Pre-Feasibility Study

COMMERCIAL EMBROIDERY UNIT

(Multi Head Embroidery Machine)

Small and Medium Enterprise Development Authority

Government of Pakistan
www.smeda.org.pk
HEAD OFFICE
6 Floor ,LDA Plaza , Egerton Road , Lahore 54000, Pkaistan
Tel: (042) 111-111-456, Fax: (042) 6304926-7
helpdesk@smeda.org.pk
th

REGIONAL OFFICE
PUNJAB

REGIONAL OFFICE
SINDH

REGIONAL OFFICE
NWFP

REGIONAL OFFICE
BALOCHISTAN

8th Floor ,LDA Plaza

Egerton Road ,
Lahore
Tel: (042) 111-111-456, Fax:
(042) 6304926-7
helpdesk@smeda.org.pk

5TH Floor, Bahria

Complex II, M.T. Khan Road,
Karachi.
Tel: (021) 111-111-456
Fax: (021) 5610572
helpdesk-khi@smeda.org.pk

Ground Floor
State Life Building
The Mall, Peshawar.
Tel: (091) 9213046-47
Fax: (091) 286908
helpdesk-pew@smeda.org.pk

Bungalow No. 15-A

Chaman Housing Scheme
Airport Road, Quetta.
Tel: (081) 831623, 831702
Fax: (081) 831922
helpdesk-qta@smeda.org.pk

June, 2006

Pre-Feasibility Study

Commercial Embroidery Unit

DISCLAIMER
The purpose and scope of this information memorandum is to introduce the subject
matter and provide a general idea and information on the said area. All the material
included in this document is based on data/information gathered from various sources and
is based on certain assumptions. Although, due care and diligence has been taken to
compile this document, the contained information may vary due to any change in any of
the concerned factors, and the actual results may differ substantially from the presented
information. SMEDA does not assume any liability for any financial or other loss
resulting from this memorandum in consequence of undertaking this activity. Therefore,
the content of this memorandum should not be relied upon for making any decision,
investment or otherwise. The prospective user of this memorandum is encouraged to
carry out his/her own due diligence and gather any information he/she considers
necessary for making an informed decision.
The content of the information memorandum does not bind SMEDA in any legal or other
form.

DOCUMENT CONTROL
Document No.

PREF-04

Revision

Prepared by

SMEDA-Punjab

Approved by

GM Punjab

Revision Date

June 2006

Issued by

Library Officer

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Commercial Embroidery Unit

INTRODUCTION

1
1. 1

Commercial Embroidery

Commercial embroidery is a new business introduced in Pakistan a few years ago. There
is a lot of potential in this business because of less number of factories in the market and
an increasing demand of embroidery in local as well as international market. Industrial
embroidery machines (multi head machines) of different makes & origins (Japanese,
Chinese and Korean) are used for embroidery.
1. 2

Opportunity Rationale

The trend of usage of embroidery on garments of all sorts is on a rise since last few years.
Initially, the embroidery work was used to be done on export garments as per foreign
customer's requirements. However, with the passage of time the trend has changed and
local market of ladies suits has also emerged as a main customer of embroidery work.
Also, the cotton fabric of ladies suits, which is exported to middle east market, is
embroided before being exported. Apart from these, the embroidery work is also done on
bed sheets, table cloths, and sofa covers, badges etc. Almost 70% of the potential
embroidery business exists with the local market while the remaining 30% is done for
foreign market. So there is a potential for new people to come into the business of
commercial embroidery.
1. 3

Project Brief

The proposed project is designed as a small-scale commercial embroidery unit. This unit
will be capable of providing its services to local garments and fabric manufacturers as
well as to those garment manufacturers who are dealing in export and require embroidery
work on their garments. This sort of project is quite flexible in a way that there is no
processing of raw materials required and each machine is independent in its working. The
project can be started even with a single machine. However keeping in view the potential
and industry norms, the project will be more feasible and economical with two
embroidery machines.
1. 4

Proposed Capacity

960,000Stitches/Hour per Machine/20 Heads1

1. 5

Total Project Cost

Rs. 12.45 Million

1. 6

Process Flow Chart

Receipt of
Fabric
1

Designing
& Tracing

Loading on
Machine

Embroidery

Threading

Packing &
Dispatch

This is an average production rate of a machine having 20 heads.20% Time wastage allowance is included

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2 Current Industry Structure

Textile industry is the largest sector of Pakistan economy. It plays a major role in
strengthening the economy and also contributing a lion share in earning of much
needed foreign exchange for national exchequer.
From 2005, there are no quota restrictions for textile products exporting countries like
Pakistan. Considering the importance of textile sector, Government of Pakistan
constituted a Committee which carried out a study and finalized a report Textile
Vision 2005 on the existing setup of textile sector, its problems and has given
recommendations on future of textile sector. The basic objective of Textile Vision
2005 is to prepare the Pakistani Textile Sector to face the challenges of post quota
free era. In this report, the importance of value added products is stressed, and it is
predicted that value-added products will earn the highest unit value for the country
unlike primary products i.e. cotton and cotton yarn.
According to Textile Commissioners Organization (TCO) there are about 600
Textile Processing Units, of which only 30 units are from the integrated mill sector,
while the rest of the companies are a independent commercial dyeing and finishing
units. Out of these 600 processing units, 394 units are woven fabrics processing units
while remaining portion can be further subdivided into knitted fabric and yarn
processing units.
There is an installed capacity of about 350 million pcs year of knitwear. The sector is
not only catering for domestic demand, but also has enormous export potential. The
knitwear industry is almost totally export oriented and highly value added. The
products made in Pakisan include T-shirts, jogging suits, jerseys, sport shirts, children
wear, gloves tracksuits, sweaters and socks etc. the bulk of knitwear garments are
mainly exported to developed countries like USA, Germany, UK, Canada, France etc.
About 15% of the total output is consumed domestically.

3 MARKETING

3.1 Target Customers

World imports of embroidered fancy fabric is growing at almost 10% a year, and it
has reached a figure of more than US$ 537 million by the end of fiscal year
2004.USA is the largest importer of embroidered fabric with annual imports of US$
129 Million in the year 2004. While, France, United Kingdom and Italy follow the
lead.

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3. 2

Commercial Embroidery Unit

Leading Importing Countries

Table 5-1:

Major Importing Countries in Year 20042

Country
USA
France
United Kingdom
Italy
Hong Kong
Germany
Spain
Mexico
Japan

Value (US $ million)

129
92
66
61
53
41
41
21
17

Figures Includes Embroidery without visible ground (code 581010), Cotton (Code 581091, Man made
Fibers (Code 581092) & other Textile material (Code 581099).

3.3 Market Demand and Supply

Demand for Pakistani-made embroidery is gaining momentum outside the country. The
industry is receiving orders from Saudi Arabia, United Arab Emirates, United Kingdom,
United States, Belgium and Oman. Pakistan has a great potential to compete abroad,
particularly in the Middle East markets. With a little effort it can gain a reasonable share.
Table 5-2

Exports of Embroidered products from Pakistan3

Trade Value in US $ Million

Year
2003
2004

1.18
3.47

Pakistans import for embroidered products has remained nominal over the years. On of
the major reason is its excellence in hand embroidery. People have preferred hand
embroidered products over the machine embroidered products. And now with the passage
of time, as the trend is changing, Pakistan is also developing its home industry for
machine embroidery. So it is expected that the imports will remain nominal as home
industry is expected to grow at a faster rate due to cheap and easy availability of raw
material and man power.

PC TAS -2004
Source: Trade Analysis System, 2004, Figures Includes Embroidery without visible ground (code
581010), Cotton (Code 581091, Man made Fibers (Code 581092) & other Textile material (Code
581099).
3

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4 RAW Material
Embroidery is the process of sewing a design onto a garment. With recent advancements
in technology embroidery machines have become computerized and software has been
developed to assist in the day to day operation of embroidery machines. This means that
designs and set up costs can be low and the machines can run quicker with any number of
colors being applied in a single operation.
Designs are converted in to digital format known as digitizing and once this has been
done can be used over and over again. These designs are individually stored on to
computer disks, which are place in to the embroidery machine every time a design is
required. This reduces the set-up times required and also means that you no longer
require large volumes to make it cost effective.
Main raw material required is thread and sequence which is readily available. Following
is the details of raw material required for embroidery fabric:

5
5. 1

COMMERCIAL EMBROIDERY IN PAKISTAN

Commercial Embroidery Units

According to the estimates given by industry and the machine sellers, there are about
1000 embroidery machines working in the Pakistan.
5. 2

Embroidery Hubs

Most of the embroidery factories are located in Karachi, Lahore, Faisalabad and Sialkot.
A few factories are also located in Hyderabad, Multan, and Rawalpindi.
5. 3

Embroidery Products

The embroidery work is done on the following products:

Fabrics
Women Suits
Bed Sheets
Table & Sofa Cloths
Badges & Monograms
Export Products (Clothes, T-shirts, Caps etc.)
5. 4

Markets for Embroidered Products

The markets for embroidered products are:

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5.4.1

Commercial Embroidery Unit

Local Market

According to estimates given by people in business, about 70 % of the embroided

products are used in local (Pakistani) market. The products include women suits, table &
sofa covers, bed sheets, badges, logos, T-shirts, caps, etc.
5.4.2

Export/Foreign Market

About 30% of the embroidered products are exported to different countries. These
products include T-shirts, caps, badges, logos, women suits, etc.
5. 5

Target Customers

Following are the target customers for a commercial embroidery unit:

Small & medium scale garments manufacturers who dont have their own embroidery
units and are dependent on commercial embroidery units for their garments.
Commercial exporters of embroidered garments who outsource their embroidery
requirements to commercial embroidery units.

6
6. 1

MACHINERY DETAILS
Machines Required

A commercial embroidery unit can be started by using any number of machines but a
combination of two machines (20 heads each) will be more economical and viable to start
the project.
6. 2

Machines Available in Market

Embroidery machines of different makes and origins are available in the market. The
prices of machines depend on make, origin and the number of heads & colors of machine.
The machines available in the market are

Tajima
Barudan
SWF
Eagle Wheel
Diamond

(Japanese)
(Japanese)
(Korean)
(Chinese)
(Chinese)

The Japanese & Korean machines are more expensive, while Chinese machines are
comparatively cheaper. However, the quality of work is almost the same butThe viability
of this project has been developed on the basis of Japanese machinery (Barudan).

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6. 3

Commercial Embroidery Unit

Technical Details

The technical details of Japanese machine are following:

Table: 3-1

Technical Details of Machinery

Estimated Price per Machine (Rs)

No. of Heads
Load (KW)
Electricity Phase
(Source: Machinery Suppliers/Industry)
6. 4

5,616,0004
20
1.5
3 Phase

Production

The production details of embroidery machine as follows:

Table: 3-2

Estimated Production details

Average Stitches per Head

8,000 stitches in 10 Minutes

Average Stitches per head per hour

Total stitches per Hour (20 Heads)
(Source: Machinery Suppliers)
6. 5

48,000
960,000

Other Equipment

Other equipment required as following:

Table: 3-4

Other Equipment
Item

Required
1
1
2
1

Computer
Printer
Air conditioner
Designing Software
Electrical Appliances
Total

30,000
20,000
50,000
10,000
10,000
Rs. 120,000

Price Includes Import duties and other costs

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Cost

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7
7. 1

Commercial Embroidery Unit

. RAW MATERIAL
Raw Material Requirement

Required raw materials and their approximate costs as follows:

Table 71 Raw Material

Sequence Per Reel

Embroidery Thread Per cone

Rs. 80
Rs. 39

Tile (Metallic thread per cone)

Cording Per KG
(Source: Industry)

Rs. 435
Rs. 80

Utilities Requirement

Electricity
Telephone
Fax

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9
9. 1

Commercial Embroidery Unit

Human Resources
Human Resource Requirement

For a unit of 2 embroidery machines the human resource requirement is given in the
Table 6-1
Table 91 Human Resource Requirement
Positions
5

9. 2

Required

Monthly Salary

Annual Salary
240,000
72,000
120,000
78,000
78,000
108,000

Chief Executive
Designer/Tracer
Office Asstt./Comp Operator
Admin Officer
Supervisor
Machine Operator6

1
1
1
1
2

20,000
6,000
10,000
6,500
6,500
4,500

Helper

4,000

96,000

Clippers
Sweeper
Guard
Total

2
1
1
11

4,000
2,500
4,500

192,000
30,000
54,000
1,068,000

Rs.

Working Time

Working time estimates are given in the following table:

Table 92 Working Time

5
6

Description

Time

Per Day Working

22 Hours (in 2 shifts)

Per Month Working

Per Annum Working

25 Days (Excluding Holidays) (550 Hours)

300 Days (6600 Hours)

Owner of the Embroidery Unit.

One operator per shift along with one helper.

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10 Land & Building Requirement

10.1 Covered Area Requirement
The covered area required for one embroidery machine is approx. 500 sq. ft. This
space is inclusive of machine installation space, fabric-handling space, clipping
space, etc. Other space requirements are listed in the table below:
Table 101 Covered Area
Type
Large Hall
Store
Designing Room
Office
Wash Room
Total Covered Area

Covered
Area(sq.ft)
For Installation of Machines
1,000
For Storing Raw material/Goods
500
For Designing & Other related issues
200
Official Work
200
50
1,950
Description

10.2 Recommended Option

It is recommended that the embroidery unit should be established in a rented
building, which can be easily found in the industrial zones. The maximum rent for
a building having covered area of 1,950 Sq. feet can be Rs.23, 400/- per month.
(12 Rs@ per S.F)
10.3 Suitable Location
The clusters of embroidery industry exist in Karachi, Lahore, Faisalabad, Sialkot,
Multan, and Rawalpindi. So it is recommended that the unit may be set up in one
of these cities.

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11 PROJECT COST & REVENUES

11.1 Project Costs Estimates
The detail of capital cost estimates is given in the Table 8-1.
Table 111 Project Cost Estimates
Account Head
Machinery & Equipment
Furniture & Fixtures
Office Equipment
Pre-Operating Costs7
Total Capital Costs

Total Cost
11,501,000
110,000
71,000
169,352
11,641,797

Equipment Spare Part Inventory8

Raw Material Inventory9
Prepaid building rental
Prepaid insurance payment
Total Working Capital

217
97,500
280,000
230,800

Total Investment in the Project

12,246,173

608,537

Table 112 Financing Plan

Financing
Equity
Debt

50%
50%

Debt Split
Long-term loan
Running finance

6,123,087
6,123,087

6,123,087
0

Include admin expenses, interest accrued and salaries (2 months salary of the CEO and one month salary
of supervisor and guard).
8
Oil & needles required for one week.
9
Raw material required for one month.

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11.2 Revenue Estimates

The expected revenue estimates are given in Table 8-3.
Table 113
Per Day per Machine Production( Max)
Per Annum Working Days
No. of Machines
Average Price for 1000 Stitches
Total Annual Revenue (Max)

42,240,000 Stitches
300 Days
2
Rs. 1
Rs. 12,672,000

12 Key Success Factors

There is a lot of potential in the commercial embroidery business because the trend of
embroidery on garments of all sorts is on a rise.
Production process is simple, there are no complications in the process, and raw material
requires no processing. Machines are fully computerized and no technicalities are
required to handle the machines.
The commercial viability of this embroidery unit depends on the regular business orders
i.e. enough orders to operate the unit for at least 300 days a year. This requires aggressive
marketing efforts at the entrepreneurs end. The local as well as foreign markets have to
be identified and approached in order to get the business and to keep the unit running.
Following points should also be ensured to make the business successful:
Assurance of high consistent quality
Surety of products on time delivery
Competitive rates
Cost efficiency through better management

13 Threats for the Business

Due to the increase in number of commercial embroidery units and competition, there are
chances that the market rates may reduce. However, this can be tackled by providing
different value added services to customers.
Another major threat to the business is credit factor. This is also related to the
competition. The customers may ask for credit facility for a longer period, and this can
disturb the cash cycles of the unit. This can be avoided by making a similar policy for all
customers, so there will be no complaints from customers and cash cycle will not be
disturbed.

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14 Financial Analysis
14.1 Projected Income Statement
Statement Summaries

SMEDA

Income Statement
Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Year 8

Rs. in
Year 9

actuals
Year 10

Revenue
Cost of goods sold
Gross Profit

8,236,800
3,705,293
4,531,507

9,313,920
4,325,176
4,988,744

10,478,160
5,025,285
5,452,875

11,735,539
5,815,360
5,920,179

13,092,461
6,706,293
6,386,168

14,555,736
7,710,262
6,845,474

16,132,607
8,840,881
7,291,726

16,939,238
9,607,694
7,331,544

17,786,200
10,445,209
7,340,991

18,675,510
11,360,185
7,315,324

General administration & selling expenses

Administration expense
Rental expense
Utilities expense
Communications expense (phone, fax, etc.)
Repairs & renewals
Office vehicles running expense
Office expenses (stationary, etc.)
Promotional expense
Insurance expense
Professional fees (legal, audit, etc.)
Depreciation expense
Amortization expense
Miscellaneous expense
Subtotal
Operating Income

432,000
280,800
515,455
30,000
21,600
82,368
225,860
41,184
1,147,400
16,780
2,793,447
1,738,060

474,060
308,880
567,001
33,000
23,703
93,139
203,274
46,570
1,147,400
16,780
2,913,807
2,074,937

520,215
339,768
623,701
36,300
26,011
104,782
180,688
52,391
1,147,400
16,780
3,048,035
2,404,840

570,864
373,745
686,071
39,930
28,543
117,355
158,102
58,678
1,147,400
16,780
3,197,468
2,722,711

626,444
411,119
754,678
43,923
31,322
130,925
135,516
65,462
1,147,400
16,780
3,363,570
3,022,598

687,436
452,231
830,146
48,315
34,372
145,557
112,930
72,779
1,147,400
16,780
3,547,946
3,297,528

754,366
497,454
913,161
53,147
37,718
161,326
90,344
80,663
1,147,400
16,780
3,752,359
3,539,368

827,812
547,200
1,004,477
58,462
41,391
169,392
67,758
84,696
1,147,400
16,780
3,965,367
3,366,177

908,409
601,920
1,104,924
64,308
45,420
177,862
45,172
88,931
1,147,400
16,780
4,201,126
3,139,865

996,853
662,112
1,215,417
70,738
49,843
186,755
22,586
93,378
1,147,400
16,780
4,461,861
2,853,464

Other income
Gain / (loss) on sale of assets
Earnings Before Interest & Taxes

1,738,060

2,074,937

2,404,840

2,722,711

3,022,598

57,355
3,354,883

179,564
3,718,931

299,568
3,665,745

403,765
3,543,631

550,998
3,404,462

Interest expense
Earnings Before Tax

865,166
872,894

754,231
1,320,706

603,034
1,801,806

418,652
2,304,060

239,362
2,783,237

17,422
3,337,460

3,718,931

3,665,745

3,543,631

3,404,462

Taxable earnings for the year

Tax
NET PROFIT/(LOSS) AFTER TAX

872,894
82,368
790,526

1,320,706
93,139
1,227,567

1,801,806
104,782
1,697,024

2,304,060
117,355
2,186,704

2,783,237
130,925
2,652,312

3,337,460
145,557
3,191,903

3,718,931
161,326
3,557,605

3,665,745
169,392
3,496,353

3,543,631
177,862
3,365,769

3,404,462
186,755
3,217,707

Balance brought forward

Total profit available for appropriation
Dividend
Balance carried forward

790,526
395,263
395,263

395,263
1,622,830
811,415
811,415

811,415
2,508,439
1,254,220
1,254,220

1,254,220
3,440,924
1,720,462
1,720,462

1,720,462
4,372,774
2,186,387
2,186,387

2,186,387
5,378,290
2,689,145
2,689,145

2,689,145
6,246,750
3,123,375
3,123,375

3,123,375
6,619,728
3,309,864
3,309,864

3,309,864
6,675,633
3,337,816
3,337,816

3,337,816
6,555,523
3,277,761
3,277,761

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14.2 Projected Cash flow Statement

Statement Summaries

SMEDA

Cash Flow Statement

Year 0
Operating activities
Net profit
Add: depreciation expense
amortization expense
Deferred income tax
Accounts receivable
Finished good inventory
Equipment inventory
Raw material inventory
Pre-paid building rent
Pre-paid lease interest
Advance insurance premium
Accounts payable
Other liabilities
Cash provided by operations

(217)
(97,500)
(280,800)
(225,860)
(604,377)

Financing activities
Change in long term debt
6,123,087
Change in short term debt
Change in export re-finance facility
Add: land lease expense
Land lease payment
Lease principal repayment
Issuance of shares
6,123,087
Purchase of (treasury) shares
Cash provided by / (used for) financing activities
12,246,173
Investing activities
Capital expenditure
(11,641,797)
Acquisitions
Cash (used for) / provided by investing activities
(11,641,797)

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Year 8

Rs. in
Year 9

3,557,605
1,147,400
16,780
(228,011)
(56,531)
(58)
(26,231)
(49,745)
22,586
36,653
4,420,448

3,496,353
1,147,400
16,780
(178,763)
(38,341)
(64)
(28,919)
(54,720)
22,586
30,562
4,412,873

3,365,769
1,147,400
16,780
(124,019)
(41,876)
(71)
(31,884)
(60,192)
22,586
24,268
4,318,761

790,526
1,147,400
16,780
(617,760)
(185,265)
(41)
(18,263)
(28,080)
22,586
87,452
1,215,336

1,227,567
1,147,400
16,780
(698,544)
(30,994)
(47)
(20,982)
(30,888)
22,586
89,695
1,722,573

1,697,024
1,147,400
16,780
(168,102)
(35,005)
(53)
(24,067)
(33,977)
22,586
25,275
2,647,860

2,186,704
1,147,400
16,780
(181,621)
(39,504)
(61)
(27,564)
(37,374)
22,586
27,888
3,115,233

2,652,312
1,147,400
16,780
(196,073)
(44,547)
(70)
(31,525)
(41,112)
22,586
30,761
3,556,512

3,191,903
1,147,400
16,780
(211,515)
(50,198)
(80)
(36,009)
(45,223)
22,586
33,921
4,069,565

(926,322)
106,250
(820,073)

(1,056,007)
144,849
(911,158)

(1,203,848)
(189,792)
(1,393,640)

(1,372,387)
(22,383)
(1,394,771)

(1,564,521)
194,396
(1,370,125)

(233,320)
(233,320)

actuals
Year 10

3,217,707
1,147,400
16,780
(130,220)
(45,749)
762
342,943
662,112
22,586
7,143
5,241,463

NET CASH

395,263

811,415

1,254,220

1,720,462

2,186,387

3,836,245

4,420,448

4,412,873

4,318,761

5,241,463

Cash balance brought forward

Cash available for appropriation
Dividend
Cash carried forward

395,263
395,263
-

811,415
811,415
-

1,254,220
1,254,220
-

1,720,462
1,720,462
-

2,186,387
2,186,387
-

3,836,245
2,689,145
1,147,100

1,147,100
5,567,547
3,123,375
2,444,172

2,444,172
6,857,046
3,309,864
3,547,182

3,547,182
7,865,943
3,337,816
4,528,127

4,528,127
9,769,590
3,277,761
6,491,828

14
PREF-04May, 2006/REV2

Pre-Feasibility Study

Commercial Embroidery Unit

14.3 Projected Balance Sheet

Statement Summaries

SMEDA

Balance Sheet
Year 0
Assets
Current assets
Cash & Bank
Accounts receivable
Finished goods inventory
Equipment spare part inventory
Raw material inventory
Pre-paid annual land lease
Pre-paid building rent
Pre-paid lease interest
Pre-paid insurance
Total Current Assets

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Year 8

Rs. in
Year 9

actuals
Year 10

217
97,500
280,800
225,860
604,377

617,760
185,265
257
115,763
308,880
203,274
1,431,198

1,316,304
216,259
304
136,744
339,768
180,688
2,190,067

1,484,406
251,264
357
160,811
373,745
158,102
2,428,686

1,666,027
290,768
419
188,376
411,119
135,516
2,692,225

1,862,100
335,315
489
219,901
452,231
112,930
2,982,965

1,147,100
2,073,615
385,513
569
255,910
497,454
90,344
4,450,504

2,444,172
2,301,626
442,044
627
282,140
547,200
67,758
6,085,567

3,547,182
2,480,388
480,385
691
311,060
601,920
45,172
7,466,797

4,528,127
2,604,408
522,260
762
342,943
662,112
22,586
8,683,198

Fixed assets
Land
Building/Infrastructure
Machinery & equipment
Furniture & fixtures
Office vehicles
Office equipment
Total Fixed Assets

11,293,000
110,000
71,000
11,474,000

10,163,700
99,000
63,900
10,326,600

9,034,400
88,000
56,800
9,179,200

7,905,100
77,000
49,700
8,031,800

6,775,800
66,000
42,600
6,884,400

5,646,500
55,000
35,500
5,737,000

4,517,200
44,000
28,400
4,589,600

3,387,900
33,000
21,300
3,442,200

2,258,600
22,000
14,200
2,294,800

1,129,300
11,000
7,100
1,147,400

Intangible assets
Pre-operation costs
Training costs
Total Intangible Assets
TOTAL ASSETS

167,797
167,797
12,246,173

151,017
151,017
11,908,815

134,237
134,237
11,503,505

117,458
117,458
10,577,944

100,678
100,678
9,677,303

83,898
83,898
8,803,864

67,119
67,119
9,107,223

50,339
50,339
9,578,106

33,559
33,559
9,795,157

16,780
16,780
9,847,378

0
9,794,466

87,452
106,250
193,701

177,147
251,099
428,246

202,421
61,307
263,729

230,309
38,924
269,233

261,070
233,320
494,390

294,991
294,991

331,644
331,644

362,206
362,206

386,475
386,475

393,617
393,617

6,123,087
6,123,087

5,196,764
5,196,764

4,140,757
4,140,757

2,936,909
2,936,909

1,564,521
1,564,521

6,123,087
6,123,087
12,246,173

6,123,087
395,263
6,518,350
11,908,815

6,123,087
811,415
6,934,502
11,503,505

6,123,087
1,254,220
7,377,306
10,577,944

6,123,087
1,720,462
7,843,549
9,677,303

Liabilities & Shareholders' Equity

Current liabilities
Accounts payable
Export re-finance facility
Short term debt
Other liabilities
Total Current Liabilities
Other liabilities
Lease payable
Deferred tax
Long term debt
Total Long Term Liabilities
Shareholders' equity
Paid-up capital
Retained earnings
Total Equity
TOTAL CAPITAL AND LIABILITIES

15
PREF-04May, 2006/REV2

6,123,087
2,186,387
8,309,474
8,803,864

6,123,087
2,689,145
8,812,232
9,107,223

6,123,087
3,123,375
9,246,462
9,578,106

6,123,087
3,309,864
9,432,951
9,795,157

6,123,087
3,337,816
9,460,903
9,847,378

6,491,828
2,734,628
568,009
9,794,466

0
-

6,123,087
3,277,761
9,400,848
9,794,466

Pre-Feasibility Study

Commercial Embroidery Unit

14.4 Key Assumptions

Table 141 Machinery Assumptions
Number of Machines Installed
Capacity Utilization 1st Year
Total Production per hour (Stitches) per Head
Total Production of the embroidery unit per day (Stitches)
Annual Production Capacity (Stitches)

2
65%
48,000
42,240,000
8,236,800,000

Table 142 Operating Assumptions

Hours operational per day
Days operational per month
Days operational per year

22
25
300

Table 143 Economy-Related Assumptions

Electricity growth rate
Wage growth rate
Office equipment price growth rate
Office vehicles price growth rate

10%
10%
5%
10%

Table 144 Cash Flow Assumptions

Accounts Receivable cycle (in days)
Accounts payable cycle (in days)
Raw material inventory (in days)
Equipment spare part inventory (in days)

45
30
30
30

Table 145 Revenue Assumptions

Production capacity of the unit (double shift basis)
Sale price per unit in year 1 (in Rs.)
Sale price growth rate
Maximum capacity utilization
Domestic Sales
Export Sales

12,672,000,000
1 Rs. per 1000 stitches
10%
95%
100%
0%

Table 146 Expense Assumptions

Cost Per 1000 Stitch (Direct)
Office expenses (stationery, entertainment etc)
Machine maintenance growth rate
Pre-paid building Rent (months)
Pre-paid insurance (months)
Insurance rate (% of net fixed assets)
Promotional Expenses

0.0142 Rs
5% of admin expense
2%
12
12
5%
1% of Revenue

16
PREF-04/May, 2006/REV 2

Pre-Feasibility Study

Commercial Embroidery Unit

Table 147 Financial Assumptions

Project life (years)
Debt ratio
Equity ratio
Interest rate on long-term debt
Interest rate on short term debt
Debt tenure (years)
Debt payments per year
Discount rate (weighted avg. cost of capital for NPV)

10
50%
50%
14%
14%
5
1
20%

Table 148 Projects finding

IRR
NPY
Pay Back Period (Years)

28%
2,572,780
4.8

17
PREF-04/May, 2006/REV 2