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Pre-Feasibility Study

LEATHER GLOVES
MANUFACTURING UNIT

Small and Medium Enterprise Development Authority


Government of Pakistan
www.smeda.org.pk
HEAD OFFICE
6th floor, LDA Plaza, Egerton Road, Lahore
Tel: (042) 111-111-456, Fax: (042) 5896619, 5899756
helpdesk@smeda.org.pk

REGIONAL OFFICE
PUNJAB

6th floor, LDA Plaza,


Egerton Road, Lahore
Tel: (042) 111-111-456,
Fax: (042) 5896619,
5899756
helpdesk@smeda.org.pk

REGIONAL OFFICE
SINDH
5TH Floor, Bahria
Complex II, M.T. Khan Road,
Karachi.
Tel: (021) 111-111-456
Fax: (021) 5610572
helpdesk-khi@smeda.org.pk

REGIONAL OFFICE
NWFP
Ground Floor
State Life Building
The Mall, Peshawar.
Tel: (091) 9213046-47
Fax: (091) 286908
helpdesk-pew@smeda.org.pk

June 2006

REGIONAL OFFICE
BALOCHISTAN
Bungalow No. 15-A
Chaman Housing Scheme
Airport Road, Quetta.
Tel: (081) 831623, 831702
Fax: (081) 831922
helpdesk-qta@smeda.org.pk

Pre-feasibility Study

INTRODUCTION ......................................................................................................................... 5
1.1
1.2

OPPORTUNITIES ................................................................................................................. 5
THREATS ............................................................................................................................. 6

PROJECT BRIEF ......................................................................................................................... 6


3.1
3.2
3.2.1
3.2.2
3.2.3
3.2.4
3.2.5
3.3
3.4
3.4.1
3.4.2
3.4.3
3.4.4
3.4.5

LEATHER & LEATHER GLOVES........................................................................................ 5


INDUSTRY BRIEF................................................................................................................ 5

KEY SUCCESS FACTORS .......................................................................................................... 5


2.1
2.2

Leather Gloves

PROCESS FLOW CHART FOR GLOVES MANUFACTURING........................................... 7


PROCESS DESCRIPTION .................................................................................................... 8
Pattern Making.................................................................................................................. 8
Cutting .............................................................................................................................. 8
Stitching ............................................................................................................................ 8
Inspection.......................................................................................................................... 8
Packing ............................................................................................................................. 8
PROJECT COST.................................................................................................................... 8
RATIONALE & JUSTIFICATION......................................................................................... 8
Local Competition ............................................................................................................. 9
Export Rebate.................................................................................................................... 9
Project Findings ................................................................................................................ 9
Viable Economic Size......................................................................................................... 9
Proposed Capacity........................................................................................................... 10

THE PROJECT CONCEPT ....................................................................................................... 10


4.1
PROJECT FINANCING....................................................................................................... 10
4.2
PROJECT DETAILS............................................................................................................ 10
4.2.1
Location .......................................................................................................................... 10
4.2.2
Land................................................................................................................................ 10
4.2.3
Building........................................................................................................................... 10
4.2.4
Material Inputs ................................................................................................................ 11
4.2.5
Machines and Equipment ................................................................................................. 11
4.2.6
Manpower ....................................................................................................................... 12

MARKET ANALYSIS ................................................................................................................ 12


5.1
5.2
5.3
5.4

GOVERNMENT INCENTIVES................................................................................................. 13
6.1
6.2
6.3

TARGET CUSTOMER........................................................................................................ 13
MARKET DEMAND........................................................................................................... 13
MARKET SUPPLY ............................................................................................................. 13
INDUSTRY GROWTH........................................................................................................ 13

REBATE.............................................................................................................................. 13
CUSTOM DUTY ................................................................................................................. 13
INCOME TAX..................................................................................................................... 13

ASSUMPTIONS .......................................................................................................................... 14
7.1
INFLATION RATE ............................................................................................................. 14
7.2
REVENUE ASSUMPTIONS................................................................................................ 14
7.2.1
Capacity Utilization......................................................................................................... 14
7.2.2
Daily Production ............................................................................................................. 14
7.2.3
Selling Price .................................................................................................................... 14
7.2.4
Depreciation on Assets..................................................................................................... 14
7.2.5
Amortization of Preliminary Expenses.............................................................................. 15

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Leather Gloves

7.3
WORKING CAPITAL ......................................................................................................... 15
7.3.1
Accounts receivables........................................................................................................ 15
7.3.2
Raw Material Stock.......................................................................................................... 15
7.3.3
Accessories and Packing Material Stock........................................................................... 15
7.3.4
Advances to Employees.................................................................................................... 15
7.3.5
Tool and Spares Stock...................................................................................................... 15
7.3.6
Accounts Payable ............................................................................................................ 15
8

FINANCIAL STATEMENTS ..................................................................................................... 16


8.1
8.2
8.3

INCOME STATEMENT ...................................................................................................... 16


BALANCE SHEET.............................................................................................................. 17
CASH FLOWS..................................................................................................................... 18

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Leather Gloves

DISCLAIMER
The purpose and scope of this information memorandum is to introduce the subject
matter and provide a general idea and information on the said area. All the material
included in this document is based on data/information gathered from various sources and
is based on certain assumptions. Although, due care and diligence has been taken to
compile this document, the contained information may vary due to any change in any of
the concerned factors, and the actual results may differ substantially from the presented
information. SMEDA does not assume any liability for any financial or other loss
resulting from this memorandum in consequence of undertaking this activity. Therefore,
the content of this memorandum should not be relied upon for making any decision,
investment or otherwise. The prospective user of this memorandum is encouraged to
carry out his/her own due diligence and gather any information he/she considers
necessary for making an informed decision.

The contents of the information memorandum do not bind SMEDA in any legal or other
form.

DOCUMENT CONTROL
Document No.
Revision
Prepared by
Approved by
Revision Date

PREF-45
2
SMEDA-Punjab
SMEDA Punjab
June 2006

PREF-45/June, 2006/ Rev 2

Pre-feasibility Study

1
1.1

Leather Gloves

INTRODUCTION
LEATHER & LEATHER GLOVES

Leather sector is the second most dynamic sector after textiles in Pakistan. It contributes
6% to Manufacturing GDP and 6.5%1 to export earnings engaging around 250,000 people
in the sector.
With respect to export value, leather gloves are the third largest in leather sector after
leather garments and finished leather. The export of leather gloves constitutes 17.50% of
total leather and leather products exports. Leather gloves can be broadly classified into
two categories:
a.

Sports Gloves

b.

Non Sports Gloves

Non-sports gloves include fashion/fancy, industrial and working gloves while sports
gloves consist of gloves, mittens and mitts meant specifically for use in sports. Fashion
gloves are normally made from high quality leather whereas the industrial and working
gloves are made from low quality and split leather.
1.2

INDUSTRY BRIEF

The leather gloves manufacturing is one of the major sector of Pakistan which is
contributing towards foreign exchange earning for the country. This industrial sector is
mostly established in the city of Sialkot, which is well-known for its quality sports goods,
leather products and surgical instruments in the global markets. However, a very small
number of gloves manufacturers are also located in Lahore and Karachi. Like all other
businesses in Sialkot, leather gloves manufacturers are categorized as small and medium
enterprise and majority of these establishments are of family businesses. Despite the
stagnant growth in the international market, and rising cost of leather this sector has
shown an impressive growth over the years. The growth rate in exports between CY 2003
& CY 2004 was 17.42%.

KEY SUCCESS FACTORS

Following factors are the key in making this project profitable:

Regular flow of export orders will be the main key success factor for the successful
running of the project.

Selection and procurement of consistent quality leather would be another key factor
for carrying out the successful operations of the proposed project.

Regular update about the latest designs in international fashion scenario.

2.1

OPPORTUNITIES

The proposed project would have a number of competitive advantages:

EPB & Digest of Industrial Sectors in Pakistan

PREF-45/June, 2006/ Rev 2

Pre-feasibility Study

Leather Gloves

Lack of competition from China and other countries in Scandinavian countries


(Sweden, Denmark) due to high health and safety requirements. (any company able
to penetrate in these markets would be yielding high prices for its products)

Government has exempted the imposition of sales tax and custom duties on the
import of machinery.

Newly emerging markets of Middle East, Far East and African countries

2.2

THREATS

The proposed project will be facing the following threat:

Imposition of environment standards

Increasing international competition with China, India and Eastern Europe)

Decline in the average unit price for Pakistani exporters

Increase in price of leather

PROJECT BRIEF

This document provides details regarding setting up a fashion leather gloves


manufacturing unit. The unit will be capable of producing on average 1250 pairs of
fancy/fashion gloves per day. For this purpose 50 stitching machines will be acquired.
The manufacture of fancy / fashion glove is less complex as compared to sports gloves,
therefore, more quantities of these gloves could be manufactured daily. The proposed
unit is also capable of manufacturing sports gloves and leather garments.

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3.1

Leather Gloves

PROCESS FLOW CHART FOR GLOVES MANUFACTURING

Finished Leather
sheep skin or cow hide
average leather required per
pair of gloves: 3.25sq.ft.
thickness: 0.6 to 0.8 mm

Pattern Cutting & Matching


customers specifications or
sample received
cutting of pattern by pattern
master
grains and color matching
of leather

Packing
each pair in separate
polythene bag
100 pairs per carton

Cutting
leather cutting with the help
of patterns

Inspection
trimming,
conformance with buyers
specifications

Stitching
one
stitcher
stitches
complete pair of glove
daily 25 pairs per stitcher
per machine

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3.2

Leather Gloves

PROCESS DESCRIPTION

The process of gloves manufacturing starts with the receipt of specification / sample of
gloves from the customer and / or design developed by the designing department. These
specifications include quality and specifications of leather, accessories to be used, design
details, stitching styles, packing instructions and all other necessary information. Based
on the specifications received, a sample pair of glove is prepared and sent to customer for
approval.
3.2.1

Pattern Making

Once the sample is approved, based on the specifications, pattern master first prepares the
pattern on chart paper and then on straw board sheet, which will then be used for cutting
leather for confirmed order.
3.2.2

Cutting

By using the patterns prepared, cutters cut the leather for gloves with the help of knives.
In case of large quantities, press machines with metal dyes can also be used. It is ensured
that that minimum waste takes place, the average wastage of leather in cutting process is
3 to 5%. A cutter cuts 50 to 70 pairs of gloves per day based on one shift of eight hours.
The cutting rate per pair of fashion glove ranges from Rs.6 to Rs.10.
3.2.3

Stitching

Stitching is the next process after cutting. The gloves are stitched by stitchers using
stitching machines. During the stitching process, accessories are added which mainly
include lining material, foam, velcro, hooks/clips, and labels. Depending upon the
design, daily output per stitcher per shift is between 20 to 30 pairs. Usually the payment
to stitcher for fashion gloves ranges between Rs.15 to Rs.25 per pair.
3.2.4

Inspection

After the completion of stitching process, quality inspection is carried out. In this process
a thorough inspection is made as to the quality of gloves, its stitching, accessories, lining,
etc. to ensure it is according to the specifications of buyers. Moreover, extra threads and
fibers are also trimmed during this process.
3.2.5

Packing

Each pair of glove is labeled, tagged and packed in plastic polythene bags and then 100
pairs of gloves are packed in a carton for their onward dispatch.
3.3

PROJECT COST

The cost of project has been estimated at Rs.11 million including land, civil works,
machinery, office equipment, preliminary expenses and working capital. Capital
expenditure, working capital and preliminary expenses are estimated at Rs.5.2 million
Rs.5.394 million and Rs. 0.45 million respectively. The machinery comprises of sewing
machines, cutters, electric wiring for the machines, base tables and electricity generator.
3.4

RATIONALE & JUSTIFICATION

There exists a huge potential in the global market for leather gloves, specifically in the
area of fancy leather gloves. During CY 2004 the global exports of leather gloves were
PREF-45/June, 2006/ Rev 2

Pre-feasibility Study

Leather Gloves

US$ 1.78 billion. Out of which, Pakistan has been able to export leather gloves of US$
154 million yielding 8.6% market share of the global leather gloves market.
Gloves manufacturers from Pakistan have concentrated more on the sports gloves rather
than on fancy leather gloves. In CY 2004 Pakistans exports of sport gloves and non
sports gloves were US$106 million and US$48 million respectively. This is because
Pakistan (specifically Sialkot) is a major supplier of sports goods to the world market and
leather sports gloves have emerged as an off shoot to this main sector. However, the
non-sports (or fashion gloves) category is an opportunity still to be explored for the local
SMEs. The breakup of leather gloves Export Market is as follows:
Table 1: World Export Market

Sports Leather Gloves

World Export
Breakup %
17%

Pakistan Export Break


up %
69%

83%

31%

Non-Sports Leather Gloves


3.4.1

Local Competition

An estimated number of 3482 leather gloves manufacturing units are working all over
Pakistan. Majority of these units are manufacturers of sports gloves and very few are
manufacturing non-sports gloves. For the proposed project, the sponsors will face a little
competition from the local suppliers.
3.4.2

Export Rebate

In order to promote the exports of the country, Government of Pakistan has been paying
rebate on export of leather gloves at the rate of 2.37% on FOB value.
3.4.3

Project Findings

Table 2: Project Findings


Project
35.3%
3 Years 2 Months

IRR
Payback Period

10,742,320

NPV @ 20%

Based on the above circumstances and figures, it is evident that the project has excellent
earning potential.
3.4.4

Viable Economic Size

A minimum of 400 pairs of gloves are required to be manufactured daily in order to


operate at breakeven. The proposed size of the project is capable to produce an average
of 1250 pairs of gloves per day. Considering the international market demand and
Pakistans export trends, initially the project would be able to receive and entertain such
number of orders which are required for the project to be economically viable.
2

Pakistan Gloves Manufacturing Association

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Pre-feasibility Study

3.4.5

Leather Gloves

Proposed Capacity

The project cost for the proposed project is based on 50 stitching machines. With this
number of machines, the project is capable of manufacturing 12503 pairs of gloves per
day.

THE PROJECT CONCEPT

4.1

PROJECT FINANCING

The estimated cost of the project is Rs.11 million including the working capital of
Rs.5.394 million. The sponsors of the project will contribute Rs.5.5 million and the
remaining amount of Rs.5.5 million will be financed by the bank.
4.2

PROJECT DETAILS

4.2.1

Location

Sialkot is the major gloves manufacturing center in Pakistan. After Sialkot, small
numbers of gloves manufacturing units are also located in Karachi and Lahore.
Therefore, primarily Sialkot is the best place to setup up this type of manufacturing unit
followed by Karachi and Lahore. The reason for setting up gloves manufacturing unit in
these cities is the easy accessibility to raw materials and skilled labor.
4.2.2

Land

For the proposed project at least nine thousand (9000) square feet (2 Kanals) of land is
required. An amount of Rs.0.945 million has been allocated for the acquisition of
required land. Construction for building and infrastructure will be carried on an area of
10,308 sq.ft.
In this report, price of land has been estimated at Rs.105 per square feet. This price is
based on the land in industrial area or in the suburbs of main city. However, prices may
considerably vary depending upon the location and area of the land.
4.2.3

Building

Construction of building and civil works required to be carried out at the proposed
location. The civil works would be carried out on an area of 10,308 square feet. The rest
of the area will be left uncovered. Civil work includes the following:

Raw Material Store

Cutting Section

Stitching Hall

Finishing, Inspection and Packing Section

Admin Block

Washrooms

Flooring/driveways/pavements

based on 30 pairs manufactured per day per machine, it might increase or decrease depending upon the
design of the glove (daily number of pairs manufactured may range from 20 to 30 pairs)

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Leather Gloves

The total cost of construction is estimated at Rs.2.945 million. But rented premises are
recommended for the project as it is economical and easily available. This feasibility is
calculated on the assumption of rented building with the monthly rent of Rs. 25,000 per
month. However some renovation and refurnishing work would be needed, this will cost
Rs. 515,400.
4.2.4

Material Inputs

Leather is the main raw material required for manufacturing of fancy/fashion gloves. The
quality of the final product largely depends on this input. Great care must be taken at the
time of selection and purchase of the required leather. Usually leather with 0.6mm to
0.8mm thickness is used in fancy gloves manufacturing.
Apart from the leather, other accessories which mainly include sewing thread, foam
lining, and various other items are also required which are easily available in the local
market.
4.2.5

Machines and Equipment

The machines, equipment and accessories required for a leather gloves manufacturing
unit are:
Table 3: Machinery & Equipment
Machine
Lock Stitch Machine-Single Needle
Lock Stitch Machine-Double Needle
Cutters
Cutting Tables
Hydraulic Press
Irons/Heating hands
Checking Table
Tools (set)
Over lock (Chinese)
Pattern master Table
Pattern master tools
Electric Wiring
Machine base table
Generator (30 KVA)
Total Machinery Cost
Miscellaneous Cost
Total Cost

Qty
50
1
5
2
1
4
3
1
1
1
1
51
51
1

Unit Price
34,500
80,000
1,500
12,500
200,000
4,500
5,000
6,000
10,000
6,000
4,000
1,000
1,500
300,000

Total Amount
1,725,000
80,000
7,500
25,000
200,000
18,000
15,000
6,000
10,000
6,000
4,000
51,000
76,500
300,000
2,524,000
100,000
2,624,000

For the purpose of this study, stitching machines with Japanese origin are considered.
The costs4 of these stitching machines are based on the assumption that these will be
4

15% general sales tax levied on the local purchase of machines is not included in the price for the said
project, because this sales tax amount would be refunded to the export based units

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Leather Gloves

acquired form local representatives of the manufacturer. Another option for acquiring the
stitching machines is to directly import these machines. In this way, custom duty and
sales tax levied on the import of these machines could be saved because these machines
would be used for export purposes. Second hand stitching machines are also available in
the market and are widely used by the new entrants.
4.2.6

Manpower

Technical skilled labor is easily available in the cities where the leather gloves are being
manufactured. Both permanent and contract labor is utilized in the gloves manufacturing
process. The cutters and the stitchers are paid on the basis of piece rate, while the
supervisory and quality control staff is hired on permanent basis. Total permanent
production staff in the first year is estimated at 13 persons. The staff salaries for the first
year are as follows:
Table 4: Human Resource Requirement
Designation

No.

Production Staff
1
20,000
1
15,000
1
10,000
1
10,000
3
6,000
1
8,000
3
5,000
1
10,000
1
5,000

Manager Production
Pattern Master
Supervisor Stitching
Supervisor Inspection
Inspectors
Packing In charge
Packers
Mechanic
Electrician
Total Production staff
Manager
Accountant
Store In charge
Helper
Watchmen
Sweeper
Total
Total Salaries

Salary/Month

Admin. & Accounts Staff


1
15,000
1
10,000
1
10,000
1
4,000
2
4,000
1
4,000

Total salary 1st Year

240,000
180,000
120,000
120,000
216,000
96,000
180,000
120,000
60,000
1,332,000
180,000
120,000
120,000
48,000
96,000
48,000
612,000
1,944,000

MARKET ANALYSIS

It is quite encouraging that in leather gloves sector, Pakistan is ranked at third position
after China, with 8.6% of market share in the global market during CY 2004. The total

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Leather Gloves

global export market of leather gloves was US$1.78 billion and Pakistan has been able to
export leather gloves worth US$154 million during the same year.
5.1

TARGET CUSTOMER

The target customer would be the developed countries of the world. USA is the largest
buyer of leather gloves in both sports and non-sports categories. USAs total import of
leather gloves constitutes 33 % of total world import of leather gloves in CY 2004. The
second position is held by Hong Kong with 12.1% share. Hong Kong is a trading hub
and serves as transit point for re-export. Other major buyers include Germany, Japan,
France, UK, Canada and Spain.
5.2

MARKET DEMAND

The export of non-sports gloves were US$1.48 billion in CY2004, which constituted 83%
of the total global gloves exports. Sports gloves export were US$299 million which
constituted 17% of total gloves exports. This shows that the market for non-sports gloves
is more than five times than that of sports gloves.
5.3

MARKET SUPPLY

China is the major supplier of leather gloves to the world market and it has outperformed
all the other countries in this sector by holding 48% of world market share in 2004
followed by Hong Kong 15% and Pakistan 8.6%. China has created the competitive
advantage in its production by producing at a lower cost than any other country in the
world. Other exporters of leather gloves include Indonesia, Thailand, Philippines, Italy
and India.
5.4

INDUSTRY GROWTH

There has been a very robust growth in the leather gloves sectors globally. During the
year 2004 a growth of 10%5 has been witnessed. Keeping this growth rate in mind, it is
expected that the new entrants would easily penetrate in the existing market.

GOVERNMENT INCENTIVES

The government has several incentives for the manufacturers and exporters of leather
products.
6.1

REBATE

A rebate of 2.37% on F.O.B. value on the exports of leather gloves is offered by the
government.
6.2

CUSTOM DUTY

On the import of stitching machines, by the exporters, the custom duty and sales tax is
exempted.
6.3

INCOME TAX

Tax applicable rate is 20% of the taxable income.

Source: Export Promotion Bureau (EPB)

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Leather Gloves

ASSUMPTIONS

7.1

INFLATION RATE

An inflation rate of 7.5% is considered while making the projections for cost of sales.
For operational expenses and salaries inflation rate of 10% is taken into account. The
prices for raw materials, labor cost and electricity are increased by 7.5% every year
compared to the operational expenses and staff salaries which are increased by 10%
every year as a result of inflation.
The selling price for pair of leather glove is increased by 5% every year keeping in mind
the inflation. Apart from the selling price, the exchange rate between Pak rupee and US
dollar is also increased at a rate of 2% each year.
7.2
7.2.1

REVENUE ASSUMPTIONS
Capacity Utilization

The capacity utilization for first year has been estimated at 45%. At 45% capacity
utilization, the management would be able to manufacture 669 pairs of gloves daily. The
capacity utilization and daily number of pairs manufactured for the remaining years are
given below:
7.2.2

Daily Production

For the proposed project, it is assumed that a stitcher would stitch 30 pairs6 of leather
gloves daily.
7.2.3

Selling Price

The selling price of fashion/fancy leather gloves ranges from $4 to $12 per pair
depending upon the design and quality of the product. An average selling price of US
$6.50 has been taken for making the projections.
7.2.4

Depreciation on Assets

Depreciation on the assets has been charged at the following rates for the calculation of
profits:
Table 5: Depreciation Rate
Land

0%

Building

5%

Machinery &Equipment

10%

Office Equipment

20%

Furniture & Fixture

10%

Daily manufactured pairs of gloves may vary from 20 to 30 pairs per stitcher per machine
depending upon the design of the gloves.

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7.2.5

Leather Gloves

Amortization of Preliminary Expenses

Preliminary expenses amounting to Rs.455,000 will be amortized at the rate of 20% per
year.
7.3

WORKING CAPITAL

Working capital is calculated on the basis of following assumptions:


7.3.1

Accounts receivables

Mostly the export sales are made on the basis of letter of credit. It is the normal practice
in the market to extend credit to the buyers through credit sales. For this reason, it is
assumed that all the export sales will be realized on average after forty five (45) days
from the dispatch of shipment. Therefore, receivables for forty five days have been taken
for calculating the working capital requirements.
7.3.2

Raw Material Stock

Leather is the main raw material for the gloves manufacturing. In order to obtain
required quality finished leather, 15 to 20 days are required for the processing of leather
by the tanner. Therefore it is necessary to maintain some stock of commonly used leather
in order to avoid stock out situation and delays in meeting the deadlines. In this project,
30 days stock is recommended and has been included in the working capital
requirements.
7.3.3

Accessories and Packing Material Stock

Accessories and packing material is easily available in the market. Therefore, 15 days
stock of accessories and packing materials has been considered in working out the
working capital.
7.3.4

Advances to Employees

Advances to employees are calculated on the basis of 30 days of both payroll and staff
benefits.
7.3.5

Tool and Spares Stock

Certain tools and spare parts are required in order to have the smooth flow of production.
A stock of tools and spare parts equivalent to 5% of the machinery cost has been taken
into account for computing the working capital.
7.3.6

Accounts Payable

Cost of sales for 30 days has been considered in calculating accounts payable.

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8
8.1

Leather Gloves

FINANCIAL STATEMENTS
INCOME STATEMENT
Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Year 8

Year 9

Year 10

Daily Production

669 Pairs

975 Pairs

1125 Pairs

1125 Pairs

1200 Pairs

1200 Pairs

1275 Pairs

1275 Pairs

1350 Pairs

1350 Pairs

Gross Sales
Add Rebate (@ 7.34% of FOB value)
Less Export Dev. Surcharge (0.25%)
Net Sales

78,243,750
1,799,606
(195,609)
79,847,747

119,778,750
2,754,911
(299,447)
122,234,214

145,116,563
3,337,681
(362,791)
148,091,452

152,372,391
3,504,565
(380,931)
155,496,025

170,657,078
3,925,113
(426,643)
174,155,548

179,189,931
4,121,368
(447,975)
182,863,325

199,908,767
4,597,902
(499,772)
204,006,897

209,904,206
4,827,797
(524,761)
214,207,242

233,364,087
5,367,374
(583,410)
238,148,051

245,032,292
5,635,743
(612,581)
250,055,454

Cost of Sales
Gross Profit

65,965,500
13,882,247

100,982,700
21,251,514

122,344,425
25,747,027

128,461,646
27,034,378

143,877,044
30,278,504

151,070,896
31,792,429

168,538,468
35,468,429

176,965,392
37,241,850

196,743,877
41,404,174

206,581,071
43,474,383

6,837,940
518,837
91,000
7,447,778
6,434,469

9,739,868
464,972
91,000
10,295,840
10,955,674

11,439,433
417,083
91,000
11,947,516
13,799,511

12,682,528
374,445
91,000
13,147,973
13,886,406

14,613,275
336,431
91,000
15,040,705
15,237,798

15,539,633
302,498
15,842,130
15,950,299

18,488,497
272,173
18,760,670
16,707,758

20,629,946
245,046
20,874,992
16,366,858

23,356,096
220,755
23,576,852
17,827,323

26,065,777
198,986
26,264,764
17,209,620

457,107
457,107
5,977,363
1,195,473
4,781,890

777,081
777,081
10,178,593
2,035,719
8,142,874
4,781,890
12,924,764

594,239
594,239
13,205,273
2,641,055
10,564,218
12,924,764
23,488,983

411,396
411,396
13,475,010
2,695,002
10,780,008
23,488,983
34,268,990

228,553
228,553
15,009,245
3,001,849
12,007,396
34,268,990
46,276,386

45,711
45,711
15,904,588
3,180,918
12,723,670
46,276,386
59,000,057

16,707,758
3,341,552
13,366,207
59,000,057
72,366,264

16,366,858
3,273,372
13,093,486
72,366,264
85,459,750

17,827,323
3,565,465
14,261,858
85,459,750
99,721,608

17,209,620
3,441,924
13,767,696
99,721,608
113,489,304

4,781,890

12,924,764

23,488,983

34,268,990

46,276,386

59,000,057

72,366,264

85,459,750

99,721,608

113,489,304

Operating Expenses:
Operating Expenses
Depreciation
Amortization of Preliminary Exp.
Operating Profit
Interest on Loan
Interest on Lease
Profit before Tax
Taxation 20%
Profit after Tax
Balance B/F
Retained Earnings
Dividend
Cash
Bonus
Balance C/F

PREF-45/June, 2006/ Rev 2

##

16

Pre-feasibility Study

8.2

Leather Gloves

BALANCE SHEET
YEAR

Start up

10

5,282,572

4,763,735

4,298,763

3,881,680

3,507,235

3,170,805

2,868,307

2,596,134

2,351,087

2,130,332

1,931,346

5,282,572

4,763,735

4,298,763

3,881,680

3,507,235

3,170,805

2,868,307

2,596,134

2,351,087

2,130,332

1,931,346

455,000
5,737,572

364,000
5,127,735

273,000
4,571,763

182,000
4,063,680

91,000
3,598,235

3,170,805

2,868,307

2,596,134

2,351,087

2,130,332

1,931,346

5,394,400
5,394,400
TOTAL ASSETS
11,131,972
CAPITAL EMPLOYED REPRESENTED BY:

10,059,911
4,677,429
125,104
181,029
220,359
619,884
15,883,714
21,011,449
-

15,400,125
7,160,400
191,514
221,949
198,323
3,298,527
26,470,838
31,042,601
-

18,657,844
8,675,100
232,027
274,947
178,490
10,242,539
38,260,947
42,324,627
-

19,590,736
9,108,855
243,628
325,030
160,641
19,488,644
48,917,535
52,515,770
-

21,941,624
10,201,918
272,864
401,707
144,577
28,597,794
61,560,484
64,731,289
-

23,038,705
10,712,013
286,507
460,100
130,120
40,019,225
74,646,670
77,514,977
-

25,702,556
11,950,590
319,634
559,560
117,108
51,132,823
89,782,271
92,378,404
-

26,987,684
12,548,120
335,616
655,938
105,397
63,210,356
103,843,110
106,194,198
-

30,003,954
13,950,556
373,126
765,996
94,857
74,832,533
120,021,023
122,151,355
-

31,504,152
14,648,084
391,782
891,506
85,371
87,309,996
134,830,893
136,762,239
-

5,565,986
5,565,986

5,565,986
4,781,890
10,347,876

5,565,986
12,924,764
18,490,750

5,565,986
23,488,983
29,054,969

5,565,986
34,268,990
39,834,976

5,565,986
46,276,386
51,842,372

5,565,986
59,000,057
64,566,043

5,565,986
72,366,264
77,932,250

5,565,986
85,459,750
91,025,736

5,565,986
99,721,608
105,287,594

5,565,986
113,489,304
119,055,290

5,565,986
5,565,986

5,009,387
5,009,387

3,896,190
3,896,190

2,782,993
2,782,993

1,669,796
1,669,796

556,599
556,599

11,131,972

5,654,186
5,654,186
21,011,449

8,655,660
8,655,660
31,042,601

10,486,665
10,486,665
42,324,627

11,010,998
11,010,998
52,515,770

12,332,318
12,332,318
64,731,289

FIXED ASSETS

Preliminary Expenses
CURRENT ASSETS
Accounts Receivables
Stocks
Accessories
Advances to Employees
Tools & Spares
Cash & Bank Balances

SHARE CAPITAL
556,599 Shares @ Rs.10/- each
UNAPP. PROFIT/(LOSS)

LONG TERM LIABILITIES


Finance Lease
Long Term Loan
CURRENT LIABILITIES
Creditors
Short Term Loans
Sales Tax Payable
TOTAL

PREF-45/June, 2006/ Rev 2

17

12,948,934
12,948,934
77,514,977

14,446,154
14,446,154
92,378,404

15,168,462
15,168,462
106,194,198

16,863,761
16,863,761
122,151,355

17,706,949
17,706,949
136,762,239

Pre-feasibility Study

8.3

Leather Gloves

CASH FLOWS
YEAR

10

5,977,363
518,837
91,000

10,178,593
464,972
91,000

13,205,273
417,083
91,000

13,475,010
374,445
91,000

15,009,245
336,431
91,000

15,904,588
302,498
-

16,707,758
272,173
-

16,366,858
245,046
-

17,827,323
220,755
-

17,209,620
198,986
-

609,837
6,587,200

555,972
10,734,565

508,083
13,713,355

465,445
13,940,454

427,431
15,436,676

302,498
16,207,086

272,173
16,979,932

245,046
16,611,904

220,755
18,048,078

198,986
17,408,606

6,587,200

10,734,565

13,713,355

13,940,454

15,436,676

16,207,086

16,979,932

16,611,904

18,048,078

17,408,606

556,599
1,195,473

1,113,197
2,035,719

1,113,197
2,641,055

1,113,197
2,695,002

1,113,197
3,001,849

556,599
3,180,918

3,341,552

3,273,372

3,565,465

3,441,924

SURPLUS / (DEFICIT)

1,752,071
4,835,129

3,148,916
7,585,649

3,754,252
9,959,104

3,808,199
10,132,255

4,115,046
11,321,630

3,737,516
12,469,570

3,341,552
13,638,380

3,273,372
13,338,532

3,565,465
14,482,614

3,441,924
13,966,682

INCREASE/(DECREASE) IN WORKING CAPITAL


NET INCREASE/(DECREASE)
OPENING BANK BALANCES
CLOSING CASH BALANCE

9,609,645
(4,774,516)
5,394,400
619,884

4,907,006
2,678,643
619,884
3,298,527

3,015,092
6,944,012
3,298,527
10,242,539

886,150
9,246,105
10,242,539
19,488,644

2,212,479
9,109,150
19,488,644
28,597,794

1,048,139
11,421,430
28,597,794
40,019,225

2,524,782
11,113,598
40,019,225
51,132,823

1,260,999
12,077,534
51,132,823
63,210,356

2,860,437
11,622,177
63,210,356
74,832,533

1,489,218
12,477,464
74,832,533
87,309,996

SOURCES
FROM OPERATION
Profit Before Tax
Add: Depreciation
Amortization

OTHER SOURCES
Sponsor's Loan
Running Finance

APPLICATION
Capital Expenditure
Repayments of Loan
Payment of Accrued Interest
Tax Payment
Dividend Paid
- Cash

PREF-45/June, 2006/ Rev 2

18