANT LOCATION AND INFRASTRUCTURE33
CHAPTER 7 ENVIRONMENTAL ASPECT..35
CHAPTER 8 PROJECT IMPLEMENTATION..37
CHAPTER 9 COST PRESENTATION...39
CHAPTER 10 FINANCIAL ANALYSIS45
CHAPTER 11 ECONOMIC ANALYSIS..59
ANNEXURES.61
Annexure 1 List of machine suppliers
Annexure 2 List of raw material suppliers
Annexure 3 - List of lab testing equipment suppliers
2. Location -
3. Markets -
Overall rating
42
40
40
35
35
35
4. Annual Production
capacity
recommended School bags 1,00,000 pieces per annum
Sets of uniform 1,20,000 pieces per annum
5. Land and
building
requirement
6. Power
requirement
45 KWH
7. Main machinery
For bag section
8. Man power
requirement
9. Total project
cost
10. Project
implementation
period
10 months
11. Means of
finance
Debt Equity -
7
2
2
35
90
70
12. Break up of
cost of project
Machinery
Construction cost
Misc. fixed assets
Pre-operative exp.
Training expenses
Interest
Working capital
Total
14. Financial
analysis
be equipped with the machines and equipment for the production of bags and uniforms
and besides meeting the requirement of school bags and uniforms, this unit can also
manufacture and supply air bags and other readymade garments for meeting the
general market requirement. To begin with Thimphu or Paro would be ideal location for
this unit as they constitute the major markets both for school supplies was well as for
general market supplies.
As would be seen from the part 1 of the report, the current demand level for
school bags and school uniforms is sufficient to justify the setting up of a manufacturing
unit in Bhutan. Besides, there exists substantial market demand for air bags and
readymade garments specially children garments which could also be manufactured in
the proposed unit. The project concept is to setup an integrated unit having two
production sections, the first one for the manufacture of bags and the second for the
manufacture of garments. The demand for both these items is likely to grow at a very
fast pace keeping in view the future economic growth in Bhutan leading to higher
purchase power and the consequent preference for readymade garments and bags, it is
considered that there is sufficient justification for setting up such an unit in Bhutan.
The details of the products, products range, quality parameters, manufacturing
technologies, machines and equipment and financial implications have been dealt with in
subsequent chapters of this report.
available from the leading readymade garment stores and shops selling luggage goods.
Besides, the possibilities of exports to adjoining areas of India viz. north-eastern region
could also be explored. The possibilities of exporting the product to other neighboring
markets also need to be looked into. Besides, the possibilities of exports especially in
case of air travel bags to adjoining market could also be explored for achieving better
economics of production and improving profitability.
3.4.1 Bag manufacturing Departments: This department would be equipped with the
facilities for the production of bags mainly in nylon fabric or canvas fabric. The main
product would be the school bags in various sizes and designs. The manufacturing
facilities of this section are also proposed to be utilized for the production of air bags for
supply to the general market. Thus following would be the two main products:
-
10
Ready made garments mainly for children in various colours and designs as per
market demand.
11
12
All school bags are to be provided with a patch pocket in front, piping all round
the edges and buckles with straps for closure. The school bags may be provided with
side strap or back strap or both if the both strap are required by the market. A handle
may also be provided if the same is required by the trade channels and market.
According to BIS specifications, the shape and dimensions of three sizes of school bags
viz. small, medium and large would be as shown below:
Size
Small
Medium
Large
330
360
380
230
260
280
90
140
110
140
140
140
All dimensions in millimeters
130
130
180
65
65
65
The length of the side strap of the bag is made adjustable by means of a buckle
as shown in figure above. The length shall be adjustable between 260 mm to 960 mm.
The lengths of the back strap for small, medium and large size of bags are specified as
430 mm, 455 mm and 470 mm respectively.
In addition to above shapes and dimensions, the school bags could be
manufactured in other shapes and dimensions also as per market demand and
customers requirement. BIS has also specified the following design, workmanship and
finishing parameters for school bags:
The school bag shall be made from three pieces of material i.e., front, back with
top flap and gusset. The specification and details of fabric are given in the next
chapter.
The front portion shall be provided with a patch pocket for small articles for use in
school as shown in above. The bag may also be provided with tow patch pockets
in the front portion. The shape of the pocket or pockets should be such as to
provide sufficient space for keeping lunch-box, pencil box, instrument box etc.
This may be done with or without gusset.
13
The bag shall be provided with minimum 10 mm wide piping at the pocket, top
edges and the sides as shown in fig. above. The piping shall be of the materials
specified in the next chapter.
The school bag shall be assembled lock stitch or chain stitch regulated to give
6 to 8 stitches per 25 mm. All ends shall be securely fastened off and loose
threads properly trimmed.
Two buckles with straps shall be provided in the bag for closure as shown in Fig.
above. A handle may also be provided if required by the purchaser or the market.
The bag shall be neatly finished with straight and parallel rows of stitching, where
required.
The ends of buckle loops, side, back and buckle straps shall be properly tacked
with the rows of stitches as shown in Fig. above.
Bureau of Indian Standard (BIS) has also specified quality parameters and tests to
be carried out on to finished school bags so as to ensure the proper performance of the
bags. These tests includes drop test and handle snatch test.
Drop Test: The school bag shall be fully loaded with books or any other suitable
material, weighing 6 kg in case of small, 8 kg in case of medium and 10 kg in case of
large size school bags. After filling the specified weight, the bags shall be close,
buckles fastened and hung on pegs at the wall, with the help of either the side strap or
the back straps. The distance between the floor and the peg shall be 1.5 meter in case
of side strap and 1.0 meter in case of back strap. The bags shall then be suddenly
dropped and this operation shall be repeated 10 times. During or after the test the
stitches shall not open, the straps and buckles shall not give way or come off the
stitched tacks.
Handle Snatch Test: the school bag shall be securely fixed in an inverted position as a
rigid support, leaving the strap free for applying the load. The strap shall be suitably
harnessed to distribute the load applied over the entire middle portion. A load of 50 N (5
kg) shall be applied suddenly to the strap for a period of 30 seconds. This operation shall
be repeated 10 times. The weight may be applied either by means of spring balance or
weights, suitably placed on a stirrup. During or after the test, the strap shall not have
snapped, loosened or come off the stitching.
Each bag is required to be legibly marked with the following:
-
14
Air travel bags are manufactured in various materials viz. leather, leather cloth,
cotton canvas, coated nylon fabrics and in various designs and shape. However,
keeping in view the utility criterion and performance requirements for air travel bags
following typical design with essential components has been recommend by BIS.
Handle
Fastener
Lock
Piping
Main Components
15
BIS has also prescribed standard dimension for above mentioned design of the
air travel bag which are given below:
Dimension in millimeter
However, as mentioned above the air travel bags are manufactured and
marketed in a large number of shapes and designs with varying storage space, number
of inner and outer pockets including those exclusive designs in which storage space
could increased or reduced with the help of slide fastener mechanism. Some of quality
and workmanship parameters and other specifications requirement as prescribed by BIS
for air travel bags are as given below. Irrespective of shape and design of the air travel
bags, adherence to these quality specifications shall ensure the proper performance and
durability of the bag while in use by the customers.
The handles with its fittings and attachments shall be strong and shall not yield
under normal usage. The handles shall be reinforced with vulcanized fibre strip
inside and riveted. The handles shall be centrally located on longer sides. The
clearance between the body of the bag and the inner face of the handles shall be
adequate to facilitate easy gripping when lifted.
Boss (feet) shall be provided to avoid ground contact.
Certain other provisions such as inside compartments, front pocket and
alternative arrangements may also be provided as agreed to between the
purchaser and the supplier.
The locking device shall be fixed to the end of the tab of fastener and one of the
lateral sides of the bag. The locking device shall be easily accessible to operate.
The stitches shall be strong and uniform. The stitches shall be lock stitch with 28
to 32 numbers per decimeter and of even tension. The stitch ends shall be
secured either by knotting the thread or back stitching or by an additional row of
stitch.
All loose ends of the threads shall be trimmed off. The seams shall be uniform,
continuous and straight.
16
The fasteners used for the outside closure of the bag shall be of heavy quality
and for inside compartments, pockets, etc, shall be of medium or light quality.
The air travel bags shall be provided with piping all round the outer edges. The
core shall be spiral spring and covered with leather cloth or plastic piping.
The lock flap shall be single piece sewn to the lateral sides of the bag. The flap
shall have sufficient size to accommodate components of the lock.
The steel components shall be plated chromium over nickel conforming to
standard specifications.
The air travel bags shall be soundly constructed and finished smooth without any
sharp edges or constructional defects. There shall not be any loose thread or
uneven seams.
In respect of appearance, general workmanship and finish the air travel bag shall
conform to the sample previously approved by the purchaser.
BIS has also prescribed the following performance test for air travel bags:
Handle Snatch Test: The air travel bag shall be securely fixed in an inverted position on
a rigid support, leading the handle free for applying the load. The handle shall be
suitably harnessed to distribute the load applied over the entire handle. A load of 100 N
(10 kgf) shall be applied suddenly to the handle and repeated 10 times.
The weight may be applied either by means of spring balance or weights, suitably placed
on a stirrup. During or after the test, the handle shall not have snapped or shall not have
loosened in its fittings.
Drop Test: The air travel bag shall be filled with cloths or other suitable materials to the
total contents to weight 50 + 2.5 N (5 + 0.25 kgf). The bag shall be locked after filling the
specified weight. The air bag shall be dropped from a height of 1 m on a wooden floor or
board for 10 times. The bag shall not be damaged or get splits. During or after the test
the contents shall not show out.
17
Correct dimensions;
Seam pucker, seam allowance and sewing faults;
Garment symmetry;
Pressing/ fusing defects;
Cleanliness;
18
Loose threads;
Correct matching of fabric and trimmings;
Shade variation;
Correct fitting and alignment of closures; and;
Correct placing of labels.
19
CHAPTER 4 - RESOURCES
4.1 Main Resources
The main resources required for the project include the following.
-
It has been envisaged in the project the land for the project would be available on
lease basis from Government of Bhutan and the building as per requirement has to be
constructed for the two production department. The plant and machinery has to be
imported as per details given in the project. There is a requirement of cutting masters
and tailoring staff both for bag section as well as uniform section of the project. In the
initial phase, the some experts viz cutting masters and tailoring staff has to be brought
from India who in turn would be able to train the local staff over a period of time. The
production supervisors also initially have to be employed from outside so as to maintain
the quality standard of the product. The experts from the machine suppliers could also
help in training the local staff on operations of machines, however, development of
adequate skills for stitching quality garments is rather a time consuming process and the
tailoring staff employed from outside would be a necessity in the initial phase.
20
cm width is used for piping and normally 4 cm width tape is used for construction of
straps.
Sewing thread - Three ply or four ply nylon thread is used. The cotton sewing thread
variety no. 28 or polyester sewing thread variety no. 9 is also used.
Buckles: Suitable metal buckles or plastic buckles are used.
Vellcrow- Vellcrow strips are stitched on the body of bags as per design. Vellcrow is
available in 2.5 cm or more width in the form of rolls measuring 20 meters.
Slide Fasteners Metal or nylon slide fasteners of good quality are fixed in the bag as
per design.
Locks: Steal or brass locks as per design are fixed in the bag.
Foundation Material: Especially in case of air bags, plywood or card board or fibre
board sheet is placed inside the bottom of the bag to provide strength to the base of the
bag and avoid the chances of collapsing of the bottom part.
Besides rivets and washers, boss (feet) to be placed at bottom, metal or plastic labels,
screen and screen printing inks are also required as raw materials for the production of
the bags.
21
Fabrics The fabric could be either cotton, woolen, synthetic, cotton synthetic blends,
woolen synthetic blends. The fabrics could be either be mill made or hand loom fabric.
Normally for uniforms cotton, polyester cotton and polyester wool blends are
recommended.
Sewing thread - Both cotton and synthetic types of sewing threads are used for
stitching of the uniform.
Slide fasteners: Both metallic any nylon slide fasteners are used in uniforms. Nylon
slide fasteners, now a days are more preferred.
Buckles and hooks Mostly metal buckles and hooks are used.
Buttons- Plastic button of requisite size are used. Besides depending on the type of
garment and design, embroidery thread, elastic tapes, eyelets and hooks, metal and
decorative buttons etc. may also be required.
Majority of the raw materials and consumables are required to be imported either from
India or any other neighboring country.
22
The main raw material for both the products is fabric which can be either
imported or sourced from wholesale fabric dealers. Depending on the acceptability in
the market, indigenously produced handloom fabric could also be used. The fittings and
accessories can be sourced from specialized shops dealing in these products in the
eastern region of India.
4.5 Recommended sources
A list of raw material supplier has been given in the Annexure II. In case of large
requirements of fabric for garments, this could be procured directly from the mills or
through their wholesale dealers.
4.6 Annual requirement of raw materials
The annual requirement of various raw materials along with their prices have
been given in the chapter 9 relating to cost presentation.
23
Factor inputs.
Market findings viz size of market and recurrence of repeat demand.
Purchasing power of consumers and prevailing price spectrum.
Future projections of market demand.
Availability of skilled manpower and support facilities.
Availability of infrastructure and transport facilities.
Environmental considerations.
24
touch with the market trends in order to produce the quality and designs as per market
requirement. The quality and performance of the tailoring machines also plays an
important part in ensuring the quality of goods and accordingly, the machines selected in
the project are of standard make with proven record of performance.
There are two types of operations particularly in the case of garment
manufacturing units in India. In the first type of operation, the manufacturing unit
undertakes all the operations viz designing, cutting, stitching and finishing by themselves
and outsource only a limited operation like embroidery, etc. In the second type of
operation, the unit undertakes designing and finishing operations only in their premises
and the cutting, stitching and fixing of buttons, etc is outsource from vendors. Keeping in
view that the facility of vendor may not be available in Bhutan in the initial phase, it has
been envisaged that entire operation of garments and bag manufacturing is undertaken
by the unit in their premises.
School bags
School uniforms
25
4. Cutting tables
5. Cutting tools viz knife cutter, Aluminium sheets, angle scales, Cutting strips, pattern
sheets, etc.
6. Hand tools for button/revert fixing
7. Screen printing & label printing machine
26
27
The process flow chart for the production of school bags and air travel bags is as
under:
Fixing of accessories
Packaging
5.4.2 School Uniform and Ready made garments
The process flow chart for the production of school uniforms and ready made
garments is as given below. The main process operations to be carried out in each
section are also mentioned in the process flow chart.
28
Fabric Store
Fabric and other accessories
Cutting Department
Cutting table
Cutting table
Cutting table
Cutting table
Production Department
Stitching M/c
Stitching M/c
Stitching M/c
Stitching M/c
Stitching M/c
Stitching M/c
Stitching M/c
Stitching M/c
Thread Cutting
Thread ends are cut manually
Table
Table
Table
Packaging Department
Uniform / Garments are packed in plastic bag and then packed in cartons
29
As given in the process flow chart above the manufacturing of uniform and
garment would involve the following process operations.
-
1,00,000 nos
1,20,000 nos
30
section and 70 unskilled workers would be required. In case the unit is required to be
operated in more than one shift, additional staff would be required. In addition to this,
there would be a requirement of contract workers during construction phase of the
factory and installation of machinery and equipment.
Organization Chart
Manager
(Overall head of the factory operations)
Bag production
Section
Production
Supervisor 1
Cutting master
1
Tailoring Staff
35 nos
Unskilled
workers 60
nos
Uniform
production
Section
Production
Supervisor 1
Administration
and accounts
Accounts and
administration
staff 4 nos
Marketing
Department
Marketing
Executive 2
nos
Cutting master
1 no
Tailoring Staff
90 nos
Unskilled
workers 10
nos
The project has a good employment potential for skilled and unskilled workers
which would be employed in the production unit. Beside the project would generate
employment potential in marketing & sales of its produce, transport of raw materials and
finished products. The project would thus create opportunity both for direct & indirect
employment.
31
32
= Education centres
33
Land
Environmental Socio
Investment
Operational Future
Overall
Access
Conditions
economic Consideration Logistics
development Rating
conditions
factors
possibilities
42
Thimphu
7
7
7
7
7
7
Chukka
7
7
6
7
7
6
40
Trashigang
7
7
6
5
5
5
35
Samdrup
7
7
6
5
5
5
35
40
Paro
7
7
7
7
7
5
Samatse
7
7
6
5
5
5
35
34
1.
Metal scrap
2.
Wooden scrap
3.
Quantity
Around 2-3 %
of the steel
used
in
construction
Around 5-7% of
the wood used
in construction.
Depending
upon on the
topography of
the construction
site.
Mitigation measures
Sold
to
channels
reprocessing.
Impact on
Environment
trade No adverse
for impact
Used as fuel.
No adverse
impact
No adverse
impact.
35
4.
Brick stone
aggregate
cement 5%
of
the Used for flooring No adverse
quantity used
and earth filling.
impact
Type of waste
Quantity
Mitigation measures
1.
Liquid effluents
(Dying plant for the
fabric has not been
included in the
project).
Gaseous effluents
Nil
Not applicable
Nil
Not applicable
Solid effluents or
waste
2.
3.
Impact
on
environment
No
adverse
impact
No
impact
No
impact
adverse
adverse
36
18
18
11
14
19
10
13
37
24
Delivery of Machinery
27
37
10
37
41
39
43
42
43
Commercial Production
43
44
37
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44
Procurement of Land
Delivery of Machinery
Commercial Production
38
1 No.
Rs. 40,000/-
30 Nos.
Rs. 3,60,000/-
3 Nos.
Rs. 45,000/-
39
2 Nos.
Rs. 20,000/-
LS
Rs. 25,000/-
LS
Rs. 10,000/-
1 each
Rs. 25,000/-
Sub-Total
Rs. 5,25,000/-
Rs. 1,00,000/-
Rs. 8,00,000/-
40 Nos.
Rs. 3,60,000/-
2 Nos.
Rs. 1,00,000/-
1 No.
Rs. 1,50,000/-
1 No.
Rs. 80,000/-
1 No.
Rs. 70,000/-
1 No.
Rs. 1,50,000/-
1 No.
Rs. 75000/-
1 No.
Rs. 1,50,000/-
5 Nos.
Rs. 75,000/-
8 Nos.
Rs. 80,000/-
Sub-total
Total of (A) and (B)
40
Bag section
Uniform section
Pre-operative expenses
8 lac meters
Rs. 68,00,000/-
6 lac meters
Rs. 18,00,000/-
2 lac sets
Rs. 20,00,000/-
4. Handles
1 lac pieces
Rs. 15,00,000/-
LS
Rs. 10,00,000/-
6. Lining material
LS
Rs. 10,00,000/-
LS
Rs. 10,00,000/-
Sub-total
Rs. 1,51,00,000/-
Rs. 1,08,00,000/-
41
2. Blended fabric
1 lac meters
Rs. 1,50,00,000/-
LS
Rs. 18,00,000/-
LS
Rs. 10,00,000/-
5. Packaging material
LS
Rs. 5,00,000/-
Sub-total
Bag section
Uniform section
1 no
2 Nos
6 Nos
2 Nos
35 Nos
90 Nos
60 Nos
10 Nos
42
Manager
Production Supervisors
Office and marketing staff
Cutting master
tailoring staff for bag section
tailoring staff for uniform section
helpers for bag section
helpers for uniform section
32 KWH
16 KWH
48 KWH
Power Requirement
43
Rs. 7,20,00,000/-
Annual Turnover
Bags
Uniform
44
Particulars
Total Project Cost
Debt
Equity
Rate of Interest
Depreciation (Building)
Depreciation (Machinery)
Tax
Construction Cost (Building) per sq.m.
Construction Cost (Shed) per sq.m.
Repayment period of Debt
Moratorium period
Installed Capacity (Units in Thousands)
Capacity Utilization
Working Capital Cycle
Rate/Amount
163.82
70%
30%
12%
SLM 10 yrs
SLM 20 yrs
30%
6000
3500
8 yrs
1 yr.
275
80%
1 month
1
2
3
4
5
6
7
36.11
51.25
3.00
5.00
0.36
11.49
56.61
163.82
45
Machinery
Construction cost
Miscellanous fixed assets
Pre operating expenses
Training expenses
Interest
Working capital
114.67
49.14
163.82
70%
30%
100%
Debt
Equity
40,000
360,000
45,000
20,000
25,000
10,000
46
Add
Add
Add
Add
M7
Sub Total
B). For uniform section
M8
M9
M10
M11
M12
M13
M14
M15
M16
M17
M18
M19
Sub Total
Total
Packaging, Forwarding, Transport and Insurance
@ 11%
Installation, Erection and Commissioning @ 2%
Duty and Taxes @ 10%
Spare Parts @ 10%
Total Cost
25,000
525,000
100,000
800,000
360,000
100,000
150,000
80,000
70,000
150,000
75,000
150,000
75,000
80,000
2,190,000
2,715,000
298650
54300
271500
271500
3,610,950
Cost of machinery
Packaging to Insurance
Installation to Commissioning
Duty and Taxes
Spare parts
1800000
3325000
47
Total
5125000
Constructed area
Industrial shed
48
No. of Employees
1
2
6
2
35
90
60
10
Per Annum
300000
180000
144000
120000
84000
84000
60000
60000
Total
3
3.6
8.64
2.4
29.4
75.6
36
6
164.64
24.70
189.34
at 15%
0.36
Rate=1.45/unit
Diesel, Water
Selling Expenses ( Publicity and Marketing
Expense)
Per month
25000
15000
12000
10000
7000
7000
5000
5000
10440
1.25
5000
0.6
5% of Sales
38
Total
64.91
6,800,000
1,800,000
2,000,000
1,500,000
1,000,000
1,000,000
1,000,000
15,100,000
10,800,000
15,000,000
1,800,000
1,000,000
500,000
29,100,000
Total
44,200,000
49
Amount
(in lacs)
442.00
1.85
189.34
Indirect Expenses
66.05
Cost Breakup
Units
Rate
Total
Bags
Uniforms
Total
100,000
120,000
220,000
280
400
28000000
48000000
76000000
50
Bags
Uniforms
51
275000.00
80%
275000.00
80%
275000.00
80%
275000.00
80%
275000.00
80%
275000.00
80%
275000.00
80%
PRODUCTION
220000
220000
220000
220000
220000
220000
220000
220000
220000
220000
Sales Revenue
760.00
760.00
760.00
760.00
760.00
760.00
760.00
760.00
760.00
760.00
442.00
442.00
442.00
442.00
442.00
442.00
442.00
442.00
442.00
442.00
1.25
0.60
1.85
189.34
1.25
0.60
1.85
189.34
1.25
0.60
1.85
189.34
1.25
0.60
1.85
189.34
1.25
0.60
1.85
189.34
1.25
0.60
1.85
189.34
1.25
0.60
1.85
189.34
1.25
0.60
1.85
189.34
1.25
0.60
1.85
189.34
1.25
0.60
1.85
189.34
5.00
3.00
5.00
3.00
5.00
3.00
5.00
3.00
5.00
3.00
5.00
3.00
5.00
3.00
5.00
3.00
5.00
3.00
5.00
3.00
0.12
641.31
38.00
679.31
0.12
641.31
38.00
679.31
0.12
641.31
38.00
679.31
0.12
641.31
38.00
679.31
0.12
641.31
38.00
679.31
0.12
641.31
38.00
679.31
0.12
641.31
38.00
679.31
0.12
641.31
38.00
679.31
0.12
641.31
38.00
679.31
0.12
641.31
38.00
679.31
80.69
13.76
6.17
60.76
18.23
42.53
80.69
12.04
6.17
62.48
18.74
43.73
80.69
10.32
6.17
64.20
19.26
44.94
80.69
8.60
6.17
65.92
19.78
46.14
80.69
6.88
6.17
67.64
20.29
47.35
80.69
5.16
6.17
69.36
20.81
48.55
80.69
3.44
6.17
71.08
21.32
49.75
80.69
1.72
6.17
72.80
21.84
50.96
80.69
0.00
6.17
74.52
22.36
52.16
80.69
0.00
6.17
74.52
22.36
52.16
Capacity
Installed Capacity (Units)
Capacity Utilisation
Factory Overheads
General Overheads
Lease
Land
Estimated Cost of Production
Selling Expenses
Cost of Sales
EBITDA
Interest
Depreciation
PBT
Taxation
PAT
10
275000.00 275000.00
80%
80%
275000.00
80%
It would be seen from table above that the PBT in the 1st year of operation in Rs. 60.76 lacs which works out to be 8% of the total sales. In the 10 th
year, the %age of PBT would be 10%. Similarly PAT in the 1 st year is Rs. 42.53 lacs accounting for 6% of total turnover. PAT in 10 th would rise to
7%. These figures could vary depending upon change in tax structure.
52
Operating Years
Rate of Interest
Loan (Outstanding)
Interest
Moratorium
Repayment
Closing Balance
1
12%
114.67
13.76
10
100.34
12.04
86.00
10.32
71.67
8.60
57.34
6.88
43.00
5.16
28.67
3.44
14.33
1.72
0.00
0.00
0.00
0.00
14.33
100.34
14.33
86.00
14.33
71.67
14.33
57.34
14.33
43.00
14.33
28.67
14.33
14.33
14.33
0.00
0.00
0.00
0.00
0.00
10.12 Depreciation
Depreciation
Operating Years
Machinery @ 10%
Construction Cost @
5%
3.61
3.61
3.61
3.61
3.61
3.61
3.61
3.61
3.61
3.61
2.56
2.56
2.56
2.56
2.56
2.56
2.56
2.56
2.56
2.56
Total
6.17
6.17
6.17
6.17
6.17
6.17
6.17
6.17
6.17
6.17
10
53
SOURCES OF FUNDS
Equity
Debt
PBDIT
Total Sources
10
80.69
80.69
80.69
80.69
80.69
80.69
80.69
80.69
80.69
80.69
80.69
80.69
80.69
80.69
80.69
80.69
80.69
80.69
80.69
80.69
14.33
13.76
18.23
14.33
12.04
18.74
14.33
10.32
19.26
14.33
8.60
19.78
14.33
6.88
20.29
14.33
5.16
20.81
14.33
3.44
21.32
14.33
1.72
21.84
0.00
0.00
22.36
0.00
0.00
22.36
163.82
46.32
45.12
43.91
42.71
41.51
40.30
39.10
37.89
22.36
22.36
0.00
34.37
0.00
34.37
35.57
34.37
69.94
36.78
69.94
106.72
37.98
106.72
144.70
39.19
144.70
183.89
40.39
183.89
224.28
41.59
224.28
265.87
42.80
265.87
308.67
58.34
308.67
367.01
58.34
367.01
425.34
49.14
114.67
APPLICATION OF FUNDS
Fixed Assets Purchase
Miscellaneous Fixed Assets
Increase in Current Assets
Repayment of Loan Payment
Payment of Interest on Term Loan
Taxation
Total Application
Operation period
5
6
SURPLUS/(DEFICIT)
A-B
OPENING CASH & BANK BALANCES
CLOSING CASH & BANK BALANCES
163.82
104.21
3.00
56.61
0.00
54
Sn
Description
1.1 Equity
1.2 General Reserves
1.3 Debt
Total Liabilities
2 Assets
2.1 Gross Fixed Assets
2.2 Accumulated Depreciation
2.3 Net Fixed Assets
2.4 Working Capital Assets
2.5 Cash & Bank Balances
Total Assets
Construction
Period
Operati0on Period
1
1
49.14
114.67
163.82
107.21
107.21
56.61
0
163.82
10
49.14
42.53
100.34
192.01
49.14
86.26
86.00
221.41
49.14
131.20
71.67
252.02
49.14
177.34
57.34
283.82
49.14
224.69
43.00
316.84
49.14
273.24
28.67
351.05
49.14
323.00
14.33
386.47
49.14
373.95
0.00
423.10
49.14
426.12
0.00
475.26
49.14
478.28
0.00
527.42
107.21
6.17
101.03
56.61
34.37
192.01
107.21
12.35
94.86
56.61
69.94
221.41
107.21
18.52
88.69
56.61
106.72
252.02
107.21
24.69
82.51
56.61
144.70
283.82
107.21
30.87
76.34
56.61
183.89
316.84
107.21
37.04
70.17
56.61
224.28
351.05
107.21
43.21
63.99
56.61
265.87
386.47
107.21
49.39
57.82
56.61
308.67
423.10
107.21
55.56
51.65
56.61
367.01
475.26
107.21
61.73
45.47
56.61
425.34
527.42
55
Years
Inflows
Net Cash Accruals After Interest &
Tax
Less: Change in Working Capital
Add back financial Expenses
Terminal value
Total inflow
Outflows
Investment
Bridge Loan
Total outflow
Net Cashflow
IRR on Investment (%)
NPV (12% Discount Rate)
Pay Back Period
Construction Period
t=0
t=1
107.21
0
107.21
-107.21
32%
Rs. 206.75
2 years 6 months
56.61
0
56.61
-56.61
Operation Period
5
6
10
48.70
0
13.76
49.91
0
12.04
51.11
0
10.32
52.32
0
8.60
53.52
0
6.88
54.72
0
5.16
55.93
0
3.44
57.13
0
1.72
58.34
0
0.00
60.40
59.88
59.37
58.85
58.34
58.34
0
0.00
290
348.34
62.46
61.95
61.43
60.92
62.46
61.95
61.43
60.92
60.40
59.88
59.37
58.85
58.34
348.34
10
48.70
0
14.33
49.91
0
14.33
51.11
0
14.33
52.32
0
14.33
53.52
0
14.33
54.72
0
14.33
55.93
0
14.33
57.13
0
14.33
58.34
0
0.00
34.37
35.57
36.78
37.98
39.19
40.39
41.59
42.80
58.34
58.34
0
0.00
191
249.34
34.37
35.57
36.78
37.98
39.19
40.39
41.59
42.80
58.34
249.34
t=o
t=1
32.16
32.16
-32.16
56%
16.98
16.98
-16.98
The IRR on investment is 32% which is quite a positive indication about the financial health of the project because the cost of borrowing is 12%.
Similarly IRR on Equity is 56% which again is a positive indicator. The NPV @ of 12% on investment is Rs. 206.75 lacs which is quite good for any
investment.
56
Case1
Case2
Case3
Case4
442.00
1.85
443.85
486.20
2.04
488.24
442.00
1.85
443.85
442.00
1.85
443.85
486.20
2.04
488.24
201.75
221.93
201.75
201.75
221.93
189.34
5.00
3.00
0.12
13.76
6.17
217.39
1811.58
345.45
151277
69%
146981
67%
189.34
5.00
3.00
0.12
13.76
6.17
217.39
1811.58
345.45
175984
80%
170987
78%
208.27
5.50
3.30
0.13
15.14
6.79
239.13
1992.74
345.45
166405
76%
161679
73%
189.34
5.00
3.00
0.12
15.14
6.79
219.38
1828.20
345.45
152664
69%
147939
67%
198.80
5.25
3.15
0.13
15.89
7.13
230.35
1919.60
328.18
216791
99%
210081
95%
The project break even in normal case is 67% i.e. after achieving 67% of the Projected Turn Over the unit would be in be in the profit zone.
57
26%
2 Return on Equity
87%
3 Debt-Equity Ratio
2.33%
58
59
result into economic upliftment of local population. This would also lead
to upgradation of skills.
There are employment opportunities in the project for persons with
managerial, technical, financial and marketing capabilities.
The
employment of such people in the local industry would provide them an
option to have an employment in private sector in Bhutan and also reduce
the migration of qualified manpower.
There would be revenue generation for the local government by way of
excise, sales tax/VAT and income tax from the unit as well as from its
promoters.
Finally, the project would lead to enhancement of economic activities in
the field of construction, transport of raw materials and finished goods,
marketing and trade, repairs and maintenance, etc.
It is important here to mention that above benefits can only be listed but these
cannot be quantified based on a single unit with small investment. However, as
mentioned above, if a number of such units in school supplies sector or any other sector
of economy are setup, these would have a significant impact on overall economy of
Bhutan.
60
Annexure
61
Annexure I
2.
3.
4.
5.
6.
7.
8.
9.
62
10.
11.
12
13.
14.
15.
63
Annexure II
List of Raw Materials suppliers:
A. Heavy duty Nylon Fabric
1.
2.
3.
4.
5.
2.
3.
64
4.
5.
Tel : 86-533-6868-387
M/s Tuhina Impex
132 Vidyut Nagar "C" Vaishali Nagar
Jaipur, Rajasthan
India 302021
Tel: 91-141-2353-479
M/s Polytex Linen Cotton Limited
Block C,D,E, 20/F, Excelsior Building,
68-76 Sha Tsui Road, Tsuen Wan, N.T.
N/A, N/A, Hong Kong 852
Tel: 852-2414-4263
65
Annexure III
List of lab testing equipment suppliers
1. M/s Imperial Lab Equipment
Address: 109, Vardhman Plaza Tower, H-3, Netaji Subhash Place
District Center, PitamPura, New Delhi, Delhi
Phone(s): 91-11-65154406 / 42470203
Fax(s): 91-11-27352924
66