INTRODUCTION

Zari (golden thread) embroidery work used for the embellishment of fabrics has found

admirers in overseas markets, as its export has risen significantly of late. Bareilly, one of

the main centres of zari work, is attracting huge export opportunities, hovering around

two billion Indian rupees annually. The presence of the country's famed work can be felt

in all the continents. The list of countries keen to purchase zari work includes the USA,

the UK, Japan and Saudi Arabia. "The turnover of zari production is around 175 crore

rupees. The main market for it is in UAE, Europe and the US. Exporters from there do

get their manufacturing done from here and export it to other countries too. We do

indirect export like this too," said Gopal Agarwal, an exporter. An index of the growing

demand of zari is the volume of exports, which was well below the billion-rupee mark

during the span of 1995-96. But the succeeding five years saw a phenomenal rise in

exports as volume grew to the tune of about 1.5 billion Indian rupees.The growth of the

business can also be attributed to the widespread presence of the Indian diaspora that has

been on the upsurge globally. Since the zari has made strong inroads into Bollywood, it's

promotional work, though, indirectly is being done by films, which are finding global

audience. Moreover, in a developing economy like India, the zari has also become a good

source of employment of a huge population in the area. "We get raw material mainly

from Punjab and Delhi. We are half paid at the time of delivery of finished goods and the

remaining we get with the next lot," said Naeem, a zari worker.

However, like many other traditional industries in the country, the mainstay of the trade

is worker who, ironically, is bereft of the fruits of the labour. The traders involved in the

trade usually earn approximately 117 to 140 US dollars in export of a zari-embroidered

piece of cloth but the workers get barely two dollars. However, with the rapid growth of

zari exports, one can hope that the profits would percolate to the workers and the artisans

involved in the trade. 

- 1 -

Executive Summary

Our Boutique Zarmeen’s Collection is newly established in Bareilly City in Satellite Town. We focus on the

establishment of designer wear Boutique including the operations of apparel designing, manufacturing,

selling and marketing. This Project has been designed to capture the dynamics of the Boutique industry in

Bareilly and other big cities of India like Budaun, Pilibhit, Noida, Delhi etc, with its many components and

possible strategic opportunities. This Project is financed with debt equity ratio of 60:40. The Average

Installed capacity of our product is 50% with 8400 dresses annually. The internal rate of return is

approximately is 78%.

- 2 -

EMBROIDERY:

Embroidery is one of the most sought out handicrafts of India the world over. Agra, Bareilly and

surrounding areas are full of gifted men and women who produce one of the most adorable cross stitch.

"Tilla" work, Pearl work and "Salma Sitary" work of NWFP are very famous throughout the country. Swat

is well-known due to thread embroidery, whereas, in D.G.Khan mirror work is done on clothes. Works of

these types are called "Kadhai." Chitrali "Patti," that is woven on hand looms and Kadhai done on Chitrali

Chugha is very famous

What is embroidery?

Embroidery is the art or handicraft of decorating or making things

Types of Embroidery

Following are some types of embroideries in India as well as in our neighbor country Pakistan.

Zardozi Embroidery:

As far as the world of design is concerned, embroidery is the backbone of India. Some of our embroideries

that can do wonder for Zardozi embroidery.

Zardozi work is an ancient form of embroidery basically done with gold or silver zari threads. It is also

known as metal embroidery. Although now-a-days it is also done with colored metal threads. The word

Zardozi is derived by combining two words Zar and Dozi which in Persian language means gold and

embroidery respectively. Therefore it is clear that this art of embroidery was originated in Persia which

was bought to India by Moghuls. Initially it was done with real metal threads of gold and silver. It was

done on clothes for the rich and royal, wall hangings, bedsheets, etc. In between the application of pearls

and precious stones looks stunning on it. Basically it is done on silk, crepe, brocade and velvet fabrics.

Zardozi embroidery saw its decline during the reign of Aurangzeb. It was revived after the independence.

Mirror Embroidery:

- 3 -

This work also originated in Persia during 13th century. Mirror work is never done alone, it is generally in

combination with other types of stitches or embroideries. This embroidery is done with both large and small

mirrors. It is embroidered using colorful threads like red, green, blue, yellow, black, maroon, etc.

Kantha Embroidery

Kantha is the traditional form of embroidery of West Bengal. It is running style of stitch. The embroidery is

done on many layers of cloth. It is done on quilts, bedsheets, blankets, saris, salwar suits, stoles, napkins,

etc.

It is also known as Dorukha. This word means making worn out garments into beautiful garments.

Therefore it is also known as recycling art. In earlier times the worn out silk or muslin clothes where used to

be put in piles and stitched together. It is believed that its date of origin lies during the era of Lord Buddha.

They used to drape themselves with rags of clothes that were stitched together.

Chikankari Embroidery

Chikankari is derived from the word Chakeen that means elegant patterns on the fabric which is a Persian

word. Earlier it was done with white thread on muslin clothes. However now it is been done on various

types of fabrics like cotton, linen nylon, georgette, chiffon and synthetic fabrics. Apart from wearable

garments it is also done on various other things like curtains, bed sheets, table cloths, pillow covers and

cushion covers.

Unlike earlier times it is not only done on white colored cloths but also fabrics of various colors. But the

thread used for the embroidery is generally white. Various motifs are embroidered through it like floral

motifs which include flowers like rose, lotus, jasmine, creepers, etc.

Sindhi Embroidary

- 4 -

sindhi embroidery is very famous all over the India including sindhi topi, ajrak. Sindhi embroidery made on

dresses.

It is made with the help of many types of threads and in in different colours on different fa brics.

Phool patti Work

Phool patti work is popular in allover the India & it need no special machines. It is done with the help of

needles not with machines. It is done with different colours threads and on different fabrics.

TYPES OF EMBROIDERY

As far as the world of design is concerned, embroidery is the backbone of India. Some of our embroideries

that can do wonders for an outfit are:

- 5 -

Mirror WorkMirror work which has its roots in Rajasthan and Kutch.

LariFine quality gold thread embroidery found in Bareilly , Benaras

( Varanasi ), Lucknow and Agra. These days silver zari is equally

popular.

Phool Patti WorkApplique work from Aligarh where usually organdi or other fabric

cutouts in floral and leaf motifs are affixed on to a plain fabric

sometimes in tandem with silver tilla embroidery.

Chikan WorkOriginating from Lucknow this involves a technique of finding

separated warp and weft threads for a textural effect.

JaaliNetwork.

ZardosiLeaf-scroll worked in gold and silver thread on silk, satin, velvet

and other rich fabrics. Zardosi is also combined with Dabka work

and is originally from Lucknow.

MokaishSilver dots strewn all over is Mokaish work.

Sitara WorkSequins are embroidered into the fabric.

Product Mix

Designers dresses for men and women,

Matching Ladies Bags

- 6 -

Ladies and gents Matching Shoes

Matching Jewelry

Embroidery dresses will design and manufactured in the boutique while Bags, shoes and

jewelry will be purchased on order form other Suppliers.

Suppliers

Stylo Shoes, Service shoes & Borjan shoes will provide us with matching ladies and

gents shoes. We will Order for matching bags to Sanat Zaar Embroidery School.

Jewelry will be purchased from main market of Bareilly.

Installed Capacity

The Boutique business capacity is greatly dependent on the market size and the number

of potential clientele one can attract. Furthermore, the women fashion wear garments will

be designed through a contracted designer and then stitched through in-house stitching

unit. On average Installed capacity of our Product is 60%..700 dresses will be

manufactured in one month to sale in Boutique. While Embroidery work on Order will

also be taken from in and outside the city.

- 7 -

Estimated Production during the first Year

With in 1 year approximately 8400 dresses will be produce in boutique for sale. Orders

are exceptions from this production.

Cost of Project

Description Rs.

Fixed Initial cost 9990320

Initial Working Capital 13773350

Total 23763670

Means of Finance

Description Amount

Debt:Eqity Ratio 60:40

Amount of Debt

Amount of Equity

14.258202

million

9.505468

million

Name of Financial Institution

HDFC Bank Limited Bareilly

Rate of Interest 18%

- 8 -

Sponsors and Machinery Suppliers

Name of Sponsors Zarmeen, Zareen

Machinery Suppliers Ahmad and Son’s Traders

Fauji Trading Corporation

Hafiz and Karim Trading Corporation

Sponsor Stake 40%

Financial Ratios & Net Profit Margin

Year 2010 2011 2012 2013 2014

Current Ratio 87.59 147.08 220.42 308.53 412.41

Debt as %-age of total capital. 60.00% 39.36% 23.39% 12.30

%

4.87%

Net Margin (%) 22.83% 26.84% 29.58% 32.03

%

34.21%

IRR:

Internal Rate of Return 78%

Payback Period:

- 9 -

Payback Period (Years) 0.2072

Introduction of Business:

Our boutique is established in 2009 to compete the market of embroided dresses, shoes,

hand bags etc. It’s a partnership type business started by 2 members Zarmeen & Zareen.

They started this business with huge investment for the purpose of this business is to

make embroided dresses and to sell these in market and as well as we sell the readymade

hand bags, shoes, jewellary in our boutique to enhance sale & to attract customer that an

opportunity to collect their relevant shopping from our boutique.

We also sell hand bags, jewellary, matching shoes but we not made these but purchase

these from market we mostly purchase shoes from Stylo, Borjan, Bata shoes.

We collect jewellary from akram Awn shopping center, Takbeer shopping mall, Ace

shopping mall etc.

Technical Analysis

In our boutique 10 embroiding machines, 20 single needle locking macines, 10 over lock

stitching machine are present for the purpose of embroidery dresses with the handmade

embroidery dresses. In this simple machines are used having not very expensive.

Inputs required are:-

Fabric

Electricity

Single needle lock stitch Machines

Embroidery machine

Scissors

Cutting board

Embroideries accessories

In technical analysis following is production process flow described as well as shown in a

diagram

- 10 -

Designing Pattern Making Embroidery

CuttingStitchingFinishing

PresentationMarket/Clientele

Design:

Pattern Making/Cutting

Stitching:

Finishing:

Presentation/Market:

Personnel Analysis

In our boutique following is description of personnel

Chief executive

Designers

Sales girls

Product supervisor/ cutting master

Iron man

Office boy

- 11 -

Above all these personnel these include all technical & non-technical personnel but at the

same time there is no special need of technical knowledge except designer who need

some technical knowledge in computer for innovating new designs day by day.

SWOT ANALYSIS

Strengths

Our Boutique would be the first big boutique in Bareilly city The labor to manufacture

embroidery dresses is easily available we can reach easily to low cost labor. Moreover

the location for our project is very attractive. We can avail maximum advantage from this

market.

Weaknesses

- 12 -

Our weakness is that we are not manufacturing other accessories like bags, shoes etc at

initial stage. And we have to rely on other contractors for these accessories. But with the

passage of time we will hopefully enter in Matching Bags and Shoes Business as well.

Opportunities

Clothing is a beautiful visual demonstration of the social and emotional needs of people

wearing it. It also portrays in a clearly understood visual manner, what people of different

cultures and styles want socially. Fashion, through times, has gone through so many rapid

changes and bizarre extremes that it has examples of nearly every kind of clothing

function.

The range of Indiai dresses is remarkably wide, according to the vast cultures,

geographical differences, purchasing capacities, influence of the western culture, and

bewildering diversities of the ethnic groups. One has, therefore, to sift and isolate, and

then relate and bring together, the ideas for creating various designs, which can fit in the

context of the fashion in vogue and the culture in practice. Furthermore, there is massive

export potential in this sector, as the demand of Indiai dresses, especially in countries like

UAE, USA, and UK, is massive due to a high number of Indiai expatriates who have

settled in these countries. The Boutique business can also be expanded into a more

profitable venture by providing stitching facilities to other boutiques, which do not own a

stitching unit or are lacking this facility.

Threats

Competitive Structure of the market

The market of the boutiques is highly competitive; therefore if the entrepreneur is

not well responsive to the tastes and response of the clientele as well as the fashions

in vogue he/she may not be able to capitalize the opportunity properly.

Pilferage in the designs

- 13 -

The designs which a designer produces can be sold by the staff even before that Design is

launched and that can pose serious threat to the business because in the Fashion industry

it is the uniqueness of the design which matters.

Selection of the wrong venue

Selection of the wrong venue can be a major hurdle in achieving the desired business

objectives.

Selection of the wrong design

If the designs are not selected according to the tastes of the clientele then it can be

detrimental for the business, so the clientele taste should be properly tracked.

Tax

Improper documentation of the sales receipt record may lead to problems with Tax

department.

MARKETING

The marketing of boutique follows the conventional marketing pattern which is

dependent on selection of venue of the outlet/s and the product mix (designs and sizes),

as well as the promotional strategy. We are using following medium to promote our

product.

1) Usage of print media i.e. printing of posters and pamphlets as well as displaying it and

distributing it at proper places

2) Advertisement in print media i.e. newspapers and fashion magazines, etc.

3) Usage of electronic media i.e. projection of the boutique in fashion programs,

Advertisement on television, and provision of dresses to various television plays and

films.

4) Event arrangement like fashion shows and photo-shoots.

5) Usage of e-commerce i.e. launching of website and advertising on web.

List of Machinery

Machinery No

- 14 -

Single needle Lock stitch machine 20

Over Lock Stitch Machine 10

Embroidery Machine 10

Accessories (Scissors, Cutting Board,

Table, Stool, Carpet etc

Other Equipments

Air Conditioner 2

Stereo System 1

Computer and Printer 5

Telephone 2

Security System( Cameras and television) 3

Raw Material:

The raw-material required for such sort of projects, would be as follows:

Fabric: The fabric, which is the basic raw material requirement for a boutique and a

major component of the cost, can be obtained from wholesale markets or from markets

specializing in designer cloth at Delhi, Noida, and Budaun.

Accessories: Accessories such as buttons, laces, zippers, elastics, threads, needles,

embroidery threads, glasses, etc. will be procured from the local market at competitive

rates.

Labels, tags and packaging: Labels and tags can be obtained on order, as these serve as

an identity for the boutique and are useful for promotion.

- 15 -

Personnel:

Requirement of Staff:

Production Staff

Designer 5

Product Supervisor/Cutting Master 5

Snitchers/Tailors 4

Press/Iron Man 5

Finishing Man 2

Administrative Staff:

Chief Executive Officer/Owner 2

Sale Girls 8

Office boy 3

Total 34

- 16 -

Infrastructure Requirement

The project will have the following infrastructure components:

Infrastructure Requirement

Description Sq.ft

Main shop (30x30)

Bags Deptt (15x4)

Shoes Deptt (15x4)

Jewelry Deptt (15x4)

Try Room 2, (4x5)

Office 7x7

Store Basement

Building for Stitching Unit 10 Marla House

- 17 -

15x4 Bags shop

15x4Shoes

7x70ffice

15x4Jewlry

4x5 4x5

30z30

30x30 Entrance

Try roomTry room

- 18 -

Main Shop Structure

Financial analysis

- 19 -

Cost of the Project

Description Local Foreign Total

Lease Expenses (shop)

100000

0 0 1000000

Furniture and Fixture

((interior Decration) 500000 0 500000

Machinery and

Equipment.

695500

0 0 6955000

Security Deposit for

Stitching house. 108000 0 108000

Pre-operating Expenses:

Staff's 1month Salaries. 442000 0 442000

Promotional Expenses 985320 0 985320

Total Pre Operating

Expenses 1427320

 

Total capital cost 9990320

 

Working Capital:

 

Raw Material (Fabric and

Accessories)

724460

0 0 7244600

Cost Incurred on Bags,

Shoes, Jewellery

436500

0   4365000

Account Recivable 5% of

sales

176775

0 0 1767750

Advance Rent (Boteque

and Stitching house) 396000 0 396000

Total Working Capital

652875

0 0 13773350

 

Total Project Cost 23763670

Project Returns

Description Rate

Internal Rate of Return 78%

Payback Period (Year) 0.2072

- 20 -

Means of finance

Debt and Equity

Debt:

Long term Loan 14258202

Total Debt 14258202

 

Equity:

Paid-up-Capital 9505468

Total Equity 9505468

Total Debt and Equity 23763670

Debt : Equity Ratio 60:40

Zarmeen’s Collection

Projected Income Statement

Projected Income Statement

Year   2010 2011 2012 2013 2014

Description            

             

Sales   35355000 38890500 42779550 47057505 51763256

Cost of Goods Sold:            

Raw Material   4809000 4857090 4905661 4954718 5004265

Embridory and

Accessories costs   2435600 2459956 2484556 2509401 2534495

             

RawMaterial,Embriodr

y and Accessory   7244600 7317046 7390216 7464119 7538760

             

Purchase of Bages ,

Shoes and Jewellery   4365000 4474125 4585978 4700628 4818143

Machine Maintanece   25000 27500 30250 33275 36603

Payroll Production staff.   3420000 3762000 4138200 4552020 5007222

Direct Electricity   120000 132000 145200 159720 175692

             

Total   15174600 15712671 16289845 16909761 17576420

             

Gross Profit   20180400 23177829 26489705 30147744 34186836

             

Operating Expenses:            

Fixed Electricity   144000 158400 174240 191664 210830

Payroll Administration   1884000 2072400 2279640 2507604 2758364

Shop and Stitching   396000 415800 436590 458420 481340

- 21 -

House rent

Amortization pre

Operating Expense   142732 142732 142732 142732 142732

Telephone, Internet

Charges   84000 88200 92610 97241 102103

Promotional Expenses   1060650 583358 641693 705863 776449

Depriciation   1093250 1093250 1093250 1093250 1093250

Total   4804632 4554140 4860755 5196773 5565069

             

Operating Profit   15375768 18623690 21628950 24950971 28621767

             

Non-Operating

Expenses:            

Fnancial Charges   2566476 2053181 1539886 1026591 513295

Total   2566476 2053181 1539886 1026591 513295

             

Profit Befor Tax   12809292 16570508 20089064 23924381 28108472

Tax   4739438 6131088 7432954 8852021 10400135

             

Net Profit After tax   8069854 10439420 12656111 15072360 17708337

             

Operating Retained

Earnings   0 8069854 18509274 31165385 46237744

Retained earning

beginning of year   8069854 18509274 31165385 46237744 63946082

             

Zarmeen’s Collection

Projected Cash Flow Statement

- 22 -

Year 2009 2010 2011 2012 2013 2014

Description            

Operating

Activities:            

             

Net Profit   8069854 10439420 12656111 15072360 17708337

Amortization of

Preoperating

Expenses   142732 142732 142732 142732 142732

Security Deposits (1108000)          

Building Rent

Expenses   396000 415800 436590 458420 481340

Building Rent

Repayments (396000) (415800) (436590) (458420) (481340) (505407)

Depriciation   1093250 1093250 1093250 1093250 1093250

Stock and

Inventory(Embriodr

y dresses and            

Bags, Shoes,

Jewellery)

(11609600

) (307435) (338178) (371996) (409196) (450115)

Account Recievable (1767750) (265163) (304937) (350677) (403279) (463771)

Account Payable   144270 1443 1457 1472 1486

             

Cash Provided By

Operations

(14881350

) 8857708 11012940 13149047 15474418 18007853

             

Financing

Activities:            

             

Share Capital 9505468          

Adition To Long 14258202          

- 23 -

Term Debt

Long term Debt

Repayment  

(2851640

)

(2851640

) (2851640) (2851640)

(2851640

)

Short Term Debt

Repayment            

             

Cash Provided/used

for financing

Activities 23763670

(2851640

)

(2851640

) (2851640) (2851640)

(2851640

)

             

Investing Activities:            

             

capital Expenditure (8882320) 0 0 0 0 0

             

Cash Used,

Provided by

Investing Activities (8882320) 0 0 0 0 0

             

Net Cash

Inflow/Out flow   6006068 8161299 10297406 12622777 15156212

             

Cash Balance

Brought Forword   0 6006068 14167368 24464774 37087551

Cash Balance   6006068 14167368 24464774 37087551 52243763

Running Finance   0 0 0 0 0

Cash Carried

Forword   6006068 14167368 24464774 37087551 52243763

             

- 24 -

Projected Balance Sheet

Year 2009 2010 2011 2012 2013 2014

Description            

Assets:            

             

Current Assets:            

Cash 0 6006068 14167368 24464774

3708755

1

5224376

3

Security Deposit 1108000 1108000 1108000 1108000 1108000 1108000

Stock and

Inventry((Embriod

ry dresses and            

- 25 -

Bags, Shoes,

Jewellery) 11609600 3074348 3381783 3719961 4091957 4501153

Prepaid Rent 396000 415800 436590 458420 481340 505407

Account

Receivbles 1767750 2032913 2337849 2688527 3091806 3555577

Net Current

Assets 14881350 12637128 21431589 32439681

4586065

4

6191390

0

             

Fixed Assets:            

Furniture and

Fixtue 500000 500000 500000 500000 500000 500000

Machinery And

Equipment 6955000 6955000 6955000 6955000 6955000 6955000

Total 7455000 7455000 7455000 7455000 7455000 7455000

Less: Accumulated

Depriciation            

Furniture and

fixture 0 (50000) (100000) (150000) (200000) (250000)

Machinery and

Equipment 0 (1043250) (2086500) (3129750)

(4173000

)

(5216250

)

Total

Accumulated

Depriciation 0 (1093250) (2186500) (3279750)

(4373000

)

(5466250

)

Net Fixed Assets 7455000 6361750 5268500 4175250 3082000 1988750

             

Intangible Assets:            

Pre Operational

Expenses 1427320 1427320 1284588 1141856 999124 856392

Less Amortization 0 (142732) (142732) (142732) (142732) (142732)

Total 1427320 1284588 1141856 999124 856392 713660

Suspense Account 0 8842687 8873431 8907248 8944448 8985368

- 26 -

             

             

Total Assets 23763670 29126153 36715376 46521303

5874349

4

7360167

8

             

Liabilities and

Owner Equity:            

             

Liabilities:            

Long term Debt 14258202 11406562 8554921 5703281 2851640 0

Short term Debt            

Account Payable 0 144270 145713 147170 148642 150128

Total 14258202 11550832 8700634 5850451 3000282 150128

             

Equity:            

Paid Up Capital 9505468 9505468 9505468 9505468 9505468 9505468

Retained Earnings 0 8069854 18509274 31165385

4623774

4

6394608

2

Total 9505468 17575322 28014742 40670853

5574321

2

7345155

0

             

Total Liabilities

and Equity 23763670 29126153 36715376 46521303

5874349

4

7360167

8

- 27 -

Important Ratios

Year200

92010 2011 2012 2013 2014

Current Ratio   87.59 147.08 220.42 308.53 412.41

Debt as %-age of total

captlsn.   60.00% 39.36% 23.39%

12.30

% 4.87%

- Gross Margin (%)   57.08% 59.60% 61.92%

64.07

% 66.04%

- Operating Margin (%)   43.49% 47.89% 50.56%

53.02

% 55.29%

- Net Margin (%)   22.83% 26.84% 29.58%

32.03

% 34.21%

Interst Coverage(Times)   5.99 9.07 14.05 24.30 55.76

             

             

Calculations

1)Machinery and Equipment

Machinery   No Rs/Unit Rs.

Single needle Lock stitch machine   20 300000 6000000

Over Lock Stitch Machine   10 25000 250000

Embriodry Machine   10 25000 250000

Accessories (Scissors, Cutting Board,        

- 28 -

Table, Stool, Carpet etc       75000

Total       6575000

Other Equipments        

Air Conditioner   2 30000 60000

Stereo System   1 20000 20000

Computer and Printer   5 40000 200000

Telephone   2 5000 10000

Security System( Cameras and television)   3 30000 90000

Total       380000

Total Machinery and Equipment cost       6955000

2)Security Deposit for Stitching house

       

Description

Month

sRent/month Total

Security Deposits for Stitching house 6 18000 108000

Rent payment for Stitching House 12 18000 216000

Rent payment for Shop 12 15000 180000

Rent Payment for Shop and Stitching House(1 Year)     396000

Advance Rent      

Advance Rent for Shop 12 15000 180000

Advance Rent for Stitching House 12 18000 216000

Total Advance Rent     396000

3)Human Resource Requirement

PositionRequire

d

salary/

month

Salary

Per

Salary

Per

    Per Worker month Annum

Chief Executive Officer/Owner 2 40000 80000 960000

Designer 5 30000 150000 1800000

- 29 -

Sale Girls 8 7000 56000 672000

Product Supervisor/Cutting Master 5 10000 50000 600000

Stitchers/Tailors 4 10000 40000 480000

Press/Iron Man 5 7000 35000 420000

Finishing Man 2 5000 10000 120000

Office boy 3 7000 21000 252000

Total 34   442000 5304000

Payroll of production Staff       3420000

Payroll Administration staff       1884000

5)Amortization Cost

Amortization Pre-Operating Expenses 10.00%

142732

0 142732

       

Tenure     10 year

6)Capital Expenditures

       

Furniture and Fixture ((interior Decration)     500000

Machinery and Equipment.     6955000

Staff's 1month Salaries.     442000

Promotional Expenses     985320

Total Capital Expenditurs     8882320

       

- 30 -

4)Depriciation Cost

DEPRECIATION COST HAS BEEN CALCULATED ON

STRAIGHT

  LINE PRINCIPLE APPLYING USUAL RATES AS UNDER;-

         

Machinery and Equipment   15.00% 6955000 1043250

Ferniture and Fixture   10.00% 500000 50000

Total       1093250

7)Long Term Debt Payment

 

1425820

2 5 2851640

8)Project Return

  Year Operating Depriciation Net cash

    Profit   flow

 2009

(23763670) 0

(23763670

)

  2010 15375768 1093250 16469018

  2011 18623690 1093250 19716940

  2012 21628950 1093250 22722200

  2013 24950971 1093250 26044221

  2014 28621767 1093250 29715017

         

Internal Rate of Return(%age)       77.99%

Payback Period(year)       0.2072

Assumptions

 1) production Assumptions        

    Ladies Gents Total

    Dress Dress  

Number of Stitching Machines       20

Production Capacity (No. of dresses per month)   800 600 1400

Production Capacity (No. of dresses per year)   9600 7200 16800

Capacity Utilization for the first year        

(No. of dresses per month)   300 400 700

- 31 -

Capacity Utilization for the first year        

(No. of dresses per Year)   3600 4800 8400

Self Production (% of total production)       100.00%

Installed Capacity       50.00%

- 32 -

- 33 -

2) Cost

Assumptions      

  Embroided Dresses    

  Average unit cost per dress (Rs.)  

  Fixed cost  

  Machine Maintenance Cost   5

  Admin & Rent expenses & promotional expenses   300

  Fixed electricity   30

  Average Fixed Cosr Per Dress(Rs)   335

       

  Ladies Dresses    

       

    Average

  Variable Cost    

  Material & Fabrics   669

  Accessories   160

  Embroidery Cost   358

  Direct Labor Cost   250

  Direct Electricity Cost   23

  Average Variable cost per Ladies dress (Rs.)   1461

  Average Total Cost Per Ladies Dress   1796

       

  Gents Dresses    

  Variable Cost    

  Material & Fabrics   500

  Accessories   22

  Embroidery Cost   97

  Direct Labor Cost   250

  Direct Electricity Cost   22

  Average variable cost per gents Dress   891

  Total cost per Gents Dress   1226

 

Raw

Material

Embriodry

and  

Direct

Electri- Maintain-  

  Cost Accessory   city Cost ence Cost  

    Cost        

Ladies Dresses 2409000 1866000   84000 18000  

Gents Dresses 2400000 569600   105600 24000  

Total 4809000 2435600   189600 42000  

             

Raw Material And Accessories

cost 7244600          

    Ladies Bags(Annual purchase)

    Cost Per units Rs.

    Unit    

Casual Bags   550 800 440000

Fancy Bags   700 500 350000

Total Cost on Bags     1300 790000

Stock in Hand (1Year) 10% 900 130 117000

    Shoes(Annual purchase)

    Purchase units Rs.

    Price/Unit    

Ladies Shoes   850 1500 1275000

Gents Shoes   1500 1000 1500000

Total Cost on Shoes     2500 2775000

Stock in Hand (1Year) 10% 1600 250 400000

- 34 -

    Jewellery(Annual purchase)

    Purchase Items Rs.  

    Price/Items      

Casual Jewelry   400 1000 400000  

Formal Jewelary   500 800 400000  

Total Cost on Jewellery     1800 800000  

Stock in Hand (1Year) 10% 650 180 117000  

           

           

Total Cost on Bags, Shoes, Jewellery       4365000  

Total Stock in Hand (Bags, Shoes,

Jewellery)       634000  

           

Increase in cost of (Bags, Shoes, Jewellery)       0.025  

3)Salea assumptions  Embroided Dresses

    

Laddies Dresses   

No. of dresses sold per month(Year 1)  500

- 35 -

Average unit price per dress (Rs.)  3283

Average Monthly Sales through retail outlet (Rs.)  1641667

Gents Dresses   

No. of dresses sold per month(Year 1)  300

Average unit price per dress (Rs.)  1933

Average Monthly Sales through retail outlet (Rs.)  580000

Net Sale per month (1 Year)  2221667

    

Net Units Produced per Year (Units) 1year   8400

Ending stock (1 Year) %age of units Produced   672

Net Units Sold per year   7728

Average Price per ress  4250

Net Sale per Year (Rs) 1year   32844000

    

Closing Stock   2856000

    Ladies Bags(Annual Sale)

    Sale units Rs.  

    Price/Unit      

Casual Bags   150 720 108000  

Fancy Bags   200 450 90000  

Net Sale of

Bags     1170! 198000  

    Shoes(Annual Sale)

    sale units Rs.

- 36 -

    Price/Unit    

Ladies Shoes   700  1350 945000

Gents Shoes   1000  900 900000

Net Sale of

Shoes      2250 1845000

    Jewellery(Annual Sale)

    Sale Items  Rs.

    Price/Items      

Casual Jewellery   200 900   180000

Formal Jewellery   400 720   288000

Net Sale of Jewellelry     1620   468000

           

           

Net sale of Bags,Shoes, jewellery (1

Year)         2511000

           

           

Net sale of Boteque         35355000

           

Sale growth rate (Units)         10.00%

Sale growth rate (price)         3.00%

- 37 -

4) Operating

Assumptions      total 

         

  Hours operational per day     8

 

Days operational per month

(Production)    25

  Days operational per month (Boutique)     25

6) Expense Assumptions      

Initial Promotional Expenses (Year 1)     3.00%

(%age of expected sales)      

Promotion Expenses after Year 1     1.50%

(% of expected sales)      

Machine Maintenance per annum Rs.     25000

Direct Electricity per month (Year 1)     10000

Fixed Electricity per month (Year 1)     12000

Telephone and Internet charges per month (Year 1)     7000

Raw Material Price Growth rate     1.00%

Payroll growth rate     10.00%

Machine Maintenance growth rate     10.00%

Direct electricity growth rate     10.00%

Fixed electricity growth rate     10.00%

Rent growth rate     5.00%

Telephone and Internet charges growth rate     5.00%

Depreciation Method     Straight Line

Account Recivable(%age of sales)     2.00%

Account Payable (%age of Raw Material and Accessories     3.00%

- 38 -

 7) Financial Assumption      

Project Life     15 year

Debt: Equity Ratio     0

Interest Rate on Long Term

Debt    18.00%

Interest Rate on Short Term

Debt    18.00%

Debt Tenure     5year

Debt Payment per year     100.00%

Discount Rate     18.00%

       

Tax Rate     37.00%

5) Cash flow

Assumptions      total 

         

  Account Payable Cycle (Days)     10

 

Account Receivable Cycle

(Days)    10

 

Raw Material Inventory

(Days)    15

- 39 -

Objectives Of The Study

• To analyze the base of rural industrialization.

• To analyze the role of small and medium scales industry towards grant of socio-

economic life of the people.

- 40 -

• How far it has created an environment for the opening of the industries present in

our neighborhood, example road and transport. Telecomm, water resources etc.

• To study the demographics of rural industrialization as 70% of the population is

living in villages.

Research Methodology

Collection of data through a structured questionnaire

Primary Research was conducted in industrial areas of Kanpur.

Various factories were visited

Face-to-face interview

Structured Questionnaire

Both open-ended & close-ended questions

- 41 -

Limitation

Meetings with industry officers

Study limited to the specified sectors of Kanpur

Climatic condition

Time barriers

- 42 -

Questionnaire

Questionnaire was divided into two parts one was given to the officials and the other to

the workers.

1.How far is the factory from the city?

2.Which mode of transportation is convenient and easily available?

3.Are the roads surrounding the factories katchcha or pakka?

4.How many monthly meetings are held between the various departmental heads?

5. Is the communication between the departments proper?

6.What is the number of male and female workers in the factory? Do you employ

children also?

7. Which cities are the suppliers of raw materials?

8. What are the methods followed to control Pollution? Where is garbage disposed?

- 43 -

9. What are the provisions for medical facilities for the workers?

10. What kind of relationship exists between the workers and the management? Are there

any strikes in this unit?

11.Are the working conditions proper for the workers? What type of incentives is given

to them?

12. How much is the total production of the factory per year? What is the provision of

supply of electricity?

13. What is the rate of return of the previous years? Is it satisfactory?

14. What are the problems at the macro level?

15. What are the problems at the micro level?

16. What is the future plan to expand the unit?

- 44 -