Pre-Feasibility Study

BED LINEN STICHING UNIT

Small and Medium Enterprise Development Authority
Government of Pakistan
www.smeda.org.pk
HEAD OFFICE 6th Floor LDA Plaza Egerton Road, Lahore Tel 111 111 456, Fax: 6304926-7 Website www.smeda.org.pk Helpdesk@smeda.org.pk
REGIONAL OFFICE PUNJAB REGIONAL OFFICE SINDH 5TH Floor, Bahria Complex II, M.T. Khan Road, Karachi. Tel: (021) 111-111-456 Fax: (021) 5610572 Helpdesk-khi@smeda.org.pk REGIONAL OFFICE NWFP Ground Floor State Life Building The Mall, Peshawar. Tel: (091) 9213046-47 Fax: (091) 286908 helpdesk-pew@smeda.org.pk REGIONAL OFFICE BALOCHISTAN Bungalow No. 15-A Chaman Housing Scheme Airport Road, Quetta. Tel: (081) 831623, 831702 Fax: (081) 831922 helpdesk-qta@smeda.org.pk

8th Floor LDA Plaza Egerton Road, Lahore Tel 111 111 456, Fax: 6304926-7 Website www.smeda.org.pk
helpdesk@smeda.org.pk

June, 2007

Pre-Feasibility Study

Bed Linen Stitching 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-52 Revision Prepared by Approved by Revision Date Issued by 2 SMEDA-Punjab Provisional Chief- Punjab JUNE, 2007 Library Officer

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1

Introduction .............................................................................................................4 Project Brief.....................................................................................................4 1. 1 Opportunity Rat ionale ......................................................................................4 1. 2 Proposed Capacit y ...........................................................................................4 1. 3 Total Project Cost ............................................................................................4 1. 4 2 Current industry structure ........................................................................................4 3 Production process flow...........................................................................................5 4 Raw material ...........................................................................................................5 List of Raw Material ........................................................................................5 4. 1 5 production ...............................................................................................................6 Production Capacit y .........................................................................................6 5. 1 Product Mix .....................................................................................................6 5. 2 Production Mix ................................................................................................7 5.3 6 Marketing ................................................................................................................7 7 Global Trade of Bed Linen ......................................................................................8 Major Exporters/Importers of Bed Linen, of Textile or Crochet Materials (In 7.1 2006) (HS 2002-630210) .............................................................................................9 Major Exporter / Importer of Bed Linen, o f Cotton, Printed not Knit (In 2006) 7. 2 (HS 2002-630221) .....................................................................................................10 Pakistan’s Exports in Bed Linen (In 2006) .....................................................11 7. 3 8 Machinery requirement.......................................................................................... 11 9 Human resource requirement ................................................................................. 12 10 Land & Building................................................................................................ 13 10.1 Total Land Requirement................................................................................. 13 10.2 Rental Details ................................................................................................ 13 10.3 Suitable Locations .......................................................................................... 14 10.4 Utilit ies Requirements....................................................................................14 11 Project Economics ............................................................................................. 14 12 Key success factors............................................................................................15 13 Threats for the business...................................................................................... 15 14 Financial statements...........................................................................................16 14.1 Projected Income Statement ........................................................................... 16 14.2 Projected Balance Sheet ................................................................................. 17 14.3 Projected Cash Flows .....................................................................................18 15 KEY ASSUMPTIONS.......................................................................................19

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Bed Linen Stitching Unit

1

INTRODUCTION

1.1 Project Brief Bed Linen is an important value added sub-sector of Textile sector. The products include bed sheets, pillow covers, quilts, etc. This project provides information about stitching unit of Bed Linen. 1. 2 Opportunity Rationale

Bed Linen is among the largest sector in terms of production and exports amongst all the made ups in Pakistan. Pakistan is a major exporter of Bed Linen in the world and the basic reason for the development of this industry in Pakistan is the existence of a huge infrastructure of weaving in formal & informal sectors. The informal sector is also known as Power Loom sector. Most of the products in Bed Linen are made from low-density fabrics of wider widths. This fabric can be easily manufactured on Power & Auto Looms, which forms the major chunk of weaving industry of Pakistan. The competitive edge in cotton has also played an important role in development of Power Loom industry, as the staple length of cotton produced in Pakistan is suitable for medium count yarn, which is used to produce low-density fabrics. The cost of a low-density fabric is low compared to a fabric meant for garments. Processing of the fabric meant for Bed Linen is done through printing and dyeing, and Pakistan has an exceptional infrastructure of such printing and dyeing in Faisalabad, Karachi and Lahore. All these factors have led to a competitive advantage for Pakistan over other countries in the Bed Linen industry, resulting in extra-ordinary growth during the past few years. The projected growth rates in the said sector are also very high and promise good growth opportunities to new entrants in the industry. 1.3 Proposed Capacity The proposed capacity of the project is based on 8-hour single shift and will produce 990 Bed Linen sets per day with 18 stitching machines. 1.4 Total Project Cost Total cost of the proposed project is about Rs.5.084 Million.

2

CURRENT INDUSTRY STRUCTURE

A major chunk of the Pakistani Bed Linen industry is in the informal sector. According to industry sources, there are 150 units producing Bed Linen in the organized sector and the rest of the units are in the unorganized sector. There is no data available on these units. The Bed Linen industry may be large or small depending upon the number of operations carried out by a unit itself. It involves weaving/knitting, processing and stitching. A Bed Linen manufacturer may be buying fabric from outside and converting it into final product after processing it in-house. Or the processing is subcontracted and manufacturers are just cutting, stitching and packing in their own premises. Vertically integrated units are smaller in number and they operate in relatively upper market segments since it is easy to control the quality in a vertically integrated operation. 4 PREF-52/June, 2007/Rev2

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Another reason for non-availability of data about Bed Linen industry is the nature of data reporting. The classification of the industry is based on the operations rather than the products. Moreover, manufacturers also keep on changing products. Major clusters of Bed Linen are in Karachi, Faisalabad, Lahore, Multan and Hyderabad.

3

PRODUCTION PROCESS FLOW

The major raw material used in the Bed Linen is printed woven fabric, which is manufactured on Power/Auto Looms or Shuttle-less Looms. Majority of the Bed Linen manufacturers procures yarn and converts it into woven grey fabric by paying conversion charges to the looms units. Figure 3-1 Process flow Diagram

Procurement of Printed Fabric

Inspection of Printed Fabric

Cutting

Packaging

Threading and Final Inspection

Stitching

The grey fabric is provided to printing & processing unit and printing charges are paid to get printing according to the given designs and colors. The other possible option used in the market is to directly buy printed fabric from the market and convert it into Bed Linen. Once the bed sheet is stitched, final inspection is done. All the sheets are checked for any defective stitching or loose threads and then they are packed in polyethylene bags along with insert, which is the printed material with brand name etc and card called stiffener.

4

RAW MATERIAL
   Printed Woven Fabric Stitching Thread & Other Accessories Packaging Material

4.1 List of Raw Material

Stitching thread and packaging material are easily available in the local market. Packaging material consists of stiffener, which is of cardboard material, an insert, which is a printed material with company’s name and design and polyetnene bag, which is the plastic cover. 5 PREF-52/June, 2007/Rev2

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5

PRODUCTION

5.1 Production Capacity The proposed project with 18 machines will produce 990 sets of Bed Linen per day on the basis of 8-hour single shift. In the first year, the capacity utilization of the project will be 40%, with annual growth rate of 10%. The maximum capacity utilization of the project is 95%. The details regarding the capacity of the project are given below: Table 5-1: -Capacity Details Description Working days Per Machine sets Per Day Number Of Sets (18 Machines) Total Capacity Per Year Capacity Utilization First Year (40%) 5.2 Product Mix The proposed stitching unit has been defined to manufacture bed sets. The general product mix and sizes are defined as follows: Table 5-2 Description Twin Set Product mix No 1 1 1 Full Set 1 1 2 Queen Set 1 1 2 King Set 1 1 2 Flat Fitted Pillows 274x257cm 244x244 + 20cm 51x76 + 15 cm Flat Fitted Pillows 229x257 cm 196x241 + 20 cm 51x76 + 15 cm Flat Fitted Pillows 206x244 cm 178x230 + 20 cm 51x76 + 15 cm Items Flat Fitted Pillow Measurement 168x244 cm 178x230 + 20 cm 51x76 + 15 cm 312 55 per Day 990 308,880 123,552 Sets

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5.3

Production Mix Production Mix Production Details Production Percentage 12.5% 50% 25% 12.5%

The proposed project will produce the products on the basis of following proportion: Table 5-3 Description Twin Set Full Set Queen King

6

MARKETING

Pakistan’s textile industry ranks amongst the top in the world. Pakistan is world's fourth largest producer of cotton and the third largest consumer of the same. Cotton based textiles contribute over 60% to the total exports, accounts for 46% of the total manufacturing and provide employment to 38% manufacturing labor force. The availability of cheap labor and basic raw cotton as raw material for textile industry has played the principal role in the growth of the Cotton Textile Industry in Pakistan. With the advent of the quota free global imperative for a rapidly developing country like Pakistan to further explore potential new markets both in its neighboring territories as well as distant ones. In this context, Pakistan has signed a Free Trade agreement (FTA) with China. This FTA is predicted to bring around $5 billion increase in our trade volume with China which is going to consist mostly of textile related commodities Pakistan’s textile industry had proven its strength in global market during the last four decades. It has proved its strength even in post quota era (2005) by not only sustaining its position but also showing growth of 5% over 2005. The current scenario posses challenges firstly to sustain its global positioning and secondly to increase its market share by both increase in volume as well as increase in unit values. The unit value can be increased only through marked improvement in quality, market tie-up, image building and change in business philosophy. This requires up gradation in resource development both in manufacturing and marketing. The focus should be on R & D, technical innovation, product development on one hand and brand & market development on other with the goal of moving up in the global textile value chain. The performance of textile industry during the last five years has been satisfactory. The market was responsive, the Government policy was supportive and inputs were viable. The industry made profits and re-invested in new machinery for balancing, modernizing, and restructuring (BMR) and expansion. The industry made an investment of approx. $ 6.0 Billion during the period 1999-2006. Textile Machinery worth $.0.8 billion has been imported during 2005-06 .The major investment has been made in spinning, weaving, Textile Processing and making up sectors. Approx. 454,000 new direct jobs have been created and industry has been able to make increase production and exports. Import of textile regime spear headed by the WTO it has become machinery, 7 PREF-52/June, 2007/Rev2

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Bed Linen Stitching Unit

which is the single largest item in the machinery group, accounted for $ 771.500 million in 2005-06.

7

GLOBAL TRADE OF BED LINEN1

Bed Linen is an important value-added sub-sector of textile sector. Bed Linen products include bed sheets, pillow covers, quilts, etc. In made ups, Bed Linens sub-sector is the second largest in terms of production and exports. Table 7-1 World Wide Imports in Recent Years (Trade value in millions$) Years 2003 2004 2005 2006 Bed Linen, Of Textile Knit Or Crochet 562,652 672,465 623,142 417,480 Materials Bed Linen, Of Cotton, Printed ,Not 1,351,865 1,569,697 1,804,811 1,228,173 Knitted Table 7-2 World Wide Exports in Recent Years (Trade value in million $) Years Bed Linen, Of Textile Knit Or Crochet Materials Bed Linen, Of Cotton, Printed ,Not Knitted 2003 474,483 1,173,274 2004 580,054 1,278,179 2005 607,342 1,496,379 2006 470,254 704,484

1

www.Comtrade.un.org

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7.1

Major Exporters/Importers of Bed Linen, of Textile or Crochet Materials (In 2006) (HS 2002-630210)
To p Ex po rte rs

Belg ium. Den mark. 4% 2% Ch in a. 10% Germa n y . 10% Pakis tan . 74%

Table 7-3 Major Exporters of Bed Linen, Of Textile or Crochet Materials Countries Pakistan Germany China Belgium Denmark Trade Value (In Millions) $313,933 $44,292 $44,236 $19,374 $10,308

Top Importe rs

Ausria 6% Belgium 8% USA 35%

Ireland 5% Germany 46%

Table 7-4 Major Importers of Bed Linen of Textile or Crochet Materials Countries Germany USA Belgium Austria Ireland 9 PREF-52/June, 2007/Rev2 Trade Value (In Millions) $171,548 $129,584 $28,832 $22,328 $17,319

Pre-Feasibility Study

Bed Linen Stitching Unit

7.2 Major Exporter / Importer of Bed Linen, of Cotton, Printed not Knit (In 2006) (HS 2002-630221)

Top Exporters
Romania 8% Germany 11% Belgium 12% Pakistan 17% China 52%

Table 7-5 Major Exporter of Bed Linen, of Cotton, Printed Not Knit Countries China Pakistan Belgium Germany Romania Trade Value (In Millions) $273,065 $87,040 $60,114 $56,723 $43,412

Top Importer
A ust ria 7% Belgium 8% Germ an y 2 4% Sweden 6% USA 55%

Table 7-6 Major Importer of Bed Linen, of Cotton, Printed Not Knit Countries USA Germany Belgium Austria Sweden 10 PREF-52/June, 2007/Rev2 Trade Value (In Millions) $544,692 $233,842 $82,607 $68,026 $54,836

Pre-Feasibility Study

Bed Linen Stitching Unit

7.3 Pakistan’s Exports in Bed Linen (In 2006) Table 7-7Pakistan Exports in Bed Linen of Cotton, Printed, Not Knit Trading Partners World USA Germany Italy UK Spain Trade Quantity(in tons) 16,532 6,310 2,586 1,245 724 598 Trade Value (In Millions) 87,040 34,958 12,645 6,394 3,735 3,481

Table 7-8Pakistan Exports in Bed Linen of Textile Knit or Crochet Materials Trading Partners World USA Germany Netherlands UK France Trade Quantity(in tons) 37,705 22,114 4,168 2,113 1,345 6,836 Trade Value (In Millions) 202,681 122,436 20,147 12,171 7,324 1,286

8

MACHINERY REQUIREMENT
Machinery Details2 Machines Required 18 2 1 2 Cost/Machine (Rs) 26,000 85,000 75,000 7,000 Total Cost (Rs) 468,000 170,000 75,000 14,000 727,000

Table 8-1

Plant and Machinery Machines Stitching Machines Safety Lock Machines Cutting Machines Finishing Iron Total

Above quoted prices are of Juki brand. All the required stitching machinery is easily available in the market. The stitching machinery is available in quite a diversified range of suppliers & origins, i.e. Japanese, Italian, Chinese, Korean and Taiwanese origin. There is a substantial difference between their prices. European and Japanese machinery
2

Aalmurtaza Machinery Co. (Pvt) Ltd. 63/1-c, Model Town, Jail Road, Faisalabad. Tel: 041-2636830-31, 041-2648955 Fax: 041-2644961 website: www.almurtaza.com 11

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is 2 to 3 times more expensive as compared to Chinese or Far Eastern machinery. Second hand machinery of different origins is also available in the local market. Table 8-2 Other Equipment Details No 5 1 1 1 2 1 10 1 10 30 1 2 1 Per Unit Cost 25,000 12,000 5,000 10,000 30,000 20,000 500 10,000 6,500 600 5,500 8,000 50,000 Total Cost 125,000 12,000 5,000 10,000 60,000 20,000 5,000 10,000 65,000 18,000 5,500 16,000 50,000 401,500

Office Equipment Computers P4 Printer External Modem Switch D-Link Split Air-conditioner 2 Ton Mini Telephone Exchange Telephone Sets Fax Machine Furniture and Fixture Work Stations Chairs Sofa Set Cutting Tables Net Working & Electrification Total Office Equipment

9

HUMAN RESOURCE REQUIREMENT

The stitching operators will be paid on piece rate basis. The rates given in the below table: Table 9-1: -Stitching Charges Description Stitching Operators Table 9-2: -Human Resource Requirement Description Administrative Salaries Chief Executive Manager Finance & Admin. Accounts Officer Marketing Manager Computer Operator Peon Gardener Security Guards Driver 12 PREF-52/June, 2007/Rev2 No. 1 1 1 1 1 1 1 2 1 Per Month 35,000 25,000 15,000 18,000 8,000 4,500 3,500 5,000 5,000 Annually 420,000 300,000 180,000 216,000 96,000 54,000 42,000 120,000 60,000 Rate Rs.10 Per Set

Pre-Feasibility Study

Bed Linen Stitching Unit

Total Production Staff Production In charge Stitching Supervisor Cutting Master Cutting Helper Finishing Supervisor Rowing Inspector Clippers Packaging Staff Final table Inspector Technician/Electrician Total

1,488,000 1 1 1 2 1 2 3 3 2 1 15,000 10,000 15,000 4,600 10,000 5,000 4,600 4,600 4,600 10,000 180,000 120,000 180,000 110,400 120,000 120,000 165,600 165,600 165,600 120,000 1,447,200

10 L A N D & B U I L D I N G
10.1 Total Land Requirement The standard size for stitching machine table is defined to be 5.5x7.5ft.In cutting area 2 tables will be placed of size 24x9ft for cutting sheets and 24x8ft for cutting pillow. Details regarding the area required for a Bed Linen unit are given below: Table 10-1 Covered Area Requirement Required Area (sq. ft) 1600 500 1,600 400 400 300 700 5,500 Description Production Cutting Area Inspection room/packing room Raw material store Finished goods store Management building Free space Total 10.2 Rental Details It is recommended that this project should be started in a rented building, as this will reduce the initial capital cost of the project. An appropriate premise is generally available in many commercial/industrial areas of the main clusters of Bed Linen. Table 10-2 Rent Cost Monthly Rent (Rs) 55,000 660,000 165,000 13 PREF-52/June, 2007/Rev2 Rent Cost Building Rent Cost (per 5,500 sq. ft) Annual Rent (Rs) 3 Months Rent As Security

Pre-Feasibility Study

Bed Linen Stitching Unit

6 Months Advance Rent 10.3 Suitable Locations

33,0000

The clusters of Bed Linen stitching industry exist predominantly in Karachi, Faisalabad, Lahore and Multan. Most of the Bed Linen manufacturers are based in these major cities, so it is recommended that such unit should be started in these areas. The basic criteria for the selection of location within these clusters should be the accessibility of skilled manpower and easy accessibility of raw material. Also, basic utilities like electricity, water and public transport are a must for the establishment of such sort of unit. 10.4 Utilities Requirements    Electricity Telephone Water

11 PROJECT ECONOMICS
Table 11-1 Project Cost Description Furniture& Fixtures Office Equipment Plant & Machinery Vehicle Preliminary Expenses Sub Total Working Capital3 Total Project Cost Table 11-2 Financed By Sponsors Equity Bank Finance Total Finance Table 11-3 Project Returns Internal Rate of Return Payback Period Net Present Value In Percentage In years In Millions
31

Rupees 154,500 247,000 727,000 669,000 165,000 1,962,500 3,121,935 5,084,435

60% 40%

3,050,661 2,033,774 5,084,435

6 1.986

3

Working Capital includes 26 days raw material and 6 months advance rent of the premise

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12 KEY SUCCESS FACTORS
The commercial viability of this Bed Linen stitching unit depends on the regular export orders, which means a very effective marketing of the product in the international market. One of the important factors in success of this business is procurement of raw material, especially the grey woven fabric which is manufactured in a huge quantity. Due to which, there is a huge fluctuation in the price of grey fabric. With better information regarding quality manufactures and lower prices, a high profit margin can be attained. Another aspect, which is mostly over-looked in this sector, is R&D. If the company has an effective R&D department, it can come up with new designs, color schemes or innovative packaging. This will increase the sales and also help in building high quality image of the product, hence moving the product to upper tiers & quality conscious market segment, resulting in higher profit margins. Following are some of the points that have to be ensured to make this business successful:      Assurance of high consistent quality Surety of products delivery on time Competitive Rates Cost efficiency through better managerial techniques Better services to customers, i.e. claim settlement, etc.

13 THREATS FOR THE BUSINESS
Due to the low capital requirement of the business there has been an increase in the number of commercial Bed Linen stitching units, which has resulted in an increase in competition internationally. The elimination of quotas in 2004 will make it harder to compete. This might decrease the profit margins in international market. Competition will be based on product quality and competitive prices.

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14 FINANCIAL STATEMENTS
14.1 Projected Income Statement
(ooo) Year - I Sales/Revenue Cost of Sales Operation Salaries Cost of bed sheets Electricity Chg. Other Utilities Consumable Store Repair & Maintenance Plant Insurance Depreciation Amortization of Prelmn.Exp Gross Profit Operating Expenses: Administrative Expenses Administrative Salaries Printing & Stationary Consultancy Charges & Audit Fee Entertainment Telephone Fax and Postage Rent Operating Profit Financial Charges Profit before Taxation
Taxation

Year - II 46,000 1,592 40,621 402 330 55 24 5 277 15 43,320 2,680

Year - III 53,130 1,751 46,917 443 363 61 19 4 223 13 49,793 3,337

Year - IV 61,365 1,926 54,189 487 399 67 15 3 180 12 57,278 4,087

Year - V 70,877 2,119 62,589 536 439 73 12 2 145 11 65,926 4,951

Year - VI 81,863 2,331 72,290 589 483 81 10 2 117 10 75,912 5,951

Year - VII 94,552 2,564 83,495 648 531 89 8 2 94 9 87,439 7,112

Year - VIII 109,207 2,820 96,437 713 585 97 6 1 76 8 100,743 8,464

Year - IX 126,134 3,102 111,384 784 643 107 5 1 62 7 116,096 10,039

Year - X 145,685 3,412 128,649 862 707 118 4 1 50 6 133,810 11,875

39,827 1,447 35,170 366 300 50 29 20 344 17 37,743 2,084

1,488 60 20 60 72 1,700 660 (276) 270

1,815 66 22 66 79 2,048 726 (94) 214 (308) (62) (246) (437) (683)

1,997 73 24 73 87 2,253 799 285 157 129 26 103 (683) (580)

2,196 80 27 80 96 2,478 878 730 100 631 126 505 (580) (76)

2,416 88 29 88 105 2,726 966 1,259 43 1,216 243 973 (76) 897

2,657 97 32 97 116 2,999 1,063 1,889 1,889 378 1,512 897 2,409

2,923 106 35 106 128 3,299 1,169 2,645 2,645 529 2,116 2,409 4,524

3,215 117 39 117 140 3,629 1,286 3,549 3,549 710 2,839 4,524 7,364

3,395 129 43 129 154 3,850 1,415 4,774 4,774 955 3,819 7,364 11,183

3,735 141 47 141 170 4,235 1,556 6,084 6,084 1,217 4,867 11,183 16,050

20%

(546) (109) (437) (437)

Profit after Taxation Accumulated. Profit b/f Accumulated Profit c/f

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14.2 Projected Balance Sheet

Year - I Tangible Fixed Assets Preliminary Expenses Current Assets: Accounts Receivable Cash in Hand / Bank 1,453 149 1,328 3,684 6,613 Owners Equity: Capital Accumulated Profit Long Term Loan Current Liabilities: Accounts Payable

Year - II 1,177 134 1,533 3,483 6,326

Year - III 954 120 1,771 3,600 6,445

Year - IV 774 108 2,046 4,103 7,031

Year - V 630 97 2,363 5,071 8,161

Year - VI 513 88 2,729 6,994 10,323

Year - VII 418 79 3,152 9,541 13,190

Year - VIII 342 71 3,640 12,844 16,897

Year - IX 280 64 4,204 17,170 21,718

"000" Year - X 230 58 4,856 22,598 27,742

3,051 (437) 1,627 2,372 6,613

3,051 (683) 1,220 2,739 6,326

3,051 (580) 814 3,161 6,445

3,051 (76) 407 3,650 7,031

3,051 897 0 4,213 8,161

3,051 2,409 0 4,864 10,323

3,051 4,524 0 5,615 13,190

3,051 7,364 0 6,483 16,897

3,051 11,183 7,485 21,718

3,051 16,050 8,642 27,742

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14.3 Projected Cash Flows
(000) Year 1 Profit before Financial Charges & Taxation Amortization Depreciation Working Capital Change Cash from other Sources Owners Bank Finance Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

(276) 17
344

(94) 15
277

285 13
223

730 12
180

1,259 11
145

1,889 10
117

2,645 9
94

3,549 8
76

4,774 7
62

6,084 6
50

85 1,045

197 160

521 185

922 214

1,414 247

2,016 285

2,748 329

3,633 379

4,843 438

6,140 505

3,051 2,034 5,084 6,214 1,798 165 677 109 2,531 3,684 . 3,684

358 620 62 559 (201) 3,684 3,483

706 563 26 589 117 3,483 3,600

1,136 506 126 633 503 3,600 4,103

1,661 449 243 693 968 4,103 5,071

2,301 378 378 1,923 5,071 6,994

3,076 529 529 2,547 6,994 9,541

4,012 710 710 3,303 9,541 12,844

5,280 955 955 4,326 12,844 17,170

6,645 1,217 1,217 5,429 17,170 22,598

Total Sources Applications: Fixed Assets Preliminary Expenses Re -Payment of Loan L C Charges Tax

-

-

Cash Increase/(Decrease)

Opening Balance Closing Balance

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15 KEY ASSUMPTIONS
Table 15-1 Operating Related Assumptions 8 26 312 308,880 Sets 40% 10% 95% 123,552 Sets 10% 10% 2.5% 30 15 Sale Price In Rs. 5% 302 298 325 435 Cost in Rs. 223.75 10 20.2 3% of Fabric cost 5.56

Hours operational per day Days operational per month Days operational per year Table 15-2 Production Related Assumptions Annual production capacity Capacity utilization (1st Year) Capacity growth rate (yearly) Maximum Capacity utilization First Year production utilization Table 15-3 Economic Related Assumptions Electricity growth rate Wages growth rate Machine maintenance growth rate Table 15-4 Cash Flow Related Assumptions Accounts Receivable cycle (in days) Accounts Payable cycle (in days) Table 15-5 Revenue Related Assumptions Products Growth Rate in Sale Price Twin Set Full Set Queen King Table 15-6 Description (Req. For Full Set) Fabric Cost4 Stitching Cost Packing Cost Wastages Freight
4

Basic Raw Material Related Assumptions

Fabric quantity and cost will vary according to the type of bed sheet

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Table 15-7

Depreciation Related Assumptions 20% 20% 10% 20% 10 60% 40% 14%

Plant & Machinery Office equipment Furniture & Fixtures Vehicle Table 15-8 Project life (Years) Equity Debt Interest rate on short term debt

Financial Related Assumptions

20 PREF-52/June, 2007/Rev2

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