Center forEntrepreneurship and

Small Business ManagementMaharshi Dayanand Saraswati University, Ajmer

Business Plan Development OnKHALSA 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:

Employees Number Salary (Rs.)

Per day Per month Annually

Production Supervisor

1 - 5000 60000

Accountant 1 - 5000 60000

Skilled Workers

5 150 450054000*5 = 2,70,000

Semi skilled Workers

8 125 375045000*8 = 3,60,000

Unskilled workers

3 100 3,00036000*3 = 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. No.

Particulars Size Area Rate Amount

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. No.

Particulars No. Rate Amount

1 Chemical treatment plant

1 200000 200000

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 machine)

1 25000 25000

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

Year

Loan O/S at

the beginnin

g

Loan O/S at the end of 1st half year

Loan O/S at the end of 2nd

half year

Interest for

the 1st half year

Interest for

the 2nd half year

Total interes

t for the

term loan

1 2590445240541

3222038

1 155426 144324 299750

2 2220381203534

9185031

7 133222 122120 255342

3 1850317166528

5148025

3 111019 99917 210936

4 1480253129522

1111018

9 88815 77713 1665285 1110189 925157 740125 66611 55509 1221206 740125 555093 370061 44408 33306 777147 370061 185029 0 22204 11102 33306

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

Annexure: 3

Working Capital Requirements

ItemsNorms in

days1st

year2nd year

3rd year

Raw materials 30.00 62500 67708 72916Stock in process 1.00 1837 1990 2143Finished goods 4.00 14698 15923 17148Book debts 7.00 25722 27866 30009Total Current Assets 42.00 104757 113487 122216Less: Margin for WC from long term sources (25% of RM CAs) 26189 28371 30554Less: Trade credit for raw materials 62500 67708 72916Bank finance for WC 16068 17408 18746

 INTREST @

12 % 1928 2088 2249

Annexure: 4

Depreciation

A. Asset Valuation for depreciation purpose

Asset expensesBasic cost

Share of Preoperative

cost

Share of Contingency

margin TotalLand 1063600 90435 64596 1218631Building 936800 79655 56896 1073351Plant & machinery 968500 82349 58821 2291982Miscellaneous fixed assets 230000 19556 13969 263525Total 3198900 271995 194282 3665177

B. Depreciation schedule for company law purposes (SLM)

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

C. Depreciation schedule for income tax purposes (WDV)

Assets 1st yr 2nd yr 3rd yrBuilding 107335 96601 86941

Plant & machinery 851750 567862 378593

& Miscellaneous fixed assets (33.3%) Total 959085 664463 465534

Annexure: 5

Profitability Estimates (Estimates of Working Results)

  1st yr 2nd yr 3rd yrInstalled Capacity 12000 12000 12000

Production 7200 7812 8476Capacity Utilization 60 65 70A. 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 38360C. 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 2249F. Depreciation 241169 241169 241169

G. Operating Profit 1012273 1186114.333 1359952.667H. Preliminary Expenses W/O 194282 194282 194282

I. Profit/ Loss Before Tax 817991 991832.333 1165670.667

J. Provision for Tax 30022.50 170561.400 282391.500K. Profit After Tax 787968.50 821270.933 883279.167

L. Retained Profit 787968.50 821270.933 883279.167M .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 1165670Add: Depreciation for company law purposes 241169 241169 241169Total 1059160 1233001 1406839Less: Depreciation for Tax purposes 959085 664463 465534Gross Total Income 100075 568538 941305Total Income 100075 568538 941305

Income Tax @ 30% of Total Income 30022.50 170561.40 282391.50

Annexure: 7

Projected Balance Sheet

 Construction Period End 1st yr 2nd yr 3rd yr

LiabilitiesShare Capital 1295203 1295203 1295203 1295203Reserve & Surplus 787968.50 1609238 2492517*Term Loans 2590445 2220381 1850317 1480253* WC Adv 16068 17408 18746Current Liabilities & Provisions 1365497.50 1555739 1745273* Trade Credit 62500 67708 72916Total 3885661 5685131 6327918 7032005AssetsFixed Assets* Gross Block 3665177 3665177 3665177 3665177* Less: Accumulated Deprecation 241169 482338 723507* Net FA 3665177 3424008 3182839 2941670Current Asset Loans & Adv* Raw Materials 62500 67708 72916* Stock in Process 1837 1990 2143* Finished Goods 14698 15923 17148*Book Debts 25722 27866 30009Cash & Bank Balances 26189 2059225 3031592 3968119

*Preliminary Expenses 194282 97141 97141Total 3885648 5685131 6327918 7032005

Annexure: 8

BREAK EVEN POINT FOR THE PROJECTAmount 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     p/v ratio 73.78564   

 Break Even Point In Terms Of Volumes Of Sales 1885081

     Break Even Point In Terms Of 57.33214

Installed Capacity

Break Even Point

YEARS 2010 2011 2012Fixed cost 1390919 1390919 1390919total cost 2252847 2324674 2396501Sales Realization 3288000 3562000 3836000Break Even Point In Terms Of Volumes Of Sales 1885081 1885081 1885081