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Feasibility report encompasses of different type of analysis, ratios and projected financial statements to enhance the investors best utilization of capital in plastic molding industry
USER[Pick the date]
STARLITE PLASTIC
A Project Feasibility Report on Plastic molding company
Submitted to:
Mr. Javed IqbalChairman department of
commerce The Islamia university Bahawalpur
Submitted By: Saima Rashid
04Habib-ullah
26M. Jawad
Rashid 49
M.Com 4th( Mor )
DEDICATION
Dedicated to our beloved parents who instilled in us the importance of education and hard work.
&
Also dedicated to our teachers who are a rock-solid potency for us, their motivation will empower us to face the intricacy
in future.
Acknowledgement
We would like to express our gratitude to all those who gave us
the possibility to complete this project. We want to thank the Owner of
the BOSS plastic company for giving us permission to commence this
documental work in the first instance, to do work and to use their data.
We are bound to the Honorable Mr. Imran Gul ( G.M ) BOSS PLASTIC
COMPANY GUJRANAWALA. Special thanks for Mr. Nadeem who
provided us reference and visited the factory with us, also special
thanks to Mr. Shahid Fida (Production Manager) who provided us
information & provided suggestions, encouraged us in all the time of
work and writing of this document. My colleagues as well as respectable
teachers from the Department of Commerce supported us in our work.
We want to thank them for all their help, support, interest and valuable
hints.
Especially, we would like to express special thanks to our
honorable teacher Mr.JAVED IQBAL under whose guidance we
Material and inputs 00Project Engineering 00Product Range 00Man power 00Installed Capacity of project 00Estimated Capacity during 00Estimated cost of project 00Project Investment 00Means of finance 00
Name of lenders 00Name of civil contractor 00Name of Machinery Suppliers 00Implementation Schedule 00Financial Ratios 00Introduction 00PROJECT PROFILE 00
Legal status 00Advantages 00Project brief 00Name of promoters 00
Market Analysis 00
Target Customers 00Exports of Pakistan 00Import of Pakistan 00Present Market Demand 00Present Market supply 00
Regulations 00
Growth percentage of Factories in Pakistan 00Ex- Factory price 00Retail price 00Distribution Channel 00
Technical Analysis 00Manufacturing Process 00
List of Machinery 00Material and Inputs 00Electricity & Gas, Fuel, Water 00Personal Analysis 00Requirement of staff 00
Financial Analysis 00
ANNAXTURE 00
Cost of Capital 00Estimated cost of Machinery and office equipment00Estimated cost of Building and civil work 00Estimated cost of salaries and wages 00Estimated cost of furniture and fixture 00Estimated Depreciation of assets 00
Capacity 00Product mix table
At 80% capacityAt 85% capacityAt 90% capacity
Assumption for calculation 00Raw material volume 00Detail of prices 00Power and Fuel 00Insurance 00Store and Sappers 00Manufacturing and Selling Expenses 00
SWOT Analysis. 00Reference: 00
Executive Summary
Name of Project “ Starlite Plastic Moulded Furniture”
Location & Site Selection
Following factors are taken into account while selecting the location
for project.
Project Location:
The proposed locations for the Molded Furniture is Hasilpur Road near The Islamia university, Bahawalpur (preferably). The said project may be established in industrial estate area or any other area of above said city.
Availability of Labor:
Adjacent with the area is the rural area that will provide cheaper and hardworking raw man power for production.
Transportation cost:
The proposed location is a Hasilpur Road, The Islamia university, Bahawalpur. The project will be situated over the Highway. The transportation will be easy and the cost of transportation over the country will be less varying with area to area.Office location
Registered Office will be with in the boundary of the factory.
Utilities:
The area is now becoming industrial area. A lot of factories are situated in the area. So, utilities are easily available there
Sponsors:
M. Jawad RashidSaima RashidHabib-Ullah
Market and Plant capacity
Sold initially in domestic market and with the passage of time after progress covers international market also.
Materials and inputs:
Plastic Granular (Dana), chemicals and colors.
Project Engineering:
Requirement of Plant and different Machinery for furniture.
All Model ChairsAll Model TablesBaby SwingsShoe RacksStool
Initial Stage of Plastic (RESIN)
Plastic Granular (DANA) Usage of Plastic Granular in Hooper
Man Power:
The composition of manpower will be 10 highly skilled persons to supervise technical operations, 30 skilled people to directly work on production process. 5 people will be hired as helpers.
Installed Capacity Of project:
The Plant and Machinery which we use is relatively more efficient and effective of the all types of machineries available in the market. The chosen Plant & Machinery is capable of producing units per month. 80% starting capacity is proposed.
Years 2011 2012 2013
Estimated Capacity 80% 85% 90%
Estimated cost of the Project
The cost of project has been estimated as Rs.100 million approximately including land, civil works, plant & machinery and office equipment. The plant & machinery mainly comprises of injection molding machines, cutter, crusher, mixer, chiller plant.Project Investment
Description Total Cost (Rs. 000)Fixed Investment 91,196Working Capital 13,804
Total Investment 105,000
Debt 60%
Equity 40%
Means of finance:
Name of Lenders:
The amount of loan will be taken from “BANK OF PUNJAB”. The amount of loan is Rs. 63 million. The interest @ 16% per annum.
Name of Civil Contractors:Mr. M. Yaseen. Name of Machinery Suppliers:
INTRODUCTION A Starlite Moulded Furniture is a Private limited proposed
to set up a Plastic furniture Manufacturing unit at Hashilpur Road, Near The Islamia university, Bahawalpur. Land measuring 4 Kanals has been required..
Due to the very low consumption as compared to developed countries and even in India, a large gap is to be filled by introducing new and cost effective products. Customers with low purchasing power don’t have any option other than plastic furniture. Middle and lower classes in Pakistan is major buyer and these classes are 65% of total population. Also there are very few players in this business
Plastic Molded is used as Lawn Furniture and outdoor restaurants furniture as substitute of wooden costly furniture. As trends are from developed countries, it was introduced in Pakistan around 1984-1985 by a Karachi based firm and used for house, school, offices etc. Then a factory was installed in Gujranwala and then with the passage of time now there are some 7 units producing plastic chairs, tables, baby products, etc day and nights. Due to low purchasing power people in Pakistan found this product cheap, associated with warranty covering the risk of consumers. The capacity to produce is also a very important edge associated to boost the business to meet immediate demands, maintain high inventory levels, variety of models and colors, etc.
P ROJECT P ROFILE:
Cost of Project:
The Estimated cost of the project as Rs.100.5 million including land, civil works, plant & machinery and office equipment. The plant & machinery mainly comprises of injection molding machines, cutter, crusher, mixer, chiller plant.
Legal Status:
The proposed legal structure of the business entity is Partnership and this financial feasibility is based on a Partnership.
Advantages:
The advantages of proposed project are as follows:i. The project will be provided cheaper products to its customers as compare to others like iron and wood. ii. To increase the preference of plastic furniture due to expensive rates of iron
and wood.iii. The cheaper rates of products and customer friendly policies may get good healthy share in market in short period.iv. To fill the demand and supply gap.
Project Brief: The sanction date of above proposed project is 17th May 2010 the legal formalities of the proposed project will be completed by 20th
June 2010
The trial once operations will take period of one months and it will end by the end of 1st March the project will start its commercial operations from the 31st March 2011.
Name of Promoters
Jawad Rashid Saima Rashid Habib-Ullah
Market Analysis
The considerable markets for the sale of the company are offices, private and public institutes, houses, hotels and restaurants, educational Institutes etc.
Target customers:
The target customers of the proposed project would be the upper, middle and lower income groups of people.
Exports of Pakistan : Exports of Pakistan last two years.
(Exports of 2006)
Countries Trade value $ Quantity (kgs)
World 149,613 35,406
Afghanistan 143,31633,916
United Arab Emirates 5,9921,418
Seychellies 16840
Canada 136 32
(Exports of 2007)
Countries Trade value $ Quantity (kgs)World 555,519 127,838
Imports of Pakistan:Import of Pakistan last two years
Import of 2006 :
Countries Trade value $ Quantity (kgs)World 219,410 57,705China 163,346 42,960Italy 20,284 5,335Turkey
15,1213,977
United Arab Emirates 11,394 2,997Rep. of Korea 3,566 938
Import of 2007 :
Countries Trade value $ Quantity (kgs)World
253,11453,789
China 182,533 38,790
Other Asians15,716 3,340
Italy 14,735 3,131China, Hong, Kong
8,990 1,911
Turkey 8,509 1,808
Present Market Demand:
Due to the increasing prices of wood and iron furniture, the trend of Plastic furniture has been raised. However, there are a large number of people who want to buy plastic furniture. All the brands of plastic furniture are available in the market on cheaper prices, which enhance the confidence in the minds of the general public and now, more people are attracted towards purchasing plastic furniture.
Present Market Supply:
Total numbers of molded furniture units in Pakistan are 7, which are quite low to meet the growing demand. The proposed project will serve the needs of national as well as of international customers. Initially the excessive distribution of the product in domestic market will be implemented which is capable to fill the demand supply gap.
Regulations:
There has been a tremendous growth in the Molded Furniture sector over the yeas. The total numbers of units sold during the year 2006 are estimated 750,000. The growth in terms of percentage is given in the following table:
Growth Percentage of Factories in Pakistan:
Year 2003 2007 %age Increase
No. of Factories 4 7 0.75
Ref: (Smeda.org)
Ex factory price:
Description Prices (Rs.)
All types of chairs 600
All types of tables 750
Baby Swings 400
Shoe Rack 500
Stools 600
It is assume that 10% increase annually.
Retail Price:
Description Models and prices (Rs.)All types of chairs 1. 750
The excessive distribution of the product in local market will be implemented for this purpose 2 sales person will be hired. The supply of product is delivered to local distributor free of cost through company’s own transportation and it varies due to deals with other dealers through company’s own transportation or contract with Transportation Company depending on supply quantity.
Technical Analysis:
The partners will be actively engaged interning management of factory a part from over all management their will be skilled workers CEO, MANAGING DIRECTOR, PRODUCTION MANAGER, FINANCE MANAGER, ACCOUNTANT, TECHNICAL STAFF, FORE MAN etc, who will carry out the policies and decision made for the business.
Manufacturing Process:
The following steps are included in the manufacturing process.1) Initially mixing of color with plastic Resin. 2) Input the material into the injection molding the machine.3) Receive chairs and parts of table as output.4) Assembling and packing.
Electricity requirement capacity for the running of machinery is 40 kw and minimum capacity of other inputs is required.
Personal Analysis:
For the proposed project both skilled and unskilled labour is required which is available at the selected area for the project. For the training of technical staff the services of technical institution and experts are haired. A well mannered process is adopt in hiring and retaining the efficient workers.
Requirement of staff:
25 people will be employed in manufacturing area, 13 will be Employed as Administrative staff, 5 will be employed as security guards and 5 will e as helper in Godown.
Financial Analysis:
The cost of project has been estimated as Rs.30 million including land, civil works, plant & machinery and office equipment. The plant & machinery mainly comprises of injection molding machines, cutter, crusher, mixer, chiller plant. The proposed project is based on the assumption of 50% equity and 50% debt.
Implementation Schedule
The sanction date of above proposed project is 17th May
2010
the legal formalities of the proposed project will be
completed by 20th June 2010
Civil work will start as soon as the legal formalities are
fulfilled and the loaned amount is obtained.
Civil work will take the time period of approximately of 5
months and will start from the 1st August 2010
At 1st September 2010 machineries will be ordered
Delivery of machines will take 3 months and the machinery
will be at site at 5th December 2010
The machinery will be installed in at least 25 days and it will
be ready to start its trial once operations by the end of 1st
January 2010
The trial once operations will take period of one months
and it will end by the end of 1st March the project will start
its commercial operations from the 31st March 2011.
Cost of the Project Local Foreign Total
Rs. (000) Rs. Rs.(000)
Land and its Development 6,692 6,692
Building and Civil Work 15,885 15,885
Machinery and Equipment 10,250 10,250
Engineering and Technical Fee 2,000 2,000
Insurance & clearance 3,909 3,909
Erection & Installation 2,000 2,000
Furniture and Fixture 940 940
Office Equipment 1,010 1,010
Vehicles 28,579 28,579
Pre-production Expense 2,387 2,387
Contingencies 4,000 4,000
Others Expenses 3,323 3,323
Interest During Construction 10,220 10,220
Total Fixed Cost 91,196 91,196
Initial Working Capital 13,804 13,804
Total Cost of the Project 105,000 - 105,000
Net Fixed Assets 88,809
Means of Finance
Debt 60% 63,000 Bank Name ( The Bank Of Punjab)
Total Debt 63,000
Equity 40% 42,000
Total Equity and Debt 105,000
Cost of Project
Initial Networking Capital
Current Assets Amount
Cash 2,351,000
Accounts Receivable 2% of sales 2,902,750
Raw materials 1,476,450
Finish goods inventory 10%production 3,850,000
Stores & Spares 1,568,000
Advances & deposits 1,858,000
Total current asset 14,006,200
Current Liabilities
Accounts Payable 10% of Raw Material 147,645
Accrued Expenses 55,000
Total current Liabilities 202,645
NET WORKING CAPITAL 13,803,555
Financial Ratios
Gross Profit Ratio 0.24 0.33 0.4
Operating Profit Ratio 0.23 0.31 0.39
Net Profit 0.12 0.16 0.21
Payback period 2 Years
IRR 33%
Current Ratio 1.08 1.1 1.13
Cash Ratio 0.8 0.82 0.84
Quick Ratio 0.27 0.28 0.29
Debt/Equity 0.68 0.38 0.19
CapacityAt 100% capacity we can produce 1944 chairs, tables, baby swings, shoe racks and stool daily Monthly 1Product Mix Table:
PRODUCTYearly
production Monthly Daily Product MixPRODUCTION CAPACITY @
100% in Unit
Chairs 1,65,000 13,750 458 24%
Tables 1,50,000 12,500 416 21%
Baby Swing 1,35,000 11,250 375 19%
Shoe Rack 1,00,000 8,333 278 14%
Stools 1,50,000 12,500 417 21%
Total 7,00,000 58333 1944 100%
Production capacity level
Capacity level 80% 85% 90%
Chairs 132,000 140,250 148,500
Tables 120,000 127,500 135,000
Baby Swing 108,000 114,750 121,500
Shoe Rack 80,000 85,000 90,000
Stools 120,000 127,500 135,000
Total 560,000 595,000 630,000
Sale capacity level
Capacity level 80% 85% 90%
Chairs 105,600 133,320 145,464
Tables 96,000 121,200 132,240
Baby Swing 86,400 109,080 119,016
Shoe Rack 64,000 80,800 88,160
Stools 96,000 121,200 132,240
Total 448,000 565,600 617,120
Sales Revenue
SALAES REVENUE Sale Price 80% 85% 90%
a) Production of Chairs 650 68,640,000 95,323,800 113,461,920
b) Porduction of Tables 750 72,000,000 99,990,000 119,016,000c) Porduction of Baby Swing 400 34,560,000 47,995,200 57,127,680d) Porduction of Shoe Rack 500 32,000,000 44,440,000 52,896,000
e) Porduction of Stools 600 57,600,000 79,992,000 95,212,800
Total 264,800 367,741 437,714
Assumptions for Calculation:
1. Operation time 2shifts/day2. Production period 330/year3. Capacity utilization 80% 1st year
85% 2nd year90% 3rd year
4. At 100% capacity
Per day production 1,944unitsPer year production 7,00,000 units
Raw material required @ 100% capacity for all production
a) Dana in Kg 1,500,000
b) Chamicals in Liters 100,000
Cost of Raw Material
1- COST OF RAW MATERIALS 80% 85% 90%
Price Per KGs/Units
a) Dana in Kg 150
180,000,000
191,250,000
202,500,000
b) Chamicals in Liters
50
4,000,000
4,250,000
4,500,000
TOTAL 184,000
195,500
207,000
Cost of Labour Category Nos Salary per Annual
Month(Rs.) Cost (Rs.000)
General Manager 1 50000 600
Technical Manager 2 48000 1152
Production Manager 1 35000 420
Processing of JuiceSection 0
-skilled 30 3500 1260
-highly skilled 10 5000 600
Helpers 8 5000 40
TOTAL 4072
Add: Fringe Benefits @ 50% 2036
TOTAL 6108
Yearly increase in cost of labor 10%
80% 85% 90%YEARLY LABOUR COSTS 6108 6718 7390
Cost of Manufacturing overheadMANUFACTURING OVER-HEADS a) FIXED COSTS (Rs.000) -Pwer KW 500 145 145 KW/Month 870
Furniture Description Quantity Unit cost Amount Table & Chair Set (Owner) 2 25,000 50,000 Table & Chair Set (Customer Service) 2 20,000 40,000 Table & Chair Set (Office Staff) 5 10,000 50,000 Waiting Chairs 20 8,000 160,000 Sofa Set for Customers 5 20,000 100,000 total expenses on instalation of fixtures 1 500,000 500,000 Curtains / Interior Décor 40,000 Total 940,000
VehiclesVehicles No cost Total Toyota GLI Second Hand 1 1,319,000 1,319,000 Mehran 7 950,000 6,650,000 Buses 2 1,100,000 2,200,000 Shezhore Trucks 10 1,700,000 17,000,000 Bolan 3 470,000 1,410,000 Total 28,579,000
“Shining Star plastic Furniture Company”“Estimated cost of Building and civil work”
Building & Civil Works
Sq ft Rate/Sq.ft Cost
Management Block & offices 3264 1000 3,264,000
Shed on production hall 8704 800 6,963,200
Mosque, Guest Room, Kitchen 1088 700 761,600
Flooring 2176 150 326,400
Godown 6528 700 4,569,600
Total Covered Area in Sq.ft 21760 15,884,800
“Starlite plastic Furniture Company”
“Estimated cost for Admin & General Expenses”
Salary Annual per Month Cost
a) Administrative Salaries Nos (Rs.) (000)
Chairman 1 50,000
600
Chief Executive 1 30,000
360
President 1 20,000
240
Financial Controller 1 15,000
180
Purchase Manager 1 10,000
120
Computer Oprater 1 10,000
120
Personal Manager 1 10,000
120
Assistants 5 4,000
240
Clerks and Typists 8 2,500
240
Driver and Peons 7 2,000
168
Sweepers 4 800
38
TOTAL 2,426
Add: Fringe Benefits @ 50% 1,213
TOTAL 3,640
b) General Expenses
Travelling & Conveyance 400
Printing & Stationary 80
Telephone, Telex, Postage 200
Rents, Rates and Taxes 150
Entertainment 120
Legal & Audit 100
Miscellaneous 100
TOTAL 1,150
Total Admin & General Expenses (a+b) 4,790
“Starlite plastic Furniture Company”
“Estimated cost for furniture & fixture”Furniture
Description Quantity Unit cost Amount Table & Chair Set (Owner) 2 25,000 50,000
Table & Chair Set (Customer Service) 2 20,000 40,000
Table & Chair Set (Office Staff) 5 10,000 50,000
Waiting Chairs 20 8,000 160,000
Sofa Set for Customers 5 20,000 100,000total expenses on instalation of fixtures 1 500,000 500,000
Curtains / Interior Décor 40,000
Total 940,00
0
“Estimated depreciation of Asset”
Plant & Machinery 10250 10% 1025
Building 15884.8 5% 794.24Furniture & Fixtures 940 10% 94
Vehicles 28579 10% 2857.9
Office Equipment 1010 10% 101
TOTAL 4771
1)Detail of Prices: R.s per kgPlastic Resinn 150/Kg
Chemica. 50/unit
.2)Insurance:
5% of production block building..
3)Stores and sappers:
Stores & Spares 1,568 46,000 48,875 51,750
Estimated Income Statement
For the Year ended 2,011 2,012 2,013
operating efficiency assumed Rs. Rs. Rs.
Sales 264,800 367,741 437,714
Cost of good Sold:.
Raw material consumed 184,000 195,500 207,000
Labour 6,108 6,719 7,391
Manufacturing expense 40,434 42,618 44,802
Depreciation 4,771 4,771 4,771
Cost Of Goods Manufactured 235,313 249,608 263,963
Add: Beginning Inventory - 35,297 37,441
Less: Ending Inv. 0 35,297 37,441 39,595
Cost of Goods Sold : 200,016 247,463 261,810
Gross Profit 64,784 120,278 175,904
Operating Expenses
General and Admin. Expenses 4,790 5,269 5,795
Total Operating Expenses 4,790 5,269 5,795
Operating Profit 59,995 115,009 170,109
Other Income
Sale of Wastage 200 220 242
Total Other Income 200 220 242
Profit before Non-Operating Expenses 60,195 115,229 170,351
Non-Operating Expenses
Financial Exp. 2,548 8,714 6,647 Amortization of preproduction