A Project Report

On
Garments factory

Submitted to:

Javeed Iqbal Sb.

Submitted by:
Hassan Raza 60
Shahid Abbas 47
Momal Javeed 26

M.s.c A/F (Afternoon) 3rd semester

Session: 2008-10

Department of Commerce
In the Name of Allah, the Most Merciful, the
Most Beneficent

Dedicated
To
Our Lovers
 Whose endless support and kindness is
beyond expressions and words may not
just be enough to express our gratitude.

Preface

First of all, all thanks to Almighty Allah who gave us the strength,
Patience and inspiration needed to complete this report.
Knowledge is power and knowledge comes through studying and
thinking but practical knowledge comes through observing
 things closely and working practically.
For improving our practical skill the Commerce department

has given a chance to explore the knowledge in different projects.

This practice will be beneficial in future while working in any organization

So for this purpose we selected project on GARMENTS FACTORY..

Acknowledgement

We bow our head, before ALLAH Almighty, who blessed us with

Potential and stamina to complete our report.

First of all we would like to pay our special regards and thanks to Respected Sir

Javeed Iqbal Sb. who provides us guidance at each and every step, in

completion of this report.

 TABLE OF CONTENTS

EXECUTIVE SUMMERY:
Name of project
Location & site selection
Organizational Profile:
Technical study
Estimated cost of the project
Implementation Schedule
Financial Ratios
Introduction:
PROJECT PROFILE
Legal status
Advantages
Project brief
Name of promoters
Market Analysis
Target Customers
Exports of Pakistan
Market Demand
Market supply
INDUSTRY GROWTH:
Ex- Factory price
Retail price
Distribution Channel
Technical Study
Financial Analysis:

ANNAXTURE:
Estimated cost of land
Estimated cost of Machinery and office equipment
Estimated cost of Building and civil work
Estimated cost of salaries and wages
Estimated cost of furniture and fixture
Estimated Depreciation of assets
Capacity:
Product mix table
i) At 60% capacity
ii) At 70% capacity
iii) At 80% capacity

Assumption for calculation:

Raw material volume
Detail of prices
Power and Fuel
Insurance
Store and Sappers
Manufacturing and Selling Expenses
SWOT Analysis:
References:

Name of Project:

Garments industry

Named

HMS mens garments

Project Location:

The proposed location of mens garments is located near NRSP university

road Bahawalpur.

Location & Site Selection:

Location Study:

Selection of proper site is an important step, some of the basic considerations in selecting site
are:

Soil characteristics
Cost of land
 Approach to site for transportation of raw material, finished products,
employees, etc.
Sources and availability of water
Availability of power
Availability of skilled manpower
Social amenities in the area
Availability of tax incentive, if any
Facilities for drainage and effluent disposal
Acceptance of the project by the local population

Office Location
Mens ready made garment office is situated at university road near NRSP office Bhawalpur
Pakistan.

Organizational Profile:

The organization is a partnership entity comprising 3 equal partners. Partners are equally
liable. All the partners belong to Bahawalpur. Following are the partners:

1. Hassan Raza

2. Momal javeed

3. Shahid Abbas

Business has its operational plant 3 KM from Islamia university new campus
BAHAWALPUR

Product Market Survey:

The product of the organization has much demand because of the large number of consumers.
These days overall garments industries grooming so the demand of the product is increasing.
Also the product has its demand outside the country. Politically the garment industry has much
importance and government also wants to promote the industry

Raw material Survey:

The raw material survey confirms that adequate material will be available to supports the
project. Raw material may available in fabric form. The managers has great experience to
purchase the raw material i.e. fabric. Raw martial which we use we purchase from Nishat
textile mill Faislaabad.

Technical Study:

Technically the project is totally feasible. Machinery and equipment needed to run operations
is locally available.

Machinery

Flat lock
Over lock
Stitching machine

Products
Unit is producing different types of Readymade Garments which includes i.e.

T-Shirt
Dress Shirt
Dress Pent

Human resource requirement

70 employees work as a
Stitching 3 security guard
1 driver
8 staff members

Installed Capacity Of project:

The initial stage the capacity of the ready made garment is 60% . our machine capacity is very
much outstanding but the labor is not available whiles the 100% capacity of the machinery is
500 per day.

Estimated cost of the Project:

The estimated cost of the project is R.s 25 Million. Project cost would include
Fixed cost and working capital requirements. Fixed cost would normally include cost of:

Land
Building and civil works
Machinery and equipment and its installation
Office equipment and furniture
Office vehicles
Pre-operative expenses
Working capital

Project Investment:

Description Total Cost

(Rs. in Millions)
Fixed Investment 24.233816
Working Capital 0.766184
Years
Total Investment 2010 2011
25 2012
Estimated 60% 70% 80%
capacity

Means of finance:

Equity 40%
Debt 60%
Name of Lenders:

Project will take long term finance from National Bank of Pakistan to finance its fixed cost.

Terms for Financing Source Expenditure to be

Financed
Long-term financing Loan from NATIONAL BANK Fixed cost and
OF PAKISTAN Working Capital

Name of Machinery Suppliers:

Citizen machinery suppliers sargodha road, Faislaabad.

Implementation Schedule:

Start completion Start finish

Establishment of local machinery

Engineering studies and designing of civil works 1 sep 2009 31st Dec 2009

Order for local machinery 1 Sep 2009

Arrival of local machinery at site 2 Oct 2009

Construction of a building and civil works 15 Sep 2009 30 Nov 2009

Erection and installation of machinery 5th Nov 2009 20 Nov 2009

Order for raw material 20 Nov 2009 30 Nov 2009

Trail runs 1st Dec 2009 31st Dec 2009

Start of commercial production 1st Jan 2010

Financial Ratios:
years 2010 2011 2012
Net profit margin 9.49 14.47 24.52

Current Ratio 57% 59% 61%

Debt equity Ratio 40:60 - -

Gross margin 32.48 31.12 36.66

EPS 0.02 0.03 0.06

Interest coverage 1.76 2.82 6.14

Sponsor Stake 40 - -

INTRODUCTION
The cost of the project has been estimated RS. 25 million in which includes
machinery cost of building staff salaries furniture and fixtures are included in the cost of the
project of ready made mens garments which is located at NRSP near university road
Bahawalpur. This study provides information and guidelines about the investment
opportunities in stitching unit for dress shirts and pent for men. The production of this unit
will be utilized for meeting the countries requirements and earn the revenue. There is vast
Varity in dress pants in relation to quality of the fabric used , style, stitching techniques etc.
This project will start its operations on commercial bases

Production Process Flow:

Procurement of
Finished Fabric

Cutting

Stitching

Trimming

Final Inspection
 Pressing

Packing &
Dispatch
Advantages:

Advantages of the project are as follows

. The following are the main key success factors:
Strong marketing skills/knowledge is required from entrepreneur
Assurance of high consistent quality
Assurance of on time delivery
Competitive rates
Cost efficiency
Better services to the customer i.e. claim settlement etc.
Better communication development with customers

Project Brief:

Name of project promoters:

HASSAN RAZA
MOMAL JAVAID
SHAHID ABBAS

Market Analysis

For formulating strategies for marketing in the local markets, the following should
Be considered:
A market opportunity analysis to determine suitable sales market(s) and suitable
Sales channels.
1. Selection of target markets to identify suitable markets for selling trousers dress shirts and
T-shirts.

As we know that the scope of the ready made garments is every where.beacuse such products
are useable in every where like offices schools colleges universities etc.

Target customers:

Our target is upper middle and lower level of the people because our mission is to provide
standard quality of the product at cheaper prices and to capture the market.
EXPORTS:

Pakistans Export (Means, boys suits, jackets, trousers etc knit or

crochet-2003-2006)

Reporting Countries Trade Value in $Millions

USA 27.794484
United Kingdom 4.204848
Spain 2.241756
Italy 2.373816
Germany 1.947852

1000000

800000
USA
600000 United Kingdom
Spain
400000
Italy
200000 Germany

MARKET DEMAND

At present there is high demand of GARMENTS because of increasing in demand of made

ups. Due to increasing trend of made ups demand of garments is increased. This trend has led
to enhancing the confidence in the minds of the general public regarding the wearing of
fashionable made ups. The location of project plays pivotal role, towards its successful
running. Therefore, the location of the above project is prime.

Market Supply

There are many ready made garments units are working in Pakistan but they are unable to
meet the demand of the customers .we are confident that to meet the local market .and we
know that there is no even one stitching. Unit in Bahawalpur
INDUSTRY GROWTH

There has been a tremendous growth in this sector over the years. The total numbers of
garments industries are increasing to fulfill the demand of market. So, in coming years
demand of garments must increase because population is increasing. Overall industry growth
is good.

Ex factory price

Description Prices (Rs.)

Dress Shirts 180
T-shirts 150
Pants 220

Annually 5 % increase in prices.

Retail Price:

Ref: geo garment .B.W.P

Description prices (Rs.)

All types of shirts 550

350
250
All types of pants 800
600
550
350

Technical Study:

Technically the project is totally feasible. Machinery and equipment needed to run operations
is locally available.
List of Machinery:

Flat lock
Over lock
Stitching machine

Materials and inputs:

Finishing fabric
Yarn
Button
Zip
Hooks
Needle
Sewing thread
Labels fusing {buckram}
Packing material
Buckles

Personal Analysis

For the success of the project skilled and unskilled workers are hire. Such workers are
available at project place at cheaper prices so we are decided to provide the training to
unskilled labors for future need also.
Financial Analysis
The cost of the project is RS. 25 million Which is included machinery which included over
lock, karal mayors machine. which are included.60% capacity of our debt and remaining 40%
is equity.
 Estimated cost of land

Sr. No Description Rs. In (000)

1 3 Kanals land 6600

(@ 110000 /Marla)

2 Transfer charges 330

(@ 5% of cost of land)
3 Development charges 330
(@ 5% of cost of land)

Total cost of land 7260

 HMS Mens ready made garment industry

Estimated cost of Machinery and office Equipment

Sr. No Description Quantity Per unit Total cost

cost (Rs in 000).
1 flat lock 25 25000 625

2 Stitching 25 12000 300

machine
3 Over lock 10 23000 230
machine
4 seizer 100 100 10

6 grantor 1 1000000 1000

7 telephone 3 1000 3

8 printer 1 10000 10

9 Air 2 32500 65
condition
10 Room 5 10000 50
cooler
11 Security 3 6000 18
cameras
12 computers 2 10000 20

13 Fax machine 1 9400 9.4

14 scanner 1 5500 5.5

Total 2345.9

Estimated cost for salaries and wages

 Designation No of employees Wage rate Amount
(Rs. In 000)
CEO 1 30000 30
Managers 1 18000 18
Supervisors 3 10000 30
Accountants 1 15000 15
Skilled labour 60 20+40 187.2
Non-Skilled 10 5000 50
labour

Guards 3 5000 15
Derivers 1 5000 5
Office boys 2 4000 8
Total 82 358.2

Monthly salaries & wages Rs. 358200

Annually salaries & wages Rs. 358200*12= 4298400

Assuming annually increase in salary 2%

Estimated cost for furniture & fixture

Sr. No Description Quantity Per unit cost Total cost
(Rs. In 000)
1 Wooden 70 170 11.9
stool
2 trolleys 3 7000 21
3 Cutting 7 4000 28
+finishing
tables
4 racks 2 1800 3.6
5 Mirror tables 2 12000 24
6 Office chairs 6 6000+1500 18
7 Visitors sofa 1 10000 10
8 Common 20 450
chairs
Total cost 116.5

Estimated depreciation of Asset

Items Values Rate Amount

Machinery 2165000 10% 216500
Building 12729600 10% 1272960
Office equipment 180900 20% 36180
Computers etc
Furniture & 116500 10% 11650
fixture
Total 1537290
Capacity
At 100% capacity we can produce 500 dress shirts, T-shirt and pant daily
Monthly 13000{500*26}

Ready made garments Quantity Produced per Product Mix

Month
Dress shirt 5200 40%
T-shirt 5200 40%
Dress pent 2600 20%
Total 13000 100%

At 60% capacity:
Daily Monthly Annually

300 7800 93600

Annul Inventory 10% of production 9360

At 70% Capacity:
Daily Monthly Annually

350 9100 109200

Annul Inventory 10% of production 10920

At 80% Capacity:
Daily Monthly Annually

400 10400 124800

Annul Inventory 10% of production 12480

Assumptions for Calculation:

1. Operation time 1 shift/day

2. Production period 312/year
3. Capacity utilization 60% 1st year
70% 2nd year
80% 3rd year
4. At 100% capacity

Per day production 500 units

Per year production 156000 units

Raw material volume: (in meters)

Year 1st 2nd 3rd

Capacity 60% 70% 80%
utilize
Finished 75000 87500 283500
fabrics

Detail of Prices: Rs. per meter

Fabrics (55+85+105) 245/{1.5meetr}

2% Increase in prices for each year is projected.
Power & Fuel

Fixed energy charges for electric connection of 25kv 100000

Estimated variable energy charges are @ 6.50/ unit produce. Because the energy
cost is less compare to day charges. we are also purchase generator for
emergency.

Insurance:

2%. Of production building

2% of office furniture

Stores and sappers:

Year 1st 2nd 3rd

Amount 20000 25000 30000
 Manufacturing admin & selling Expenses

Year 1st 2nd 3rd

Capacity 60% 70% 80%
utilization
Fixed:
Power 100000 100000 100000
Insurance:
Building 87584 87584 87584
Depreciation:
Building 1272960 1272960 1272960
Machinery 216500 216500 216500
Variable exp:
Power 608400 709800 811200
Wages & salaries 2846400 2903328 2961395

Store & spares 20000 25000 30000

Total 5151844 5315172 5479639
manufacturing
exp
Admin & Selling
Exp:
Salaries 1452000 1481040 1510660
Postages & 30000 32000 34000
telegram
Printing & 40000 42000 44000
Stationary
Advertisement 100000 105000 110000
Depreciation:
Office equipment 36180 36180 36180

Furniture & 11650 11650 11650

Fixture
Insurance:
Furniture & 2330 2330 2330
Fixture
Total 1672160 1710200 1748820
SWOT Analysis
1 Strengths

Raw material available locally

Infrastructure available
Excess install capacity
2 Weaknesses

Four times less productivity by use of local made old technology

Non conformity of standard
Semi skilled labor
No technical training institute for Ginning Industry
Cluster Development Program Area
Cluster Profile Cotton Ginning Area 1 2
No testing laboratory for staple and fiber testing
Contaminated cotton
High rate of contamination
Lack of online market facility to access international buyers
No warehouses and cotton lint storage facilities
3 Opportunities

Introduction of latest modern ginning technology being used in developed

countries
Export of cotton to other countries
Possibilities to achieve premium for best quality that government had
announced on the basis of grade
Access to international markets through online market
Ginning Training Institute
4 Threats

Shifting trend from cotton fiber to polyester fiber

Government regulations i.e. lot of taxes on the industry
Fluctuation in international market price
Global Competition
Pest diseases on cotton crop result in low production of cotton lint
Import of cotton
WTO
 References

Three star multan Mr. ameen manager

Mr. Rizwan faisalabad masood textile mills faisalabad
Geo garments Bahawalpur
Huzaifa property dealers one unit chowk Bahawalpur
Wood works D.I.G chowk Bahawalpur
Sajid computer university chowk Bahawalpur
Citizen machinery works Faisalabad
National Bank Pakistan