A Project Report

On
Garments factory
Submitted to:
Javeed Iqbal Sb.

Submitted by:
Hassan Raza

60

Shahid Abbas

47

Momal Javeed

26

M.s.c A/F (Afternoon) 3rd semester

Session: 2008-10

Department of Commerce

In the Name of Allah, the Most Merciful, the

Most Beneficent

Dedicated
To
Our Lovers

Whose endless support and kindness is

beyond expressions and words may not
just be enough to express our gratitude.

Preface

First of all, all thanks to Almighty Allah who gave us the strength,
Patience and inspiration needed to complete this report.
Knowledge is power and knowledge comes through studying and
thinking but practical knowledge comes through observing

things closely and working practically.

For improving our practical skill the Commerce department
has given a chance to explore the knowledge in different projects.
This practice will be beneficial in future while working in any organization
So for this purpose we selected project on GARMENTS FACTORY..

Acknowledgement
We bow our head, before ALLAH Almighty, who blessed us with
Potential and stamina to complete our report.
First of all we would like to pay our special regards and thanks to Respected Sir
Javeed Iqbal Sb. who provides us guidance at each and every step, in
completion of this report.

TABLE OF CONTENTS
EXECUTIVE SUMMERY:
Name of project
Location & site selection
Organizational Profile:
Technical study
Estimated cost of the project
Implementation Schedule
Financial Ratios
Introduction:
PROJECT PROFILE
Legal status
Advantages
Project brief
Name of promoters
Market Analysis
Target Customers
Exports of Pakistan
Market Demand

Market supply
INDUSTRY GROWTH:
Ex- Factory price
Retail price
Distribution Channel
Technical Study
Financial Analysis:

ANNAXTURE:
Estimated cost of land
Estimated cost of Machinery and office equipment
Estimated cost of Building and civil work
Estimated cost of salaries and wages
Estimated cost of furniture and fixture
Estimated Depreciation of assets
Capacity:
Product mix table
i)
At 60% capacity
ii)
At 70% capacity
iii) At 80% capacity
Assumption for calculation:
Raw material volume
Detail of prices
Power and Fuel
Insurance
Store and Sappers
Manufacturing and Selling Expenses
SWOT Analysis:

References:

Name of Project:

Garments industry
Named
HMS mens garments
Project Location:
The proposed location of mens garments is located near NRSP university
road Bahawalpur.
Location & Site Selection:
Location Study:
Selection of proper site is an important step, some of the basic considerations in selecting site
are:

Soil characteristics
Cost of land

Approach to site for transportation of raw material, finished products,

employees, etc.
Sources and availability of water
Availability of power
Availability of skilled manpower
Social amenities in the area
Availability of tax incentive, if any
Facilities for drainage and effluent disposal
Acceptance of the project by the local population

Office Location
Mens ready made garment office is situated at university road near NRSP office Bhawalpur
Pakistan.
Organizational Profile:
The organization is a partnership entity comprising 3 equal partners. Partners are equally
liable. All the partners belong to Bahawalpur. Following are the partners:
1. Hassan Raza
2. Momal javeed
3. Shahid Abbas

Business has its operational plant 3 KM from Islamia university new campus
BAHAWALPUR
Product Market Survey:
The product of the organization has much demand because of the large number of consumers.
These days overall garments industries grooming so the demand of the product is increasing.
Also the product has its demand outside the country. Politically the garment industry has much
importance and government also wants to promote the industry
Raw material Survey:

The raw material survey confirms that adequate material will be available to supports the
project. Raw material may available in fabric form. The managers has great experience to
purchase the raw material i.e. fabric. Raw martial which we use we purchase from Nishat
textile mill Faislaabad.
Technical Study:
Technically the project is totally feasible. Machinery and equipment needed to run operations
is locally available.

Machinery

Flat lock

Over lock

Stitching machine

Products
Unit is producing different types of Readymade Garments which includes i.e.

T-Shirt
Dress Shirt
Dress Pent

Human resource requirement

70 employees work as a
Stitching 3 security guard
1 driver
8 staff members

Installed Capacity Of project:

The initial stage the capacity of the ready made garment is 60% . our machine capacity is very
much outstanding but the labor is not available whiles the 100% capacity of the machinery is
500 per day.

Estimated cost of the Project:

The estimated cost of the project is R.s 25 Million. Project cost would include
Fixed cost and working capital requirements. Fixed cost would normally include cost of:

Land
Building and civil works
Machinery and equipment and its installation
Office equipment and furniture
Office vehicles
Pre-operative expenses
Working capital

Project Investment:
Description
Fixed Investment
Working Capital
Years
Total Investment
Estimated
capacity

2010
60%

Total Cost
(Rs. in Millions)
24.233816
0.766184
2011
2012
25
70%
80%

Means
finance:

Equity
Debt

of

40%
60%

Name of Lenders:
Project will take long term finance from National Bank of Pakistan to finance its fixed cost.
Terms for Financing
Long-term financing

Source
Loan from NATIONAL BANK
OF PAKISTAN

Expenditure to be
Financed
Fixed cost and
Working Capital

Name of Machinery Suppliers:

Citizen machinery suppliers sargodha road, Faislaabad.
Implementation Schedule:

Start completion

Start

Establishment of local machinery

Engineering studies and designing of civil works

1 sep 2009

Order for local machinery

1 Sep 2009

finish
31st Dec 2009

Arrival of local machinery at site

2 Oct 2009

Construction of a building and civil works

15 Sep 2009

30 Nov 2009

Erection and installation of machinery

5th Nov 2009

20 Nov 2009

Order for raw material

20 Nov 2009

30 Nov 2009

Trail runs

1st Dec 2009

Start of commercial production

1st Jan 2010

31st Dec 2009

Financial Ratios:
years
2010
Net profit margin 9.49
Current Ratio

57%

Debt equity Ratio 40:60

2011

2012

14.47

24.52

59%

61%

Gross margin

32.48

31.12

36.66

EPS

0.02

0.03

0.06

Interest coverage

1.76

2.82

6.14

Sponsor Stake

40

INTRODUCTION
The cost of the project has been estimated RS. 25 million in which includes
machinery cost of building staff salaries furniture and fixtures are included in the cost of the
project of ready made mens garments which is located at NRSP near university road
Bahawalpur. This study provides information and guidelines about the investment
opportunities in stitching unit for dress shirts and pent for men. The production of this unit
will be utilized for meeting the countries requirements and earn the revenue. There is vast

Varity in dress pants in relation to quality of the fabric used , style, stitching techniques etc.
This project will start its operations on commercial bases

Production Process Flow:

Procurement of
Finished Fabric

Cutting

Stitching

Trimming

Final Inspection

Pressing

Packing &
Dispatch

Advantages:
Advantages of the project are as follows
. The following are the main key success factors:
Strong marketing skills/knowledge is required from entrepreneur
Assurance of high consistent quality
Assurance of on time delivery
Competitive rates
Cost efficiency
Better services to the customer i.e. claim settlement etc.
Better communication development with customers
Project Brief:
Name of project promoters:

HASSAN RAZA
MOMAL JAVAID
SHAHID ABBAS

Market Analysis
For formulating strategies for marketing in the local markets, the following should
Be considered:
A market opportunity analysis to determine suitable sales market(s) and suitable
Sales channels.
1. Selection of target markets to identify suitable markets for selling trousers dress shirts and
T-shirts.
As we know that the scope of the ready made garments is every where.beacuse such products
are useable in every where like offices schools colleges universities etc.

Target customers:
Our target is upper middle and lower level of the people because our mission is to provide
standard quality of the product at cheaper prices and to capture the market.

EXPORTS:
Pakistans Export (Means, boys suits, jackets, trousers etc knit or
crochet-2003-2006)
Reporting Countries
USA
United Kingdom
Spain
Italy
Germany

Trade Value in $Millions

27.794484
4.204848
2.241756
2.373816
1.947852

MARKET DEMAND
At present there is high demand of GARMENTS because of increasing in demand of made
ups. Due to increasing trend of made ups demand of garments is increased. This trend has led
to enhancing the confidence in the minds of the general public regarding the wearing of
fashionable made ups. The location of project plays pivotal role, towards its successful
running. Therefore, the location of the above project is prime.

Market Supply
There are many ready made garments units are working in Pakistan but they are unable to
meet the demand of the customers .we are confident that to meet the local market .and we
know that there is no even one stitching. Unit in Bahawalpur

INDUSTRY GROWTH
There has been a tremendous growth in this sector over the years. The total numbers of
garments industries are increasing to fulfill the demand of market. So, in coming years
demand of garments must increase because population is increasing. Overall industry growth
is good.

Ex factory price
Description
Dress Shirts
T-shirts
Pants

Prices (Rs.)
180
150
220
Annually 5 % increase in prices.

Retail Price:
Ref: geo garment .B.W.P
Description

prices (Rs.)

All types of shirts

550
350
250
800
600
550
350

All types of pants

Technical Study:
Technically the project is totally feasible. Machinery and equipment needed to run operations
is locally available.

List of Machinery:

Flat lock

Over lock

Stitching machine

Materials and inputs:

Finishing fabric
Yarn
Button
Zip
Hooks
Needle
Sewing thread
Labels fusing {buckram}
Packing material
Buckles

Personal Analysis
For the success of the project skilled and unskilled workers are hire. Such workers are
available at project place at cheaper prices so we are decided to provide the training to
unskilled labors for future need also.

Financial Analysis
The cost of the project is RS. 25 million Which is included machinery which included over
lock, karal mayors machine. which are included.60% capacity of our debt and remaining 40%
is equity.

Estimated cost of land

Sr. No

Description

3 Kanals land
(@ 110000 /Marla)

6600

Transfer charges
(@ 5% of cost of land)
Development charges
(@ 5% of cost of land)

330

Total cost of land

7260

Rs. In (000)

330

HMS Mens ready made garment industry

Estimated cost of Machinery and office Equipment

Sr. No

Description Quantity

flat lock

12000

300

23000

230

Stitching
25
machine
Over lock 10
machine
seizer
100

100

10

grantor

1000000

1000

telephone

1000

printer

10000

10

32500

65

10000

50

6000

18

12

Air
condition
Room
cooler
Security
cameras
computers

10000

20

13

Fax machine 1

9400

9.4

14

scanner

5500

5.5

10
11

Total

25

Per
unit Total cost
cost
(Rs in 000).
25000
625

2345.9

Estimated cost for salaries and wages

Designation

No of employees Wage rate

Amount
(Rs. In 000)

CEO

30000

30

Managers

18000

18

Supervisors

10000

30

Accountants

15000

15

Skilled labour

60

20+40

187.2

Non-Skilled
labour

10

5000

50

Guards

5000

15

Derivers

5000

Office boys

4000

Total

82

358.2

Monthly salaries & wages

Rs. 358200

Annually salaries & wages

Rs. 358200*12= 4298400

Assuming annually increase in salary 2%

Estimated cost for furniture & fixture

Sr. No

Description

Quantity

Per unit cost Total cost

(Rs. In 000)

Wooden
stool

70

170

11.9

2
3

trolleys
Cutting
+finishing
tables

3
7

7000
4000

21
28

4
5
6
7
8

racks
Mirror tables
Office chairs
Visitors sofa
Common
chairs

2
2
6
1
20

1800
12000
6000+1500
10000
450

3.6
24
18
10

Total cost

116.5

Estimated depreciation of Asset

Items
Machinery
Building
Office equipment

Values
2165000
12729600
180900

Rate
10%
10%
20%

Amount
216500
1272960
36180

Computers etc
Furniture &

116500

10%

11650

fixture
Total

1537290

Capacity

At 100% capacity we can produce 500 dress shirts, T-shirt and pant daily
Monthly 13000{500*26}
Ready made garments

Quantity Produced per

Product Mix

Month

Dress shirt
T-shirt
Dress pent
Total

5200
5200
2600
13000

40%
40%
20%
100%

Daily

Monthly

Annually

300

7800

93600

At 60% capacity:

Annul Inventory 10% of production 9360

At 70% Capacity:
Daily

Monthly

Annually

350

9100

109200

Annul Inventory 10% of production 10920

At 80% Capacity:
Daily

Monthly

Annually

400

10400

124800

Annul Inventory 10% of production 12480

Assumptions for Calculation:
1. Operation time
2. Production period
3. Capacity utilization

1 shift/day
312/year
60% 1st year
70% 2nd year
80% 3rd year

4. At 100% capacity
Per day production
Per year production

500 units
156000 units

Raw material volume: (in meters)

Year
Capacity
utilize
Finished
fabrics

1st
60%

2nd
70%

3rd
80%

75000

87500

283500

Detail of Prices: Rs. per meter

Fabrics (55+85+105)
2% Increase in prices for each year is projected.

245/{1.5meetr}

Power & Fuel

Fixed energy charges for electric connection of 25kv 100000
Estimated variable energy charges are @ 6.50/ unit produce. Because the energy
cost is less compare to day charges. we are also purchase generator for
emergency.
Insurance:
2%. Of production building
2% of office furniture
Stores and sappers:
Year
Amount

1st
20000

2nd
25000

3rd
30000

Manufacturing admin & selling Expenses

Year
Capacity
utilization
Fixed:
Power
Insurance:
Building
Depreciation:
Building
Machinery
Variable exp:
Power
Wages & salaries

1st
60%

2nd
70%

3rd
80%

100000

100000

100000

87584

87584

87584

1272960
216500

1272960
216500

1272960
216500

608400
2846400

709800
2903328

811200
2961395

Store & spares

Total
manufacturing
exp
Admin & Selling
Exp:
Salaries
Postages &
telegram
Printing &
Stationary
Advertisement
Depreciation:
Office equipment

20000
5151844

25000
5315172

30000
5479639

1452000
30000

1481040
32000

1510660
34000

40000

42000

44000

100000

105000

110000

36180

36180

36180

Furniture &
Fixture
Insurance:
Furniture &
Fixture
Total

11650

11650

11650

2330

2330

2330

1672160

1710200

1748820

SWOT Analysis
1 Strengths
Raw material available locally
Infrastructure available
Excess install capacity
2 Weaknesses
Four times less productivity by use of local made old technology
Non conformity of standard
Semi skilled labor
No technical training institute for Ginning Industry
Cluster Development Program Area
Cluster Profile Cotton Ginning Area 1 2
No testing laboratory for staple and fiber testing
Contaminated cotton
High rate of contamination
Lack of online market facility to access international buyers
No warehouses and cotton lint storage facilities
3 Opportunities
Introduction of latest modern ginning technology being used in developed
countries
Export of cotton to other countries
Possibilities to achieve premium for best quality that government had
announced on the basis of grade
Access to international markets through online market
Ginning Training Institute
4 Threats
Shifting trend from cotton fiber to polyester fiber
Government regulations i.e. lot of taxes on the industry
Fluctuation in international market price
Global Competition
Pest diseases on cotton crop result in low production of cotton lint
Import of cotton
WTO

References
Three star multan Mr. ameen manager
Mr. Rizwan faisalabad masood textile mills faisalabad
Geo garments Bahawalpur
Huzaifa property dealers one unit chowk Bahawalpur
Wood works D.I.G chowk Bahawalpur
Sajid computer university chowk Bahawalpur
Citizen machinery works Faisalabad
National Bank Pakistan