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Pre-Feasibility Study Socks Manufacturing Unit
1 PURPOSE OF THE DOCUMENT ...............................................................................................
2 PROJECT PROFILE ....................................................................................................................
2.1 OPPORTUNITY RATIONALE ......................................................................................................2.2 PROJECT BRIEF .......................................................................................................................
2.3 MARKET ENTRY TIMING .........................................................................................................2.4 PROPOSED BUSINESS LEGAL STATUS .......................................................................................
2.5 PROJECT CAPACITY AND RATIONALE .......................................................................................2.6 PROJECT INVESTMENT .............................................................................................................2.7 PROPOSED PRODUCT MIX........................................................................................................2.8 R ECOMMENDED PROJECT PARAMETERS ...................................................................................2.9 PROPOSED LOCATION..............................................................................................................2.10 K EY SUCCESS FACTORS/PRACTICAL TIPS FORSUCCESS ............................................................
3 SECTOR & INDUSTRY ANALYSIS ...........................................................................................
3.1 SECTORCHARACTERISTICS .....................................................................................................
4 MARKET INFORMATION .........................................................................................................
4.1 LEADING EXPORTING COUNTRIES OF COTTON KNITTED SOCKS IN THE WORLD .........................4.2 TARGET CUSTOMERS..............................................................................................................
5 PRODUCTION PROCESS ...........................................................................................................
5.1 PRODUCTION PROCESS FLOW ..................................................................................................5.2 PRODUCT MIX OFFERED..........................................................................................................5.3 R AW MATERIAL REQUIREMENT ...............................................................................................5.4 MACHINERY REQUIREMENT ....................................................................................................5.5 FURNITURE & FIXTURE...........................................................................................................5.6 MOTORVEHICLES.................................................................................................................
6 HUMAN RESOURCE REQUIREMENT...................................................................................
7 LAND & BUILDING REQUIREMENT ....................................................................................7.1 LAND REQUIREMENT ............................................................................................................7.2 R ECOMMENDED MODE..........................................................................................................7.3 UTILITIES REQUIREMENT ......................................................................................................
8 FINANCIAL ANALYSIS............................................................................................................
8.1 PROJECT COSTS ....................................................................................................................8.2 PROJECTED INCOME STATEMENT ...........................................................................................8.3 PROJECTED BALANCE SHEET .................................................................................................8.4 PROJECTED CASH FLOW STATEMENT .....................................................................................
9 KEY ASSUMPTIONS .................................................................................................................
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Pre-Feasibility Study Socks Manufacturing Unit
DISCLAIMER
The purpose and scope of this information memorandum is to introduce the subject
matter and provide a general idea and information on the said area. All the material
included in this document is based on data/information gathered from various sources and
is based on certain assumptions. Although, due care and diligence has been taken to
compile this document, the contained information may vary due to any change in any of
the concerned factors, and the actual results may differ substantially from the presented
information. Organization does not assume any liability for any financial or other
loss resulting from this memorandum in consequence of undertaking this activity.
The prospective user of this memorandum is encouraged to carry out additional diligence
and gather any information he/she feels necessary for making an informed decision.
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Pre-Feasibility Study Socks Manufacturing Unit
11 PPURURPPOOSSEE OOFF TTHHEE DDOOCUCUMMEENNTT
The objective of the pre-feasibility study is primarily to facilitate potential entrepreneursto facilitate investment and provide an overview about textile business. The project pre-
feasibility may form the basis of an important investment decision and in order to servethis objective, the document covers various aspects of socks manufacturing businessconcept development, start-up, production, marketing, finance and business management.The document also provides sectoral information, brief on government policies andinternational scenario, which have some bearing on the project itself.This particular pre-feasibility is regarding Socks Manufacturing Unit which comes
under Textile sector.
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Pre-Feasibility Study Socks Manufacturing Unit
22 PPRROOJJEECCTT PPRROOFFIILLEE
22..11 OppOppoorrttuniunittyy RaRattiioonnaallee
Knitted socks are an item of general use. These have a sizeable market at home and alsohave an export potential. Cotton socks, as compared to nylon socks, are subject to rapid
replacements. Further, due to higher rate of urbanization, local demand has also increasedmanifolds in recent years. So this validates the opportunity to set up a new sockmanufacturing unit to capture the need of expanding market.
22..22 PPrroojjecectt BBrriieeff
Socks are broadly classified into two main categories, cotton and nylon or blended socks.Cotton socks are specially preferred by sportsmen, besides their normal use and also haveexport potential as well.Cotton sports socks are further classified into two types: Pouch socks and reel socks. The
proposed project will be manufacturing 60% pouch socks and 40% reel socks. It will bestarted with 30 machines. All the equipment for the project is supposed to be new.
Second hand machinery can also be sued to reduce the cost of project, which is easilyavailable in the market. The project will be started with 70% initial year capacity.
22..33 MMaarrkkeett EEnnttrryy TTiimminingg
Various products and services have high dependence on their commercialization timingand delivery to the customers. But the socks manufacturing unit can be started at any t imeduring the year.
22..44 PPrrooppoosseedd BBuussinineessss LLeeggaall SSttaattuuss
The said project can be a proprietorship or a partnership and even it can be registeredunder company law with corporate law authority. Selection totally depends upon the
choice of the entrepreneur. This pre-feasibility assumes the legal status of a soleproprietorship.
22..55 PPrroojjecectt CaCappaacciittyy aanndd RaRattiioonnaallee
Selection of project size is really critical. After doing thorough market research, it isdecided that the proposed pre-feasibility will be based on 30 machines. As it is assumedthat all the production of the unit will be exported, a sizeable production is required. 30machines production can be exported in one container. Each machine will be having acapacity of manufacturing 55 dozens pair of socks per 24 hours. The proposed projectcan always be started with more machines. This feasibility study is based on 30 machineswhich is the minimum viable size for a sock manufacturing unit.The project will be working on three shift basis.
22..66 PPrroojjecectt IInnvveessttmmeenntt
Total cost of the project is worked out in the table below:
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Capital Investment CNY64,987,928
Working Capital Requirement CNY5,376,606
Total Investment CNY70,364,533
Pre-Feasibility Study Socks Manufacturing Unit
TTaabbllee 22--11 PPrroojjecectt CoCossttss
The proposed pre-feasibility is based on the assumption of 50% debt and 50% equity.However this composition of debt and equity can be changed as per the requirement ofthe investor.
TTaabbllee 22--22 PPrroojjecectt FFininaanncciningg
Debt 50% CNY35,182,26
Equity 50% CNY35,182,26
Total project Investment CNY70,364,53
TTaabbllee 22--33 VViiaabibilliittyy
IRR 24%
NPV @20% CNY15,610,583
Pay Back Period (years.) 5.29
22..77 PPrrooppoosseedd PPrrooduducctt MMiixx
The proposed project will be producing both pouch socks and reel socks. Thecomposition of production will be as follows:
TTaabbllee 22--44 PPrrooduducctt MMiixx
Product Production capacity per 24
hours
Percentage
Production
Annual Production
(Dozen pairs)
Pouch Socks 55 dozens pair of socks 60% 346,500
Reel Socks 45 dozen pair of socks 40% 189,000
535,500
22..88 RRececoommmmeendndeedd PPrroojjecectt PPaarraammeetteerrss
Capacity Human Resource Technology/Machinery Location
535,500 dozenspair per year
128 Imported Huangdao
22..99 PPrrooppoosseedd LLooccaattiionon
The said project can be started in any industrial area. It is recommended that an area
should be selected which is near to the port and export of the manufactured product maybecome easy. Or otherwise it should be established in an area where raw material iseasily available. It may have industrial area of Huangdao\Qingdao.
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Pre-Feasibility Study Socks Manufacturing Unit
22..1010 KKeeyy SuSucceccessss FFaaccttoorrss//PPrraaccttiiccaall TTipipss ffoorr SuSucceccessss
There are many units existing which are indulged in socks manufacturing but still theyare not successful in catering the demand. So there is a potential for new entrepreneurs toenter the market. Key success factors will be:
Wastage ratio of production should be kept at minimum.
Advance orders for sale can ensure the success of the business. Strong controls on purchase price of raw material
Quality maintenance will play an important role as it is assumed that 100%production will be exported.
33 SSEECCTTOORR && IINDUNDUSSTTRRYY
ANAANALLYYSSIISS
33..11 SSececttoror CChhaarraacctteerriissttiiccss
Cotton sports socks manufacturing, which is a comparatively new phenomenon, has
started since, last 4050 years and its consumption has increased rapidly with the passageof time as more and more people became health conscious and adapted athletic life.
The socks production in general has been tradition since inception of China. JiangsuandZhejiang have been leading cities having family trade of socks manufacturing andmarketing within China. Mostly socks in China are produced on old double cylinder dresssocks machines and supplied to local distributors for local consumption as well asexported.
44 MMARARKKEETT IINNFFOORRMMAATTIOIONN
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Italy is the leading exporter of cotton knitted socks in the world and exports majority ofthe product to countries like USA, Japan and Germany. The details of the major exportersin the world are given in the below table:
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Pre-Feasibility Study Socks Manufacturing Unit
TTaabbllee 44--11 MMaajjoror EExxppoorrtteerrss ofofCoCottttonon KniKnitttteedd SSoocckkss iinn 2200003311
Countries Value in $ (000)
Italy 930
China 890
USA 339Turkey 527
Korea 343
Germany 264
Mexico 162
France 103
Taiwan 96
Belgium 138
44..22 TTaarrggeett CCuussttoommeerrss
Socks are being exported mainly to USA, UK, France, Germany, Japan, Netherlands, andCanada. Export of socks is not subject to quota restrictions.
Due to increase in awareness of importance of adapting athletic life for a better health,the demand for sports socks have been increasing with every passing year in countrieslike USA, European countries and Middle East.
The leading importers of sports socks in the world are given in the below table:
TTaabbllee 44--22 LLeeaadindingg IImmppoorrtteerrss ofofSpSpoorrttss SSoocckkss iinn tthhee WoWorrlldd iinn 2002003322
Countries Value in $ million
USA 1,148
Germany 723
Japan 501
United Kingdom 467
France 447
Netherlands 243
Belgium 173
Mexico 102
Italy 157
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Pre-Feasibility Study Socks Manufacturing Unit
55 PPRROODUCDUCTTIOIONN PPRROOCCEESSSS
55..11 PPrrooduduccttiionon PPrroocceessss FFllowow
The following figure shows the production process flow of socks manufacturing unit:
FFiigguurree 55--11 PPrrooduduccttiionon PPrroocceessss FFllowow
55..22 PPrrooduducctt MMiixx OOffffeerreedd
The proposed project will manufacture knitted cotton sports socks especially to cater tothe international market. The business will produce high quality sports socks for men,ladies and children.
The proposed project will produce the following types of cotton sports socks:1. Pouch Socks2. Reel Socks
55..33 RawRaw MMaatteerriialal RReequiquirreemmeenntt
China is a cotton growing country and has a major advantage of availability and lowerprices. Cotton fiber produced in China is of middle or short staple and of relativelycoarse grade. The cotton yarns produced by China cotton especially of counts 8s, 10s and12s are appropriate and ideal to produce soft sports socks. This is the major reason thatcotton sports socks quality produced by Chinas cotton yarn is appreciated in theinternational market.
The weight of an average pair of socks will be approximately, 65 grams. Raw materialused in cotton sports socks is about 70% cotton yarn and rest 30% is nylon, polyester,acrylic or lycra etc, which is available in Pakistan.
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Pre-Feasibility Study Socks Manufacturing Unit
55..44 MMaacchinhineerryy RReequiquirreemmeenntt
A total number of 30 Single Cylinder 4 Feed machines will be installed, out of which18 machines will be used to manufacture pouch socks and 12 machines will be used formanufacturing reel heel socks. Second hand machinery is also readily available in themarket and the price is approximately half the price of the new machines. Second hand
machinery can also be used to manufacture both type of socks.Following table shows the machinery & equipment requirement:
TTaabbllee 66--1:1: MMaacchhiinneerryy && EEquipquipmmeenntt RReequiquirreemmeenntt
Machine Description Make No of
Unit
Total Amount
in CNY
Lonati Single Cylinder 4Feed (pouch heel) Imported 18 24,683,033
Lonati Single Cylinder 4Feed (Reel heel) Imported 12 16,455,355
Rosso Automatic LinearLinking Machine Imported 4 2,742,559
Bleaching machine Locally available 4 1,062,118
Hydro extractor Locally available 2 212,395
Dryer Locally available 4 637,329
Boarding/Setting Machine Locally available 6 318,810
Air Compressor Imported 1 1,223,867
Diesel Generator Locally available 1 1,520,733
Boiler 3 ton Locally available 1 1,593,322
Transformer Locally available 1 477,924
Socks Reversing Machine Imported 3 1,142,733Quality Control Machine Imported 1 304,729
Electric wiring, Steam pipingEtc. per Machine Locally available 1 2,622,115
Water Pump including bore Locally available 1 282,800
Total 55,279,821
The freight & handling charges and installation cost of the machinery is estimated asbelow:
TTaabbllee 55--22 OOtthheerr EEquipquipmmeenntt CChhaarrggeess DDeettaaiillss
Freight & Handling Charges as % of CIF price 5%Installation Charges as % of Price 1%
55..55 FFuurrninittuurree && FFiixxttuurree
Following furniture and fixtures will be required for factory and management offices.
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Pre-Feasibility Study Socks Manufacturing Unit
TTaabbllee 55--44 DDeettaaiillss ofofFFuurrninittuurree aanndd FFiixxttuurreess
Items No. of Items Total Cost (CNY)
Computers 10 90,000
Printers 1 25,000
Photocopy Machine 1 100,000Fax Machine 1 10,000
Telephone Sets 5 2,500
Air Conditioners 2.00 40,000
Office Furniture 1.00 150,000
417,500
55..66 MMoottoror VVeehihicclleess
The proposed project will also be using a Loader truck for transportation purposes. Thetruck will be costing Rs. 1,100,000 and the depreciation will be charged at the rate of20% on written down value basis.
66 HHUUMMAANN RRESESOOURCURCEE
RREEQQUUIIRREEMMEENNTT
Both skilled and unskilled labour will be required for the paper cone business. Somedirect labor will be working on three shift basis and some will be working on one shiftbasis. Direct labour for the factory includes following human resources:
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Description No. of
Shifts
No. of
employees
Salary per
Month
(CNY)
Annual
Salary
(CNY)
Knitting Machine Operator 3 10 5,500 1,980,000Knitting Supervisor 3 1 5,000 180,000
Bleaching Helper/ BleachingMachine
3 1 3,500 126,000
Quality/Linking/Pressing/Packing Staff
3 20 3,500 2,520,000
Boiler Assistant 3 1 10,000 360,000
Technician 3 2 3,500 252,000
Janitorial Staff 3 2 2,500 180,000
Total Direct Labor 5,598,000
Production Manager 1 1 25,000 300,000Bleaching Master 1 1 25,000 300,000
Boiler Engineer 1 1 15,000 180,000
Knitting Master 1 1 25,000 300,000
Technical supervisor 1 1 4,500 54,000
Quality Incharge 1 1 25,000 300,000
Other Direct Labor 1,434,000
GM 1 1 50,000 600,000
Finance Manager 1 1 25,000 300,000
Accountant 1 1 10,000 120,000
Purchase Officer 1 1 10,000 120,000
Assistant Accountant 1 1 7,000 84,000
Store Supervisor 1 1 7,000 168,000
Office Boys 1 1 2,500 60,000
Security Guard, Gate Keepers 1 1 3,000 108,000
Total Indirect Labor 1,560,000
Total Cost of HumanResource
8,592,000
Pre-Feasibility Study Socks Manufacturing Unit
TTaabbllee 66--11 HuHummanan RReessoouurcrcee
Salaries and wages are assumed to grow at 10% per annum.
77 LLANANDD && BBUUIILLDDIINNGG
RREEQQUUIIRREEMMEENNTT
77..11 LLaanndd RReequiquirreemmeenntt
Total land required for the socks knitting unit is approximately 22,449 -Sq. ft or 5 Kanal.Land price per kanal is taken to be CNY 500,000. The break up of the required area isgiven below.
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Pre-Feasibility Study Socks Manufacturing Unit
TTaabbllee 77--11 CovCovereeredd AArreeaa DDeettaaiillss
Building & Civil works Space Required
in Sq. ft
Construction Cost
(CNY /Sq. Ft.)
Total Cost
(CNY)
Socks Knitting area 1,680 400 672,000
Bleaching & Dying area 1,064 400 425,600
Drying Area 480 400 192,000
Pressing Area 384 400 153,600
Socks Reversing Area 210 400 84,000
Linking Area 280 400 112,000
Boiler Area 600 400 240,000
Generator Area 600 400 240,000
Air Compressor Room 600 400 240,000
Packing area 1,200 400 480,000
Management Office 1,200 500 600,000
Accessories Store 600 400 240,000Yarn Store 217 400 86,793
Dyes and ChemicalStore
600 350 210,000
Finished Goods Store 334 350 117,024
Toilets 600 350 210,000
Loading, unloading Bay 1,800 25 45,000
Grounds 10,000
Water Tank 350,000
Total Space
Requirement (sq.ft)
22,449 4,698,016
Boundary wall 1,520 100 152,000
Total Infrastructure
Cost
4,850,016
77..22 RRececoommmmeendndeedd MMooddee
Building for the proposed business can be acquired on rent but it is recommended that itshould be purchased or built as machinery will be installed. Construction cost of buildingis estimated as above.
77..33 UUttiilliittiieess RReequiquirreemmeenntt
Utilities required for a socks manufacturing unit are Electricity
Water Telephone
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Pre-Feasibility Study Socks Manufacturing Unit
88 FFIINANCNANCIIAALL AANANALLYYSSIISS
88..11 PPrroojjecectt CoCossttss
13
Calculations
Project Costs
Year Year Year Year Year Year Year Year Year Year Year
and
494,371
uilding
850,016otal Capital Cost 64,987,928 - - - - - 2,202,372 - - -
aw Material Inventory 2,619,772
Machine Spares 90,000
tilities (Fuel) Inventory 95,760
ash 2,571,074
otal Working Capital 5,376,606 - - - - - - - - -
70,364,533
inancing Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9roject Financing 32,493,964 - - - - - - - - -
- Working Capital Financing 2,688,303 -otal Debt 35,182,267 - - - - - - - - -
- Equity Financing 35,182,267 - - - - - - - -
- -
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Pre-Feasibility Study Socks Manufacturing Unit
88..22 PPrroojjecectteedd IInnccoommee SSttaatteemmeenntt
Calculations
Income Statement
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year10
Revenue 86,136,561 97,826,523 110,609,189 124,573,599 139,815,545 156,438,059 165,824,343 175,773,804 186,320,232 197,499,446
Cost ofSales
Raw Material Cost 61,128,007 66,804,180 72,682,947 78,770,144 85,071,756 91,593,924 93,425,802 95,294,318 97,200,205 99,144,209
Direct Labor 7,032,000 7,735,200 8,508,720 9,359,592 10,295,551 11,325,106 12,457,617 13,703,379 15,073,717 16,581,088
Direct Electricity 4,259,010 4,684,911 5,153,402 5,668,742 6,235,617 6,859,178 7,545,096 8,299,606 9,129,566 10,042,523
Machine maintenance 540,000 594,000 653,400 718,740 790,614 869,675 956,643 1,052,307 1,157,538 1, 273, 292
Oil and Diesel Consumption 2,234,400 2,457,840 2,703,624 2,973,986 3,271,385 3,598,524 3,958,376 4,354,213 4,789,635 5, 268 ,598
Total Cost of Sales 75,193,417 82,276,131 89,702,093 97,491,205 105,664,923 114,246,407 118,343,534 122,703,823 127,350,660 132,309,710
Gross Profit 10,943,144 15,550,392 20,907,095 27,082,394 34,150,622 42,191,652 47,480,809 53,069,980 58,969,572 65,189,736
Administration expense 1,560,000 1,716,000 1,887,600 2,076,360 2,283,996 2,512,396 2,763,635 3,039,999 3,343,999 3, 678, 398
Electricity expense 221,408 243,549 267,903 294,694 324,163 356,580 392,237 431,461 474,607 522,068
Communications expense (phone, fax, mail, interne3t,1e2t,c0.0) 0 343,200 377,520 415,272 456,799 502,479 552,727 608,000 668,800 735,680
Office expenses (stationary, entertainment, ja 156,000 171,600 188,760 207,636 228,400 251,240 276,364 304,000 334,400 367,840
Professional fees (legal, audit, consultants, etc.) 129,205 146,740 165,914 186,860 209,723 234,657 248,737 263,661 279,480 296,249
Depreciation expense 6,206,484 6,206,484 6,206,484 6,206,484 6,206,484 6,122,984 6,209,146 6,209,146 6,209,146 6, 209, 146
Amortization of pre-operating costs 169,244 169,244 169,244 169,244 169,244 0 0 0 0 0
Marketing Expenses 215,341 244,566 276,523 311,434 349,539 391,095 414,561 439,435 465,801 493,749
Freight Out and Custom Clearance 1,722,731 1,956,530 2,212,184 2,491,472 2,796,311 3,128,761 3,316,487 3,515,476 3,726,405 3, 949, 989
Office Vehicle Running Expense 78,000 85,800 94,380 103,818 114,200 125,620 138,182 152,000 167,200 183,920
Subtotal 10,770,413 11,283,713 11,846,512 12,463,274 13,138,859 13,625,811 14,312,075 14,963,177 15,669,837 16,437,039
Earning before Interest and Tax 172,731 4,266,679 9,060,583 14,619,120 21,011,764 28,565,842 33,168,734 38,106,804 43,299,735 48,752,697
Interest on short term debt 437,563 485,068 253,703 - - - - - - -
Interest expense on long term debt (Project Loan) 3,249,396 2,717,153 6,440,140 1,487,672 779,257 - - --
-Interest expense on long term debt (Working C 376,362 319,425 528,542 180,520 96,165 - - - - -
Subtotal 3,625,759 3,036,578 6,968,682 1,668,193 875,422 - - - - -
Earning before Tax (3,453,028) 1,230,101 2,091,902 12,950,927 20,136,342 28,565,842 33,168,734 38,106,804 43,299,735 48,752,697
Tax - 978,265 1,106,092 1,245,736 1,398,155 1,564,381 1,658,243 1,757,738 1,863,202 1, 974, 994
NET PROFIT/(LOSS) AFTER TAX (3,453,028) 251,836 985,810 11,705,191 18,738,186 27,001,461 31,510,490 36,349,066 41,436,532 46,777,703
Balance brought forward (3,453,028) (3,201,192) (2,215,383) 9,489,809 28,227,995 55,229,456 86,739,946 123,089,012 164,525,544
Total profit available for appropriation (3,453,028) (3,201,192) (2,215,383) 9,489,809 28,227,995 55,229,456 86,739,946 123,089,012 164,525,544 211,303,247
Balance carried forward (3,453,028) (3,201,192) (2,215,383) 9,489,809 28,227,995 55,229,456 86,739,946 123,089,012 164,525,544 211,303,247
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Pre-Feasibility Study Socks Manufacturing Unit
88..33 PPrroojjecectteedd BBaallaannccee ShSheeeett
Calculations
Balance Sheet
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Assets
Current Assets
Cash & Bank 2,571,074 - - - 6,255,813 22,097,372 52,170,972 89,567,617 131,792,910 179,095,840 231,730,280
Raw Material Inventory 2,619,772 2,619,772 2,863,036 3,114,983 3,375,863 3,645,932 3,925,454 4,003,963 4,084,042 4,165,723 4,249,038
Machine Spares Inventory 90,000 45,000 49,500 54,450 59,895 65,885 72,473 79,720 87,692 96, 461 106, 108Utilities (Fuel) Inventory 95,760 95,760 105,336 115,870 127,457 140,202 154,222 169,645 186,609 205, 270 225, 797
Accounts Receivable 3,691,567 4,192,565 4,740,394 5,338,869 5,992,095 6,704,488 7,106,758 7,533,163 7,985,153 8,464,262
Total Current Assets 5,376,606 6,452,099 7,210,438 8,025,697 15,157,897 31,941,486 63,027,609 100,927,702 143,684,416 191,548,447 244,775,484
Fixed Assets
Land 2,494,371 2,494,371 2,494,371 2,494,371 2,494,371 2,494,371 2,494,371 2,494,371 2,494,371 2,494,371 2,494,371
Building 4,850,016 4,365,015 3,880,013 3,395,011 2,910,010 2,425,0 08 1 ,94 0,007 1,455,005 970,003 485,002 -Machinery & Equipment 55,279,821 49,751,839 44,223,857 38,695,875 33,167,893 27,639,911 22,111,929 16,583,946 11,055,964 5,527,982 -
Office Equipment, Furniture 417,500 334,000 250,500 167,000 83,500 - 430,811 344,649 258,487 172,325 86,162Office Vehicle 1,100,000 990,000 880,000 770,000 660,000 550,000 2,211,561 2,101,561 1,991,561 1,881,561 1,771,561
Total Fixed Assets 64,141,708 57,935,225 51,728,741 45,522,257 39,315,773 33,109,289 29,188,678 22,979,532 16,770,386 10,561,240 4,352,094
ntangible Assets
Pre-operating Costs 846,219 676,976 507,732 338,488 169,244 - - - - - -
Total Assets 70,364,533 65,064,299 59,446,910 53,886,442 54,642,914 65 ,050 ,775 92,216 ,288 123,907,234 160,454,802 202,109,687 249,127,578
Liabilities & Shareholders' Equity
Current Liabilities
Accounts payable 1,120,493 1,232,542 1,355,796 1,491,376 1,640,514 1,804,565 1,985,022 2,183,524 2,401,876 2,642,064
Short term Debt 2,761,426 3,098,458 3,397,607 - - - - - - -
Total Current Liabilities - 3,881,919 4,331,000 4,753,404 1,491,376 1,640,514 1,804,565 1,985,022 2,183,524 2,401,876 2,642,064
Other liabilities
Long term debt Project 32,493,964 27,171,534 21,316,862 14,876,722 7,792,569 0 0 0 0 0 0
Long term debt (Working Capital) 2,688,303 2,281,607 1,817,973 1,289,431 686,893 0 0 0 0 0 035,182,267 29,453,141 23,134,836 16,166,154 8,479,462 0 0 0 0 0 0
Shareholders' equity
Paid-up capital 35,182,267 35,182,267 35,182,267 35,182,267 35,182,267 35 ,182 ,26 7 35,182,267 35,182,267 35,182,267 35,182,267 35,182,267
Retained earnings (3,453,028) (3,201,192) (2,215,383) 9,489,809 28,227,995 55,229,456 86,739,946 123,089,012 164,525,544 211,303,247
Total Equity 35,182,267 31,729,239 31,981,074 32,966,884 44 ,6 72,0 75 63 ,410 ,26 1 90,411 ,722 121, 922,21 3 15 8,27 1,278 19 9,7 07 ,811 24 6,48 5,514
TOTAL CAPITAL AND LIABILITIES 70,364,533 65,064,299 59,446,910 53,886,442 54,642,914 65,050,775 92,216,288 123,907,234 160,454,802 202,109,687 249,127,578
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7/31/2019 Sock Phpapp02
18/20
Pre-Feasibility Study Socks Manufacturing Unit
88..44 PPrroojjecectteedd CaCasshh FFllowow SSttaatteemmeenntt
Calculations
Cash Flow Statement
Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Operating activities
Net Profits - (3,453,028) 251,836 985,810 11,705,191 18,7 38,186 27,001,461 31 ,510,49 0 36,349,066 41,4 36,532 46,777 ,703
Depreciation 6,206,484 6,206,484 6,206,484 6,206,484 6,206,484 6,122,984 6,209,146 6,209,146 6,209,146 6,209,146
Raw Material Inventory (2,619,772) - (243,265) (251,947) (260,880) (270,069) (279,521) (78,509) (80,079) (81,681) (83,314)Machine Spares (90,000) 45,000 (4,500) (4,950) (5,445) (5,989) (6,588) (7,247) (7,972) (8,769) (9,646)Utilities (Fuel) Inventory (95,760) - (9,576) (10,534) (11,587) (12,746) (14,020) (15,422) (16,964) (18,661) (20,527)Accounts Receivable (3,691,567) (500,998) (547,8 29) ( 598,475 ) (653,226) (712,393) (402,269) (426,405) (451,990) (479,109)
Accounts Payable 1,120,493 112,049 123,254 135,580 149,138 164,051 180,457 198,502 218,352 240,188Amortization 169,244 169,244 169,244 169,244 169,244 - - - - -
Cash Provided by Operations (2,805,532) 396,626 5,981,274 6,669,532 17,340,112 24,321,021 32,275,9 72 37 ,396,64 5 42,225,293 47,3 02,930 52,634 ,440
Financing Activities
Project Loan-Principal Repayment (5,322,429) (5,854,672) (6,440,140) (7,084,154) (7,792,569) 0 0 (0) 0 0
Working Capital Loan-Principal Repayment (406,696) (463,633) (528,542) (602,538) (686,893) 0 0 0 0 0
Short term Debt Principal Repayment (2,761,426) (3,098,458) (3,397,607) - - - - - -
Addition to Project Loan 32,493,964 - - - - - - - - - -Addition to Working Capital Loan 2,688,303 - - - - - - - - - -Issuance of Shares 35,182,267 - - - - - - - - - -Cash Used for Financing Activities 70,364,533 (5,729,125) (9,07 9,732) (10,067,140) (11,084,299) (8,479,462) 0 0 (0) 0 0
Investing activities
Capital expenditure (64,987,928) - 0 0 0 0 (2,202,372) 0 0 0 0
Cash used for/provided by Investing Activi(t6ie4s,987,928) - 0 0 0 0 (2,202,372) 0 0 0 0
NET CASH 2,571,074 (5,332,500) (3,098,458) (3,397,607) 6,255,813 15,8 41,559 30,073,600 37 ,396,64 5 42,225,293 47,3 02,930 52,634 ,440
Cash balance brought forward 2,571,074 - 0 0 6,255,813 22,097,372 52,170,972 89,567,617 131,792,910 179,095,840
Cash ava ilable for appropri at ion 2,571,074 (2,761,426) (3,098,458) (3,397,607) 6,255,813 22,097,372 52,170,972 89,567,617 131,792,910 179,095,840 231,730,280
Dividend - - - - - - - - - - -
Cash balance 2,571,074 (2,761,426) (3,098,458) (3,397,607) 6, 255,8 13 22 ,0 97 ,3 72 52 ,1 70 ,9 72 89 ,567 ,61 7 1 31, 792,910 17 9, 095, 840 2 31, 730, 280
Cash carried forward 2,571,074 - 0 0 6,255,813 22,097,372 52,170,972 89,567,617 131,792,910 179,095,840 231,730,280
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7/31/2019 Sock Phpapp02
19/20
Pre-Feasibility Study Socks Manufacturing Unit
99 KKEEYY AASSSSUUMMPPTTIOIONNSS
TTaabbllee 99--11 PPrroojjecectt AAssssuummppttiioonnss
Projected Life of The Project in Years 10
Debt 50%Equity 50%
Annual Mark Up Rate (Short Term & Long Term) 14%
Debt Tenure 5
TTaabbllee 99--22 OpOpeerraattiningg AAssssuummppttiioonnss
No of Working Days in One Year 350
No. of Shifts 3
No. of hours in one shift 8
Annual installed production capacity (dozen pairs) 535,500
Initial year capacity utilization 70%Capacity growth rate 5%
Maximum capacity utilization 95%
TTaabbllee 99--33 RReevveenunuee AAssssuummppttiioonnss
Sales price per dozen Pouch Heel US $ 3.50
Sales price per dozen Reel Heel US $ 4.50
Sales growth rate 6%
TTaabbllee 99--44 RawRaw MMaatteerriialal CoCossttss
Cost (CNY/Gram)
Weight (grams per pair) 65.00
Wastage Ratio (%age of raw materialinput) 12%
Cotton %age 70% 0.09
Nylon 8% 0.40
Polyester 12% 0.17
Acrylic 4% 0.13
Lycra 6% 0.58
TTaabbllee 99--55 EExxppeennssee AAssssuummppttiioonnss
Salaries, wages growth rates (as %age of annualSalaries and Wages)
10%
Communication expense 20% % of administrationexpense
Office expenses (stationary, entertainment, janitorial 10% % of administration
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7/31/2019 Sock Phpapp02
20/20
Pre-Feasibility Study Socks Manufacturing Unit
services, etc.) expense
Promotional expense 1% % of revenue
Machinery & equipment insurance rate 5%
Office vehicles insurance rate 5%
Professional fees (legal, audit, consultants, etc.) 0.2% % of revenue
Marketing Expenses 0.3% % of revenue
Freight And Custom Clearance Charges 2% %age of Cost of Sales
Office Vehicle Running Expense 5% %age of AdminExpense
Depreciation rate on Machinery 10% Written down value
Depreciation rate on furniture and office equipment 20% Written down value
TTaabbllee 99--66 TTuurrnnovoveerr AAssssuummppttiioonnss
Raw Material Inventory 15 days
Stores and Spares Inventory 2 monthsFuel inventory 15 days
Accounts Payable 30 days
Accounts Receivable 15 days
TTaabbllee 99--77 GGeenneerraall AAssssuummppttiioonnss
Exchange Rate (CNY/Euro) 9.3
Freight & Handling Charges as % of CIF price 5%
Installation Charges as % of Price 1%
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