50732563 22849287 Business Plan to Open a Handicraft Work

8/10/2019 50732563 22849287 Business Plan to Open a Handicraft Work

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PROMOTERS IDEA

"he idea of handicraft manufacturing #as concei%ed by loo&ing the aptitude + 'ualifications

of the concei%er /myself0!

Qualifications:

1 MBA in Mar!tin" # $R

% BCA

long #ith the abo%e 'ualification belongingness to a Busin!ss& fa'il( #ill support my

project!

"he idea #as generated as my $ncle is a manufacturer and exporter of #ooden

handicraft! o this project #ould pro%ide me an in1depth &no#ledge to set up a

handicraft1manufacturing mill in Jhunjhunu!

"he Indian Handicraft Industry is sho#ing continuous gro#th rate of .23 e%ery year!

"he profitability #ith #hich the current firms are running nationally as #ell as

internationally is also one of the factors for concei%ing the idea of handicraft

manufacturing mill!

"hus, ta&ing all of the abo%e factors into account the idea of setting up a handicraft1

manufacturing mill #as established!

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$A*DICRA)T

Intro-uction4start5

Handicrafts are uni'ue expressions and represent a culture, tradition and heritage of a

country! "he Handicraft Industry is one of the important producti%e sectors! 8arious

attempts ha%e been made to define this broad and di%ersified industry! "he follo#ing

definition stri%es to co%er di%ersity and complexity of Handicraft Industry!

D!finin" $an-icrafts:

6efinition ccording to $nited 9ations :ducational, cientific and Cultural

Organi;ation


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In-ustr( Anal(sis

India is a country of rich culture, history and traditions! India is one of the major

producer and supplier of Handicrafts products in the #orld! India has been major

producer and supplier of handicrafts products since %ery long time! Before the industrial

de%elopment, this art and industry #as a potential economic ad%antage for the country!

6uring recent years, the importance of handicrafts has been surged due to their cultural

and financial %alues! "he small1scale industries including handicrafts can play a major

role in the de%elopment of the economy of both de%eloped and the de%eloping countries

e'ually! "he @A1@23 of the total industrial products of the #orld is produced in small

#or&shops run by less than .AA people! or instance, Japan, #hich is at the pea& of the

economic de%elopment, has considered ?3 of its industries as small and medium scale

industries! In countries such as India and China, handicrafts are as high as the

mechani;ed products in 'uality and %olume, and are a major source of their foreign

earnings! "hese countries are focusing on the de%elopment of handicraft industry, in

order to strengthen the economy!

"he Indian handicrafts industry is highly labour intensi%e, cottage based and

decentrali;ed industry! "he industry is spread all o%er the country mainly in rural and

urban areas! Most of the manufacturing units are located in rural and small to#ns, and

there is huge mar&et potential in all Indian cities and abroad! Handicraft industry is a

major source of income for rural communities employing o%er six million artisans

including a large number of #omen and people belonging to the #ea&er sections of the

society!

"he Handicraft sector is highly creati%e sector and produces large %ariety of craftsproducts! "his industry is locali;ed segment of the domestic and international mar&et! In

India the production of craft products are done on both large and small scale! Because of

lo# capital in%estment people can start their business on small scale! "hrough this

flexibility the demand and supply can be managed Hough Indian Handicraft industry is

considered a cottage industry, but it has e%ol%ed as one of the major re%enue generator

o%er the years! "here has been consistent gro#th of .23 o%er fe# years and the industry

has e%ol%ed as one of the major contributor for export and foreign re%enue generation!

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"here is huge demand for the Indian Handicraft products in both national and

international mar&et! "o match the demand and supply #ith 'uality, there is need to ha%e

greater technological support and inno%ati%eness #ith the uni'ueness in industry!

;!( )acts of In-ian $an-icrafts In-ustr(

India5s rich cultural di%ersity and heritage pro%ides a uni'ue and huge resource for

de%eloping craft products!

"he Indian Handicraft Industry is sho#ing continuous gro#th rate of .23 e%ery year!

Handicrafts industry is one of the important segments of decentrali;ed sector in India!

Major parts of industry operates in rural and semi urban areas throughout the country

and has potential Indian and International mar&et #ith around DEAAA exporters to tap

the mar&et!

ccording to the national census of handicrafts, underta&en by the 9ational Council

for pplied :conomic Research the %alue of handicrafts produced last year #ere of

Rs 4D, 4.) Crores!

"his Industry pro%ides huge employment opportunities to artisans that include #omen

and people belonging to bacard and #ea&er society! "his is one of the major

sources of income there!

India5s contribution in #orld mar&et is .!43

"he total exports of crafts items7 1 Rs! .)?.4@!4 millions!

Industry5s share in IndiaFs exports71 .!2. 3

In spite of ha%ing di%ersified products, some part of Indian mar&et are still untapped

and mar&et is price sensiti%e!

Groducts are high priced in big and metro cities, #hich are beyond, reach of people

belonging middle and lo#er middle class!

Craft producers ha%e to compete on price, 'uality and deli%ery for different segments!

"here is poor promotion for craft products in national mar&et!

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"here is lac& of a#areness about ne# traditions and among craftsmen and there is

need of technological support and training!

Classification:

Handicrafts industry comprises di%ersified products portfolio and there is large %ariety

a%ailable in mar&et! Handicrafts products can be distinguished into follo#ing7

Metal #are, (ood #are, Hand printed textiles, :mbroidered and crocheted goods,

ha#ls, Carpets, Bamboo products, ari goods, Imitation je#ellery, Gaintings,

:arthen#are, Jute products, Marble culpture, Bron;e culpture, *eather Groducts and

other /are u going to produce all these 0 miscellaneous handicrafts!

S *ac& of infrastructure and communication facilities!

$na#areness about international re'uirements and mar&et!

*ac& of co1ordination bet#een go%ernment bodies and pri%ate players!

Inade'uate information of ne# technology!

Inade'uate information of current mar&et trends! *ess interest of young people in craft industry!


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*ac& of s&illed labour!

till confined to rural areas and small cities and untapped mar&et!

*ac& of promotion of products!

O22ortuniti!s:

Rising demand for handicraft products in de%eloped countries such as $, Canada,

Britain, rance, ermany, Italy etc!

6e%eloping fashion industry re'uires handicrafts products!

6e%elopment of sectors li&e Retail, Real :state that offers great re'uirements of

handicrafts products!

6e%elopment of domestic and international tourism sector!

:1Commerce and Internet are emerged as promissory distribution channels to mar&et

and sell the craft products!

T+r!ats:

Competition in domestic mar&et!

uality products produced by competing countries li&e China, outh frica!

Better "rade terms offered by competing countries!

Increased and better technological support and R and 6 facility in competing

countries!

=i'itations of $an-icraft In-ustr(4last 2oint5

Inspite of ha%ing di%ersified products, some part of Indian mar&et is still untapped and

mar&et is price sensiti%e!

Groducts are high priced in big and metro cities, #hich are beyond the reach of people

belonging middle and lo#er middle class!

Craft producers ha%e to compete on price, 'uality and deli%ery for different segments!

"here is poor promotion for craft products in national mar&et!

"here is lac& of a#areness about ne# traditions and among craftsmen!

It is difficult to balance the cultural and commercial %alue of handicraft products!

Inade'uate supply chain management and distribution reduces the sector5s

commercial %iability and economic sustainability!

*ac& of "echnological support and training!

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*ac& of Research and de%elopment for &ey handicraft sectors li&e, ceramics, paper

ma&ing etc!

"here is shortage of s&illed craftsmen and labour to match the competition!

*ac& of ability to produce in large scale and create economies of scale! Inade'uate material testing and performance measurement!

Inappropriate energy supplies to rural and sub1urban areas!

$ntapped and inaccessible mar&et due to poor transportation infrastructure!

"here are inade'uate training centres to de%elop s&illed craftsmen!

Possi6l! Initiati1!s s+oul- 6! ta!n to o1!rco'! t+! li'itations of

in-ustr(4last 2oint5

"he primary objecti%e is to create an en%ironment that helps the industry to compete

on the global basis!

"o build the en%ironment that #ill focus on7 (ealth Creation, Infrastructure

6e%elopment, "raining, "echnological 6e%elopment, and Go%erty lle%iation etc! to

enhance the sector performance!

#areness should be increased among craftsmen and customers through "rade

:%ents, eminars, Craft orums and ad%ertisements!

More training centres should be opened to pro%ide proper training to craft persons!

"here should be more trade sho#s to facilitate craft producers to access the mar&et!

"ransportation infrastructure should be impro%ed to access the untapped mar&et that

#ould be beneficial to reduce the transportation cost!

Gromotion of cultural tradition and heritage!

Gromotion of Indian "ourism to attract the foreign customers!

6e%eloping technologies to recycle natural resources to produce ne# products and

ensure #aste minimi;ation, product durability and reliability!

Gromoting Gartnership and collaboration #ith pri%ate sector!

"here should be mar&et platform for craft producers belonging to rural areas to

mar&et their products!

6e%elopment of electronic platform by using internet to pro%ide information,

database, and mar&eting and distribution solution!

Increased Gri%ate participation in industry!

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"here should be optimi;ed distribution net#or& and supply chain management!

"hrough impro%ing labour producti%ity in a high labour intensi%e and price

competiti%e mar&et!

"here should be proper balance bet#een cultural and commercial %alue of craftproducts to sustain business opportunities!

"hrough using lo# cost production methods the sustainability of small business can

be impro%ed!

Valu! A--ition Mo-!l

"he performance of Handicraft Industry can be impro%ed and the greater %alue addition

can be done by implementing follo#ing model7

Identify the Gotential Mar&et

Ma&ing :ffecti%e Business Glan and Refinement in existing business

"est Mar&eting to test the initial potential of ne# products in mar&et

:ffecti%e Operational and "echnological $p gradation

Hiring s&illed manpo#er, pro%ide training and a#areness about latest technology and

mar&et trends and effecti%e management! Hiring s&illed manpo#er, pro%ide training and a#areness about latest technology and

mar&et trends!

Cost :ffecti%e Groduction- Maintain uality tandards, and Gac&aging!

et the Costing and Gricing #ith uality ta&en to be consideration

Cost :ffecti%e 6istribution 6e%elopment using both Ghysical and :lectronic

6istribution Channels /Internet, e1Commerce0

Both 9ational and International Mar&et 6e%elopment for better :xport and oreign

Re%enue!


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handicrafts reflect unmatched #or&manship, fine designs, and subtle elegance! "his ma&es

India one of the chief exporters of #ooden handicrafts in the #orld mar&et!

ccording to the classification of Indian industries, a small scale industry is defined as an

industry that is7

9ot registered under the actory ct!

In%estment in fixed assets does not exceed Rs DA la&hs!

mall scale industries are classified into t#o categories7

Modern small scale industries li&e po#er looms etc!

"raditional industries li&e handlooms, sericulture, &hadi, coir, and handicrafts!

(ooden handicrafts fall in the category of small scale traditional industries!

Rol! in In-ian Econo'(

"he #ooden handicrafts industry plays an important role in the Indian economy! "his

industry re'uires lo# capital in%estment and other resources! "he #ooden handicraft sector

pro%ides a high ratio of %alue addition, and has emerged as one of the major sources of

foreign exchange earnings for India!

Indian #ooden handicrafts are much sought after the #orld o%er, and form an important

export commodity of India! lthough IndiaFs handicraft exports sho# a consistent increase offifteen percent e%ery year, its share in the international mar&et is not more than t#o percent!

"he Indian #ooden handicraft sector is the second largest employment pro%ider /after

agriculture0! It employs about six million artisans! (omen constitute a large section of the

handicrafts industry, including people belonging to the #ea&er sections of society!

Conclusion:

"he Indian Handicraft Industry stands a uni'ue place among all other industries! It represents

the rich culture, tradition and heritage of India! India5s rich cultural di%ersity and heritage

pro%ides a uni'ue and huge resource for de%eloping craft products! "he Indian Handicraft

Industry is sho#ing continuous gro#th rate of .23 e%ery year and it is one of the most

important segment of decentrali;ed sector in India!

Most of the part of industry operates in rural and semi urban areas throughout the country

and ha%e large and potential in Indian + International mar&et! Indian Handicraft Industry

pro%ides #ide range of products because of country5s di%ersified culture, traditions and

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heritage! "here is huge demand of Indian Handicraft products in international mar&et!

Industry pro%ides ample opportunities for employment to people belonging to bacard

and #ea&er classes of society! Ho#e%er, Indian Handicraft Industry has the status of

cottage industry in India, but it has sho#n promising gro#th and e%ol%ed as one of the

major re%enue generator o%er the years! It has sho#n continuous gro#th at the rate of .21

4A3 o%er the years and contributes major role for export and foreign earnings!

*o# capital in%estment, Cheap and s&illed labour, 6i%ersified product portfolio, lexible

Groduction are fe# important features of Indian Handicraft Industry! Ho#e%er, *ac& of

Infrastructure + "echnological support, *ac& of a#areness of international and ne# trends

and Goor Gromotional campaigns are a fe# dra#bac&s of industry #hich needs to be

o%ercome! It is estimated that Handicraft Industry in India is all set to gro# #ith rapid rate infuture and contribute its share to#ards economic de%elopment handsomely!

"H: GRO6$C" "O B: M9C"$R:6 (I** B: (OO6:9 H96ICR"

6:COR"I8: I":M /oogle small names0

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MAR;ET A*A=YSIS

3!o"ra2+ical Ar!a

Jhunjhunu /RIICO Industrial rea0

O6/!cti1! of t+! sur1!(

"o &no# about the mar&et potential for the handicraft

"o analy;e the handicraft manufacturing, its competition, customer preferences and

their satisfaction le%el!

"o find out the major players in the mar&et

Sourc! of Infor'ation

Grimary /Mar&et ur%ey0 and econdary data

M!t+o-olo"( A-o2t!-:

Research plan #as de%eloped through conclusi%e research design using descripti%e research

analysis methods by sur%ey as detailed belo#7

R!s!arc+ A22roac+:

.! Grimary data for gathering information regarding manufacturing re'uirements and

facilities a%ailable at he&ha#ati region #as collected by personal inter%ie# #ithdifferent manufacturers selected on the basis of random sampling sur%ey method!

4! econdary data regarding #orld demand and supply positions, Indian Handicraft

status and other rele%ant information #ere gathered from different #ebsites!

R!s!arc+ Instru'!nts: uestionnaire /ee nnexure I0 #as used to collect the data on

both the sensiti%ity of demand and supply, customer preferences and to &no# the mar&et

potential and future gro#th!

fter deciding the research approach and instruments, sampling plan #as prepared!

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Sa'2lin" Proc!-ur!7 imple random sampling method #as used for sur%ey on

representati%e basis!

Sa'2l! Si>!:4A handicraft units

Contact M!t+o-: Gersonal inter%ie# #ith each of the manufacturer and ra# material

suppliers #as conducted!

Infor'ation coll!ct!- fro' Manufactur!rs Qu!stionnair! ,is!

!. 8ariety of handicraft item you manufactureK

/a0 Chairs

/b0 "ables

/c0 Boo& shel%es

/d0 6ecorati%e items

/e0 ll of the abo%e

Chairs A

"ables A

Boo& shel%es A

6ecorati%e items 4

ll of the abo%e .

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s the abo%e analysis sho#s that @A3 manufacturer are manufacturing all the major items

li&e chairs, tables, boo&shel%es etc!

!4 rom #here you ac'uire the ra# material for #ooden handicraftK

/a0 Bihar

/b0 $!G!

/c0 ujarat

/d0 ll of the abo%e

/e0 Import from other countries, if yes specify

Bihar 2

$!G! 4

ujarat 2

ll of the abo%e 11

Import from other

countries 1

"he ra# material is ac'uired from all the places li&e Bihar , $!G! , ujarat etc! but the

analysis sho#s that most the #ood is purchased from $!G! some part of ra# is also a%ailable

in Rajasthan!

!) Lour Re1 order point

/a0 (ee&ly

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/b0 ortnightly

/c0 Monthly

/d0 s re'uired

s the analysis sho#s that most of the manufacturers &eep in%entory as per the re'uirement!

?! Order si;e

/a0 ?AA 2AA units

/b0 2AA EAA units

/c0 EAA .AAA units

/d0 .AAA and abo%e

400-500 units 2

500-700 units 15

700-1000 units 2

.E

Weekly 3

Fortnightly 0

Monthly 4

As required 13


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1000 units and above 1

s the abo%e analysis sho#s that most of the manufacturer gets the a%g! order 2AA1EAA units

per month! "here are only 4A3 manufacturers #ho get the orders abo%e EAA units per month

or .AAA units per month!

!2! (ho bears the transportation costK

/a0 upplier

/b0 Lourself

u!!liers 4

"oursel# 1$

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n analysis sho# that mostly cases manufacturer bears the transportation cost!

!D (hich type of handicraft item is more in demandK

/a0 (ooden

/b0 lass made

/c0 Metal made

Wooden %

&lass 'ade 4

Metal 'ade 7

(ooden items are more in demand because ?23 of respondent said that #ooden item is more

in demand!

!E (hich type of #ood is more in demand in manufacturingK

/a0 Babul


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(abul 7

hisha' %

)ine 1*eak 1

Mango 2

In ans#er of this 'uestion ?23 respondent said that shisham is more in demand after

shisham, babul made handicraft is more in demand!

! #hat le%el of In%entory you &eepK

/a0 .2 days

/b0 )A days

/c0 4 months

/d0 ? months15 +ays 1

30 +ays 1$

2 Months 3

4 Months 0

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"he analysis sho#s that most of manufacturer &eep )A days in%entory! ome manufacturer

also &eep 41month in%entory!

!@ rom #here you get the s&illed #or&ersK

/a0 aharanpur

/b0 Barmer

/c0 jaisalmer

/d0 *ocally

aharan!ur 4

(ar'er 1

,aisal'er 1

o.ally 14

4.


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"he analysis of this 'uestion sho#s that mostly s&illed are locally a%ailable! ome part of

labour comes from aharanpur also!

!.A On #hich basis you appoint the #or&ersK

/a0 Contractual basis

/b0 Monthly basis

/ontra.tual basis 14

Monthly basis $

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Most of manufacturer appoints #or&ers on contractual basis!

!.. (hat type of facility you pro%ide to the #or&er to retain themK

/a0 Housing

/b0 Canteen

/c0 Bonus

/d0 Medical

ousing 5

/anteen 1

(onus 12

Medi.al 2

In the ans#er of this 'uestion respondent said that they pro%ide mainly bonus to their

employees to retain them some manufacturer pro%ide housing facility also to their #or&ers!

"here are only fe# manufacturer #ho pro%ide medical and canteen facility to their

employees!

!.4 (hat mode of selling of handicraft you useK

4)


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/a0 "hrough exhibition

/b0 6irect selling through retailer

/c0 :xport

*hrough hibition 1

+ire.t elling through etailers 2

!ort 17

Mainly the mode of selling is through export! Most of manufacturers go for direct export

as per the data! s per analysis 23 respondents said that they are direct exporting their

product!

!.) Ho# much margin you get #hile going for exportK

/a0 A3 1 23

/b0 23 1 .A3

/c0 .A3 1 .23

/d0 .23 1 4A3

0 - 5 0

4?


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5 - 10 0

10 - 15 2

15 - 20 1

If the manufacturer is going for export then the profit margin is .214A3 as per the analysis!

@A3 manufacturers are in fa%our of this! Only .A3 said that they get only .A1.23 profit

margin if they go for export!

!.? Ho# much margin you get #hile going for local sellingK

/a0 A3123

/b0 231.A3

/c0 .A31.23

/d0 .23 14A3

0 - 5 3

5 - 10 17

10 - 15 0

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15 - 20 0

If the manufacturer is going for local selling then they get 21.A3 profit margin!

D!'an- Anal(sis

fter conducting the mar&et sur%ey in the form of 'uestionnaire and inter%ie# of themanufacturers, the next step is to estimate the effecti%e demand in the past and the present!

s per the secondary data the demand of #ooden handicraft is as follo#s7

"otal 6emand in units N @4AAAAAunits


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Su22l(:

Ar!a Manufactur!r Su22l(4units0'ont+5

Siar . ?AA

.+un/+unu 2 4,?.A

.ai2ur .A 2,D2A

Mun-,a ? 4,.AA

"otal supply by these

4A manufacturer

.A,2DAunits


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capacity #ill be DA3 for .styear + than #ill gro# accordingly! "he plant #ill run only in one

shift!

"he production and capacity related data #ill be7

Y!ar O2!ratin"

ca2acit(

*o of s+ifts

4In G+rs0-a(5

Total Pro-uction

4Units 0(!ar5

4AA@ DA3 . E4AA

4A.A D23 . EAA

4A.. EA3 . ?AA

4A.4 ED3 . @.4A

4A.) 43 . @?A

4A.? @3 . .ADA

4A.2 @E3 . ..D?A

Mar!tin" C+ann!l

Most producers do not sell their goods directly to the final users- bet#een them stands a set ofintermediaries performing a %ariety of functions! "hese intermediaries constitute a mar&eting

channel! "he mar&eting channels just not only ser%e the mar&ets but they also ma&e mar&ets!

(ill be selling through exhibitions ,

Currently, the existing mar&eting channel of the #ooden handicraft manufacturers is as

follo#s7

4

Manufactur!rs

Distri6utors

En- Us!rs


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Strat!"ic Mar!tin" Plan:

(ooden handicraft is being an unbranded commodity, so as such the manufacturers incur no

promotional expenditure! ometimes they just increase the commissions or the margins of

these, if the targets are achie%ed enormously!

But in order to differentiate the product and capture the existing mar&et and to de%elop strong

customer base, some strategic mar&eting plan is necessary to be designed and implemented!

8arious strat!"i!sthat #ill be used being a ne# entrant are71

teady supply #ith timely deli%ery to fulfil the demand of the domestic area as #ell

as outside area and good 'uality #ould be one of the strategic strength of the

mar&eting plan!

part from good 'uality good designs are an important factor! "hese designs #ill be

based on traditional pattern so that it can impress foreign customer!

Besides from these efforts e1commerce is also a promotional tool for mar&eting of this

product! o I #ill do online selling also in order to promote my product!

o orders #ill also be ta&en online apart from fax and telephonically!

4@


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T!c+nical Anal(sis

Proc!ss in1ol1! in 'anufacturin" of ,oo-!n +an-icraft:

lot of s&ill and hard #or& goes into e%ery piece of Indian #ooden handicraft! It mirrors

Indian culture, and each handicraft is a masterpiece in its o#n right! *etFs ta&e a pee& at the

actual process #hich goes into creating a piece of #ooden handicraft!

Ra# #ood a%ailable in the form of logs is cut into plan&s of desired thic&ness and

length!

"he piece of #ood is then s!ason!- to obtain a texture #hich is fa%ourable for

car%ing!

6ecorati%e patterns are first -ra,non the #ood #ith a pencil!

"he design is then car1!-into the #ood #ith a car%ing tool!

Craftsmen inla(the #ooden handicraft #ith metal, bone, or #ood #hich gi%es off a

contrast effect, enhancing the intricacies of the car%ed design!

6ifferent pieces of car%ed #ood are /oin!- together to ma&e complete, functional

objects!

protecti%e coating is applied #ith a suitable #ood finis+!

Pro-uction Ti'!

(ood car%ing is a time consuming process! "he time needed by Indian craftsmen to create

car%ed #ooden handicrafts may range any#here from a #ee& /for small items0 to a fe#

months /for large items #hich re'uire elaborate car%ing techni'ues!

Pro-uction Tools

Indian craftsmen ha%e a #ide range of tools at their disposal, depending on the stage of

production! ome of them are as follo#s7

Sa,s: Go#ered by an electric motor, Ban- sa,s are used to cut off scrap #ood

effortlessly! C+ain sa,sare used to cut logs for large car%ings!

Drillsare primarily used to drill holes, and they are a%ailable #ith se%eral attachments

to perform sanding, sa#ing, mixing paint etc!

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=at+!s are used to turn #ood! "hey are used to ma&e spherical, cylindrical or round

objects! "hey are handy #hile ma&ing %ases, bo#ls, and plates!

Grimarily used for #hittling and chip car%ing, Car1in" ni1!s are also used to ma&e

the surface of the #ood smooth!


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"hese machines #ill be purchased from *udhiana as many manufacturers are ma&ing these

machines! "herefore, these are a%ailable at competiti%e prices!

=ocation an- sit! -!1!lo2'!nt

"he area for setting up a handicraft manufacturing unit is decided after sur%eying all

the potential areas! "he location of plant #ill be in RIICO industrial area in

Jhunjhunu district!

"he rate of land is Rs 2AAs' meters /one side road plot0, of area 4,AAAs' meters or 4.24@s' ft!

Structur! an- Ci1il ,ors:

S *o Particulars Si>! Ar!a Rat! A'ount

. actory shed )A>DA> .AA 4AA ),DA,AAA

4 4 stoc& room .>4A> )DA 4AA E4AAA

) uard room >.A> A 4AA .DAAA

? Go#er room >.A> A 4AA .DAAA

2 Boundary #all 44AAAAD (ashroom D>> ? 4AA @DAA

H la6our uart!rs %

E Room .4>.A> .4A 4AA 4?AAA2N.4AAAA

(ashrooms D>> ? 4AA @DAA2N?AAA

@! Office room .2>.4> .A 4AA )DAAA

.A! ire fitting )@4AA

Total @,)D,AA

Utiliti!s

"he important utility used in handicraft manufacturing is po#er!

Other necessary utilities used in plant are7 1

ans 4

"ubelights14A

)4


33/48

Computer #ith laser printer

urniture comprise of office table, cello chairs!

Mat!rials

Ba6ool0Aaas+i(a7 "his is a%ailable in Rajasthan and some part of ujarat! "he rates of

babool are Rs!4A < s' ft

S+is+a':Most of #ooden handicraft is made of shisham #ood! "he highest demand is of

shisham made #ooden handicraft! "his is a%ailable in ujarat, $!G! + Bihar! "his is made

a%ailable by local #holesale timber merchant! "he rates are Rs! )A


34/48

Strat!"( to a22oint # r!tain !'2lo(!!s

On time payment is a best retention strategy! o I #ill gi%e on time payments to retain

my s&illed #or&er!

Medical facility to all #or&er and employees!

Occasional bonus to s&illed #or&ers!

Housing facility7 I #ill pro%ide labour 'uarter to s&illed #or&er #ho are not from

local areas!

I #ill pro%ide employment to their spouses based upon their ability!

)?


35/48

)I*A*CIA= A*A=YSIS

Cost of Pro/!ct

Particulars Cost in Rs

*and + ite de%elopment .A,D),DAA

Building @,)D,AA

Glant + Machinery @,D,2AA

Other ixed ssets 4,)A,AAA

Greoperati%e :xpenses 4,E.,@@2

Greliminary :xpenses .,@?,44

Gro%ision for Contingency .,@?,44

(C Margin 4D,.@

"otal ),2,D?

M!ans of )inanc!

Particulars Cost in Rs

GromoterFs Capital .4,@2,4A)

*ong< medium "erm *oan from Ban&s 42,@A,??2

"otal ),2,D?

Basic Assu'2tions un-!rl(in" )inancial Pro/!ctions

"he profitability and other projections may be prepared on the basis of follo#ing

assumptions71

.!0 "he construction period #ill last for one year!

4!0 "he company #ould #or& for )DA days per year on a . shift basis! "he installed

capacity on this basis #or&s out to .4AAA!

)2


36/48

)!0 "he company #ill start commercial production on July ., of year .! "he expected

capacity utili;ation #ill be DA3 in first year, D23 in the second year, and EA3 for the

third year and so on!

?!0 (ages and salaries are expected to be Rs @.AAA!

2!0 actory o%erheads expenses #ill be Rs )4A for the first year!

D!0 dministration expenses #ill be Rs )DAAAA per annum!

E!0 "he term loan #ill be repaid in .? e'ual half1yearly instalments, #ith the first

instalment due at the end starting of first operating year! "he interest rate on the

outstanding term loan #ill be .43!

!0 "he ban& finance for #or&ing capital #ill cost .43 interest rate!

@!0 "he depreciation rates for company la# purposes are as follo#s7

Building 7 )!)?3

Glant and Machinery 7 3

Miscellaneous ixed assets 7 23

..! "he depreciation rates for the income tax purposes are as follo#s, under the #ritten do#n

%alue method7

Building 7 .A3

Glant + Machinery + Miscellaneous ixed assets7 ))!))3

.4! "he income tax rate applicable is )A3! urther .A3 of ross "otal income #ill be

allo#ed as deduction for ne#ly set up industrial underta&ing under sec! AI for .A years

from the initial year!

.)!0 "he current assets re'uirements are expected to be as follo#s71

Ra# materials 7 )A days

toc&1in1process 7 . day

inished goods 7 ? day

Boo& debt 7 E days

.?!0 "he suppliers of ra# material #ill pro%ide trade credit for .2 days!

.2!0 "he sal%age %alue is assumed to be 23 of ixed ssets!

.D!0 "he corporate tax rate is )A3 p!a!

)D


37/48

SA=ES )ORECASTI*3

SA=ES )ORECAST

Y!ar @8 @7 @77

Sal!s @GG H@ G

)E


38/48

Bi6lio"ra2+(

,,,in-ian+an-icraft!?2ort!rco'

,,,"oo"l!coin

,,,,ii2!-iaco'

,,,(a+ooco'

,,,orinicin

,,,ans,!rsco'

,,,+an-icraft-2r+t'

)
http://www.indianhandicraftexporter.com/http://www.google.co.in/http://www.wikipedia.com/http://www.yahoo.com/http://www.ori.nic.in/http://www.answers.com/http://www.handicraftdpr.htm/http://www.indianhandicraftexporter.com/http://www.google.co.in/http://www.wikipedia.com/http://www.yahoo.com/http://www.ori.nic.in/http://www.answers.com/http://www.handicraftdpr.htm/


39/48

Ann!?ur!: 7

Qu!stionnair! 4Manufactur!r5

*a'! Co'2an( na'!

Ar!a of 2ro-uctionJJJJJJJJJJJJJJJJJ Y!ar of Esta6lis+'!nt

.0 8ariety of handicraft item you manufactureK

a0 Chairs c0 6ecorati%e items

b0 "ables d0 ny other

40 rom #here you ac'uire the ra# material for #ooden handicraftK

a0 Bihar c0 ujarat

b0 $!G! d0 Import from other countries

)0 t #hat fre'uency do you order the ra# material stoc&K

a0 (ee&ly c0 Monthly

b0 ortnightly d0 s re'uired

?0 Order si;e

a0 ?AA12AA units c0 EAA1.AAA units

b0 2AA1EAA units d0 .AAA units and abo%e

20 (ho bears the transportation costK

a0 upplier

b0 Lourself

D0 (hich type of handicraft item is more in demand K

a0 (ooden

b0 lass made

c0 Metal made

E0 (hich type of #ood is maximum in demand for manufacturingK

)@


40/48

a0 Babul


41/48

Ann!?ur!: @

Int!r!st T!r' =oan

7K Eual Instal'!nts L 7@ 2!r annu'

Y!ar

=oan O0S

at t+!

6!"innin"

=oan O0S at

t+! !n- of 7st

+alf (!ar

=oan O0S at

t+! !n- of @n-

+alf (!ar

Int!r!st

for t+!

7st +alf

(!ar

Int!r!st

for t+!

@n- +alf

(!ar

Total

int!r!st

for t+!

t!r' loan

. 42@A??2 4?A2?.) 444A). .22?4D .??)4? 4@@E2A

4 444A). 4A)2)?@ .2A).E .))444 .44.4A 422)?4

) .2A).E .DD242 .?A42) ...A.@ @@@.E 4.A@)D

? .?A42) .4@244. ...A.@ .2 EEE.) .DD24

2 ...A.@ @42.2E E?A.42 DDD.. 222A@ .44.4A

D E?A.42 222A@) )EAAD. ???A )))AD EEE.?

E )EAAD. .2A4@ A 444A? ...A4 )))AD

*ot!: t!r' loan of @H& 8&KKH ,ill 6! 2ai-

Ann!?ur!:


42/48

Ann!?ur!: K

D!2r!ciation

A Ass!t Valuation for -!2r!ciation 2ur2os!

Ass!t !?2!ns!s Basic cost

S+ar! of

Pr!o2!rati1!

cost

S+ar! of

Conti"!nc(

'ar"in Total

*and .AD)DAA @A?)2 D?2@D .4.D).

Building @)DAA E@D22 2D@D .AE))2.

Glant + machinery @D2AA 4)?@ 24. 44@.@4

Miscellaneous fixed

assets 4)AAAA .@22D .)@D@ 4D)242

"otal ).@@AA 4E.@@2 .@?44 )DD2.EE

B D!2r!ciation sc+!-ul! for co'2an( la, 2ur2os!s 4S=M5

Building )!)?3 ?AEA4

Glant + machinery 3 2D

Miscellaneous fixed assets 23 ..?2@@

Annual -!2r!ciation 7K @K778

C D!2r!ciation sc+!-ul! for inco'! ta? 2ur2os!s 4


43/48

Ann!?ur!: H

Profita6ilit( Esti'at!s 4Esti'at!s of


44/48

Ann!?ur!:

Ta? Calculation

7st (r @n- (r r- (r

Grofit< *oss Before "ax .E@@. @@.)4 ..D2DEAdd7 6epreciation for company la#

purposes 4?..D@ 4?..D@ 4?..D@

Total 7H87 7@7 7KG8

*ess7 6epreciation for "ax purposes 8H8GH KK KHHK

ross "otal Income .AAAE2 2D2) @?.)A2

Total Inco'! 79H HGHG 8K7H

Income "ax S )A3 of "otal Income )AA44!2A .EA2D.!?A 44)@.!2A

Ann!?ur!: 9

Pro/!ct!- Balanc! S+!!t

Construction

P!rio- En- 7st (r @n- (r r- (r

=ia6iliti!s

hare Capital .4@24A) .4@24A) .4@24A) .4@24A)

Reser%e + urplus EE@D!2A .DA@4) [email protected]

"erm *oans 42@A??2 444A). .2A).E .?A42)

(C d% .DAD .E?A .E?D

Current *iabilities +

Gro%isions .)D2?@E!2A .222E)@ .E?24E)

"rade Credit D42AA DEEA [email protected]

Total GGH7 HGH77 @987G 9@H

Ass!ts

ixed ssets

ross Bloc& )DD2.EE )DD2.EE )DD2.EE )DD2.EE

*ess7 ccumulated

6eprecition 4?..D@ ?4)) E4)2AE

9et )DD2.EE )?4?AA ).4)@ 4@?.DEA

Current sset *oans + d%

Ra# Materials D42AA DEEA [email protected]

toc& in Grocess .)E .@@A 4.?)

inished oods .?D@ .2@4) .E.?

Boo& 6ebts 42E44 4EDD )AAA@

Cash + Ban& Balances @7G8 @H8@@H 7H8@ 8G778

Greliminary :xpenses .@?44 @E.?. @E.?.

Total GGHKG HGH77 @987G 9@H

??


45/48

Ann!?ur!: G

Pro/!ct!- Cas+ )lo,

Construction

P!rio- 7st (r @n- (r r- (r

Sourc!s of )un-s

hare Issue .4@24A)

GB" #ith Interest dded

Bac& ...@DD@ .4?@4D4 .)E22

6epreciation 4?..D@ 4?..D@ 4?..D@

Greliminary :xpenses (


46/48

Ann!?ur!: 8

O2!ratin" Cas+ flo,s

(r 7st (r @n- (r r- (r

"otal funds )2D?

B Re%enues )4AAA )2D4AAA ))DAAA

C Operating Costs .E)4A .EE4E 4A4.D@)

6 6epreciation @2@A2 DD??D) ?D22)?!AAA

:

Interest on #or&ing capital

ad%ance .@4 4A 44?@

Interest on term loan 4@@E2A 422)?4 4.A@)D

H Grofit before tax 4@?)2E ED44A ..)22

I "ax )AA44!2A .EA2D.!?A 44)@.!2A

J Grofit after tax 4D?))?!2A 2@442!DA 2).@D!2A* 9et sal%age %alue of fixed assets

M 9et sal%age %alue of current assets

9 Initial in%estment )2D?

G Operating cash flo#s .?)?2@? .?)D@44!DA .?DE@DA

"erminal cash flo#

R 9et cash flo# )2D? .?)?2@? .?)D@44!DA .?DE@DA

?D


47/48

Ann!?ur!: 7

BREA; EVE* POI*T )OR T$E PRO.ECT

A'ount A'ount A'ount

A Sal!s R!alisation @GG H@ G

B Varia6l! Costs

Ra# Materials E2AAAA .42AA E2AAA

Interest On (or&ing Capital .@4 4A 44?@

Go#er + (ater DAAAA D2AAA EAAAA

elling + 6istribution :xpenses 2AAAA 2?.DE 2)))

Total G78@G 89HH 7HHG@

C )i?!- Cost

(ages nd alaries ?AAAA

Repairs nd Maintainance .AAAA 6epriciation 4?..D@

dministrati%e :xpenses )DAAAA

Interest On "erm *oan 4@@E2A

Total 78878 78878 78878

D Contri6ution4A%B5 @K@9@ @@G@KH @GK7G

201 ratio 99GHK

Br!a E1!n Point In T!r's Of Volu'!s Of Sal!s 7GGHG7

Br!a E1!n Point In T!r's Of Install!- Ca2acit( H9@7K

?E


48/48

"A 200% 2010 2011

)i?!- cost 78878 78878 78878

total cost @@H@GK923246

74

23965

01

Sales Realisation @GG H@ G

Br!a E1!n Point In T!r's Of Volu'!s Of Sal!s 7GGHG718850

81

18850

81

Date post:	02-Jun-2018
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