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Center for

Entrepreneurship and
Small Business Management
Maharshi Dayanand Saraswati University, Ajmer

Business Plan Development On


KHALSA COLLECTIONS- “SOMERTHING DIFFERENT
AND AFFORDABLE”

Submitted To: Submitted By:


Mr. Dushyant Bafna Mohit Jadam
Manish
Tailor
Gaurav
Mawar
Amit Tak
BBA
(E&FBM)
Part-III
(Sem-VI)
CONTENTS

 ACKNOWLEDGMENT
 CONTENTS

Introduction to Khalsa Collections

• Mission
• Unique Features
• Objectives
• Production Time
• Material
• Labour Requirement
• Location

Market Analysis

• Market Segmentation
• Marketing Mix
• Marketing Strategy

Operational Requirements

• Internal Working Criteria


• Transportation
Financial Analysis

• Ratios and Depreciation Charged


• Profit and Loss Account
• Balance Sheet

ACKNOWLEDGMENT
It gives us immense pleasure in a submitting this Project of Business Plan
Development (BPD) for the Semester VI As the part of BBA in

ENTREPRENEURSHIP AND FAMILLY BUSINESS MANAGEMENT.

FIRST AND FORMOST, We would like to acknowledge Mr. Dushyant


Bafna, Faculty Member of Center for Entrepreneurship and Small Business
Management, Maharshi Dayanand Sarswati University, Ajmer. Who has
provided this opportunity and enabled us to gain this experience in a
business area.

Before we explain about our Business Plan, We would express thanks from
the core of our heart to Mr. Hemraj Sharma, Who is the owner of HB.
Furniture House, Ajmer for suggesting and helping us in preparing this
Business Plan. Without there co-operation and help we wouldn’t have been
in a position to complete our Business Plan.

Mohit Jadam, Manish Tailor, Gaurav Mawar & Amit Tak

BBA (E&FBM) Part III Semester- VI


INTRODUCTION
Handicrafts are unique expressions and represent a culture, tradition and
heritage of a country. The Handicraft Industry is one of the important
productive sectors. Various attempts have been made to define this broad
and diversified industry. The following definition strives to cover diversity
and complexity of Handicraft Industry.

Defining Handicrafts:
Definition According to United Nations Educational, Scientific and Cultural
Organization/Information Technology Community (UNESCO/ITC)
International Symposium on “Crafts and the International Market: Trade and
Customs Codification”, Manila, Philippines, October 1997:

Handicrafts can be defined as products which are produced either completely


by hand or with the help of tools. Mechanical tools may be used as long as
the direct manual contribution of the artisan remains the most substantial
component of the finished product. Handicrafts are made from raw materials
and can be produced in unlimited numbers. Such products can be utilitarian,
aesthetic, artistic, creative, culturally attached, decorative, functional,
traditional, religiously and socially symbolic and significant.
Definition according to Govt. of India:
Handicraft can be defined, which is made by hand; should have some artistic
value; they may or may not have functional utility.

Today the people are more aware of furnishing and interiors of their houses,
so they ask for a large rang of variety end excellent services which are the
main aim of KHALSA COLLECTION- “SOMETHING DIFFERENT AND
AFFORDABLE.”

This Business Plan Unit is a small retail business aimed at a big time in order
to reach its lofty goals and stands for its quality and affordable prices in the
markets of its product like Dinning Tables, Single or Double Beds with
different features, Dressing Tables, Antics, Show Piece, Wooden Toys, All
over Furniture Goods are available in our Furniture Mart.

It will be providing the products which already exist in the market and will
also provide a new breadth of air in the market through the availability of
unique products and services. Our unique selling preposition will target the
customers with their unique demands.

MISSION-
‘Khalsa Collections’ will build its image as a quality first and then will begin
earning higher profits.
UNIQUE FEATURES-

• Different varieties and sizes of products are available under one


roof with a unique customer’s service.
• The Furniture Goods are altered according to the order.
• Our Furniture Goods are also designed and shaped with the help
of fully skilled carpenters.

OBJECTIVES-

• To capture its market share by 25%within a year, by focusing on


getting customers from near by areas of Ajmer like nasirabad, beawar.
• To provide different varieties of product to the customers by
fulfilling their expectation and to achieve a good position in the market.

PRODUCTION TIME-

Wood carving is a time consuming process. The time needed by Indian


craftsmen to create carved wooden handicrafts may range anywhere from a
week (for small items) to a few months for large items which require
elaborate carving techniques.

LABOUR REQUIRMENTS-

Handicraft is a labour intensive product and it is all depend upon labour only
and all kind of labour requirements are there like in this we need skilled,
semi skilled and unskilled workers. So total requirements are as follows:
Salary (Rs.)
Employees Number
Per day Per month Annually
Production
1 - 5000 60000
Supervisor
Accountant 1 - 5000 60000
Skilled 54000*5 =
5 150 4500
Workers 2,70,000

Semi skilled 45000*8 =


8 125 3750
Workers 3,60,000

Unskilled 36000*3 =
3 100 3,000
workers 1,08,000
Peon 1 - 2,500 30,000
Guard 1 - 2,500 30,000
Total 20 9,18,000

LOCATION AND SITE DEVELOPMENT-

 The area for setting up a handicraft manufacturing unit is


decided after surveying all the potential areas. The location of
plant will be at Makarwali Road Vaishali Nagar, Ajmer.

The rate of land is Rs 500sq meters (one side road plot), of area 2,000sq
meters or 21529sq ft
Structure and Civil works:
S. Particulars Size Area Rate Amount
No.
1 Factory shed 30”*60” 1800 200 3,60,000
2 2 stock room 18”*20” 360 200 72000
3 Guard room 8”*10” 80 200 16000
4 Power room 8”*10” 80 200 16000
5 Boundary wall 220000
6 Washroom 6”*8” 48 200 9600
5labour
quarters -
7 Room 12”*10” 120 200 24000*5=120000
8 Washrooms 6”*8” 48 200 9600*5=48000
9. Office room 15”*12” 180 200 36000
10. Fire fitting 39200
Total 9,36,800

MATERIALS-

Babool/Aakashiya: This is available in Rajasthan and some part of Gujarat.


The rates of babool are Rs.20 / sq ft

Shisham: Most of wooden handicraft is made of shisham wood. The highest


demand is of shisham made wooden handicraft. This is available in Gujarat,
U.P. & Bihar. This is made available by local wholesale timber merchant.
The rates are Rs. 30/sq ft.

Pine: Rs. 25 /sq ft. These are less demanded.

Teak: Rs. 80 /sq ft

Mango: Rs. 25 /sq ft

Only Shisham will be used to manufacture wooden handicraft because it is


more in demand and suitable for these type of handicrafts.

KEY TO SUCCESS-
“KHALSA COLLECTION”-‘SOMETHING DEFFERENT AND
AFFORDABLE’ will build an impression in the mind of the customers
because the punch line itself explains about the different variet of product.
This punch line will also be printed on every poly bag of KHALSA
COLLECTIONS.

EXPECTED ACCOMPLISHMENTS-
The Business Unit expects to capture an additional 25% of the market share
in the second year, following this expansion and another 50% in the
following year.
MARKET ANALYSIS-

Geographical Area
Makarwali Road Vaishali Nagar, Ajmer

Objective of the survey


• To know about the market potential for the handicraft

• To analyze the handicraft manufacturing, its competition, customer


preferences and their satisfaction level.

• To find out the major players in the market

Source of Information
Primary (Market Survey) and Secondary data

Methodology Adopted:
Research plan was developed through conclusive research design using
descriptive research analysis methods by survey as detailed below:
Research Approach:
1. Primary data for gathering information regarding manufacturing
requirements and facilities available at Ajmer region was collected by
personal interview with different manufacturers selected on the basis of
random sampling survey method.

2. Secondary data regarding world demand and supply positions, Indian


Handicraft status and other relevant information were gathered from
different websites.

Research Instruments:
Collect the data on both the sensitivity of demand and supply, customer
preferences and to know the market potential and future growth.

After deciding the research approach and instruments, sampling plan was
prepared

Sampling Procedure: Simple random sampling method was used for survey
on representative basis.

Sample Size: 20 handicraft units

Contact Method: Personal interview with each of the manufacturer and raw
material suppliers was conducted.
STRATEGIC MARKETING PLAN-
Wooden handicraft is being an unbranded commodity, so as such the
manufacturers incur no promotional expenditure. Sometimes they just
increase the commissions or the margins of these, if the targets are achieved
enormously.

But in order to differentiate the product and capture the existing market and
to develop strong customer base, some strategic marketing plan is necessary
to be designed and implemented.

Various strategies that will be used being a new entrant are:-

• Study supply with timely delivery to fulfill the demand of the


domestic area as well as outside area and good quality would be one of
the strategic strength of the marketing plan.

• Apart from good quality good designs are an important factor. These
designs will be based on traditional pattern so that it can impress foreign
customer.

• Besides from these efforts e-commerce is also a promotional tool for


marketing of this product. So I will do online selling also in order to
promote my product.

• So orders will also be taken online apart from fax and


telephonically.
OPERATIONAL REQUIRMENT-

Machinery Involved

S. Particulars No. Rate Amount


No.
1 Chemical treatment 1 200000 200000
plant
2 Seasoning plant 1 300000 300000
3 Surface planner 9 30000 270000
4 Grinder(small) 5 2500 12500
5 Grinder(big) 5 7000 35000
6 Driller 2 1500 3000
7 Band show (aara 1 25000 25000
machine)
8 Gaze machine 3 30000 90000
9 Ziksha machine 1 3000 3000
10 Sanding machine 1 30000 30000
Total: 968500
FINANCIAL ANALYSIS

Cost of Project
Particulars Cost in Rs
Land & Site development 10,63,600
Building 9,36,800
Plant & Machinery 9,68,500
Other Fixed Assets 2,30,000
Preoperative Expenses 2,71,995
Preliminary Expenses 1,94,282
Provision for Contingency 1,94,282
WC Margin 26,189
Total 38,85,648
Means of Finance
Particulars Cost in Rs.
Promoter's Capital 12,95,203
Long/ medium Term Loan from
Banks 25,90,445
Total 38,85,648
Basic Assumptions underlying Financial Projections
The profitability and other projections may be prepared on the basis of
following assumptions:-
1.) The construction period will last for one year.
2.) The company would work for 360 days per year on a 1 shift
basis. The installed capacity on this basis works out to 12000.
3.) The company will start commercial production on July 1, of year 1.
The expected capacity utilization will be 60% in first year, 65% in the
second year, and 70% for the third year and so on.
4.) Wages and salaries are expected to be Rs 918000.
5.) Factory overheads expenses will be Rs 32880 for the first year.
6.) Administration expenses will be Rs 360000 per annum.
7.) The term loan will be repaid in 14 equal half-yearly installments, with the
first installment due at the end starting of first operating year. The interest
rate on the outstanding term loan will be 12%.
8.) The bank finance for working capital will cost 12% interest rate.
9.) The depreciation rates for company law purposes are as owes:
Building : 3.34%
Plant and Machinery : 8%
Miscellaneous Fixed assets : 5%
Annexure: 1
Questionnaire (Manufacturer)

Name____________________________
Company Name___________________
Area of production_________________
Year of Establishment___________________

1) Variety of handicraft item you manufacture?

a) Chairs c) Decorative items

b) Tables d) Any other

2) From where you acquire the raw material for wooden handicraft?

a) Bihar c) Gujarat

b) U.P. d) Import from other countries

3) At what frequency do you order the raw material stock?

a) Weekly c) Monthly

b) Fortnightly d) as required

4) Order size

a) 400-500 units c) 700-1000 units

b) 500-700 units d) 1000 units and above


5) Who bears the transportation cost?

a) Supplier b) Yourself

6) Which type of handicraft item is more in demand?

a) Wooden b) Glass made

c) Metal made

7) Which type of wood is maximum in demand for manufacturing?

a) Babul/Aakashiya d) Teak

b) Shisham e) Mango

c) Pine

8) What level of Inventory you keep?

a) 15 days c) 2 months

b) 30 day d) 4 months

9) From where you get the skilled workers for the ornamental work?

a) Saharanpur c) Jaisalmer

b) Barmer d) Locally
Bibliography

• www.indianhandicraftexporter.com

• www.google.co.in

• www.wikipedia.com

• www.yahoo.com

• www.ori.nic.in

• www.answers.com

• www.handicraftdpr.htm
Annexure: 2

Interest Term Loan

14 Equal Instalments @ 12% per annum


Loan Loan
O/S at O/S at Interest Total
the end the end Interest for the interest
Loan O/S of 1st of 2nd for the 2nd for the
Yea at the half half 1st half half term
r beginning year year year year loan
240541 222038
1 2590445 3 1 155426 144324 299750
203534 185031
2 2220381 9 7 133222 122120 255342
166528 148025
3 1850317 5 3 111019 99917 210936
129522 111018
4 1480253 1 9 88815 77713 166528
5 1110189 925157 740125 66611 55509 122120
6 740125 555093 370061 44408 33306 77714
7 370061 185029 0 22204 11102 33306

Note: term loan of 25, 90,445 will be paid


Annexure: 3

Working Capital Requirements


Norms in 1st 2nd 3rd
Items days year year year
Raw materials 30.00 62500 67708 72916
Stock in process 1.00 1837 1990 2143
Finished goods 4.00 14698 15923 17148
Book debts 7.00 25722 27866 30009
Total Current
Assets 42.00 104757 113487 122216
Less: Margin for
WC from long
term sources
(25% of RM
CAs) 26189 28371 30554
Less: Trade
credit for raw
materials 62500 67708 72916
Bank finance for
WC 16068 17408 18746
INTREST @
12 % 1928 2088 2249
Annexure: 4
Depreciation
A. Asset Valuation for depreciation purpose
Share of Share of
Basic Preoperative Contingency
Asset expenses cost cost margin Total
106360
Land 0 90435 64596 1218631
Building 936800 79655 56896 1073351
Plant &
machinery 968500 82349 58821 2291982
Miscellaneous
fixed assets 230000 19556 13969 263525
319890
Total 0 271995 194282 3665177

B. Depreciation schedule for company law


purposes (SLM)
Building 3.34% 40702
Plant & machinery 8% 85868
Miscellaneous fixed
assets 5% 114599
16.34
Annual depreciation % 241169

C. Depreciation schedule for income tax purposes


(WDV)
Assets 1st yr 2nd yr 3rd yr
Building 107335 96601 86941
Plant & machinery
& Miscellaneous
fixed assets
(33.3%) 851750 567862 378593
Total 959085 664463 465534

Annexure: 5

Profitability Estimates (Estimates of Working Results)


1st yr 2nd yr 3rd yr
Installed Capacity 12000 12000 12000
Production 7200 7812 8476
Capacity Utilization 60 65 70
A. Sales Realization 3288000 3562000 3836000
B. Cost of production 1322880 1433120 1543360
*Raw Materials 750000 812500 875000
*Power 60000 65000 70000
*Wages & Salaries 480000 520000 560000
*Factory Overheads 32880 35620 38360
C. Admn & Selling
Expenses 410000 444167 478333
*Admn Expenses 360000 390000 420000
*Selling Expenses 50000 54167 58333
D. Gross Profit Before
interest 1555120 1684713 1814307
E. Total Financial
Expenses 301678 257430.000 213185.000
*Interest on Term Loans 299750 255342 210936
*Interest on Bank
Borrowings 1928 2088 2249
F. Depreciation 241169 241169 241169
G. Operating Profit 1012273 1186114.333 1359952.667
H. Preliminary
Expenses W/O 194282 194282 194282
I. Profit/ Loss Before 817991 991832.333 1165670.667
Tax
J. Provision for Tax 30022.50 170561.400 282391.500
K. Profit After Tax 787968.50 821270.933 883279.167
L. Retained Profit 787968.50 821270.933 883279.167
M .Add: *Depreciation 241169 241169 241169
*Preliminary Expenses
W/O 194282 194282 194282
*N. Net Cash Accruals 1223419.50 1256721.933 1318730.167
Annexure: 6

Tax Calculation
1st yr 2nd yr 3rd yr
Profit/ Loss Before Tax 817991 991832 1165670
Add: Depreciation for company
law purposes 241169 241169 241169
Total 1059160 1233001 1406839
Less: Depreciation for Tax
purposes 959085 664463 465534
Gross Total Income 100075 568538 941305
Total Income 100075 568538 941305

Income Tax @ 30% of Total 170561.4


Income 30022.50 0 282391.50
Annexure: 7

Projected Balance Sheet


Construction
Period End 1st yr 2nd yr 3rd yr
Liabilities
Share Capital 1295203 1295203 1295203 1295203
Reserve & Surplus 787968.50 1609238 2492517
*Term Loans 2590445 2220381 1850317 1480253
* WC Adv 16068 17408 18746
Current Liabilities & 1365497.5
Provisions 0 1555739 1745273
* Trade Credit 62500 67708 72916
Total 3885661 5685131 6327918 7032005
Assets
Fixed Assets
* Gross Block 3665177 3665177 3665177 3665177
* Less: Accumulated
Deprecation 241169 482338 723507
* Net FA 3665177 3424008 3182839 2941670
Current Asset Loans
& Adv
* Raw Materials 62500 67708 72916
* Stock in Process 1837 1990 2143
* Finished Goods 14698 15923 17148
*Book Debts 25722 27866 30009
Cash & Bank
Balances 26189 2059225 3031592 3968119
*Preliminary
Expenses 194282 97141 97141
Total 3885648 5685131 6327918 7032005

Annexure: 8
BREAK EVEN POINT FOR THE PROJECT
Amount Amount Amount
A Sales Realisation 3288000 3562000 3836000

B Variable Costs
Raw Materials 750000 812500 875000
Interest On Working Capital 1928 2088 2249
Power & Water 60000 65000 70000
Selling & Distribution Expenses 50000 54167 58333
Total 861928 933755 1005582

C Fixed Cost
Wages And Salaries 480000
Repairs And Maintainance 10000
Depriciation 241169
Administrative Expenses 360000
Interest On Term Loan 299750
Total 1390919 1390919 1390919

D Contribution(A-B) 2426072 2628245 2830418

73.7856
p/v ratio 4

Break Even Point In Terms Of


Volumes Of Sales 1885081

Break Even Point In Terms Of 57.3321


Installed Capacity 4
Break Even Point
YEARS 2010 2011 2012
139091 1390919 1390919
Fixed cost 9
225284 232467 239650
total cost 7 4 1
328800
Sales Realization 0 3562000 3836000
Break Even Point In Terms Of Volumes 188508 188508 188508
Of Sales 1 1 1