Project businesss plan

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Project Management

Project Report: Business plan of

December-2011

Millenium Garments Ltd.

The garment industry of Bangladesh has been the key export division and a main source of foreign exchange for the last 25 years. At present, the country generates about $5 billion worth of products each year by exporting garment.

ASA University Bangladesh (ASAUB)

ASA University Bangladesh (ASAUB)

Agenda

Project summary (introduction) Overview of the industry and promoter Overview of the project Project proposal Findings and recommendation conclusion

2 Millenium Garments ltd

Project Summary3 Millenium Garments ltd

Overview of the Industry and Promoter

Information of garments industryContribution of RMG to our national economyExport Earning (Region wise)Factors helping our RMG and Textile sector to continue its growthKey issues and challenges that face the RMG sectorProfile of the Millenium Garments Ltd.


Information of the garments industry.

a main source of foreign exchange for the last 25 years.

The vibrant growth in this sector has been possible due to quota restriction in the USA, Canada under Multi-fibre Arrangement regime and Preferential GSP facilities in the EU market.

Under the MFA system, Bangladesh enjoyed an ensured market restricted by quota limit to our competitors.


Contribution of RMG to our national economy and GDP:

the country generates about $5 billion worth of products each year by exporting garment.

Over 1.8 millions workforces are directly employed in this sector,

80% of whom are women


Export Earning (Region wise)

Total export in RMG sector during 2004-2005 amounted to U.S. Dollar 6.4 billion.

The major destination of our RMG products is EU, USA, Canada, Japan, and Australia.

Countries 2003 -2004 %2004 - 2005

%

EU 3653.59 64.25 3921.93 61.11

USA 1628.18 28.64 2023.96 31.54

Canada 256.70 4.51 307.25 4.79

Others 147.62 2.60 164.53 2.56

G. Total 5686.09 100 6417.67 100


Factors helping our RMG and Textile sector to continue its growth:

Duty free import of capital machinery & raw materials for export oriented RMG & Textile Industries.

Continuation of cash incentive in export of RMG & Textile products.

One-Stop-Service for FDI. Reduction of interest rates in export credit & port

charge. Permission to set up RMG industries in EPZ area with

100% foreign investment.

Initiatives of both the Government & exporters’ associations in collaboration with different development partners to make the sector compliant.


Key issues and challenges that face the RMG sector

They demand that minimum labor standards, occupational safety measures and other environmental concerns are properly addressed by the suppliers.

As a result, compliance issue has come out as a major threat to our RMG sector.

All the big and medium range buyers are setting different conditions (code of conduct) as precondition to secure order.

Price fall against volume of export. A core labour standard which covers wages, working hours,

overtime, safety, job-security, right to form trade unions, environment and social security are being negotiated under compliance issues.


Profile of the Millenium Garments Ltd.

Established in: 1998 Products: men's shirts, pants, sweater etc Exports its garments :Canada, Germany, Belgium

and Netherlands Founder & The Managing Director : Nomare Sattar.

a Canadian citizen.

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Millenium Garments ltd

Overview of the Project

Details of the projects Products Target customer, pricing strategy,

competitive advantage and constraints of this project

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Details of the project

Millenium Garments Ltd. Name of the Project : Business plan of Millenium

Garments ltd.(extension unit)Location of the Project : Delwar Complex ,26, Hatkhola

Road, Shahid Nazrul Islam Aveneue , Dhaka-1203

Mission: producing high quality garments at competitive prices using a skilled workforce, superior raw materials and complying with social standards.

Vision: seeks to achieve the objectives set out by the most economical way of using its available resources

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Products

(Extension Unit) produce knit basic sweater to designed highly fashionable ones including woolen jumper, muffler, full sleeve, t-shirt, men's shirt etc. Some product of the Millenium Garments ltd. is given below:

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Target customer, pricing strategy, competitive advantage and constraints of this project

Target Customer: Canada, , EEC, UK, France , Germany, Belgium and Netherlands etc.

Pricing strategy: FOB or C&F basis or on CM basis Competitive Advantage: Tax holiday benefit of 5

years for newly set-up export oriented industries, Cheaper infrastructural facilities, Possibilities of getting duty and quota free access to

EEC ,USA, Canada and Japan Constraints: Incompetent ports, entry/exit

complicated and loading/unloading takes much time.

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Project proposal

Planning: land, capital, resource and equipment Timeframe and duration of projects Analysis (market, technical, financing, capital

budgeting tools, risk and uncertainty analysis) Economic and Ecological analysis (SCBA) FRICTO analysis Implementations Review

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Planning: Land, Capital, Resource and Equipment

land-The project is proposed to be located at Hatkhola Road,

Installation expense: estimated TK.7,00,000 Start-up Finance: estimated at Tk.5,93,06000 only including a

net working capital of TK. 1,05,00,000. 13 Nos Computerized Jacquard Knitting Machines 120 Nos Hand Driven Flat Knitting Machines, 90 Nos Linking Machines, 4 Nos Winding Machines, 01 No Hydro Extractor (200 Lbs), 01 No 165 KVA Diesel Generator, 03 Nos 50 KVA UPS.

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Timeframe and duration of projects

high-level schedule milestones here

1yr 2yr 3Yr 4Yr 5Yr 6Yr 7Yr 8yr 9yr 10yr goal

Phase 1(PBP)

Phase 2

Phase 3

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Analysis: (Market analysis)

Market analysis: business within existing and future markets plan presents a market-research survey, locating your business in the market environment. They analyze-

Participants in this industry Distribution patterns identify the main competitors.

Analyze the strengths and weaknesses of the offers of competitors by comparing their offers to customer.

Our own decision (As a Project Manager):we will conduct:

Internet Search Requests & Online Competitor Research

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Analysis: (Technical analysis)Flow of manufacturing process1

9Millenium Garments ltd

Technical analysis

Our own decision (As a Project Manager):As a project manager we conduct the technological

analyzes as –

First select the modern technology

Consider the alternatives

Hire the experienced technical expert

Provide the clear idea about plant capacity and functional layout.

Create the web address

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Analysis: (Financial analysis)

Financial Estimates and Projections: Cost of Project : The total cost of project is

Tk.5,93,06,000

Working Capital : The working capital of Tk. 1,05,000

Means of financing : Debt &equity financing

Sales Revenue 1,97,400Total Production Cost ,administration expense

1,58,449

Cash inflow of project 1st yr- 25583 2nd yr- 28919 3rd yr- 28228Analysis of total Cost Total cost Fixed Cost Variable CostTotal 1,58,449 18,784 1,39,665

Figures in‘000 Taka

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Capital Budgeting tools

Capital

investment

of this

project

Year Net

present

value

(NPV)

Internal

Rate of

Return

(IRR)

Accounting

Rate of

Return

(ARR)

Profitability

index(PI)

Pay

back

period

(PBP)

5,93,06,000 10 668200

0

18.34% 46.49% 1.01 2.37

(year)

Capital budgeting tools in this projects: PBP, ARR, NPV, IRR AND Profitability index

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Our own decision (As a Project Manager):

As a project manager we will also used the same tool they used. But as a project manager we used many tools for feasibility to the finance.

The above information ensures project profitability.

Decision criteria Accept if PROJECT IS

ACCEPTABLE

Pay back period PBP < Target period 2.37 < target period

Accounting rate of

return

ARR > Target Rate 46.49 % > target rate

is 15.56

Net present value NPV > 0 6682000 > 0

Internal rate of return IRR > Cost of Capital 18.34% > cost of

capital

Benefit of ratio BCR > 1 1.0 1> 1

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Risk and Uncertainty:(Sensitivity analysis)

Decision: Variable cost is the most sensitive in this project; because it has more deviates of pessimistic as well as optimistic situation of expect NPV.

Range NPV

Variables Pessimistic Expected Optimistic Pessimistic Expected Optimistic

Investment 70,000 59306 50,000 13,270 23,964 33,270

Sales 1,50,000 197400 2,00,000 63,081 23,964 60,964

Variable

cost

80% 70% 65A% 14,011 23,964 87,651

Fixed cost 12,000 10,000 8,000 58,130 23,964 68,078

Investment Figures in‘000 Taka

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Economic analysis (SCBA)

Contribution to GDP: On completion, the project will add Tk. 7,83,73,000 to the GDP.

Project estimated cost: 5,93,06,000UNIDO(Difference between Social value-Economic value)

Project market value: BDT-5.7Core

Adjusted factor[ (sv/mp)-1):(145/100)-1=.45

Adjustment factor*market price=2.25

Social value= 8.28

Social Benefit > cost

We found it’s a ecologically friendly project.

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FRICTO & Implementation & Review

flexible financing condition because they financing their debt by providing 9.5% interest to the Agrani bank.

Risk-more buyers response and getting more revenue so they can easily recover their debt.

Control have the full power to take decisions and implement all relevant decisions.

Implementation: This project will start commercial operations within three months from the date of installation of the machines.Review: They have continues review to their project. Corrective initiative if any uncertainty occur.

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The Millenium Garments ltd.

FINDINGS AND

RECOMMENDATION

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Findings:

After completing all required part we found some problems. These are given below:

Lack of research & development; Lack of experienced people; Lack of energy supply; External raw materials supply; Negative image of Bangladesh in the international

market for less concern on human and social issues; Time-consuming custom clearance;

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Recommendation:

For solve above problems we draw some recommendation:

The Millenium Garments ltd. need to be develops research and development division. To introduce new product to the buyers;

They have to be analyze market in proper way; Provide training facility to workers for the

improvement ; Satisfy workers and provide a helpful working

environment; Provide fastest delivery to the buyers.

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Conclusion

The Ready-Made Garments (RMG) industry occupies a unique position in the Bangladesh economy. It is the largest exporting industry in Bangladesh, which experienced phenomenal growth during the last 25 years.

By taking advantage of an insulated market under the provision of Multi Fibre Agreement (MFA) of GATT, it attained a high profile in terms of foreign exchange earnings, exports, industrialization and contribution to GDP within a short span of time.

By this project they create employment opportunity. They have many competitors in this field. But they always provide better service more than their rivals. They are trying their level best to do the business successfully.

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Project businesss plan

Economy & Finance

millenium

factors helping

main source

extension

region wise

country generates

pricing strategy

target customer