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Table of ContentsChapter I................................ ................................ ................................ ................................ ............ 3

INTRODUCTION ................................ ................................ ................................ ............................. 3

PERSONAL INFORMATION ABOUT PARTNERS ................................ ................................ ................ 4PRESENT STATUS & MARKET POTENTIAL................................ ................................ ........................ 5

Brief about Leather Industry ................................ ................................ ................................ ...... 6

Existing manufacturers of the product in our area and their annual production/sales turn over . 6

Annual production and market need ................................ ................................ .......................... 7

Expected customer and selected areas................................ ................................ ....................... 7

Marketing strategy ................................ ................................ ................................ ..................... 7

Scope of diversification ................................ ................................ ................................ .............. 7

Risk factors ................................ ................................ ................................ ................................ 8

Chapter II ................................ ................................ ................................ ................................ ........... 9

COST OF THE PROJECT AND MEANS OF FINANCE ................................ ................................ ............... 9

TYPE OF UNIT AND SITE SELECTION ................................ ................................ ............................ 9

COST OF PROJECT ................................ ................................ ................................ ...................... 9MEANS OF FINANCE ................................ ................................ ................................ ................. 10

Chapter III ................................ ................................ ................................ ................................ ........ 11

PRODUCTION PROGRAMME AND PROCESS ................................ ................................ ................. 11

PRODUCTION PROGRAMME ................................ ................................ ................................ .... 11

PRODUCTION PROCESS ................................ ................................ ................................ ............ 11

Chapter IV ................................ ................................ ................................ ................................ ....... 14

FACILITIES AND UTILITIES ................................ ................................ ................................ ............. 14

MANPOWER REQUIREMENTS ................................ ................................ ................................ .. 14

INFRASTRUCTURE FACILITIES (100% Capacity utilisation) ................................ ......................... 15

UTILITIES AND OVERHEAD COSTS: (at 100% capacity utilization) ................................ .............. 15

ADMINISTRATIVE EXPENSES (at 100% capacity utilization) ................................ ....................... 15

Chapter V ................................ ................................ ................................ ................................ ........ 16BREAK EVEN CALCULATION ................................ ................................ ................................ .......... 16

ANALYSIS OF BREAK EVEN Analysis ................................ ................................ .......................... 16

(Rs. In thousands) ................................ ................................ ................................ .................... 16

Chapter VI ................................ ................................ ................................ ................................ ....... 17

PROJECT IMPLEMENTATION SCHEDULE ................................ ................................ ....................... 17

PROJECT IMPLEMENTATION SCHEDULE ................................ ................................ ................... 17

Chapter VII ................................ ................................ ................................ ................................ ...... 18

HR POLICIES ................................ ................................ ................................ ................................ . 18

ANNEXURES ................................ ................................ ................................ ................................ ..... 19

ANNEXURE-1 ................................ ................................ ................................ ............................... 19

COST OF PLANT AND MACHINERY ................................ ................................ ............................ 19

COST OF OTHER FIXED ASSETS ................................ ................................ ................................ . 19

LAND AND BUILDING ................................ ................................ ................................ ............... 20

PRE- OPERATIVE EXPENSES ................................ ................................ ................................ ...... 20

NAME AND ADDRESSES OF THE MACHINERY SUPPLIERS ................................ .......................... 21

ANNEXURE-2 ................................ ................................ ................................ ............................... 22

RAW MATERIAL REQUIREMENT AND ITS COST ................................ ................................ ......... 22

ANNEXURE-3 ................................ ................................ ................................ ............................... 23

WORKING CAPITAL REQUIREMENTS (AT 100% UTILIZATION) ................................ ................... 23

ANNEXURE-4 ................................ ................................ ................................ ............................... 23


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DEPRECIATION CALCULATION ................................ ................................ ................................ .. 23

ANNEXURE-5 ................................ ................................ ................................ ............................... 23

INTEREST CALCULATION ................................ ................................ ................................ ........... 23

ANNEXURE-6 ................................ ................................ ................................ ............................... 24

COST OF PRODUCTION AND PROFITABILITY (AT 90% CAPACITY UTILIZATION) .......................... 24

ANNEXURE-7 ................................ ................................ ................................ ............................... 25

CASH FLOW STATEMENT ................................ ................................ ................................ .......... 25ANNEXURE-8 ................................ ................................ ................................ ............................... 26

INTERNAL RATE OF RETURN (IRR) ................................ ................................ ............................. 26


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Chapter I

INTRODUCTION

Bag is one of the convenient means used for carrying the belongings such as clothes, daily-use articles, books in case of students and other essentials during travelling from one place to

other. Some other types of bags are also used for carrying important documents and office

use equipments by the executives and high profile personnel. Although this product is

manufactured from various types of materials such as textile, jute, coated fabrics, yet leather

bag is having wider acceptance due to its superior strength, aesthetic look and up-man-ship

among middle and high-income group people. A wide range of bags are in use for various

purposes. The cost of the leather bags depend upon the type of leather nylon, space and/or

style of it. This project aims at manufacturing various school bags and other variants.

JVK bag will be a bag manufacturing unit located in Botad. The main idea behind starting

this project is the potential opportunity that is untapped yet. We are going to manufacture

bags as per the order and requirement of targeted customer. We will have a good scope of

getting large quantity order from school bag retailers, wholesalers, government, various,

tuition classes, and co operative societies. Looking into the trend, there is good scope in this

particular segment because now days each and every coaching-classes and tuition classes

institutions are giving a bag to the students. For e.g. PT education/Endeavour, CAT and other

Entrance exams coaching classes, give bags to their students with their brand name on it.

Companies give various type of bag to their employee like office bag, Tiffin bag, and

equipment tool bag. We have a number of non profit making organizations which give a

trolly bag, and other bags as gift. Thus there is a huge scope and potential for our venture to

grow and create significant value.

We will be producing the bags as per order and requirements of target audience. What type of

bag they need? In what price they can afford? What type of raw material they want? These

are the questions on the basis of which we will be judging particular requirements of

customer regarding bag. The price of bag will be fixed according to the use of particular raw

material in the bag. We will also negotiate with different parties in deciding the price of bag

and in initial stages our aim will be customer satisfaction rather than profit maximization.


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PERSONAL INFORMATION ABOUTPARTNERS

JVK bag is a partnership firm which will be established by following partners mentioned

below. We will come in to the partnership by contract between us about capital investment,

profit sharing, and other activities. Each of us has a special skill in different field of the

business.

1) Name : Bijaya Laxmi ChoudharyAddress : Nepal

Telephone number : 9909567756

Date of birth : 01/10/1986

Education qualification : MBA Marketing

Family background : Service

Your strength in this field : Marketing

2) Name : Chetan G GohelAddress : Aveda Gate, Botad



Education qualification : MBA Finance

Family background : Business

Your strength in this field : Experience in producing bag

3) Name : Sondarva PiyushAddress : Police line, Maliya hatina



Education qualification : MBA Marketing

Family background : Service

Your strength in this field : Marketing research


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4) Name : Jignesh V KhadelaAddress : 302, Plot area, Chogath,Ta-Umrala,District-Bhavnagar

Telephone number : M-9510785145


Education qualification : MBA (Finance)

Family background : Agriculture

Your strength in this field : Finance

PRESENT STATUS & MARKETPOTENTIAL

The leather and leather products industry is one of Indias oldest manufacturing industries

that catered to the international market right from the middle of the nineteenth century. Since

the beginning the demand for its products has been both domestic as well as international.

About 46 per cent of the production in the sector is exported and it ranks eighth in the list of

Indias top export earning industries and contributes roughly Rs. 10,000 crores per annum,

i.e., about 4 per cent to export earnings. The sector accounts for 2.5 per cent of the global

leather-related trade of Rs. 387,200 crores. An estimated 15 per cent of total purchase of

leading global brands in footwear, garments, leather goods & accessories, in Europe, and 10

percent of global supply is outsourced from India.

The demand for bags is increasing day-by-day in tune with the growth of industrialization,

educational institutions and coaching classes. The products with a price range of Rs. 200 to

Rs.400 are commonly seen in the market which is felt quite acceptable with reasonable

quality. Further, export worthiness of this product is quite substantial with qualitative and

latest designs. A small manufacturer can have tie-up with any exporter merchant in the

country for executing the order as per the specified design. There is an ample scope of

students bags unit with ease and considerably cheaper availability of indigenous raw

materials and skilled manpower.


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Brief about Leather Industry

The leather industry employs about 2.5 million people and has annual turnover of Rs. 25,000

crores. The industry is also one with strong links with the social structure through caste and

community. Thus a large number of people engaged in the industry (entrepreneurs as well asworkers) are even today, from traditional leather working castes (belonging to the lower

castes in the caste hierarchy) and the Muslim community. Due to the age of the industry and

its links with the social structure, the organisational structure that has emerged is a very

complex one that contains within it elements of continuity with traditional structures as well

as those that represent a break with them. In addition to these historical aspects of its

evolution, the dynamics of the industry has been shaped, to a large extent, by export

orientation from colonial times. The sector is dominated by small-scale firms although there

are also a significant number of medium and large sized firms in all segments of the industry.

The industry is concentrated in several leather clusters in four or five distinct locations in the

country, with each cluster containing a wide variety of enterprise forms and organisational

structure. To be more specific, the major production centres of leather and leather products

are located at Chennai, Ambur, Ranipet, Vaniyambadi, Trichy, Dindigul in Tamil Nadu,

Kolkata in West Bengal, Kanpur and Agra in U.P., Jallandhar in Punjab, Delhi, Hyderabad in

Andhra Pradesh, Bangalore in Karnataka and Mumbai in Maharashtra. Tamil Nadu is the

biggest leather exporter 40 percent of the country and its share in Indias output on leather

products is 70 percent.

Currently, Gujarat has around 300 small and medium plastic bag and school bags

manufacturing units with a total industry size pegged at close to Rs 300 crore (Source:

Gujarat State Plastic Manufacturers Association (GSPMA)).

Existing manufacturers of the product in our area and their annual

production/sales turn over

Name Location Sales turnover

Kisan bag Botad 150000

Spirit bag Bhavnagar 200000

Dharmesh bag Bhavnagar 300000


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Annual production and market need

The total annual production capacity of our plant will be 750000 units. As the numbers of the

schools are increasing day by day so there is a great demand of these bags in prevailing

market. We will try to capture complete market in nearby areas of Botad and complete orders

far away places if it is according to our convenience and need. In the initial years, we will be

able to fulfil the market need at 80 per cent capacity utilization and will be able to get good

amount of profit.

Expected customer and selected areas

We are expecting all type of customers pertaining to the need of bags. The major customers

will be coaching classes, retail marketers, large companies etc. We will first try to cover the

areas which are nearby Botad and Bhavnagar side areas so that our distribution cost can be

minimized. If we are able to meet the demand of nearby areas then we will try to look at the

large cities like Ahmedabad, Rajkot, Vidyanagar, Baroda etc. Our prime objective will be

customer satisfaction and meeting to their needs on time in all areas.

Marketing strategy

We will try to use different marketing strategy at different market looking at the need of the

market and conditions prevailing in that market. The main strategy which will be used by us

will be pricing strategy. We will be providing more discounts on bulk buying. Our initial

strategy will be market penetration rather than profit maximization. When we are dealing

with coaching classes we will try to see that we provide such a service that they become our

regular customer. We will keep separate price for coaching class and retailer market. The

bags will be distributed as per the demand of the market. We will be also making some

special bags with extra strength if demanded and the price will be separate for such units.

We will see to that there is no fixed price for any type of bags which are provided in bulks

but we will be focusing on our negotiating skill. With proper negotiation with various dealers

we will try to maximise our profit by customer satisfaction.

Scope of diversification

We will try to gain maximum from the existing business only but if needed or as per the

demand of market we will try to look at the various diversification options available to our business. If possible we will try to diversify into manufacturing of travelling bags or

manufacturing of leather shoes. We will also try to manufacture various other leather

products if possible.


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Risk factors

There are various risk factors available with our project but we will try minimizing or

nullifying those risk factors with our specialization and proper research and study of market.

The various risk factors are:

1. Inventory pile up: - If we are not able to study the demand of market properly then there

are chances that our inventory will be piled up and resulting into a great loss arising out of

inventory pile up.

2. Competitors entry: - as it is an open market so there can be easy entry of competitors

which can also have a great influence on the demand curve of our business.


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Chapter II

COST OF THE PROJECT AND MEANS OF FINANCE

TYPE OF UNIT ANDSITESELECTIONName of unit : JVK Bag

Address : JVK BAG

Paliyad road,

Botad-364710 Dist- Bhavnagar

Type of unit : Small scale Industry

Techno-economical reason for site selection : The main reasons behind selecting GIDC

Botad are nearness to market and availability cheaper land and workforce. Besides, GIDC

Botad provides following benefits:

GIDC land is for industrial purpose. So no need to waste time on getting Non-Agricultural./ N.O.C.

GIDC establishes its estates after verifying the viability and availability of water,power, linkages, communication, disposal of waste water etc. So the entrepreneur getsa really developed and planned area

An entrepreneur can start the industry by paying only 30 % of the total cost as downpayment and can pay remaining amount in a period of 10 years.

GIDC estate provides a unique opportunity to an entrepreneur to avail cluster benefitsrelated to raw material, market, technology, common services, linkages etc.

Location of the factory & address : as mentioned above

Requirement of land & building : 5000 sq metres

COST OF PROJECT

Land : 5000000

Building : 800000

Plant & machinery : 925600

(Including installation, erection, electrification)


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Other fixed asset : 215000

Contingency and escalation : 50000

Preliminary & preoperative expenses : 80000

Working capital margin : 2505650

Total Rs. 9576250(=9600000)

MEANS OF FINANCE

1. Promoters contribution : 40000002. Long term loan(@8% : 31000003. Working capital loan : 2500000

Total 9600000

PRELIMINARYANDPREOPERATIVEEXPENSES

Pre-operativeExpenses (Rs.)

1. Preparation of project report and consultancy 40000

2. Administrative expenses 10000

3. Travelling, Market development and tie-up 20,000

4. Other formalities and expenses prior to production 10,000

Total 80000


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Chapter III

PRODUCTIONPROGRAMMEAND PROCESS

PRODUCTION PROGRAMME

Annual installed capacity : 750000

Utilization of capacity : first year we will utilize 80% of capacity install, next year

90%, and thereafter 100% onwards we use our capacity

Number of shift per day: 2 shifts per day

Production detail per year

Sr. No Name of the

product

At 80%

utilization

At 90%

utilization

At 100%

utilization1 School Bag 160000 180000 200000

2 Side bag 72000 81000 90000

3 College bag 88000 99000 110000

4 Kids bag 40000 50000 50000

5 Cross belt bag 40000 50000 50000

6 Haver shape bags 40000 50000 50000

7 Teddybears bag 40000 50000 50000

8 Equipment bag 120000 135000 150000

PRODUCTION PROCESS

Technical know-how availability

The leather bags proposed to be manufactured in this project are mainly as per customer

requirement. First of all the components are cut from suitable materials. The basic raw

material is the finished nylon or leather, which is not uniform, irregular in shape and size,

variation with grain structure and presence of defects on the surface. On the other hand, the

components are generally regular or rectangular shape and the adjacent components should

have similar shade and structure. Therefore, necessary care should be taken in cutting thecomponents. The cut components are then skived to the edges for ease of folding and/or

stitching. The edges are then beaded and the zips and other fasteners attached as per the

specification. The outer surface (leather), the inner surface (lining) and the re-enforcement

materials if required so, are attached first with the adhesive and then by stitching. The linings

and thread-ends are trimmed and sealed. The surface is cleaned and polished and made ready

for packing


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Step wise conversion process from raw material to finished product with the

utilisation of per unit production

Step 1: Cutting of a nylon or leather as per customer order with a bag making tool.

Step 2: Giving priorities and order to each and every work, so that less time will require.Priority is given such a way that each of the nylon pieces stitch on skewing machine in order

so that minimum time require to produce bag. It will also reduce free time time of worker.

Step 3: As per order or priorities stitching work will given to worker.

Step 4: After stitching, with bag making tool and other equipment the nylon, lock, handle,

and nylon border will fit to the bag.

Step 5: Bags will ready for packing and quality checking. Bags will pack in polythine bag.

Raw material requirement per unit production

The basic raw materials to produce one bag are nylon or leather, zip, chain, lock, handle,

nylon border, etc. The quantity of raw material requirement will depend on the size of the

bag. For example if we have to produce a single bag size of 18 inch the following raw

material required.

Nylon or leather 0.5 meter if length is 60

Nylon border 3 meter

Chain 3 meter

Zip Depends on number of pocketLock 2 pcs

Handle and other item As per requirement

Quality control measures

The quality of this product has to be maintained as per buyer's specification. However, the

main criteria for quality control are selection of suitable materials, (especially the nylon with

required thickness, shade, strength and softness) cutting components from suitable portions of

nylon, uniform folding, fastener attachment, regular stitching with suitable thread with

specified stitch length and finishing.

We own a highly spacious manufacturing unit which is spread over a vast area and is

equipped with all the essential facilities that ensure an uninterrupted production of variety of

bags. To assist in creating unique designer bags, we are backed by an in-house design unit


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which is managed by experienced designers and craftsmen. These personnel are engaged in

developing bags in standard as well as customized options.

Our manufacturing plant has various efficient machines that assist in producing a flawless

range of designer bags without causing any material wastage, in the process.


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Chapter IV

FACILITIES AND UTILITIES

MANPOWERREQUIREMENTS (at 90% capacity utilisation)

Sr. No. Particulars Nos. Salary per

month

Monthly Rs. Yearly Rs.

A)

1

2

3

4

5

6

Factory staff

Production manager

Supervisor

Skilled worker(s)

Semi-skilled

worker(s)

Unskilled worker(s)

Chowkidar

2

10

100

20

5

1

20000

5000

3000

2000

1500

1200

40000

50000

300000

40000

7500

1200

480000

600000

3600000

480000

90000

14400

B)

7

8

9

Office Staff

Clerk/Typist

Accountant

Peon

1

1

1

4000

6000

1200

4000

6000

1200

48000

72000

14400

C)

10

11

Sales staff

Sales manager

Field staff

2

10

20000

6000

40000

60000

480000

720000

Subtotal:

Add: Benefits@30%

6598800

1979640

Total........ 8578440


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INFRASTRUCTURE FACILITIES (100% Capacity utilisation)

Electricity : 360000

Fuel requirement/day (oil, gas, etc.) : 60000

UTILITIESAND OVERHEAD COSTS: (at 100% capacity utilization)

Sr. No. Particulars Monthly Rs. Yearly Rs.

1 Electricity 30000 360000

2 Fuel 5000 60000

3 Repair and maintenance 200000

TotalRs. 35000 620000

ADMINISTRATIVEEXPENSES (at 100% capacity utilization)

Sl.

No.

DescriptionAmount

(Rs.)

1. Other consumable 10000

2. Insurance 20000

3. Telephone, fax and other postal expenses 24000

4. Stationery and printing 10000

5. Other misc. expenditure 10000

Total 274000


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Chapter V

BREAKEVEN CALCULATION

ANALYSIS OF BREAKEVENAnalysis

(Rs. In thousands)

A.Sales realisation 108000B. Variable cost

- Raw material 92500- Consumables 180- Power and fuel, water 480- Salaries and wages 8578- Interest on working capital loan 150- Selling, packing & distribution expenses 3500

Total Variable Cost 105358

Variable cost PerUnit Rs. (600000units) 176C.Fixed cost

- Repair & Maintenance 200- Rent, Taxes, Insurance 150- Salary & wages 1200- Administrative 274- Interest on term loan 248- Depreciation 221

Total Fixed Cost 2293

D. Contribution 2642

BEP=

Revenue=Variable cost + Total cost

180X=176X+2293

X=573.250

HenceBEPis 573250 units.

(OnandAveragethesellingpriceofabagisassumedtobeRs.180)


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Chapter VI

PROJECT IMPLEMENTATION SCHEDULE

PROJECT IMPLEMENTATIONSCHEDULE Days Date

Auspicious beginning (On Auspicius day ofLabh Pancham) - Nov 10,2010

1. Project selection and completion and market survey 15 Nov 25,20102. Project report preparation 5 Nov 30,20103. Site selection 5 Dec 5,20104. Loan application for Fixed asset and working capital 15 Dec 20,20105. Machinery order to be placed 3 Dec 20,20106. Building for factory to be ready(starting from Nov10) 180 May 10,20117. Installation of the machine 7 May 17,20118. Power connection 15 June 2,20119. Recruitment of manpower 7 June 9,201110.Electrification/ Erection 5 June 14,201111.Trial Production 15 June 29,201112.Sales Arrangements 7 July 6,201113.Commercial Production 30 Aug 6,2011


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Chapter VII

HR POLICIES

We will be using following H.R .policies for carrying out our project in a successful manner.

The different HR policies are:-

Recruitment:-

Our recruitment policy for workers will be not based on their qualification but how better

they are able to deal with machine. We will try to conduct some test with stitching of bags

and we will try to see how efficiently they are able to make the bags. In case of higher staff

we will try to see various skills like technical know-how and selling and production

knowledge of different persons in various departments. The salary will be provided to people

at various levels as per their skills and experience.

Compensation:-

We will keep different type of compensation plans for various levels of people. We will try

to compensate through some gifts or by providing bonus during various festivals or during

birthday of that particular person. We will try to see that suitable compensation is available

for right person.

Training:-

There will be certain programs available in order to increase the efficiency of the staff at

various levels. At higher level we will be conducting training programs like attending

seminars and various study circle related to our industry. For other staff we will be

conducting programs to increase the speed and efficiency of stitching so that we can get a

better output.

Motivation:-

There will be various motivational activities in order to make homely atmosphere. One type

of motivation will be providing compensation to the workers. We will also try to give

surprise birthday gifts to various workers in order to motivate them. We will also keep some

special gifts of the day who stitch maximum bags in a day. We will try to make lively

atmosphere by playing certain indoor games on some special occasion. We will try to see that

essential need of the workers is being taken care of.


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ANNEXURES

ANNEXURE-1

COST OF PLANT AND MACHINERY

Sr.No Name/Particularof

Machinerys with

specification

Nos.

Required

Costperm/c TotalValue

1

2

3

4

Sewingmachine25 vaultmotor

Standofsewingmachine

Plywoodplate

Total:

Add: 30% towardstaxes,freight,insurance,

installation,erection,

electrificationetc

40

40

40

40

15000

1000

1200

600

600000

40000

48000

24000

712000

213600

GrandTotal 925600

COST OF OTHER FIXEDASSETS

Sl.

No.Description Qty.

Rate

(Rs.)

Value

(Rs.)

1. Bag makers tool kit 3 sets 5000 15000

2.Machine maintenance and

electricians tool kit1set -

5000

3.Testing equipments-thickness

gauge, measuring scales etc.- -

5000

4.Workshop working tables,

racks etc.- -

80000

5.Office furniture and

equipments- -

100000


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6. Misc. equipments - - 10000

215000

LANDANDBUILDING

(i) LandandBuildingAmount

(InRs.)

(i) Land 5000 sq. ft. @ Rs. 1000 per sq. ft including

registration 5000000

(ii) Total built-up area 2000 sq. ft. @ Rs 400 per sq ft 800000

Total civil cost= cost of land + building 5800000

PRE- OPERATIVEEXPENSES

Pre-operativeExpenses (Rs.)

1. Preparation of project report and consultancy 40000

2. Administrative expenses 10000

3. Travelling, Market development and tie-up 20,000

4. Other formalities and expenses prior to production 10,000

Total 80000


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NAMEANDADDRESSES OF THE MACHINERYSUPPLIERS

1. NSIC Technical Service Centre

Sector B-24, Guindy Indl. Estate,

Ekkaduthangal,Chennai-32.

2. M/s. Atlanta Trading (P) Ltd.

Atur House,Worli Naka,

Mumbai-18.

3. M/s. Twin Star Engineering

No. 98, Pammal Main Road,

Pammal,

Chennai-75.

4. M/s. Raj Machine HomeOpp. New Jyoti Building,

35/44, Karabala Road,Agra-5.


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ANNEXURE-2

RAW MATERIAL REQUIREMENT AND ITS COST

REQUIREMENT PER YEAR (AT 90% CAPACITY UTILISATION)

Sr. No Name/ Particular of raw materials

required

Qty per bag Value (in 000)

1

2

3

4

56

Nylon or leather

Chain

Runner

Nylon border

LockOther things like thread,lable

printing

0.5 mtr

3 mtr

5 pcs

5 mtr

2 pcsAs per

requirement

37500

7500

11250

11250

150007500

90000

NAMEANDADDRESSES OF RAWMATERIALSSUPPLIERS

1. M/s. Alpha Global

445/1,6th Cross, 7th Block,

Jayanagar KPM Road,

Baroda-560 082.

2. M/s. Amjad Finished Leather Co.

54, Maddox Street, Choolai,

Rajkot-112.

3. M/s. Arkay Leathers

No. 3, Third Floor, Crown Court,

34, Chathedral Road,

Ahemdebad-86.

4. M/s. Mow Chung Tannery Pvt. Ltd.

47, South Tangra Road,

Kolkata-46.

5. M/s. Pidilite Industries Ltd.

J.B. Marg, Nariman Point,

Delhi

(for adhesive)

6. M/s. APL Poly Fab Pvt. Ltd.

48 C, Matheswar Tala Road,

bhavnagar-46

(for lining)


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ANNEXURE-3

WORKING CAPITAL REQUIREMENTS (AT 100% UTILIZATION)

a) Raw Material(15 days ) :3750000b) Stock in process(2 days) : 500000c) Finished goods stocks (1 month) :2500000d) Receivables :6250000e) Working expenses for one-month :772600

(Salaries: Rs.714800 and Other

Expenses:57800)

Total: 13772600

Less: Credit against purchases :3750000

Net working capital :10022600

Margin for working capital

@25% of net working capital :2505650

ANNEXURE-4

DEPRECIATION CALCULATION

Particular Percentage Yearly(Rs)

Building 5 40000

Machinery 15 138840

Tools and furniture 20 43000

Total 221840

ANNEXURE-5

INTEREST CALCULATION

Particular Percentage Yearly (Rs)

Interest on term loan 8 248000

Interest on working capitalloan

6 150000

Total 398000


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ANNEXURE-6

COST OF PRODUCTIONAND PROFITABILITY (AT 90% CAPACITY

UTILIZATION)

Sr. No. Particulars Yearly ( Rs in crore)

A) Cost of Production1 Raw Material 90000

2 Utilities 730

3 Consumables, Stores and Spare 180

4 Repair and maintenance 200

5 Rent, Tax and Insurance 290

6 Salaries and Wages 8578

7 Administration Expenses 274

8 Selling, Distribution and Marketing

Expenses

5000

9 Packaging Expenses 500

10 Miscellaneous Expenses 100

11 Interest on Term Loan 248

Working capital Loan 150

12 Depreciation 221

Total Production Cost 106471

B) Income

1 Total Sales Income 108000

2 Job Work Income 1200

3 Scrap and Other 50

Total Income 109250

C) Gross Profit (B-A) 2729

D) Income Tax(@30%) 818

E)N

et Profit (C-D) 1911


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ANNEXURE-7

CASH FLOW STATEMENT

Sources of Fund Year of Production

I II III IV V

1. Term loan 3100 - - - -2. Promoters Contribution 4000 - - - -

3. Gross profit(Percent increase over previous

year)

2729 2947

(5%)

3242

(10%)

3728

(15%)

4473

(20)

4. Working Capital Loan 2500 - - - -Capital Investment 6970 - - - -

Increase in Net Working Capital 10000 100 150 180 180

Repayment of Loan - 620 620 620 620

Interest on term loan(@8% onoutstanding amount at the end of

year)

248 198 148 99 49

Interest on Bank Loan(@6% on

2500)

150 150 150 150 150

Opening Balance 3000 (2039) (160) 2014 4693

Net Surplus (5039) 1879 2174 2679 3474

Closing Balance (2039) (160) 2014 4693 8167


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ANNEXURE-8

INTERNAL RATE OF RETURN (IRR)

Internal Rate of Return (IRR) =

CALCULATION OF IRR(Net cash flows RS in thousands)

C0 NCI1 NCI2 NCI3 NCI4 NCI5 terminal value*

Net Cash Inflows -9600 -5039 1879 2174 2679 3474 39372

IRR 27%

*Terminal value= 3473(1+Growth Rate)

Ke-g

(Where Ke=11%, g=2%)

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