Business proposal for setting up of a jacket manufacturing company

NISHANT ROHIT KUMAR

Introduction

The men's Jackets is, without question, the most universal and steadfastly appropriate item in a gentleman's wardrobe. There are few occasions at which a man in a quality Jackets will be out of place, particularly if the wearer has a firm grasp of fashion and an established personal style. The path to elegant style begins with the jackets, the cornerstone of men's fashion.

Business Plan/Proposal

For Jacket Manufacturing company (Silver Sparks) Compiled by Rohit Kumar and Nishant of Silver Sparks

Aims & Objectives

To Provide best fashion at cheapest price.

To target the common people & make jackets a common attire in every wardrobe.

Market Share of Mens Jackets

The mens suits, jackets and blazers market in India is valued at Rs 4,100 crore, which is 8.9 per cent of the total mens wear market in the country. This market is growing at a rate of 16 per cent and is expected to reach Rs 7,400 crore by 2012. In terms of volume, this market is 1.5 crore pieces, which is 1 per cent of the total mens wear market. It is expected to grow to 2.1 crore pieces by 2012. Premium suits, jackets and blazers are priced at an average of Rs 12,282. They contribute 1.3 per cent to the mens suits, jackets and blazers market in terms of value, and 2.2 per cent in terms of volume. Low-priced suits, jackets and blazers are priced at an average of Rs 1,252. They contribute 29.6 per cent to the mens suits, jackets and blazers market in terms of value, and 57.2 per cent in terms of volume.

Executive summary

In a nutshell, this is the overview to our business. It defines the market our company will operate in and lists the products or services we will deliver. Garment industry is one of the fastest growing sectors in the country with huge orders for suit making because of the advent of western companies in India and also huge orders for the make to measure jackets. It is very imperative that one company comes which is Indian in nature, suits Indians to the core and understands their demands expectations and fulfills them. The most important thing about this company is that it has been brought into existence after much study into demands of jacket. We are unique because we are the first to come into this market after such a study and have huge experience in this field.

Administration Information

Name of business : Silver Sparks Type of business activity: Manufacturing Type of business ownership and the legal structure ; Private - all disputes under Delhi High court jurisdiction. Physical and Postal address of business ; A 202 sector 51, Noida 567890, UP

Contact numbers of key persons

Person Involvement Telephone

Fax E-mail

: ROHIT &NISHANT : G.M : 9323222698 9619683435 : 011 2345678 : justlikemerohit@yahoo.co.in

Name(s) of partners and their percentage shareholding :ROHIT &NISHANT

50:50

Introduction & Background Information

Intended starting date of operations :31

October The project and for which finance is required: Jacket Manufacturing Total amount of finance required:60 crores Period over which the finance is required: mentioned later on The primary source of financing: Bank loan Internally generated funding investment to the tune of 2 crores.

Management Team

Highly qualified and experienced Product of NIFT Work experience:25 years in RMG and 10 years in export and merchandising of suits. Both partners highly experienced and have the ability to get their work done in extreme of the conditions. They have great understanding of this sector and have done a lot in this sector over the years.

Marketing Plan

Products and Target market/s, (geographically if possible) - Jackets and India The size of this market, its growth prospects and factors that influence it. - Huge, Bright weather Main competitors, their strengths and weaknesses and their market shares. MADURA - PRICING - OLD MACHINERY 20% Anticipated market share in percentage terms and explanation of believe that we can successfully capture this section of the Market. - 15%in 5 years because of the pricing and new attitude.

Marketing plan in detail

Jackets to be made in four lines, ASTM standards, the jackets will have hand sewing in critical operations to make it better and more attractive than that of our competitors. The selling price is double of the cost price and this price is lower to that of our competitors. Our promotional efforts will be done in all major print and electronic media. For sale promotions we will tie up with different retail brands. etc. Distribution agreements with these channels have yet not been finalized though blue print is ready.

Market Potential

Great potential just because of the fact that men now-a days wanted to dress as smartly as possible and with the advent of white collar jobs in India this has just increased. There are very few units in the State which are engaged in manufacturing jackets. The export of readymade garments to different countries has also been increased. There is good scope if some units come forward for manufacturing of jackets.

We intend to sell 6,00,000 units of jacket a year. Turn over is mentioned in the document. Our 50% sell will be in metropolis of India and then 20% in small cities, 10% as MTM and rest for exports. A break down of our selling expenses is given in the document.

Manufacturing Production Plan

Our factory size, (sq mtrs) and suitability, taking into account our proposed project has been furnished. Details of the current cost per month per square meter has been given. Details of the owners of the property have been mentioned. The layout and production flow of the factory has been Incorporated. Description of each new machine cost and supply quotes have been mentioned. A plant manager along with a project manager will commission the plant and the time period required. Maintenance contract will be there for house keeping. Any further machines that will have to be purchased in the next three years : Cutters

 List of people currently employed in the factory have

been supplied and breakdowns of the salaried, permanent and casual labor force have been given. We are using an average wage per category. No labor councils and unions but company will adhere to the Govt rules. SALARY

A breakdown of the quantity and price of raw materials (including packaging) required, to producing product range has been given

Salaries and wages (detailing salary has been given)

Production expenses (rent, insurance, light & water, maintenance, consumables, etc.).

Financial and Administration Plan

Audited financial statements of our business for the past two years and detailed interim accounts not older than two months are provided . Company has to be started so no interim accounts available. Bank account holder(s) contacts - 9987654321 and Auditors contact numbers 9876567878 A budget for our administrative expenses, e.g. audit fees, bank charges, telephone, stationary, levies, etc. in time periods to match the other budgets has been given. Budgeted balance sheets and income statements, by month for the first year have been given.

Attachments and supporting Documentation

Copy of detailed curriculum vitae or resume of all partners. Copy of identity documents of directors and shareholders. Copies of quotations and / or plans for building. Copies of title deeds and / or leases. Details of any municipal requirements and SABS / ISO 9000 requirements. Copies of patents / trademarks and royalty agreements. Copies of proof of own contribution. Layout sketch. Organogram (plan of who will do what in the business). Copies of financial statements. Copies of proof of orders or letters of commitment. Maps showing location. Any other relevant substantiating documentation.

Production Capacity

Qty: 6,00,000 (per annum) Value: Rs. 24,00,00,000(taking rs 400 as cost price)

Basis and Presumptions

The scheme has been prepared on the basis of 75% efficiency on single shift considering 25 working days in a month. The rate of 12% interest in the scheme has been worked out on the basis of 12% on an average however, this figure is likely to vary depending on the financial out-lay of the project as well as location of the unit. The break-even point in the scheme has been calculated on the full capacity utilization basis. The cost of machinery and equipment as indicated are approximate which are fueling locally at the time of preparation of the scheme when a tailor cut project profile is prepared, necessary changes are to be made.

The rate quoted in respect of salaries and wages for workers and others are the minimum rates in the State, neighboring states. After the initial gestation period of one and half year, it will require approximately 2.5 years to pay back the loans. Working capital for 2 months has been taken into consideration for smooth running of the project.

Pollution Control
Effluents are required, since the process involves many processes which can cause pollution. So, there is a requirement of installation of effluent plant.

Energy Conservation
Energy Conservation has become essential in these days. It becomes the individuals duties to realize its necessity.

Financial Aspects
A. Fixed Capital (i) Land and Building Value (Rs.) 130680.98 sq.ft.@ Rs. 2000 sq.ft. Rs. 26,13,61,960

SALARY
(i) Staff and Labor (per month) Administrative and Supervisory 1. Vice president 2. G.M 3. Manager 4. Supervisor/Accountant 5. Peon/Watchman Skilled/Unskilled Worker 1. Operators A Skilled/Unskilled Worker 2. Operators B 3. Helpers Total prerequisites@20% Total Say 250 80 4000 3000 1000000 240000 2682000 533600 3215600 70 5000 350000 1 4 15 15 22 100000 100000 75000 35000 6000 3500 300000 525000 90000 77000 (Rs.)

BACK

RAW MATERIAL COST

(ii) Raw Material (per month) Shell fabric lining Felt trims INTERLINING @200 @90 @15 @12 @75 (Rs.) 1,00,00,000 4,50,000 7,50,000 6,00,000 3,75,000

Total

1,21,75,000

OTHERS
(iv) Other Contingent Expenditure 2. Postage and stationery 3. Repair and maintenance 4. Telephone 5. Transportation charges/cartage 6. Insurance 7. Office expenditure 9. Packing expenses 10. Sales & Marketing Expenses Total (Rs.) 3000000 3600000 5400000 2400000 5000000 3600000 3000000 1200000 35200000

(v) Working Capital (per month) Staff and Labour Raw Material Utilities Other expenditure Total

(Rs.) 22,82,000 1,21,75,000 8000000 20,00,000 2,44,57,000

(1) Cost of Production (per annum) Raw Material Staff and Labour Utilities Other contingent expenses Depreciation on Machinery @ 10% Interest on total investment @ 12% Depreciation on Office furniture. Total

(Rs.) 14,61,00,000 2,73,84,000 9,60,00,000 14,76,000 30,15,900 101564030 40,000 27,43,60,780

(2) Turnover (per annum) By sale of : 6,00,000 @ 800 (3) Net Profit (per year) Profit = Sales Production = 48,00,00,000-27,43,60,780 Cost

(Rs.) 48,00,00,000 (Rs.) 215639,220

Net Profit Ratio

Net Profit per year 100 ----------------------------Turnover per year 215639,220 -----------x100 48,00,00,000 44.9%

Net Rate of Return

Net Profit per year -------------------- 100 Total Investment 215639,220 -----------x100 84,63,66,920 =25.47%

Break-even Point

Fixed Cost (per annum) 1. 40% of salaries 2. 40% of utilities 3. 40% of other expenditure 4. Depreciation on machinery 5. Depreciation on office furniture 6. Interest on total investment Total

(Rs.) 10953600 3200000 800000 30,15,900 40000 101564030 119573530

B.E.P.
=Fixed Cost 100 --------------------Fixed Cost + Profit = 2862400 -------------x100 3962520 = 72.2%

PAY BACK PERIOD

Rs. 21,56,39,220 profit per year. Rs. 84,63,66,920 investment in year. Pay back period= 84,63,66,920/ 215639,220 3.92 years

Internal rate of return

STEP 1 846366920={4(215639220)-(3055900)4}/4 =212583320 STEP 2 846366920/ 212583320 =3.9813 PVIFA table gives the value as

The prices of the machinery are correct in the maximum possible manner. They have been taken from the internet. This whole endeavor is for a jacket factory that will have four jacket lines. The data for the machinery has been taken from the records of silver spark ltd. For raw material lining has been taken as Rs 6 per meter and thus 1.5 meter per jacket. Interlining as Rs 75 Trims which consist of thread, labels and buttons have been taken to be around Rs 15. Maximum effort have been paid to have the data as possibly correct as possible and as close as possible to the factory we saw.