15130078@gift.edu.pk

Group members1. Asif Nawaz2. Ameer Khan3. Hafiz Farukh4. Gulfam

Assignment 3:

Submitted to Miss Umara YousefIntroduction to Business

SMEDASMALL MEDIUM ENTREPRENEUR

DEVELOPMENT AUTHORITY

DEMONSTRATION OF SMEDA

SMEDA was inaugurate in October 1998, For developing of SME in Pakistan

SMEDA provide imputes of economy of SMEs Study prefeasibility of SMEDA to hallmark SME facilitation by

SMEDA SMEDA carried access finance, business development,

institution collaboration SMEAD is not only SME policy govt of Pakistan but facilitates

other stakeholders in SME developer SMEAD prepare successful strategies for industry like gems and

jewelry, fruits and vegetables, leather and footwear, etc.

PROJECT INTRODUCTIONPROJECT BRIEF

Socks are classified in two categories: cotton and nylon Cotton sports socks also have two types: pouch and reel Cotton sports socks manufacturing by 65% pouch and 35% reel and started with 30 machines Second hand machines also can use, which is easily avail in market

Opportunity Knitted socks are an item use as general Sports socks demand increasing in every passing year as USA, European and middle East Pakistan 4th largest producer of socks after China, India and USA Raw material easily avail local market so confirm opportunity of new socks manufacturing

Market Entry Timing Many products and services have a specific time to run a business but business of socks can be run any time during year

Proposed legal status• It can be proprietorship and partnership• We can register company by Law

Explanation of project Capacity Size of project is critical It will be based on 30 machines which is minimum size for expert

oriented manufacture for socks

Key Success Factors/Practical Tips for Success

Wastage ratio of production should be kept at minimum Advance orders for sales 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

EXECUTIVE SUMMARY Socks production has been tradition since inception of Pakistan Socks production also have export potential Karachi and Faisalabad cities leading family trade of socks manufacturing

and marketing in Pakistan Knitted socks are an item use a general Objective of pre-feasibility to facilitate entrepreneurs investment

opportunity and provide overview about socks business This document covers various aspects of socks manufacturing concept

like start-up, marketing, finance and management Estimated coast of the project RS 87.534 million and can be run by 50%

equity and 50% Bank loans

MARKET INFORMATION

Leading Exporting Countries of Cotton Knitted Socks in the World:

• China is the leading exporter of cotton knitted socks in the world and exports majority of the product to countries like USA, Germany and Italy.

• Countries Value in US $ (000)

• China 3,767,689

• Italy 1,246,669

• Germany 881,179

• USA 507,677

EXPORTS OF COTTON SPORTS SOCKS FROM PAKISTAN: Partner Trade Value in US $(000) %Age Changes

2010 2009 2008 2010 2009

World 276,146 237,886 243,677 16.08% -2.38%

USA 163,322 144,785 150,502 12.80% -3.80%

Netherlands 20,374 17,948 28,424 13.52% -36.86%

Canada 20,365 19,603 18,755 3.89% 4.52%

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Rest of the World 11,105 6,924 $ 9,156 60.38% -24.37%

PRODUCTION PROCESS

Yarn Preparation on Cone Type Knitting Quality Check Pre-turning

Swing or Linking

Post turning(Inspection)

Dyeing/Bleaching

Boarding and pressing

Inspection Pairing Clipping Labeling

PackingFinished SocksDispatch

MACHINERY REQUIREMENT

• A total number of 30 “Single Cylinder 4 Feed machines” will be installed, out of which 18 machines will be used to manufacture pouch socks and 12 machines will be used for manufacturing reel heel socks.

• Second hand machinery is also readily available in the market and the price is approximately half the price of the new machines.

• Second hand machinery can also be used to manufacture both types of socks.

in Rs

Total Machinery Cost 64,699,664

FURNITURE AND FIXTURE

• There are seven items and total cost required is 1255700

• The project will be using a truck for transportation purposes

• The truck cost would be 1100000

HUMAN RESOURCES REQUIREMENT• Both skilled and unskilled labor would be

required for the manufacturing purpose• Direct labor would be working on three

shift basis and some will be working on one shift basis• Total cost of hr is 15876000

LAND AND BUILDING AND UTILITIES REQUIREMENT• Total land required is 5 canals• Per canal price is 2500000• Total 22381 sq. area is proposed for manufacturing unit• Total cost required for infrastructure is 9045350

Utilities required are:• Electricity, water, telephone.

PROJECTED INCOME STATEMENT

• Year 1

• Revenue 141891750

• Cost of sales 106447494

• Gross Profit 35444256

• Expenses 17756331

• Net profit 9708763

INCOME STATEMENT YEAR 10

• Revenue 379561616

• Cost of sales 223587800

• Gross Profit 155973816

• Expenses 31918372

• Net profit 120259828

as per the above figures it can be seen that the company progressed over the period of 10 years

PROJECT ASSUMPTIONS Projected Life of The Project in Years

10 Debt

50% Equity

50% Annual Mark Up Rate (Short Term & Long Term)

16% Debt Tenure

5

TURNOVER ASSUMPTIONSRaw Material Inventory

30 days Stores and Spares Inventory

2 months Fuel inventory

15 days Accounts Payable

30 days Accounts Receivable

45 days