IMITATION JEWELLERY

INTRODUCTION
The word imitation jewellery refers to any jewellery, which are worn as a
replacement to Gold, and other costly jewellery. They are cheaper in prices and
easy to manufacture. They look like original jewellery. The imitation jewellery are
made of 1) plastic with electroplated 2) Brass with silver plated and 3) silver with
gold plated. They are also made of stones and other metals also such as copper
with gold plated like the Gold Covering, which is popular in the market.

MARKET
The market for the imitation jewellery is always on the increase as the population
and standard of living of the people are increasing. The consumption of the
jewellery items are always on the increase. The tendency to wear cheaper
imitation jewellery is also on the increase. There is good export potential also.

INSTALLED CAPACITY
The installed capacity of the proposed unit is 200 pieces of the Imitation jewellery
per day on single shift basis. On this basis the annual capacity is 60000 pieces .
The imitation jewellery proposed is plastic with electroplated with gold.
PLANT AND MACHINERY
Hand injection moulding
machine-1 oz capacity 2 24000
Hand injection moulding
machine-0.5 oz capacity 2 17000
Moulding Dies 25000
Work tables 4 9000
Misc jigs & fixtures 2500
Heat sealing machine 2200
TOTAL 79700

Total Rs. Lakhs 0.80

MANUFACTURING PROCESS
Preparation of dies for injection moulding
II
Granules of HDPE/LDPE of different colours are melted
and melted material is injected into the mould cavity
through the nozzle of injection moulding machine
II
Cooling
II
Knocking
II
Trimming
II
Sending for electroplating on job work units outside.
II
Packing and Despatching

RAW MATERIALS
The raw material required for the production at full capacity is given below
For Quantity Nos 60000.00 Qty-kgs Rate/kg Value
HDPE/LDPE granules 15000 88.00 1320000

(Coloured) 0

Total 1320000

TOTAL for 60000 Rs. lakhs 13.20

Raw material cost per -piece 22.00

Electroplating charges- per piece 30.00

Total electroplating charges 1800000

Total Rs. lakhs 18.00
Total material cost 31.20
Packing material cost 2.00 120000
Packing material cost -Rs. lakhs 1.20

LOCATION LAND AND BUILDING

The infrastructural facilities required for the project by way of land and building
are the following.
Built up area-Sq.ft 800
Rent p.m.-Rs 1600
Advance-10 months.Rs 16000

UTILITIES
The utilities required for the project are the following
Single Phase
Power charges Rs.lakhs p.a 0.24
Water-For process-Litres per day 0
For human consumption 200

MANPOWER
The manpower requirement for the project is given below

Monthly wages Total

Supervisor 1 5000 5000
Skilled 3 4000 12000
unskilled 3 3000 9000
Salesman 1 5000 5000
sub total 31000
Add benefits 20% 6200
Total per month 37200
TOTAL PER ANNUM-Rs. lakhs 4.46
COST OF PROJECT AND MEANS OF FINANCE
The cost of project and Means of Finance is estimated as given below
1. COST OF PROJECT
[Rs.lakhs]
Land & Building (Advance) 0.16
Plant & Machinery 0.80
Other Misc. assets 0.03
Pre-Operative expenses 0.05
Margin for WC 0.13
1.39
2. MEANS OF FINANCE

Capital 0.79

Term Loan 0.60

1.39

-The term loan proposed is 75% of the Plant and machinery value.
-The promoters will bring in the required capital contribution to the project.

COST OF PRODUCTION AND PROFITABILTY

A cost and profitability statement projected for the first 5 years of operations is
given in Annexure. The profitability is based on the following assumptions.
Assumptions
Installed capacity 60000 Nos per annum
Capacity utilisation Year-1 -60%
Year -2 -70%
Year-3 onwards- 80%
Selling price Rs.80.00 per piece
Raw materials As per the details given above
Packing materials As per details given above
Power Rs.0.24 lakh per annum at 100%
Wages and salaries
Repairs and Maintenance
Depreciation
Selling general
administrative expenses
Interest on Term loan
Interest on working capital
Income tax
Rs. 4.46 lakhs with increase 5% every year.
Rs.0.06 lakh per annum
Written down value method -15 % on machinery
and Rs.5000 per month
14% per annum
14% per annum
33.99% on profits

ASSESSMENT OF WORKING CAPITAL

The following levels are projected for working capital

4. WORKING CAPITAL:
Months Values % Margin B

Consumptions Amount Fin

Raw Materials 0.50 0.33 25% 0.08

Expenses 1.00 0.05 100% 0.05

0.38 0.13
A bank finance of Rs 0.25 lakh is required by the unit for meeting the working
capital

PROFITABILITY RATIOS
The project ensures good profits on investment and sales turnover.

DEBT SERVICE COVERAGE RATIO

The debt service coverage ratio of this concern is very high as the Term loan
component is too low and the returns are high in this project.
BREAK EVEN LEVEL
The break even level of the unit is 37% of the installed capacity

MACHINERY SUPPLIERS Injection Moulding machines

M/s Sarvodaya Plastics Products
46, Perumal Koil Street
Chennai 600 079

Shiv Machine Tools

67, Armenian Street
Chennai 600 001

RAW MATERIAL SUPPLIERS Sankar Mercantile Agency

43, Vyasarpady Industrial Estate
Chennai 600 039

FINANCIAL ASPECTS
1. COST OF PROJECT
[Rs.lakhs]
Land & Building (Advance) 0.16
Plant & Machinery 0.80
Other Misc. assets 0.10
Pre-Operative expenses 0.20
Margin for WC 0.13
1.39
2. MEANS OF FINANCE

Capital 0.79
Term Loan 0.60
1.39

3. COST OF PRODUCTION & PROFITABILITY STATEMENT

[Rs.lakhs]
Years 1 2 3 4 5
Installed Capacity Nos 60000 60000 60000 60000 60000
Utilisation 60% 70% 80% 80% 80%
Production/Sales Nos 36000 42000 48000 48000 48000

Selling Price Rs.80.00 per

Sales Value (Rs.lakhs) 28.80 piece
38.40 38.40 38.40
33.60
Raw Materials 7.92 9.24 10.56 10.56 10.56
Packing Materials 10.80 12.60 14.40 14.40 14.40
Power 0.14 0.17 0.19 0.19 0.19
Wages & Salaries 4.46 4.55 4.64 4.74 4.83
Repairs & Maintenance 0.06 0.07 0.08 0.09 0.10
Depreciation 0.12 0.10 0.09 0.07 0.06
Cost of Production 23.51 26.73 29.96 30.05 30.15

Selling, Admin, & General exp 1.20 1.26 1.32 1.39 1.46
Interest on Term Loan 0.09 0.08 0.06 0.06 0.06
Interest on Working Capital 0.04 0.04 0.04 0.04 0.04
Total 24.84 28.11 31.38 31.54 31.71

Profit Before Tax 3.96 5.49 7.02 6.86 6.69

Provision for tax 1.35 1.86 2.39 2.33 2.28
Profit After Tax 2.61 3.63 4.63 4.53 4.41

Add: Depreciation 0.12 0.10 0.09 0.07 0.06

Cash Accruals 2.73 3.73 4.71 4.60 4.48

4. WORKING CAPITAL:
Months Values % Margin Bank
Consumptions Amount Finance
Raw Materials 0.50 0.33 25% 0.08 0.25
Expenses 1.00 0.05 100% 0.05 0.00
0.38 0.13 0.25

6. PROFITABILITY RATIOS BASED ON 80% UTILISATION

Profit after Tax = 4.63 12%

Sales 38.40

Profit before Interest and Tax = 7.12 434%

Total Investment 1.64

Profit after Tax = 4.63 586%

Promoters Capital 0.79
7. BREAK EVEN LEVEL
Fixed Cost (FC): [Rs.lakhs]
Wages & Salaries 4.64
Repairs & Maintenance 0.08
Depreciation 0.09
Admin. & General expenses 1.32
Interest on TL 0.06
6.19
Profit Before Tax (P) 7.02

BEL FC x 100 = 6.19 x 80 x

= FC +P 13.21 100 100

37% of installed capacity