Implementation Schedule

Sl. No.	Activity	Period (in months)
1.	Registration and other formalities	1
2.	Acquisition of land and shed	3
3.	Arrangement of electricity and water supply	2
4.	Machinery purchasing and installation	4
5.	Trial Production	1
	Total	11

Technical Aspects
Process of Manufacture

These articles are manufactured by different methods. However, the main operations are:

1) Pattern cutting
2) Economical layout of pattern
3) Clicking of components
4) Skiving
5) Colouring of edges
6) Assembling
7) Stitching
8) Fitting
9) Cleaning and finishing.

The components are cut as per the patterns of various sizes and designs, from the leather by hand after duly checking of the leather keeping in view holes and flaying cuts. The components are then stitched after skiving, wherever necessary. After completion of stitching, handle is fixed and stitched on the central portion of the bag. Zips, buckles, rivets and other fittings are attached. The bags are cleaned, polished, finished and packed.

Quality Control and Standards

Specific standards are to be followed as mutually agreed upon between the manufacturers and the buyers. In case of export, rigid quality control is to be maintained. The quality of product depends upon the purchase of right raw material, grinderies and strict supervision. Final inspection is a must before packing.

Production Capacity (per annum)

	Quantity	Rate	Value (Rs.)
Portfolio Bag (1st Quality)	16000 Pieces	680	10880000
Portfolio Bag (2nd Quality)	20000 Pieces	560	11200000
Total			22080000

Motive Power

5 HP.

Pollution Control

These types of leather goods industries do not pollute. Hence, no arrangement is necessary to check the pollution.

Energy Conservation

Energy conservation in this type of unit is on the lower side since low power motors are used in the production line. The staff of the unit should be made aware of the need to conserve energy by switching off the energy sources when not required.

Financial Aspects
A. Fixed Capital

(i) Land and Building	(Rs.)
Land 300 sq. mtr @ Rs 5000/- per sq.mtr	1500000
Office building, Lab. Store 100sq.mtr. @ 7000/mtr.	700000
Floor area construction ,factory shed, Boundary wall etc. 200 sq.mtr. @ Rs 5000/per sqmt	1000000
Total	3200000

(ii) Machinery and Equipments

Sl. No.	Description	Total H P	Ind. Imp.	Qty.	Rate	Amt (Rs.)
1.	Flat-bed Stitching machine	1	Ind.	2	15000	30000
2.	Cylinder-bed stitching machine	0.5	Imp.	1	160000	160000
3.	Skiving machine	0.5	Ind.	1	70000	70000
4.	Splitting machine	1	Ind.	1	280000	280000
5.	Punching machine	0.5	Ind.	1	30000	30000
6.	Roughing, Buffing and Polishing machine	0.5	Ind.	1	30000	30000
7.	Cutting table for components	-	-	2	10000	20000
8.	Tools and Equipments	-	-	L.S.		80000
9.	Office equipment and furniture,	-	-	L.S.		100000
10	Taxes , Erection Electrification and Installation charges @ 40% upto Sl. No. 6					240000
	Total					1040000

(iii) Pre-operative Expenses	50000
Total Fixed Capital (i+ii+iii)	4290000

B. Working Capital (per month)

(i) Personnel (per month)

Sl. No.	Designation	No.	Salary (Rs.)	Total (Rs.)
1.	Manager	1	17000	17000
2.	Supervisor	1	8000	8000
3.	Cashier-cum-Accountant	1	6,000	6000
4.	Store keeper-cum-typist	1	4500	4500
5.	Master Cutter	2	7000	14000
6.	Machine Operators	10	6000	60000
7.	Skilled Worker	4	6000	24000
8.	Semi-skilled worker	4	4000	16000
9.	Helper	4	3000	12000
10.	Peon	1	3000	3000
11.	Watchman	1	3000	3000
12.	Sweeper	1	3000	3000
	Total			170500
	Add. 22% perquisites			37510
	Total			208010

(ii) Raw Material (per month)

3000 Nos. Portfolio Bag.

Sl. No.	Designation	Qty.	Unit	Rate	Value (Rs.)
1.	V.T. finished leather/Semi-chrome leather-brown/coffee brown/black colour (1.2 mm to 1.5 mm)	3600	Kg. (Approx.)	250	900000
2.	Grinderies, Lock, D-ring, Zip, rivets, adhesive, thread etc.)	L.S.(3000 pieces)		100	300000
3.	Packing	L.S.		6 per piece	18000
	Total				1218000

(iii) Utilities (per month)

Sl. No.	Description	Amount (Rs.)
1.	Power requirement including lighting, fan etc.	15000
	Total	15000

(iv) Other Contingent Expenses (per month)

Sl. No.	Description	Amount (Rs.)
2.	Postage and Stationery	4000
3.	Telephone	5000
4.	Consumable stores	10000
5.	Repair and Maintenance	10000
6.	Transport charges	15000
7.	Advertisement and publicity	20000
8.	Insurance	6000
10.	Sales & Marketing Expenses	20000
11.	Misc. Expenses	10000
	Total	100000

(v) Total Recurring Expenditure (per month)

Sl. No.	Description	Amount (Rs.)
1.	Salary and Wages	208010
2.	Raw Materials	1218000
3.	Utilities	15000
4.	Other contingent expenses	100000
	Total	1541010

(vi) Working Capital (for 1.5 months)

Rs. 1541010 X 1.5 =

2311515

C. Total Capital Investment

Sl. No.	Description	Amount (Rs.)
1.	Total Fixed Capital	4290000
2.	Working capital for 1.5 months	2311515
	Total	6601515

Machinery Utilisation

Initially there will be 50% utilization of major machines which will increase thereafter @ 10% per year and consequently 90% utilization will be achieved in course of time, say, between 4-5 years.

Financial Analysis

(1) Cost of Production (per annum)

Sl. No.	Description	Amount (Rs.)
i)	Total recurring cost	18492120
ii)	Depreciation on machinery @ 10% including installation charges	86000
iii)	Depreciation on tools and equipment @ 25%	20000
iv)	Depreciation on office equipment and furniture @ 20%	20000
v)	Depreciation on building @ 5%	160000
vi)	Interest on Total Capital Investment @ 12%	792182
	Total	19570302

(2) Turnover (per annum)

Sl. No.	Items	Qty. in No.	Rate/piece	Price (Rs.)
1.	Portfolio bags 1st quality	16000.	680	10880000
2.	Portfolio bags 2nd quality	20000	560	11200000
	Total			22080000

(3) Net Profit (Before taxation) Amount	(Rs.)
Turnover	22080000
Cost of Production	19570302
Total	2509698

(4) Net Profit Ratio
		Net Profit per year x 100
	=	———————————
		Turnover per year
		2509698 x 100
	=	————————
		22080000
	=	11.37
(5) Rate of Return on Total Investment
		Net Profit per year x 100
	=	———————————
		Total Investment
		2509698 x 100
	=	————————
		6601515
	=	38.02

(6) Break-even Point

Fixed Cost

Sl. No.	Description	Amount (Rs.)
ii)	Depreciation on machinery @ 10% including installation charges	86000
iii)	Depreciation on tools and equipment @ 25%	20000
iv)	Depreciation on office equipment and furniture @ 20%	20000
v)	Depreciation on building @ 5%	160000
vi)	Interest on Total Capital investment @ 12%	792182
vii)	Insurance	72000
viii)	40% of salary and wages	998448
ix)	40% of utilities	72000
x)	40% of other Contingent expenses (Excluding insurance)	451200
	Total	2671830

B.E.P.
		Fixed cost x Profit
	=	————————-
		Fixed cost + Profit
		2671830 x 100
	=	——————————
		2671830 + 2509698
	=	51.56

Additional Information

With the same plant and machinery, it is possible to manufacture different types of leather goods namely industrial hand gloves, suitcases, briefcases, bags etc.

Addresses of Machinery and Equipment Suppliers

1. M/s. Benson Industries,
96, Shri Aurobindo Road,
Salkia, Howrah.

2. M/s. Bengal Machinery Co. (P) Ltd.
9-A, New Tangra Road,
Kolkata-700 046.

3. M/s. PTDC (Under NSIC)
Industrial Estate,
Ekkaduthangal,
Chennai-97.

4. M/s. Bharat Sales Agency
Gesham Assurance House,
3rd Floor, Sir P.M. Road,
Mumbai-1.

5. M/s. Leather and Packaging
Machinery Corpn.,
1/23-B, Asaf Ali Road,
New Delhi-110001.

Raw Material Suppliers

1. M/s. Modern Leather Stores
1, Biddhan Sarani,
Kolkata-700 012.
(Misc. Items)

2. M/s. Vallappa Leather Corporation
Narayana Chetty Street,
Periamet,
Chennai-1.
(Misc. Items)

3. M/s. Asia Tannery (P) Ltd.
1/A, Jazmau,
Kanpur.
(Leather only)

4. M/s. Zaz Tannery
150, Feet Road,
Jazmau,
Kanpur.
(Leather only)

5. M/s. Kazi Khilafat Hussain and Co.
Lower Chitpur Road,
Kolkata-700 001.
(Leather only)

6. M/s. T.A. Abdul Wahid and Co.
26, Vepery High Road,
Chennai-600 003.
(Leather only)