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. Plant & Machinery The following items of plant & machinery are required. Sl. Types of Machine Qty Value (US$). 1. Straight knife cutting M/c. 1 2. Band Knife cutting M/c. 1 3. End cutter 1 4. Fusing M/c. 1 5. Collar Turning & Blocking M/c. 1 6. Automatic cuff Blocking M/c. 1 7. Pneumatic Pocket creasing M/c. 1 8. Collar Knotcher 1 9. Collar Contour Trimmer 1 10. Bottle Irons 4 11. Needle Lockstitch M/c. 40 12. Programmable 1 needle M/c. 2 13. Needle with edge trimmer 4 14. Button Hole M/c. 1 15. 2 Needle lockstitch M/c. 2 16. Needle with split needle bar 2 17. Button Stitch with knotting device 1 18. Class feed of M/c. 1 19. Safety stitch overlock 2 20. 4 Needle chain Stitch M/c. 1 21. Bartacking M/c. 1 22. Steam Ironing System 1 23. Shirt Folding table 4 24. Thread sucking M/c. 1 25. Essential Spares & Attachments Total -A value (Rs.lakhs) 50.00 2
OTHER EQUIPMENTS: Qty. Value (Rs.lakhs) 1. Cutting Tables 1 2. Line Centre Tables 16 3. Checking Tables 4 4. Trimming Tables 2 5. Line Ironing Tables 3 6. Tailors stools 100 7. Sampling tables 1 8. Storage Racks 15 9. Storage Plastic Bins & Trolleys 15 10. Shoe Racks 2 11. Canteen Tables & Chairs 15 12. Packing M/c. 1 13. Weighing M/c. 1 14. Cloth checking M/c. 1 15. Scissors & Trimmers 120 16. Machine trolleys 2 Total -- (B) ELECTRICALS 1. 75 KVA Generator 1 Total -- ( C) 12.00 Total Machinery & Electricals (A+B+C) 62.00 3. 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
TRIMMING INSPECTION IRONING INSPECTION PACKAGING / SHIPPING. 4. Raw Materials Raw materials required per annum is given below Qty. Rate/Mtr. Value Fabric 450000 Rs.50 225.00 Trims & Accessories Rs. 22 per piece 39.60 (Thread Button Lining materials, Labels, Collar) Packing materials Rs. 13 per piece 23.40 Total 288.00 5. 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 1 15000 15000 Master cutter/designer 1 10000 10000 Supervisor 3 7000 21000 Tailors 60 4000 240000 Helpers 15 2500 37500 Lay Section 4 2500 10000 Checking Section 5 2500 12500 4
Ironing Section 4 4000 16000 Packing Section 2 3000 6000 Administrative Staffs: General Manager 1 20000 20000 Accountant 1 5000 5000 Computer Operator 1 4000 4000 Sub Staff 2 2500 5000 Sweepers 2 2500 5000 Watchman 2 2500 5000 Security 2 2500 5000 Total 417000 Add : 20% benefits 83400 Total 500400 Total salary per annum (Rs.lakhs) Rs.60.04 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 180000 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.230.00 per garment plus duty draw back at 10% which works to Rs.246 per garment. This works out to Rs.442.80 lakhs per annum at 100% capacity utilisation. Cost of raw materials Rs.288.00 lakhs at 100% capacity utilisation per annum. 5
Power charge is estimated at the current rate which works out to Rs.4.44 lakhs per annum. Wages & Salaries is estimated at Rs.60.04 lakhs per annum. Repairs & Maintenance is estimated at Rs.10000 per month. Depreciation is calculated on WDV method Selling, General & Adm. expenses is Rs.50000 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 600 032. 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 600 006. Other Accessories like Ironing Machines 5. M/s.Ramsons Garment Finshing Equipemnts Pvt. Ltd., No.320, Mysore Road, Bangalore 560 026 6
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 62.00 Other Misc. assets 2.00 Pre-Operative expenses 3.00 Margin for WC 15.11 Total 85.71 2. MEANS OF FINANCE Capital 39.21 Term Loan 46.50 Total 85.71 3. COST OF PRODUCTION & PROFITABILITY STATEMENTS Years 1 2 3 Installed Capacity (No.of garments p.a.) 180000 180000 180000 Utilisation 60% 70% 80% Production/Sales (No. of garments p.a.) 108000 126000 144000 Selling Price Rs.230 per garment Sales Value 248.40 289.80 331.20 Add: Duty draw back 10% 24.84 28.98 33.12 7
Sales Value 273.24 318.78 364.32 Raw Materials 172.80 201.60 230.40 Power 2.66 3.11 3.55 Wages & Salaries 60.04 63.04 66.19 Repairs & Maintenance 1.20 1.26 1.32 Depreciation 9.30 7.91 1.19 Cost of Production 246.00 276.92 302.65 Selling, Admin, & General expenses 6.00 6.30 6.62 Interest on Term Loan 5.58 4.88 3.49 Interest on Working Capital 5.46 5.46 5.46 Total 263.04 293.56 318.22 Profit Before Tax 10.20 25.22 46.10 Provision for tax 3.66 9.05 16.54 Profit After Tax 6.54 16.17 29.56 Add: Depreciation 9.30 7.91 1.19 Cash Accruals 15.84 24.08 30.75 4. WORKING CAPITAL: Months Values % Margin Bank Consumptions Amount Finance Raw Materials 2.00 28.80 25% 7.20 21.60 Finished goods 1.00 20.50 25% 5.13 15.37 Debtors 1.00 22.77 10% 2.28 20.49 Expenses 1.00 0.50 100% 0.50 0.00 72.57 15.11 57.46 Say --> Rs.57.47lakhs 8
6. PROFITABILITY RATIOS BASED ON 80% UTILISATION Profit after Tax 29.56 Sales 364.32 Profit before Interest and Tax 55.05 Total Investment 143.18 Profit after Tax 29.56 Promoters Capital 39.21 8% 38% 75% 7. BREAK EVEN LEVEL Fixed Cost (FC): Rs.lakhs] Wages & Salaries 66.19 Repairs & maintenance 1.32 Depreciation 1.19 Admin. & General expenses 6.62 Interest on TL 3.49 78.81 Profit Before Tax (P) 46.10 BEL = FC x 100 78.81x 80 FC +P 78.81+46.10 100 x 100 50% of installed capacity 9