PROJECT REPORT ON

READYMADE GARMENTS

UNDER NAME & STYLE

M/S WELCOME ENTERPRISES

PROPOSED PROJECT ADDRESS AT:-

VILL+PO – MALINAGAR,

THANA – CHAKMEHSI,

DISTT – SAMASTIPUR, BIHAR

Under the scheme of PMEGP OF KVIC MARGINE MONEY

Prepared by :- RR MISHRA & ASSOCIATES
[Chartered Accountants]
NEAR ADITYA ITI,
NEW RAILWAY COLONY(Awadhpuri)
DIGHA GHAT, PATNA - 800011
Email : [email protected]
[email protected]
CONTACT FOR:- Project Reports, GST, Income Tax,
Company Registration and other related works
 CONTENT
CHAPTER Subject Matter Page No.
1. Project at A Glance
2. Introduction
3. Market Prospects
4. TECHNICAL ASPECTS
5. Installed Capacity & Utilisation
6. Cost Of Project
7. Means of Finance
List of Annexures:-
Annexure-I (a) Detail Estimate of Machineries &Tools
(b) Furniture &Electricals
(c)Others Fixed Assets
Annexure-II Calculation of Raw Materials &Cons .
Annexure-III Calculation of Man Power
Annexure-IV (a) Power & Fuel
(b) Other General Expenses
Annexure-V Assessment of Working Capital
Annexure-VI Calculation of Sales Turn Over
Annexure-VII (a) Calculation of Depreciation of Machinery&
Fixed Assets
(b) Break even Point
(c) Percentage of Profit
Annexure-VIII (a) Calculation of Interest &Repayment of
Term Loan
(b) Calculation of Interest of Interest of Working
Cap. Loan
Annexure-IX Project Performance and Profitability Statement
Annexure-X Projected Balance Sheet
Annexure-Xi Analysis of DSCR & FINANCIAL RATIO
Annexure-Xii Cash flow statement
Annexure-Xiii Analysis of break even point & LEVERAGES
Annexure-XiV Guidelines for the Entrepreneurs & CONCLUSION
 CHAPTER-1
PROJECT AT AGLANCE CUM BIO DATA
S.N. PARTICULARS DETAILS
1. Name of the beneficiary ANITA KUMARI
2. HUSBAND’S NAME PRAMOD KUMAR RAM
3. DATE OF BIRTH 15/12/1985
4. CATEGORY SC (WOMEN)
5. PROPOSED PROJECT ADDRESS VILL+ PO:-MALINAGAR
THANA – CHAKMESI
DIST:- SAMASTIPUR
, BIHAR

6. RESIDENTIAL ADDRESS AS ABOVE

7. PERMANENT ADDRESS AS ABOVE
8. Activity (nature of product ) MANUFACTURING OF READYMADE GARMENTS
9. NAME OF THE INDUSTRY M/S WELCOME ENTERPRISES
10. PROJECT COST :-
(a) Capital Expenditure Rs.480000/-
(a) Working Capital Rs.220000/-
TOTAL Rs. 800000/-
11. MEANCE OF FINANCE :-
(a) Own Contribution Rs. 40000/-
(b) Term Loan Rs.456000/-
( c )Working Capital Loan Rs. 304000/-
TOTAL Rs. 800000/-
12. SUBSIDY FROM KVIC Rs.280000/-
13. EMPLOYMENT 8 PERSON
14. INSTALLED CAPACITY 1 YEAR
ST

( a) PRODUCTION VALUE Rs.12.16Lac

(b) Sale Value Rs. 13.80 Lac
15. AREA RURAL
16. Adhar No. 271666629321
17. PAN NO. EGBPK4253A
18. CONTACT NO.

Signature of the Beneficiary

 CHAPTER-2
INTRODUCTION
Readymade garment industry has occupied a unique place in the industrial scenario of our
country by generating substantial export earnings and creating lot of employment. Its
contribution to industrial production, employment and export earnings are very
significant. This industry provides one of the basic necessities of life. The employment
provided by it is a source of livelihood for millions of people. It also provides maximum
employment with minimum capital investment. Since this industry is highly labor-
intensive, it is ideally suited to Indian condition. This project report is prepared for the
manufacture of Readymade garments like shirts, trousers, pants, etc as they find wide
acceptance in local and international markets. Any person having the knowledge of cutting
and stitching operations can easily set up such establishments.
India’s export performance in Textile Sector in the recent years has been remarkable. The
Textile exports have now emerged as the largest gross & net foreign exchange earner for
the country. On dismantling of quota regime under WTO, the international market has
been fully opened up since 01.01.2005. This has resulted in fierce competition in the Asian
countries especially China, Korea & India to capture the unlimited world market. The
Central Government as well as some State Governments offer various incentives for setting
up of new textile units with the view to encourage exports of Textiles. The potential in the
growth of Readymade garments units in India is tremendous since the present
contribution of clothing exports of India constitute only 3.2% out of the world textile
clothing exports. China ranks the first place in clothing exports whereas India ranks only
the 6th place. The growth of Readymade garments units in India is also facilitated by the
Amended Technology Upgradation Fund Scheme (ATUFS) of the Government of India
wherein 15% interest reimbursement is provided on the capital investment made in the
land, building and plant & machinery of the Readymade Garments units. The ATUFS
scheme is in force up to 31.3.2025. Hence this isthe best time for venturing new
Readymade garments units as the market, Government as well as trends are conducive for
the growth of Readymade garments units.

CONSTITUTION: - Proprietorship
ABOUT PROMOTER :- The promoter of the proposed unit is ANITA KUMARI , W/O PRAMOD
KUMAR RAM, VILL+ PO- MALINAGAR, THANA- CHAKMEHSI, DISTRICT- SAMASTIPUR, BIHAR
She has acquired all ideas and knowledge about perfect technical process and marketing of such
services. She is able to achieve the anticipated target i.e. She will do better in running of this
business in the industry.

LOCATION:-The proposed MICRO unit will be Installed at VILL+PO- MALINAGAR, THANA-

CHAKMEHSI,DISTRICT- SAMASTIPUR,BIHAR. This site is OWNED by the promoter and
having area of 1000 sq ft. out of this total area. This site is very suitable and Almost all
infrastructural facilities are available.
 BASIS AND PRESUMPTIONS :-

a) The unit proposes to work at least 300 days per annum on single shift of
8hr per day basis.
b) The unit can achieve its 50% ,55% 60% 65%, &70% capacity utilization
during the 1th , 2nd , 3rd, 4th & 5th year of operation.
c) The wages for skilled workers is taken as per prevailing rates in this type of
industry.
d) Interest rate for total capital investment is calculated @ 10% per annum.
e) The entrepreneur is expected to raise 5 % of the capital as margin money.
Moratorium Period three month
f) NOTE:- RATE OF MACHINIRIES IS TAKEN FROM QUOTAION AND RATE
OFRAW MATERIALS IS BASED ON MARKET PRICE.
g) Power Requirement :-The borrower shall require power load of 5 KW which shall
beapplied with Power Corporation.
 CHAPTER-3
MARKET PROSPECTS
Readymade garments are the choice of urban people. It is also gaining wider
acceptance in semi-urban and rural areas. The huge charges made by tailors and delay
in delivery has made people to switch over to readymade garments. In domestic
market and export market, it has made spectacular progress in the last decade. This
industry is becoming very vibrant and lot of foreign investment pouring in this
industry because of low risk and high earning nature of this industry. As these
products are fashion oriented, entrepreneurs should always keep in mind the
changing fashion styles. Considering its advantageous position, it is assumed that
there will be no constraint in marketing of gent’s readymade garments. The global
readymade garments market stood at a value of around USD 865 billion in 2020. The
market is further expected to grow at a CAGR of 8.70% in the forecast period of 2022-
2027 to attain a value of around USD 1,496.50 billion by 2026. The growth of the
readymade garments industry in the Asia Pacific can be attributed to the rising
disposable income, growing working population, rapid urbanisation, and the thriving
fashion and clothing industry in the region. The improving living standards and the
growing focus on appearance, especially in countries like Vietnam, India, and China,
can be observed. Therefore, the market is likely to get ample opportunities for the
market expansion in the region.

Besides it since the unit is an small level i.e. its production capacity/target is very low
in quantity ,so to sale such low quantity of products will be very easy The sale’s target
is within a month which will be achieved very easily while theproduct will be provided
of standard quality on competitive price .At initial stage the marketing area will be
entire regions /areas of SAMASTIPUR & Block districts.
Finally it is clear the proposed unit will achieve this meager sales target, i.e. the unit
will be viable economically. Thus the proposed unit would sure be economically
viable.
 Chapter-4
TECHNICAL ASPECTS
Process of Manufacture
1. Procurement of Fabrics : Dyed/bleached/printed cotton/synthetic fabrics as
per demand are to be procured from the open market. The fabric will be
inspected by laying on the inspection table against light before cutting so
that unevenness in color/shade or any other fault, if any visible in the fabric
are eliminated.
2. Cutting and Stitching: The inspected fabric is placed on the cutting
table in layers and then the different parts of the respective garments are
demarked by a chalk as per different sizes. Cutting is carried out by the
cutting machine. Stitching is carried out for individual portion of the
garments by skilled workers with the help of over-lock, lock stitch
machines etc.
3. Washing, Checking, Pressing and Packing : All garments are charged
into washing machine containing mild detergent and washed for 4 hours in
order to remove dirt and stains acquired during the manufacturing process.
After washing, the garments are hydro extracted to remove excess water
and after this, these garments are dried in tumbler dryer. Final checking is
done before pressing and packing on the checking table so that any fault in
the piece may be removed and protruding threads eliminated. The
individual pieces are pressed by steam presses to remove any wrinkle marks
and packed in the carton boxes.

4. QUALITY CONTROL & STANDARD: The quality of garments

mainly depends on quality of fabric used. Therefore, care must be taken
while purchasing fabrics to ensure good colorfastness properties, uniformity
in shade etc. Generally garments are made as per customer's specification in
respect of size, design and fashion.
 CHAPTER -5
INSTALLED CAPACITY&UTILISATION OF CAPACITY
A. INSTALLED CAPACITY:- Installed Capacity and machinery of the
proposed READYMADE GARMENTS MANUFACTURING is as Following :-

S.N. PARTICULARS
MAIN MACHINERY
1. POWER DRIVEN CLOTH CUTTING MACHINE
2. SINGLE NEEDLE LOCK STITCH MACHINE
3. DOUBLE NEEDLE LOCK STITCH MACHINE
4. BUTTON HOLE MAKING MACHINE
5. BUTTON STITCHING MACHINE
B. UTILISATION CAPACITY:- Utilization Capacity assumed at
50%55%,60% , 65% and 70% during the operation of 1st ,2nd ,3rd 4th and 5th Year
respectively only for the MANUFACTURING OF READYMADE GARMENTS.

Note:- The Proposed Machinery will be run 8 hours per Day or 25 Days in a Month Or 300
Days in a Year.
 CHAPTER-6
COST OF PROJECT
S.N. PARTICULARS AMOUNT (in Lac)
1 Work Shop Godown, Office 0.00
2 Machinery Tools etc (As per Annex-1A ) 4.30
3 Electrical Fitting & Furniture and 0.50
Fixtures (As per Annex -1B )
(A) Capital Expenditure Total of (1+2+3) 4.80
(B) Working Capital (As per Annex-v) 3.20
Total (A+B) RS.8.00 LAC
 CHAPTER-7
MEANS OF FINANCE
S.N PARTICULARS AMOUNT Promoters Bank Finance
In Lac Contribution @ 95 %
@5%
(A) Capital Expenditure 4.80 0.24 4.56
(B) Working Capital 3.20 0.16 3.04
Total 7.00 0.35 7.60
OR
S.N PARTICULARS AMOUNT In Lac
(A) Promoters Contribution 0.40
@ 5 % of Total Project Cost Rs.8.00 Lac
(B) Loan From Bank
(i) Term Loan@ 95% of Rs.4.80 Lac 4.56
(ii) Working Capital Loan 95% of 3.04
Rs. 3.20 Lac
Total Rs.8.00 Lac

Note:- Margin Money of KVIC35% of Rs8.00 Lac= Rs.280000/-

Thus:- KVIC Margin Rs. 280000/- Will be Finally Adjusted in Borrower’s

Loan a/c After Three year

2.Once the Margin Money (subsidy) is released in favour of the loanee, it should
be kept in the Term Deposit Receipt of three years at branch level in thename of
the beneficiary/Institution. No interest will be paid on the TDR and no interest
will be charged on loan to the corresponding amount of TDR.
 ANNEXURE –I
ESTIMATE OF REQUIRED MACHINERY AND OTHER FIXED ASSETS
SN. AMOUNT
PARTICULARS
1. POWER DRIVEN CLOTH CUTTING 430000
MACHINE
2. SINGLE NEEDLE LOCK STITCH MACHINE
3. DOUBLE NEEDLE LOCK STITCH
MACHINE
4. BUTTON HOLE MAKING MACHINE
5. MISCELLANEOUS TOOLS
TOTAL Rs 4.30 LAC
B. ELECTRICALS & FURNITURE
1. Electrical Fitting & Appliances 30000/-
(Fan Exhaust Fan Lighting System &Fitting)
2. Furniture For Office & Work Shop 20000/-
Total 50000/-
 ANNEXURE –II
CALCULATION OFRAW MATERIALS &CONSUMABLES
FOR ONE MONTH (25 DAYS) ON INSTALLED CAPACITY
SN. PARTICULARS AMOUNT in a
month
1. COTTON CLOTHES 140000/-
2. BLENDED FABRICS
3. STITCHING THREADS
4. BUTTONS
5. ZIPS
6. PACKING MATERIAL
7. MISCEALLNEOUS
TOTAL 140000/-
OR IN YEAR 1680000/-
OR SAY Rs16.80 Lac
Thus 1st Year ( 50% utilization) Rs 8.40 Lac
2nd Year ( 55% utilization) Rs 9.24 Lac
3rd Year ( 60% utilization) Rs 10.08 Lac
4th Year( 65% utilization) Rs 10.92 Lac
5th Year( 70% utilization) Rs 11.76 Lac
 ANNEXURE –III
MAN POWER
SN. PARTICULARS NO. SALARY / AMOUNT
MONTH
1. Production & Marketing Manager 1 SELF NIL
2. Skilled Worker 2 8000/-
3. Helper ON CASUAL BASED 5 8960/-
TOTAL 8 16960/-
OR IN A YEAR 203520/-
OR SAY Rs.2.04 Lac
NOTE:- It will be increased by 6% in 2 and 3 Year Respectively and 2.5% from
nd rd

4th Year
2nd Year Rs 2.16 Lac
3rd Year Rs 2.29 Lac
4th Year Rs 2.35 Lac
5th Year Rs 2.41 Lac
 ANNEXURE – IV
POWER & FUEL & OTHER WORKING EXPENSES
S.N. PARTICULARS AMOUNT
1. Power & Fuel @ 5000/- x 12 Month 60000/-
Total 60000/-
i.e.1st Year 50% Utilization of Rs. 0.60Lac 0.30 Lac
i.e.2nd Year 55% Utilization of Rs. 0.60 Lac 0.33 Lac
i.e.3rd Year 60% Utilization of Rs. 0.60 Lac 0.36 Lac
i.e.4th Year 65% Utilization of Rs. 0.60 Lac 0.39 Lac
i.e.5th Year 70% Utilization of Rs. 0.60 Lac 0.42 Lac
2. Repair and Maintenance 2% of the value of Building & Machinery & 0.06 Lac
Other Fixed Assets From 2nd year 2% of Rs3.00 Lac
3. Insurance@ 800 x Rs. 5.00 Lac 0.04Lac
4. General Administrative Expenses
(i) Stationery & Postage 6000/-
(ii) Phones 6000/-
(iii) Travelling & Convey 30000/-
(iv) Misc. Expenses 6000/-
(v) Advertisement 6000/-
(vi) Chares of delivery of finished product/Service for 15000/-
sales turn Over
(vii) Selling expenses gift & publicity of Sales turn over 15000/-
Total 84000/-
Or Say Rs. 0.84 Lac
2nd Year Rs 0.88 Lac
3rd Year Rs. 0.93 Lac
4th Year Rs. 0.97 Lac
5th Year Rs. 1.02 Lac
 ANNEXURE- V
ASSESSMENT OF WORKING CAPITAL
S.N. Particulars Period 1styear 2ndyear 3rdyear 4thyear 5th year
value value value value value
1. Raw Materials & cons 1month 0.70 0.77 0.84 0.91 0.98
2. Service in Process 4Days 0.14 0.15 0.17 0.18 0.20
3. Finished services 15days 0.53 0.58 0.64 0.69 0.74
4. RECEIVABLE 15days 0.63 0.70 0.75 0.82 0.88
Total 2.00 2.20 2.40 2.60 2.80
Margin Money @5 % 0.10 0.11 0.12 0.13 0.14
As per norms of KVIC
Margin Money
Scheme and
assumed in 1st and
2nd year only
Working Capital Loan 2.66 2.79 2.93 3.06 3.19
Working Cap. As 2.76 3.04 3.31 3.59 3.86
per “Nayak
committee” i.e.
20% of Sales Turn
Over which ever is
less
Finally Working Cap. 2.66 2.79 2.93 3.06 3.19
Loan Assumed on
Minimum based
 ANNEXURE –VI
SALES TURN OVER
S.N. PARTICULARS Total Sale in a Month
1. Sale revenue from sale of various 230000/-
readymade garments
Total 230000/-
OR IN A YEAR 2760000/-
OR SAY Rs. 27.60 LAC
Thus 1st Year ( 50% utilization) Rs 13.80 Lac
2nd Year ( 55% utilization) Rs 15.18 Lac
3rd Year ( 60% utilization) Rs 16.56 Lac
4th Year( 65% utilization) Rs 17.94 Lac
5th Year( 70% utilization) Rs 19.32 Lac
 ANNEXURE –VII
CALCULATION OF DEPRICIATION OF MACHINERY AND OTHER FIXED ASSETS
Year Depn. of Machinery & Furniture & electric & other Total
Building @ 20% value Fixed Assets @ 10% value
OPENING 3.70 0.50 4.20
BALANCE
1st Year
Depn. 0.74 0.05 0.79
WDV 2.96 0.45 3.41
1ST Year
Depn. 0.59 0.04 0.63
WDV 2.37 0.41 2.78
2ND Year
Depn. 0.47 0.04 0.51
WDV 1.90 0.37 2.27
3RD Year
Depn 0.38 0.04 0.42
WDV 1.52 0.33 1.85
4th Year
Depn 0.30 0.03 0.33
WDV 1.22 0.30 1.52
5th Year
 ANNEXURE –VIII
A. CALCLATION OF INTEREST & REPAYMENT OF TERM LOAN
YEAR /PERIOD OPENING REPAYMENT CLOSING INTEREST
BALANCE BALANCE @ 10.00 %
1ST YEAR 3.99 1.05 3.34 0.40
2nd YEAR 3.34 1.05 2.62 0.33
3rd YEAR 2.62 1.05 1.83 0.26
4th YEAR 1.83 1.05 0.96 0.18
5TH YEAR 0.96 1.05 0.00 0.10
B. CALCLATION OF INTEREST & OF WORKING CAPITAL LOAN
YEAR /PERIOD OPENING ADDITION CLOSING INTEREST
BALANCE BALANCE @ 10.00 %
1st Year 2.66 … 2.66 0.27
2nd Year 2.66 … 2.66 0.27
 ANNEXURE –IX
PERFORMANCE ON PROJECT & PROFITABILITY STATEMENT
S.N PARTICULARS 1ST Year 2nd Year 3rdYear 4th Year 5thYear
A. Sales Turn Over 13.80 15.18 16.56 17.94 19.32
B. Cost of Production
(i) Raw Material 8.40 9.24 10.08 10.92 11.76
(ii) Salary and Wages 2.04 2.16 2.29 2.35 2.41
(iii) Repair & 0.00 0.06 0.06 0.06 0.06
Maintenance
(iv) Power & Fuel 0.30 0.33 0.36 0.39 0.42
(v) Rent & Insurance 0.04 0.04 0.04 0.04 0.04
(vi) Depreciation 0.79 0.63 0.51 0.42 0.33
(vii) General 0.84 0.88 0.93 0.97 1.02
Administrative &
Selling Expenses
Total Of B 12.41 13.34 14.27 15.15 16.04
C. Gross Profit (A-B) 1.39 1.84 2.29 2.79 3.28
D. Interest On
(i) Term Loan 0.40 0.33 0.26 0.18 0.10
(ii) Working Capital 0.27 0.27 0.27 0.27 0.27
Loan
E. Profit before Tax 0.72 1.24 1.76 2.34 2.91
[C-D]
F. Provision of Tax 0.14 0.19 0.25 0.32 0.37
G. Net Profit 0.58 1.05 1.51 2.02 2.54
H. Depn. Added Back 0.79 0.63 0.51 0.42 0.33
I. Cash Accruals[G+H] 1.37 1.68 2.02 2.44 2.87
J. Repayment 0.67 0.60 0.53 0.45 0.37
K. Drawing 0.31 0.49 0.55 0.79 0.83
L. Per Capita. Investment Rs.100000/-
 ANNEXURE –X
(A) PROJECTED BALANCE SHEET
Capital & Liability 1st Year 2nd Year 3rdYear 4th Year 5thYear
Proprietor’s Capital 0.35 0.35 0.35 0.35 0.35
Reserve & Surplus 0.74 1.75 3.04 4.66 6.59
(after less Drawing)
TERM LOAN 3.34 2.62 1.83 0.96 0.00
WORKING CAPITAL 2.66 2.66 2.66 2.66 2.66
TOTAL 7.09 7.38 7.88 8.63 9.60
ASSETS& PROPERTIES 1st Year 2nd Year 3rdYear 4th Year 5th ear
GROSS BLOCK 4.20 3.41 2.78 2.27 1.85
LESS DEPRECIATION 0.79 0.63 0.51 0.42 0.33
NET BLOCK 3.41 2.78 2.27 1.85 1.52
Working capital 2.66 2.66 2.66 2.66 2.66
INVESTMENT 0.44 0.88 1.28 1.70 2.10
CASH & BANK BALANCE 0.58 1.06 1.67 2.42 3.32
TOTAL 7.09 7.38 7.88 8.63 9.60
(B) ANALYSIS OF PROJECTED BALANCE SHEET
LIBILITIES
SN PARTICULARS 1st Year 2nd Year 3rdYear 4th Year 5thYear
A. Working Capital Loan 2.66 2.66 2.66 2.66 2.66
B. PROVISION OF TAX/ 0.14 0.19 0.25 0.32 0.37
OTHER CURRENT
LIBILITIES
C. TOTAL CURRENT 2.80 2.85 2.91 2.98 3.03
LIBILITIES(A+B)
D. TERM LIBILITIES/ TERM 3.34 2.62 1.83 0.96 0.00
LOAN
E. TOTAL OUTSIDE 6.14 5.47 4.74 3.94 3.03
LIBILITIES /TOL (C+D)
F. TANGIBLE NET WORTH 1.04 1.96 3.29 5.04 7.24
TOTAL LIBILITIES (E+F) 7.18 7.43 8.03 8.98 10.27

ASSETS
A. Working Capital 2.80 2.80 2.80 2.80 2.80
B. INVESTMENT/ OTHER 0.25 0.60 1.04 1.59 2.26
CURRENT ASSETS
C CASH & BANK BALANCE 0.58 1.06 1.67 2.42 3.32
D TOTAL CURRENT ASSTES 3.63 4.46 5.51 6.81 8.38
(A+B+C)
E Net Block 3.41 2.78 2.27 1.85 1.52
F INTANGIBLE ASSETS 0.14 0.19 0.25 0.32 0.37
TOTAL ASSETS (D+E+F) 7.18 7.43 8.03 8.98 10.27
 ANNEXURE –XI
(A) DEBT.SERVICE COVERAGE RATIO:-
YEARS 1st Year 2nd Year 3rdYear 4th Year 5th ear
NET PROFIT 0.58 1.05 1.51 2.02 2.54
Depreciation 0.79 0.63 0.51 0.42 0.33
REPAYMENT 1.05 1.05 1.05 1.05 1.05
INTEREST ON TERM LOAN 0.40 0.33 0.26 0.18 0.10
DSCR(stand alone) 1.69 1.91 2.17 2.50 2.83
AVERAGE DSCR(stand alone) 2.22

(B) FINANCIAL RATIO :-

Particulars 1st Yr % 2ndYr % 3rdYr % 4th Yr % 5th Yr %

CURRENT RATIO( CURRENT 1.30 1.56 1.89 2.29 2.77
ASSETS ÷ CURRENT
LIBILITIES)
DEBT EQUITY RATIO (TERM 3.21 1.38 0.56 0.19 0.00
LIABILITIES ÷ TNW)
GP RATIO= GROSS PROFIT X 10.07 12.12 13.83 15.55 16.98
100 ÷ SALES TURN OVER
Percentage of Profit ( Net 4.20 6.92 9.12 11.26 13.15
Profit x 100 ÷ Turn Over)
RATE OF RETURN ( NET PROFIT 21.00 28.80 36.80 46.40 55.20
X 100 ÷ TOTAL INVESTMENT)
INTEREST COVERAGE 2.07 3.07 4.32 6.20 8.86
RATIO = PBIT ÷ TOTAL
INTEREST
FACR= WDV ÷ TL 1.02 1.06 1.24 1.93 0.00
 ANNEXURE –XII
ANALYSIS OF BREAK EVEN POINT &LEVERAGES:-
SN Particulars 1st Year 2nd Year 3rdYear 4th Year 5th Year
A. Fixed Cost:-
i. Interest on Term Loan @10% 0.40 0.33 0.26 0.18 0.10
ii. Insurance 0.04 0.04 0.04 0.04 0.04
iii. 40 % of SALARY & WAGES 0.82 0.86 0.92 0.94 0.96
iv. 40% OF GENERAL EXPENCESS 0.34 0.35 0.37 0.39 0.41
v. 40% OF UTILITIES 0.12 0.13 0.14 0.16 0.17
Total 1.72 1.71 1.73 1.71 1.68
B. Sales Turn Over 13.80 15.18 16.56 17.94 19.32
C. VARIABLE COST:-
i. RAW MATERAL 8.40 9.24 10.08 10.92 11.76
ii. 60% OF SALARY &WAGES 1.22 1.30 1.37 1.41 1.45
iii. 60% OF UTILITIES 0.18 0.19 0.22 0.23 0.25
iv. 60% OF GENERAL 0.50 0.53 0.56 0.58 0.61
ADDMINISTRATIVE &
SELLING EXPENSES
v. INTEREST ON WORKING 0.27 0.27 0.27 0.27 0.27
CAPITAL
TOTAL 10.57 11.53 12.50 13.41 14.34
D. CONTRIBUTION =SALES TURN 3.23 3.65 4.06 4.53 4.98
OVER - VARIABLE COST(B – C)
E. BREAK EVEN POINT = Fixed 47.73% 42.59% 39.08 % 35.08% 31.94%
Cost x 100 ÷CONTRIBUTION
F. BREAK EVEN POINT = 60.08 % 52.32% 46.67 % 40.97% 36.84%
Fixed Cost x 100 ÷ Fixed
Cost+ Net Profit
G. LEVERAGES:-
i. FINANCIAL LEVERAGE = 1.65 1.43 1.33 1.26 1.22
EBIT ÷ EBT
ii. OPERATING LEVERAGE 3.15 2.58 2.24 1.98 1.83
=COTRIBUTION ÷EBT
iii. DEGREE OF TOTAL 0.52 0.55 0.59 0.64 0.67
LEVERAGE =FINANCIAL
LEVERAG ÷OPERATING
LEVERAGE
 ANNEXURE –XIII
CASH FLOW STATEMENT (Rupees in Lakhs)
PARTICULARS 1st Year 2nd Year 3rdYear 4th Year 5th ear
Utilization 50% 55% 60% 65 % 70%
Source of Fund
Profit before Tax 0.72 1.24 1.76 2.34 2.91
Depreciation 0.79 0.63 0.51 0.42 0.33
TERM LOAN 3.34 2.62 1.83 0.96 0.00
WORKING CAPITAL LOAN 2.66 2.66 2.66 2.66 2.66
Proprietor’s Capital 0.35 0.35 0.35 0.35 0.35
SUBSIDY 2.45 2.45 2.45 2.45 2.45
Provi. Of libili. 0.14 0.32 0.43 0.74 1.27
TOTAL 10.45 10.27 9.99 9.92 9.97
Application of Cash
Repayment OF Term Loan 1.05 1.05 1.05 1.05 1.05
Current Assets 3.63 4.46 5.51 6.81 8.38
TOTAL 4.68 5.51 6.56 7.86 9.43
DEFECITS 5.77 4.76 3.43 2.06 0.54
OPENING BALANCE 0.00 5.77 10.53 13.96 16.02
CLOSING BALANCE 5.77 10.53 13.96 16.02 16.56
 ANNEXURE –XIV
Guidelines for the Entrepreneurs:-
i. The success of any prospective READYMADE GARMENTS MANUFACTURING
project depends on how closer the assumptions made in the initial stage are with the reality
of the targeted market/place/situation. Therefore, the entrepreneurs must do its homework
as realistic as possible on the assumed parameters.
ii. The entrepreneur must be efficient in managing the strategic, financial, operational,
material and marketing aspects of a business. In spite of the assumed parameter being
closely realistic, a project may become unsustainable if the entrepreneur does not possess
the required efficiency in managing different aspects of the business and respond
effectively in changing situations.
iii. The machineries should be purchased after thorough market research and satisfactory
demonstration.
iv. The entrepreneur must ensure uninterrupted quality raw materials’ supply and
maintain optimum inventory levels for smooth operations management.
v. The entrepreneur must possess a strategic look to steer the business in upward
trajectory.
vi. The entrepreneur must maintain optimum (not more or less) inventory, current assets.
Selecting optimum source of finance, not too high debt-equity ratio, proper capital
budgeting and judicious utilization of surplus profit for expansion is must.
vii. The entrepreneur must explore prospective markets through extensive research, find
innovative marketing strategy, and maintain quality, adjust product mix to demand.
viii. The entrepreneur must be hopeful and remain positive in attitude.
Conclusion:-
The project as a whole describes the scope and viability of the TRADING industry and
mainly of the financial, technical and its market potential. The project guarantee sufficient
fund to repay the loan and also give a good return on capital investment. When analyzing
the social- economic impact, this project is able to generate an employment of 5 and above.
It will cater the demand of other business entities to increase the production and service
which provide service and support to this industry. Thus more cyclic employment and
livelihood generation. So in all ways, we can conclude the project is technically and socially
viable and commercially sound too. When we take a close look at the Debt Service
Coverage Ratio (DSCR), the avg. : DSCR (stand alone) is 4.03 : 1 & DSCR(cumulative)
is 3.35:1 , which is at a higher proposition and proposes a stable venture The Profit and
Loss shows a steady growth in profit throughout the year and the firm has a higher
Current Ratio (average) of 2.18,this shows the current assets and current liabilities are
managed & balanced well.