EXPORT GARMENTS (STITCHING)
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1 EXPORT GARMENTS (STITCHING) A. INTRODUCTION Readymade garments play a vital role in developed nations. The time one has to spend in selecting the dress material and difficulties encountered in locating a good tailor are now overcome by spontaneous selection of variety of readymade garments available in the market. These are generally cheaper than the garments stitched to order. Readymade garments are needed for internal consumption as well as to cater to the needs of the export markets. In developed nations like the USA, Germany and other European countries the labour rate per hour is increasing every year. As a result the cost of making garment has become prohibitive and hence all the developed nations are depending on the imported readymade garments for their daily use. In view of the above facts, there has been consistent growth for the Indian export of garments for the last several years and many new garment factories are being set up with latest machines and equipments to cater to the increased demand in the world market. The consumption of readymade garments like Casual wear, T-shirts and other cotton garments are increasing due to frequent changes in the styles and fashion in consuming countries. B. PRODUCT SPECIFICATION & USES General quality specifications are not provided. requirements quality specifications are determined. According to buyers C. TECHNICAL ASPECTS 1. Installed capacity The installed capacity of the unit proposed is 1,80,000 woven garments per annum at 100% capacity utilisation, which is based on 600 garments per day, the unit works for 300 days per year on single shift basis. 1
2 2. Plant & Machinery The following items of plant & machinery are required. Sl. Types of Machine Qty Value (US$). 1. Straight knife cutting M/c Band Knife cutting M/c End cutter 1 4. Fusing M/c Collar Turning & Blocking M/c Automatic cuff Blocking M/c Pneumatic Pocket creasing M/c Collar Knotcher 1 9. Collar Contour Trimmer Bottle Irons Needle Lockstitch M/c Programmable 1 needle M/c Needle with edge trimmer Button Hole M/c Needle lockstitch M/c Needle with split needle bar Button Stitch with knotting device Class feed of M/c Safety stitch overlock Needle chain Stitch M/c Bartacking M/c Steam Ironing System Shirt Folding table Thread sucking M/c Essential Spares & Attachments Total -A value (Rs.lakhs)
3 OTHER EQUIPMENTS: Qty. Value (Rs.lakhs) 1. Cutting Tables 1 2. Line Centre Tables Checking Tables 4 4. Trimming Tables 2 5. Line Ironing Tables 3 6. Tailors stools Sampling tables 1 8. Storage Racks Storage Plastic Bins & Trolleys Shoe Racks Canteen Tables & Chairs Packing M/c Weighing M/c Cloth checking M/c Scissors & Trimmers Machine trolleys 2 Total -- (B) ELECTRICALS KVA Generator 1 Total -- ( C) Total Machinery & Electricals (A+B+C) Manufacturing Process The process of manufacturing Readymade garments is a universally adopted process. The process comprises the following sequence of operation: PURCHASE OF WOVEN FABRIC INSPECTION CUTTING THE FABRIC SUB ASSEMBLIES STITCHING, FINAL ASSEMBLIES INSPECTION 3
4 TRIMMING INSPECTION IRONING INSPECTION PACKAGING / SHIPPING. 4. Raw Materials Raw materials required per annum is given below Qty. Rate/Mtr. Value Fabric Rs Trims & Accessories Rs. 22 per piece (Thread Button Lining materials, Labels, Collar) Packing materials Rs. 13 per piece Total Land & Building A land area of 25 cents with constructed floor space of 4500 sq. ft. is required to install the machinery and to store the raw materials and finished goods. It may be taken on lease basis. An advance of Rs.3.60 lakhs is provided. 6. Utilities Power: The total power requirement of the unit will be about 50 HP. Water: Water is not required for this process. Water is required only for human consumption. Man power: Category Nos Monthly Total Production Manager Master cutter/designer Supervisor Tailors Helpers Lay Section Checking Section
5 Ironing Section Packing Section Administrative Staffs: General Manager Accountant Computer Operator Sub Staff Sweepers Watchman Security Total Add : 20% benefits Total Total salary per annum (Rs.lakhs) Rs lakhs 7. Implementation Schedule The imported machinery will be normally delivered within a period of 3 months from the opening of L/c. in favour of the supplier. If by the time the building is available the project can be implemented within a period of 4 months after the idea is conceived. 8. ASSUMPTIONS Installed capacity is Nos. of Woven Garments per annum. During first year of operation 60% of capacity utilisation is assumed. This will be increased to 70% and 80% in subsequent years. Selling price is estimated at Rs per garment plus duty draw back at 10% which works to Rs.246 per garment. This works out to Rs lakhs per annum at 100% capacity utilisation. Cost of raw materials Rs lakhs at 100% capacity utilisation per annum. 5
6 Power charge is estimated at the current rate which works out to Rs.4.44 lakhs per annum. Wages & Salaries is estimated at Rs lakhs per annum. Repairs & Maintenance is estimated at Rs per month. Depreciation is calculated on WDV method Selling, General & Adm. expenses is Rs per month. Interest on Term Loan is estimated at 12% p.a. Interest on working capital export finance is assumed at 9.5%p.a. Income tax is provided at 33.99% on taxable income. LIST OF MACHINERY SUPPLIERS Brother Brand Machines 1. M/s.Technik India (Apparel) Pvt. Ltd., No.73, Mount Road, Guindy Chennai Juki Machines 2. M/s.Veesew Machine, 11, Thiruvalluvar Street, Villivakkam, Chennai-49 Singer Brand Machines 3. E.H.Tourel & Co, 4 A, Haddows Road, Nungambakkam, Chennai - 6. Mitsubishi & Kanhai Brand 4. Mehala & Co., 6 Gee Gee Manor, College Road, Chennai Other Accessories like Ironing Machines 5. M/s.Ramsons Garment Finshing Equipemnts Pvt. Ltd., No.320, Mysore Road, Bangalore
7 LIST OF RAW MATERIAL SUPPLIERS Woven Fabrics All handloom and powerloom operators in Erode, Salem, Karur, Coimbatore, Tirupur, Nageri (A.P) Other Accessories Dealers of the sewing threads, buttons, zip tapes etc. located in Chennai & Bangalore. FINANCIAL ASPECTS 1. COST OF PROJECT [Rs.lakhs Building (Advance) 3.60 Machinery & Electricals Other Misc. assets 2.00 Pre-Operative expenses 3.00 Margin for WC Total MEANS OF FINANCE Capital Term Loan Total COST OF PRODUCTION & PROFITABILITY STATEMENTS Years Installed Capacity (No.of garments p.a.) Utilisation 60% 70% 80% Production/Sales (No. of garments p.a.) Selling Price Rs.230 per garment Sales Value Add: Duty draw back 10%
8 Sales Value Raw Materials Power Wages & Salaries Repairs & Maintenance Depreciation Cost of Production Selling, Admin, & General expenses Interest on Term Loan Interest on Working Capital Total Profit Before Tax Provision for tax Profit After Tax Add: Depreciation Cash Accruals WORKING CAPITAL: Months Values % Margin Bank Consumptions Amount Finance Raw Materials % Finished goods % Debtors % Expenses % Say --> Rs.57.47lakhs 8
9 6. PROFITABILITY RATIOS BASED ON 80% UTILISATION Profit after Tax Sales Profit before Interest and Tax Total Investment Profit after Tax Promoters Capital % 38% 75% 7. BREAK EVEN LEVEL Fixed Cost (FC): Rs.lakhs] Wages & Salaries Repairs & maintenance 1.32 Depreciation 1.19 Admin. & General expenses 6.62 Interest on TL Profit Before Tax (P) BEL = FC x x 80 FC +P x % of installed capacity 9
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