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INVESTMENT OPPORTUNITY PROFILE FOR WOODEN FURNITURE MANUFACTURING IN NWFP
SUBMITTED TO AYESHA KHAN CHIEF TECHNICAL ADVISOR Community Based Livelihood Recovery Program (CBLRP) United National industrial Development Organization (UNIDO)
BY Sardar Shahid Farid Chartered Accountant
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The major raw material used will be fine quality wood which is readily available for use in furniture production. at 100 capacity utilization.2 FINANCIAL SUMMARY • • • • Sales Gross Profit Margin Net Profit Margin Internal Rate of Return 15% 57% Rs 30 Million 26% Foreign collaboration sought Joint – Venture Loan Market access Sub contracting Buy – back arrangement Equipment purchase Feasibility study Other Specify 25th October 2007 Management expertise Technical expertise Marketing expertise Technology transfer Joint R&D Other :Project description Studies Available Date: 1 . This project will be capable of integrated manufacturing of wooden furniture starting from cutting of wood to retailing of product to the customer. PROJECT EXECUTIVE SUMMARY 1. The total capital cost of the project is Rs. The factory will produce 700 completed units in a year. rock chairs. dressing tables. Auxiliary processes like carving will be met through sub contracting. 6. 1. chairs. Furniture of all kinds either with or without carving and including but not limited to tables.353. This factory will be able to start manufacturing in 4 months.1 PROJECT BRIEF The proposed project is for setting up a “Wooden Furniture Manufacturing Unit” in Mansehra.390. beds. Approximately 24 employees will be employed in this furniture factory.1. dining tables are to be manufactured in the Unit.
Production capacity will be increased study to achieve maximum capacity. Normal.2.41% makes and Forestry covering an area of 1.3 persons1.85% The target market comprises of the following segments: 1. However.816 Growth 3. Therefore the opportunity of display and marketing of furniture exists Skilled Labor Force is readily available and so are the wooden seasoning centers. 2 . Consortiums can be developed to market the fine furniture.4 Million Acres (Source. Following are the export trend of Pakistani Furniture.318 9. 2. There seems to be a growing trend in the gap of supply and demand in the future.000 housing units whereas the annual production is estimated around 300. With the rapid increase in the development of new housing schemes. to cater to the need of both local and export markets. The household size is 6. Dowry. MARKET OPPORTUNITY Wooden furniture forms the major portion of sales in Pakistan. Around 2. 5. Export growth trend of country simultaneously applies to furniture industry as well. Institutional buyer.22% 22. Furthermore.e.4 million tourists (both foreign and local) visit the vicinity. The project will be able to employ skilled labor to add value for the local wood in to finished product i.000 housing units annually. Some of the orders will also be sub contracted. the increased demand of wooden furniture is anticipated.000 housing units resulting in a recurring backlog of 270. 3. introduction of new schemes by different banks for house and consumer financing have also raised the purchasing power of public. Business Plan Furniture of three qualities will be made: Superior. All the tools required in the manufacturing of the furniture are readily available at low costs. 4. Wooden Furniture Export from Pakistan (000 in USD) Year 2003 2004 2005 World 9. Strong historical background of craftsmen is also an added advantage of this project. Sardar and Sardar associates) makes the opportunity for investment in this sector. In the international market. there are constraints on the latest technology know-how. 3. PROJECT RATIONALE The demand for wooden furniture is increasing in the domestic market as well as in the international market due to its traditional appeal and durability. Offices (public & private sector) 4. The high growth rate of population 2. Export potential also exists. Highly skilled labor will be employed so that the finished product is of superior quality. Fine. wooden furniture. the annual additional requirement is estimated around 570.618 11. The demand of wooden furniture in the International market is increasing gradually at an annual average rate of 4 percent (Statistical Division of Pakistan). According to the National Housing Policy 2001. Newly built house.6 persons and the occupancy per room is 3. demand for wooden furniture is increasing for its unique style and elegant appearance. Renovation. Over all Export target is set more than 18 million dollar by Government of Pakistan.
153 8.561 11.024 42.2 RAW MATERIAL The basic raw material for manufacturing of furniture is wood. glue/solution. Generally dry wood is recommended for manufacturing of quality wooden furniture. etc. Furniture Superior Fine Normal Office Furniture Superior Fine Normal Mix 20% 30% 50% 20% 30% 50% 20% 30% 50% 20% 30% 50% 20% 30% 50% Cost Price 56. Wood obtained from the forest is of prime quality.975 54. sealer.000 32. Other types of wood used in manufacturing furniture are: . spirit.1 Product sales Capacity Utilization (%) Annual Production of Furniture Bed set Dinning set with chairs Sofa set Misc Furniture Office furniture Total 100% 700 units Unit Price 53. Forest wood is easily available in the market. Furniture manufacturing units in Pakistan mostly use sheesham wood. Walnut wood .742 3 .366 29.4. thinner.033 23.000 10. hardener. lacquer.193 33.279 39.000 47. screws. Cost of goods detail: Description Product Bed Set Superior Fine Normal Dinning Set Superior Fine Normal Sofa Set Superior Fine Normal Misc.168 24.000 51.000 Qt in units 185 165 90 82 178 700 4. Keekar wood Raw material wood is easily available from the forest reserve which comprise of almost 42% of the area.894 43.883 36. Other material used in the furniture manufacturing process is nails. These raw materials are easily available in the market.937 14. Teak wood .812 56.745 30.
and Newspapers are the conventional mediums.M Channels. Selection of elegant design is important to ensure attractive finished product.4 Distribution / Marketing Channels Though the demand for wooden furniture in domestic market is persistent throughout the year. Boiler System • Vacuum System • Seasoning through putting the wood slices under normal environmental temperature for considerable duration. Radio. Quality of carving depends on the skills of the labor. After the base is prepared final finishing is applied depending on requirement in term of paint/polish. Billboards. namely: . Once the different pieces are carved & molded than these parts/pieces are assembled or fixed together to give the shape to the final product. Once the surface is smooth. Assembled product is grind to make the surface smooth. the primetime to enter into market is start of August. Condensation . The seasoned wood blocks are cut into desired shape and slices according to the requirement of design. Upholstery of fabric is carried out according requirement of design. Carving means different elegant pattern carved in the wood. which have been powerfully used for the promotion of products 4 . The demand for the furniture almost doubles during this period. finishing material is applied to make the surface ready for paint or polish. Hence. Before start of manufacturing of any furniture product a desired design is selected. If the wood purchased is not seasoned than these blocks/slices are seasoned through different processes. F. but it significantly increases during the period of October to March because of the wedding season. The slices of wood are molded into the desired shape according to the design. 4.4.3 PRODUCT MANUFACTURING PROCESS Wood is cut into different sizes of blocks and slabs.
100 248.500 8.500 91.000 144.000 523.000 96.000 12.000 120. per unit basis and permanently employed.590. Furniture for Factory Pre-operating Costs Total Capital Expenditure 900.000 4.000 8.790 6.000 4.4.000 10.000 Total Annual Salary (Rs) 180.6. Factory Staff Requirement Details Description No Production supervisor 1 Carpenter 10 Machine man 1 Polish man 3 Carving 2 Helpers 2 Factory admin officer 1 Draftsman / CAD Operator 1 Purchaser/Store Officer 1 Gate Keeper 2 Total Production Staff 24 Monthly Salary (Rs) 15.2 Fixed Cost Land for Factory(3 kannals @ 300.353. Following permanent human resource is required both at factory and show room.000 96.000 4. Year 01 Qt in units 111 99 54 49 103 416 Year 02 Qt in units 130 116 63 57 120 486 Year 03 Qt in units 148 132 72 66 138 556 Year 04 Qt in units 165 185 81 78 155 664 Year 05 Qt in units 185 165 90 82 178 700 Items/products Bed set Dinning set with chairs sofa set Misc Furniture Office furniture Total 4.390 5 .6.000 8.1 Project Financials Operational Data The Factor will be able to manufacture 700 complete units of furniture at 100 % capacity.000 96.5 HUMAN RESOURCE REQUIREMENT The labor required for manufacturing process is easily available on daily wages.000 12.000 8.000 144.334.000 2. It is recommended that selective highly skilled labor should be employed permanently and other labor should be hired as and when required.000 4.6 4.000 960.000 192.000) Building/Infrastructure for Factory Machinery & Equipment Office Equipment.000 306.
000 1.000 290.000 1.4 Overheads Following Overheads are assumed to occur in the first year of production.2 Million is requires required.6.960 6 .4.3 Working Capital The initial working capital to the tune of Rs 1.000 550. Expense Utilities Depreciation Administration Selling and Distribution Miscellaneous Total Year amount 560.000 150.000 300.960 480.780.000 4.246.6. Raw material inventory Cash requirements Total 696.
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