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Pre-Feasibility Study

BED LINEN STITCHING UNIT

Small and Medium Enterprises Development Authority


Ministry of Industries & Production
Government of Pakistan
www.smeda.org.pk
HEAD OFFICE
4th Floor, Building No. 3, Aiwan-e-Iqbal Complex, Egerton Road,
Lahore
Tel: (92 42) 111 111 456, Fax: (92 42) 36304926-7
helpdesk@smeda.org.pk
REGIONAL OFFICE
PUNJAB

REGIONAL OFFICE
SINDH

REGIONAL OFFICE
KPK

REGIONAL OFFICE
BALOCHISTAN

3rd Floor, Building No. 3,


Aiwan-e-Iqbal Complex,
Egerton Road Lahore,
Tel: (042) 111-111-456
Fax: (042) 36304926-7
helpdesk.punjab@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 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

SMEDA-Punjab

Approved by

Provisional Chief- Punjab

Revision Date

JUNE, 2007

Issued by

Library Officer

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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
Pakistans 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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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.

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.
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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.

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

Packaging

Inspection of
Printed
Fabric

Threading
and Final
Inspection

Cutting

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.

RAW MATERIAL

4.1 List of Raw Material

Printed Woven Fabric


Stitching Thread & Other Accessories
Packaging 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 companys name and design and polyetnene bag, which is the
plastic cover.
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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%)

312
55 per Day
990
308,880
123,552 Sets

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

Product mix

Description
Twin Set

No

Items

Measurement

1
1
1

Flat
Fitted
Pillow

168x244 cm
178x230 + 20 cm
51x76 + 15 cm

1
1
2

Flat
Fitted
Pillows

206x244 cm
178x230 + 20 cm
51x76 + 15 cm

1
1
2

Flat
Fitted
Pillows

229x257 cm
196x241 + 20 cm
51x76 + 15 cm

1
1
2

Flat
Fitted
Pillows

274x257cm
244x244 + 20cm
51x76 + 15 cm

Full Set

Queen Set

King Set

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5.3

Bed Linen Stitching Unit

Production Mix

The proposed project will produce the products on the basis of following proportion:
Table 5-3

Production Mix Production Details

Description
Twin Set
Full Set
Queen
King

Production Percentage
12.5%
50%
25%
12.5%

MARKETING

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

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

2004
580,054

2005
607,342

2006
470,254

1,173,274

1,278,179

1,496,379

704,484

www.Comtrade.un.org

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7.1

Bed Linen Stitching Unit

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%
Pakis tan .
74%

Germa n y .
10%

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%

Ireland
5%
Germany
46%

USA
35%

Table 7-4 Major Importers of Bed Linen of Textile or Crochet Materials


Countries
Germany
USA
Belgium
Austria
Ireland

Trade Value (In Millions)


$171,548
$129,584
$28,832
$22,328
$17,319
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7.2 Major Exporter / Importer of Bed Linen, of Cotton, Printed not Knit (In 2006)
(HS 2002-630221)

Top Exporters
Romania
8%
Germany
11%
China
52%

Belgium
12%
Pakistan
17%

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%

Sweden
6%
USA
55%

Germ an y
2 4%

Table 7-6 Major Importer of Bed Linen, of Cotton, Printed Not Knit
Countries
USA
Germany
Belgium
Austria
Sweden

Trade Value (In Millions)


$544,692
$233,842
$82,607
$68,026
$54,836
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7.3 Pakistans 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

MACHINERY REQUIREMENT

Table 8-1

Machinery Details2

Plant and Machinery

Machines
Required

Machines
Stitching Machines
Safety Lock Machines
Cutting Machines
Finishing Iron
Total

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

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
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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

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

No
5
1
1
1
2
1
10
1

Per Unit Cost


25,000
12,000
5,000
10,000
30,000
20,000
500
10,000

Total Cost
125,000
12,000
5,000
10,000
60,000
20,000
5,000
10,000

10
30
1
2
1

6,500
600
5,500
8,000
50,000

65,000
18,000
5,500
16,000
50,000
401,500

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

Rate
Rs.10 Per Set

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

No.
1
1
1
1
1
1
1
2
1
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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

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

Description
Production
Cutting Area
Inspection room/packing room
Raw material store
Finished goods store
Management building
Free space

Required Area (sq. ft)


1600
500
1,600
400
400
300
700

Total

5,500

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

Rent Cost
Building Rent Cost (per 5,500 sq. ft)
Annual Rent (Rs)
3 Months Rent As Security

Monthly Rent (Rs)


55,000
660,000
165,000
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6 Months Advance Rent

33,0000

10.3 Suitable Locations


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

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

Total Project Cost

5,084,435

Table 11-2 Financed By


Sponsors Equity
Bank Finance
Total Finance

60%
40%

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

Table 11-3 Project Returns


Internal Rate of Return
Payback Period
Net Present Value

In Percentage
In years
In Millions

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

Year - II

Year - III

Year - IV

Year - V

Year - VI

Year - VII

Year - VIII

Year - IX

Year - X

39,827

46,000

53,130

61,365

70,877

81,863

94,552

109,207

126,134

145,685

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

1,592
40,621
402
330
55
24
5
277
15
43,320
2,680

1,751
46,917
443
363
61
19
4
223
13
49,793
3,337

1,926
54,189
487
399
67
15
3
180
12
57,278
4,087

2,119
62,589
536
439
73
12
2
145
11
65,926
4,951

2,331
72,290
589
483
81
10
2
117
10
75,912
5,951

2,564
83,495
648
531
89
8
2
94
9
87,439
7,112

2,820
96,437
713
585
97
6
1
76
8
100,743
8,464

3,102
111,384
784
643
107
5
1
62
7
116,096
10,039

3,412
128,649
862
707
118
4
1
50
6
133,810
11,875

1,488
60
20
60
72
1,700
660

1,815
66
22
66
79
2,048
726

1,997
73
24
73
87
2,253
799

2,196
80
27
80
96
2,478
878

2,416
88
29
88
105
2,726
966

2,657
97
32
97
116
2,999
1,063

2,923
106
35
106
128
3,299
1,169

3,215
117
39
117
140
3,629
1,286

3,395
129
43
129
154
3,850
1,415

3,735
141
47
141
170
4,235
1,556

(94)

285

730

1,259

1,889

2,645

3,549

4,774

6,084

(276)

Financial Charges

270

214

157

100

43

Profit before Taxation

(546)
(109)

(308)
(62)

129
26

631
126

1,216
243

1,889
378

2,645
529

3,549
710

4,774
955

6,084
1,217

(437)

(246)

103

505

973

1,512

2,116

2,839

3,819

4,867

(437)

(683)

(580)

(76)

897

2,409

4,524

7,364

11,183

(683)

(580)

(76)

897

2,409

4,524

7,364

11,183

16,050

Taxation

20%

Profit after Taxation


Accumulated. Profit b/f
Accumulated Profit c/f

(437)

16
PREF-52/June, 2007/Rev2

Pre-Feasibility Study

Bed Linen Stitching Unit

14.2 Projected Balance Sheet

Year - I
Tangible Fixed Assets
Preliminary Expenses
Current Assets:
Accounts Receivable
Cash in Hand / Bank

Owners Equity:
Capital
Accumulated Profit
Long Term Loan
Current Liabilities:
Accounts Payable

Year - II

Year - III

Year - IV

Year - V

Year - VI

Year - VII

Year - VIII

Year - IX

"000"
Year - X

1,453
149

1,177
134

954
120

774
108

630
97

513
88

418
79

342
71

280
64

230
58

1,328
3,684

1,533
3,483

1,771
3,600

2,046
4,103

2,363
5,071

2,729
6,994

3,152
9,541

3,640
12,844

4,204
17,170

4,856
22,598

6,613

6,326

6,445

7,031

8,161

10,323

13,190

16,897

21,718

27,742

3,051
(437)

3,051
(683)

3,051
(580)

3,051
(76)

3,051
897

3,051
2,409

3,051
4,524

3,051
7,364

3,051
11,183

3,051
16,050

1,627

1,220

814

407

2,372

2,739

3,161

3,650

4,213

4,864

5,615

6,483

7,485

8,642

6,613

6,326

6,445

7,031

8,161

10,323

13,190

16,897

21,718

27,742

17
PREF-52/June, 2007/Rev2

Pre-Feasibility Study

Bed Linen Stitching Unit

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

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

Year 2

(94)
15

285
13

730
12

344

Year 5

Year 6

1,259
11

1,889
10

Year 7

Year 8

2,645
9

Year 9

3,549
8

4,774
7

223

180

145

117

197
160

521
185

922
214

1,414
247

2,016
285

3,051
2,034
5,084

358

706

620
62
559

563
26
589

506
126
633

449
243
693

378
378

529
529

710
710

955
955

(201)

117

503

968

1,923

2,547

3,303

4,326

5,429

3,684

3,483

3,600

4,103

5,071

6,994

9,541

12,844

17,170

3,483

3,600

4,103

5,071

6,994

9,541

12,844

17,170

22,598

1,798
165
677
109
2,531

1,136

1,661

2,301

2,748
329

3,076

76

6,084
6

277

94

Year 10

85
1,045

3,684

Cash Increase/(Decrease)

Year 4

(276)
17

6,214

Year 3

3,633
379

4,012

62

4,843
438

5,280

50

6,140
505

6,645
1,217
1,217

.
Opening Balance
Closing Balance

3,684

18
PREF-52/June, 2007/Rev2

Pre-Feasibility Study

Bed Linen Stitching Unit

15 KEY ASSUMPTIONS
Table 15-1

Operating Related Assumptions

Hours operational per day


Days operational per month
Days operational per year
Table 15-2

8
26
312

Production Related Assumptions

Annual production capacity


Capacity utilization (1st Year)
Capacity growth rate (yearly)
Maximum Capacity utilization
First Year production utilization
Table 15-3

308,880 Sets
40%
10%
95%
123,552 Sets

Economic Related Assumptions

Electricity growth rate


Wages growth rate
Machine maintenance growth rate
Table 15-4

10%
10%
2.5%

Cash Flow Related Assumptions

Accounts Receivable cycle (in days)


Accounts Payable cycle (in days)
Table 15-5

30
15

Revenue Related Assumptions

Products
Growth Rate in Sale Price
Twin Set
Full Set
Queen
King
Table 15-6

Sale Price In Rs.


5%
302
298
325
435

Basic Raw Material Related Assumptions

Description (Req. For Full Set)


Fabric Cost4
Stitching Cost
Packing Cost
Wastages
Freight
4

Cost in Rs.
223.75
10
20.2
3% of Fabric cost
5.56

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

19
PREF-52/June, 2007/Rev2

Pre-Feasibility Study

Table 15-7

Bed Linen Stitching Unit

Depreciation Related Assumptions

Plant & Machinery


Office equipment
Furniture & Fixtures
Vehicle
Table 15-8

20%
20%
10%
20%

Financial Related Assumptions

Project life (Years)


Equity
Debt
Interest rate on short term debt

10
60%
40%
14%

20
PREF-52/June, 2007/Rev2

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