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The Feasibility Report: Acknowledgement is an Art (Coursework Sample)

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A REPORT MADE FOR academic purposes

source..
Content:
730005673725205836SATCHEL PVT.(LTD.)242000SATCHEL PVT.(LTD.)232913207034Feasibility Study Leather Goods Company 00Feasibility Study Leather Goods Company
Table of ContentsAcknowledgements3Executive Summery4SWOT Analysis5Process6Market Analysis6Raw Materials7Men Power Requirements7Machinery8Land & Building8Project Cost9Projected Sales10Projected Income Statement11Projected Cash-flow Statement12Projected Balance Sheet13Project Returns14Conclusion14Recommendations15Key Assumptions16
Acknowledgements
"Acknowledgement is an art, one can write glib stanzas without meaning a word, and on the other hand one can make a simple expression of gratitude”
First and for most, Thanks to ALLAH (S.W.T) who helps us, without him we are not able to do anything.
We are extremely thankful and pay our gratitude to our instructor Mr Arsalan Hashmi for his valuable guidance and support on completion of this project in its presentation. We also acknowledge with a deep sense of reverence, our gratitude towards our parents and member of our families, who has always supported us morally.
At last but not least gratitude goes to all of group members who helped each other to complete this project report.
Executive summary
This particular pre-feasibility is regarding "Leather Bags and Wallets" which comes under "Leather" sector. This proposed project presents details about the investment opportunity in the area of leather goods manufacturing.
Leather industry in Pakistan, including leather products, is the second largest export earning sector after textiles. Basically, it is a job-oriented sector providing employment to a very large segment of the society besides earning foreign exchange for the country. Pakistan’s share in world markets is around 1.50 %. Pakistan has a lot of potential in this sub sector and focused efforts by entrepreneurs can result in substantial export earnings. Export market is the primary market for a leather goods-manufacturing unit. In the export market, major customers include chain stores and major brands in Europe and USA.
A Leather Goods Manufacturing Unit needs a capital investment estimated at PRs. 0.865 million for purchasing machinery & equipment. In addition to this, an estimated sum of PRs. 0.990 million is required as working capital, which should be used for purchasing leather and other inputs like metal corners, silk lining, etc. The total project cost is estimated at PRs. 1.855 million.
SWOT ANALYSIS
Strengths
* Large domestic population of cattle resulting in excess supply of hides and skins.
* Availability of skilled workforce.
* Access to international markets and brand names through leather garments sector.
* Well established repute of country in international finished leather markets.
Weaknesses
* Price and quality of hides and skins related to seasons.
* Shortage created in local market due to exports of raw and finished leather.
* High cost of electricity.
* High cost of accessories obsolescence.
* Inadequate availability of product design and development facilities.
* Exports mostly in low to medium end segment.
Opportunities
* World trade in leather consumer goods is on the growth path.
* Better policies by government in livestock sector resulting in higher availability of hides and skins.
* Policies of government for encouraging leather garment exports by providing export rebate of 4.03 % of FOB value.
Threats
* Exponential increase in prices of finished leather due to exports.
* Non availability of leather during peak production season.
* Animal protection rights issue in western hemisphere markets.
* Stakes concentrated in few traditional international markets.
* Difficult or non-availability of imported accessories.
* The level of technology being used is very low. This not only reduces the production capacity of the smaller manufacturers, but also affects the quality of their products, thereby affecting their competitive edge in the international markets.
PROCESS
1. Pattern Making: Cutting (Cutter will perform the duty of pattern cutting)
2. Flushing {Skiving}: (Chhilaee, a process of rubbing leather to make it thin, it’s a part of stitching); (Skiving operator will perform the Flushing (Skiving) procedure)
3. Stitching & Finishing: (Stitcher will stitch the product while initially 03 helpers will pack the finished goods.)
MARKET ANALYSIS
World Leather Market Size and Growth
Primary target of this unit will be the export market. International market figures are incorporated so that one can analyse that leather products are exported to which country. This will give fair idea of global export and imports trends; this will allow the investor to have leverage of time when he starts his business.
The global leather industry is valued at about US$ 85 billion. Most of the producing countries are developing countries, while developed markets such as the US are major consumers of leather products. The industry is buyer-driven, with producing countries manufacturing in line with specifications, guidelines and technical advice provided by the buyer countries.
Target Customers
Export market is the primary market for a leather garment-manufacturing unit. In the export market, major customers include chain stores and major garment brands in Europe and USA. Major customers of Pakistani leather goods are UAE, USA, Germany, United Kingdom, KSA and France. The business is done either directly to the buyers or through middlemen.
Direct shipping facility or service for the delivery of goods on behalf of customers shall be available. The payment channels will be direct funds transfer generally referred as Cash against Documents (CAD) or Letter of Credit (L.C.). Target customers in the export market include small/medium sized retail chain stores, catalogue companies, specialty stores, clubs and associations, corporate clients, etc.
RAW MATERIAL
The basic raw material required for manufacturing of wallets is as follows:
Sr. No#

Description

Price per unit

Quantity

Total cost

1

Finished Leather

PRs. 150/ meter

1000 meter

150,000

2

Zipper

PRs. 10/ piece

100 pieces

1,000

3

Magnetic Buttons

PRs. 15/ set

100 sets

1,500

4

Lining Material

PRs. 100/ meter

800 meters

80,000

5

Buckles/ Rings

PRs. 10/ piece

100 pieces

1,000

6

Corners (Bags & Wallets)

PRs. 50 & 10/ piece

100 pieces each

5,000 +
1,000

7

Rivets

PRs. 11.5/ piece

100 pieces

1,150

8

Total Raw Material Inventory



240,650

MAN POWER REQUIREMENTS
This industry requires different type of skill with distinctiveness, so the skilled labour is difficult to get. Expertise required in the following areas:
* Pattern making
* Cutting
* Stitching
* Skiving
Sr. No#

Details

Quantity

Salaries per month (PRs.)

Salaries Per Year (PRs.)

1.

Manager

1

35,000

420,000

2.

Production Supervisor

2

30,000

360,000

3.

Accounts Officer

1

20,000

240,000

4.

Export Officer

1

20,000

240,000

5.

Stitching Machine Operator

8

96,000

1,152,000

6.

Skiving Machine Operator

2

20,000

240,000

7.

Helper

4

32,000

384,000

8.

Cutter

2

16,000

192,000

9.

Security

2

20,000

240,000


Total

23


3,468,000

MACHINERY
Sr. No#

Required Machinery

Quantity

Price

Total Cost

1.

Stitching Machine

8

39,900

319,200

2.

Skiving Machine

2

40,000

80,000

3.

Creasing Tool

2

4,000

8,000

4.

Generator (5 KVA)

1

65,000

65,000


Total Machinery Cost



472,200

LAND & BUILDING
Area requirement:
For leather goods manufacturing unit with production of about 100 wallets and 50 bags per day, approximately 850 sq. yd. area is required.
Description

Area (sq. yd.)

Factory Area

600

Office Area

250

Total

850

Recommended mode:
Renting a small or medium size place in industrial Area. Facilitated with electricity, phone and DSL.
Rent

Per Month (PRs.)

Per Year (PRs.)

Building & Land

50,000

600,000

PROJECT COST
Project cost

Total Cost (PRs.)

Plant & Machinery( 5% dep./year)

472,200

Furniture

175,000

Office Equipment(10% dep./year)

130,000

Pre-operating Expenses

88,000

Total Projected Project Cost

865,200

Working Capital:
Description

Amount (PRs.)

Cash in Hand

150,000

Raw Material Inventory

240,650

Upfront for Building & Land (Rent)

600,000

Total Projected Capital Cost

990,650

Total Investments:
Total Investments in the Project (PRs.)

1,855,850

Financing Plan:
Finance

Ratio

Amount (PRs.)

Equity

50%

927,925

Debt

50%

927,925

PROJECTED SALES
SALES QUANTITY & PRICE
Quantity

Year 1

Year 2
...
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