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Portfolio Bag

This document provides information for establishing a portfolio bag manufacturing business with an annual production capacity of 18,000 pieces. Key details include: - The total capital required is Rs. 25.23 lakhs, including Rs. 6 lakhs for fixed assets like machinery and Rs. 19.23 lakhs working capital. - The annual turnover would be Rs. 93.5 lakhs with a net profit of Rs. 12 lakhs, giving a 12.8% net profit ratio and 47.6% return on total investment. - The breakeven point is estimated at 47.84% production capacity. - Supplier information is provided for machinery, equipment, raw materials and addresses

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216 views5 pages

Portfolio Bag

This document provides information for establishing a portfolio bag manufacturing business with an annual production capacity of 18,000 pieces. Key details include: - The total capital required is Rs. 25.23 lakhs, including Rs. 6 lakhs for fixed assets like machinery and Rs. 19.23 lakhs working capital. - The annual turnover would be Rs. 93.5 lakhs with a net profit of Rs. 12 lakhs, giving a 12.8% net profit ratio and 47.6% return on total investment. - The breakeven point is estimated at 47.84% production capacity. - Supplier information is provided for machinery, equipment, raw materials and addresses

Uploaded by

pradip_kumar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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17

Portfolio Bag
PRODUCT CODE

: 293999007/293101000

QUALITY AND STANDARDS

: As Per Buyers Specification

PRODUCTION CAPACITY

: Qty. 18000 Pieces (per annum)


: Value: Rs. 93,50,000

MONTH AND YEAR


OF PREPARATION

: January, 2003

PREPARED BY

: Small Industries Service Institute


C.G.O. Complex, Block C, Ground
Floor, Seminary Hills, Nagpur-440 006.
Phone Nos.: 2510046/2510352.
Fax No. : 07122510352

INTRODUCTION
Portfolio bags made of leather are
used generally by office goers as well as
by business people to carry papers, pen,
pencils, tiffin box and personal
belongings etc. These types of bags are
also widely used by medical
representatives because they need to
keep a large number of samples of
medicines.
Portfolio bags are made of vegetable
tanned leather/semi-chrome leather. All
the machines and raw materials used
for its manufacture are easily available
from indigenous sources and not much
technology is involved in manufacturing.

MARKET POTENTIAL
The scope of manufacturing this item
is increasing due to the growing demand
of Portfolio bags in cities from the
increasing number of consumers.
Hence, the market of portfolio bags
required by the office-goers and
travellers is very bright. Portfolio bags

industry is located mainly in Kolkata,


Mumbai, Delhi, Chennai, Kanpur and
Bangalore. The item has demand not
only in India but also abroad. India is
exporting portfolio bags and similar
types of items to Bangladesh, Nepal,
Middle East, Germany, Canada etc.

B ASIS AND PRESUMPTIONS


(1) The production is based on single
shift basis of 8 hours per day and
25 working days in a month i.e.
300 working days in a year.
(2) The unit is expected at 60%
efficiency in the first year and 90%
efficiency will be achieved within
3-4 years.
(3) Time period for achieving
envisaged capacity utilization is 3
months after trial run.
(4) Interest rate is calculated @ 15%
per annum on average.
(5) Payback period is 4-5 years.
(6) Labour will be engaged on
monthly basis, which is more than

P ORTFOLIO BA G

the minimum wage declared by


the State Govts.
(7) Considering the product and
usage, the project can work for
more than 20 years.

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

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.)

TECHNICAL ASPECTS

Portfolio Bag
(1st Quality)

8000
Pieces

575
each

46,00,000

Process of Manufacture

Portfolio Bag
(2nd Quality)

10000
Pieces

475
each

47,50,000

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

Total

Motive Power

93,50,000

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.

105
104

106

P ORTFOLIO BA G

FINANCIAL ASPECTS

Sl. Designation
No.

A. Fixed Capital

6. Machine Operators

4,000

20,000

7. Skilled Worker

4,000

8,000

8. Semi-skilled worker

3,000

6,000

(i) Land and Building

Amount (Rs.)

Covered shed (2000 sq.ft.) allotted


by State Govt. at subsidized
rate on rent per month

5,000

(ii) Machinery and Equipments


Sl. Description
No.

Total Ind. Qty. Amount


H P Imp.
(Rs.)

1. Flat-bed Stitching
machine

Ind.

20,000

2. Cylinder-bed
stitching machine

0.5

Imp.

1,00,000

3. Skiving machine

0.5

Ind.

50,000

4. Splitting machine

Ind.

1 2,00,000

5. Punching machine

0.5

Ind.

20,000

6. Roughing, Buffing
and Polishing
machine

0.5

Ind.

20,000

7. Cutting table for


components

10,000

8. Tools and
Equipments

L.S.

50,000

9. Office equipment
and furniture,
Electrification
and Installation
charges @ 10%
upto Sl. No. 6

L.S.

50,000

31,000

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

6,00,000

B. Working Capital (per month)


(i) Personnel (per month)
Sl. Designation
No.

Total
(Rs.)

9. Helper

2,000

4,000

10. Peon

2,000

2,000

11. Watchman

2,000

2,000

12. Sweeper

2,000

2,000

Total

75,000

Add. 20% perquisites

15,000
Total

90,000

(ii) Raw Material (per month)


1500 Nos. Portfolio Bag.
Sl. Description
No.

Qty.

Rate

1. V.T. finished
1800 Kg.
leather/Semi(Approx.)
chrome leatherbrown/coffee
brown/black
colour (1.2 mm
to 1.5 mm)
2. Grinderies,
Lock, D-ring,
Zip, rivets,
adhesive, thread
etc.)

L.S.

3. Packing

L.S.

Value
(Rs.)

200 3,60,000
per kg.

100 1,50,000
per piece

4 per piece

Total

5,51,000
Rs. 49,000

No. Salary
(Rs.)

6,000

5,16,000

(iii) Utilities (per month)


Sl. Description
No.

Amount
(Rs.)

1. Power requirement including


lighting, fan etc.
2. Water and Fuel

4,500
500

Total

5,000

No. Salary
(Rs.)

Total
(Rs.)

1. Manager

1 10,000

10,000

2. Supervisor

7,000

7,000

Sl. Description
No.

3. Cashier-cum-Accountant

5,000

5,000

1. Rent

5,000

4. Store keeper-cum-typist

4,000

4,000

2. Postage and Stationery

2,000

5. Master Cutter

5,000

5,000

3. Telephone

2,000

(iv) Other Contingent Expenses (per month)


Amount
(Rs.)

P ORTFOLIO BA G
Sl. Description
No.

Amount
(Rs.)

4. Consumable stores

2,000

5. Repair and Maintenance

3,000

6. Transport charges

5,000

7. Advertisement and publicity

3,000

8. Insurance

1,000

9. Taxes

1,000

10. Sales Expenses

3,000

11. Misc. Expenses

3,000
Total

30,000

(v) Total Recurring Expenditure (per month)


Sl. Description
No.

FINANCIAL ANALYSIS
(1) Cost of Production (per annum)
Sl. Description
No.
i)

Total recurring cost

ii)

Depreciation on machinery
@ 10% including
installation charges

90,000

2. Raw Materials

5,16,000

3. Utilities

5,000

4. Other contingent expenses

30,000

Total

6,41,000

iv) Depreciation on office equipment


and furniture @ 20%

30,000

vi) Interest on TCI @ 15%

C. Total Capital Investment


Amount
(Rs.)

1. Total Fixed Capital

6,00,000

2. Working capital for 3 months


Total

3,78,450

Total

81,49,550

Say

81,50,000

(2) Turnover (per annum)


Sl. Items
No.

Qty.

Rate

Price
(Rs.)

1. Portfolio bags
1st quality

8000
Nos.

575
each

46,00,000

2. Portfolio bags
2nd quality

10000
Nos.

475
each

47,50,000

Total

Rs. 19,23,000

Sl. Description
No.

34,100

15,000

(vi) Working Capital (for 3 months)


Rs. 6,41,000 x 3 =

76,92,000

iii) Depreciation on tools


and equipment
@ 25% on Rs. 60,000

Amount
(Rs.)

1. Salary and Wages

Amount
(Rs.)

19,23,000
25,23,000

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.

(3) Net Profit (Before taxation)

93,50,000
Amount (Rs.)

Turnover

93,50,000

Cost of Production

81,50,000
Total

12,00,000

(4) Net Profit Ratio


= Net Profit per year x 100
Turnover per year
= 12,00,000 x 100
93,50,000
= 12.8%
(5) Rate of Return on Total Investment
= Net Profit per year x 100
Total Investment
= 12,00,000 x 100
25,23,000
= 47.6%

107

108

P ORTFOLIO BA G

Ekkaduthangal,
Chennai-97.

(6) Break-even Point


Fixed Cost
Sl. Description
No.

Amount
(Rs.)

a) Rent

60,000

b) Depreciation on plant and machinery

34,100

c)

Depreciation on tools and equipments 15,000

d) Depreciation on office equipments


and furniture

30,000

e) Interest on Investment
f)

Insurance

g)

40% of salary and wages

3,78,450
12,000
4,32,000

h) 40% of utilities
i)

24,000

40% of other Contingent expenses


on Rs. 24,000 (excluding rent
and insurance)
Total

1,15,200

11,00,750

B.E.P.
= Fixed cost x Profit
Fixed cost + Profit
= 11,00,750 x 100
11,00,750 + 12,00,000
= 47.84%

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,

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)

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