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Executive Summary

1. Brief Description of the Project.


Abhushan is a Partnership Organization incorporated under the Partnership act through the foresight and vision of Ms. Prakriti Nepal, Ms. Prajita Shrestha and Ms. Pranita Rana. It is a 100% wholly owned company. Abhushan is clothing line that gives you a wide range of varieties. It creates attire reflecting Nepalese culture blended with modern touch. It serves the best quality and ease with a dedicated and experienced staff, excellent networking, and effective management and marketing. Services and products provided will be of extremely high quality, comfortable and based on the clients needs. Abhushan garment Pvt. Ltd manufacture garment such as Pashmina, Skirt, T-shirt, Trouser etc. The main targets of our product are foreign and local customer. We are going to establish the industry in Sano Thimi, Bhaktapur. It will be the partnership company which will come into operation in middle of 2012 with the capital of Rs.15 crores. Our marketing strategy will be based mainly on ensuring customers know about our existence and the services we fulfill. This will be done through implementing a market penetration strategy that will ensure that we are well known and respected in the garment industry. We will ensure that our prices take into consideration peoples' budgets, that these people appreciate the services, know that it exists, and how to contact us. Our promotional strategy will involve integrating advertising, events, personal selling, public relations, direct marketing and the Internet, details of which are provided in the marketing section of this plan. It is important to recognize that we ensure that clients be fond of nature through informative briefings on objects origins. This element will assist in differentiating us from our competitors and contribute towards the development of a sustainable competitive advantage. We intend to develop our team so that our people can grow as the company grows. In a nutshell, we focus on providing a different array of services to gain competitive advantage in the market in order to establish a reliable image of the organization.

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2. Entrepreneurs Profile Abhushan garment will be a partnership firm consisting of three partners and their profiles are as follows: Ms. Prakriti Nepal Ms. Prajita Shrestha Ms. Pranita Rana The above mentioned partner will contribute equally in this project in order to complete in time. Each partner will contribute their valuable time to make this project a success with their innovation, experience, self confidence and hard work. They have high level of energy, high degree of commitment and tolerance for ambiguity.

3. Projects Contribution to the Local Economy The project to contribute following benefits to local economy: Employment opportunity: As the industry needs large no. of labor it will automatically create employment opportunity by hiring the local people. Growth in economy: Establishment of business will help the country to increase its economy as we target to export the garment.

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Marketing Plan
1.1 Description of Product

The main garments we are going to produce are: Pashmina, skirts/trousers, and t-shirts for both ladies and gents. We are going to produce these garments in different colors and sizes like: small, medium, and large with different designs. The features of different garments that will be offered are as follows: Pashmina: The pashmina product (shawls) are in different sizes (i.e. small and big) with the length of 1.5 meters and an approximately weight of 250 gms. The shawls are available in a wide range of colors like: red, black, white, blue, pink, green and many more. We are offering the shawls with different embroideries designs as per customers preference. T-shirts: T-shirts will be offered in different prints that especially reflect the culture of our country such as: print of Mt. Everest, Buddha, map of Nepal, and many more. Skirts/Trousers: Skirts/Trousers will be of different lengths as: full, knee and quarter length with the simple embroideries.

1.2

Comparison of the product with its competitors

There are many existing popular Apparel industries in the market which are being captured by many procedure and manufacturers like: Surya Garments, Sashi Garments, Springwood and so on. We differentiate our products from other competitors on the basis of: High variety: we provide varieties of apparel, variety ranges from skirts, shirts to pashmina product as well varieties giving traditional and modern looks Better quality: we dont compromise with the quality of textile. We use cotton textile having attractive colors and good quality. Affordable price: the price of product is not that high, we provide it in reasonable price. Availability

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1.3

Location

We have chosen Bhaktapur as head office, the reasons are as follows: 1.4 1.5 Linked by 6 lane road Low wages and rent charge Near to the airport Cheap labour cost Pleasant environment Marketing Areas Head office: Bhaktapur Branches: Thamel, Pokhara, Palpa, Chitwan, Lumbini Abroad: USA, Germany, UK, India, China, Canada, Bangladesh Main Customers

The target customers of New Arrival Apparel are as follows: Local Customers: Local customers prefer products with reasonable price and moderate quality, so we are going to produce the products to satisfy their needs targeting only the local people. Foreigners: Knowing the fact that foreigners are attracted with our national cultures and traditions. We will be targeting them with the different prints and designs that reflect our culture, and it is obvious that they will like it. For the foreign export we are going to produce products with high quality and increase the price.

1.6

Total Market Demand

By survey, the total market demand for the business is 150,000/unit per month. Pashmina: 25,000/unit Skirts/Trousers: 75,000/unit T-shirts: 50,000/unit

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1.7

Market Share

Out of the total market demand of 150,000 per unit per month we will be targeting 15% which makes our targeted market share 22,500 per unit per month.

1.8

Sales Forecast

At the starting point of our business we will not be able to capture the 15% of the total market demand. Therefore, the company will target only 80% of the total targeted market shares in the 1st year i.e. 0.80x22500 = 18,000 per unit per month. In the 2nd year it can be assumed that the sales will grow to 90% i.e. 0.90x22500 = 20,250 per unit per month. In the 3rd year it can be assumed that the business can capture the targeted market share of 22,500 per unit per month.
Sales Forecast Units per month 40% 30% 30%

Pashmina Year 1 Year 2 Year 3 onward 80% 90% 100% 18,000 20,250 22,500 7,200 8,100 9,000

Skirts/Trousers 5,400 6,075 6,750

T-shirts 5,400 6,075 6,750

1.9

Selling Price:

The selling price for the different products is: Products Rs/piece Pashmina 2500 Trousers and skirts 800 T-shirts 700

1.10

Promotional Activities Advertisement Exhibitions programs Hoarding boards/posters Media advertisement through famous models in TV and magazines Special schemes to be provided during festive seasons like: buy 2 get 1 free

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1.11

Marketing Expenses The marketing activities will cost money to our business so one has to be sure that for every promotional measure adopted there is a foreseeable increase in sales. The estimated marketing expenses for the business are Rs. 1,200,000 per year.

Production Plan 2.1 Production process 1. Allocation and separation of area 2. Building 3. Setting of the machine 4. Procure a raw material from supplier 5. Managing the raw material 6. Design of clothes and pashmina 7. Produce goods 8. Cleaning and dying 9. Storage of fixed product 10. Distribution channel 2.2 Fixed capital requirement S.N. 1 2 3 4 5 Description Land Building Furniture Vehicle Machinery and equipment: - dying machine - sewing machine - piko machine - packaging machine - computer Total 6 Office and equipment TOTAL Quantity 4 ropanies Rate 7500000 Amount (Rs) 30000000 15000000 466004 10000000

4375000 5375000 2375000 4375000 3500000 20000000 10000000 85466004


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2.3 Life of fixed capital

S.N. 1 2 3

Description Building Machinery and Equipment Vehicle Total depreciation Depreciation per month

Rate 5% 10% 10%

Total (Rs) 15000000 20000000 10000000

Depreciation 750000 200000 100000 3750000 312500

2.4 Repair and maintenance The total repair and maintenance cost is estimated to be Rs. 50000 per month.

2.5 Source of machinery and equipment We will purchase machine from our own country and if necessary we will import from abroad.

2.6 Plant capacity We will utilize 100% capacity in order to produce garment for every season.

2.7 When and how will the machinery be paid for? We will buy all the required machinery and equipment from our investment and loan.

2.8 Factory location and layout 1. Located at Bhaktapur along with its main head office 2. Sewing machine will be arranged in u-shaped so that it is easy for the worker to work with each other 3. Well try to separate each hall for each work so that there will not be any disturbance for worker to work 4. Spacious working place within the factory with refreshment area

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2.9 Cost of Raw material


Description Unit Quantity per month 200 300 2000 20 200 10 10 Rate Total cost

Thread Needle Fiber Chalk Machine oil Glue Stone Total Cost ( per month ) Total Cost ( per year )

Boxes Boxes Per lot Boxes Boxes Boxes Boxes

200 150 800 50 300 200 450

40000 45000 160000 1000 60000 2000 45000 1752500 21030000

2.10 Cost of labor


S.N. 1 Description Direct labor - repair and maintenance - workers Total 2 Indirect labor -guard -driver -helper Total TOTAL ( per month ) TOTAL COST ( per year ) No. Rate Amount

10 500

5000 6000

50000 300000 3050000

5 10 10

5000 8000 3000

25000 80000 30000 135000 3185000 38220000

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2.11 Labor availability As we starting our business in Bhaktapur it will not be problem for us regarding availability of labor.

2.12 Factory overhead & expenses S.N. 1 2 3 4 5 6 Indirect labor Electricity & water Repair & maintenance Transportation of raw material Tea for worker Depreciation Total Factory Expenses (per month) Total Cost (per year) Description Amount (per month) 135000 60000 50000 16667 1166 312500 575333 6903996

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2.13 Production cost per unit S.N. 1 2 3 Raw material Direct labor Factory overhead Total cost of production Pashmine (40%) Skirt & trouser (30%) T-shirt (30%) Description Amount (Rs) 1752500 3050000 575333 5377833 2151133 645340 645340

Total unit of production Pashmine Skirt & trouser T-shirt 4200 9000 11000 24200

Total unit Total cost of production Pashmine Skirt & trouser

2250 720 630 3600

T-shirt Total cost

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Organizational and Management Plan

3.1

Form of Business

The business will be register as ABUSHAN GARMENT, registered under Partnership act 2020. It will be the partnership firm. Partnership will involve co-ownership of the business by one or a few partners. Partners will bring into their capital or their expertise or both. In our case we have 3 partners. The member has contributed Rs 500, 00,000 each for the working of the organization. Abhushan Garments will be registered under the Partnership Act 2020. There will be three partners but. All three will invest the same amount and share same amount of profit while they are liable for same amount of losses and liabilities. All three will however supervise and overlook the day to day activities of the shop.

3.2 Organizational Structure

Owners (Prakriti Prajita,Pranita) Marketing & Production Manager (Prajita) Financial Manager (Prakriti)

Human Resource Manager (Pranita)

Supervisor

Supervisor

Supervisor

Staff

Staff

Staff

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3.3 Business Experience and Qualification In order to run the business effectively and efficiently people are the most important resources of organization. It is important that these people exhibit proper qualification and suitable experience for the related job. All the promoters of the Abhushan Garments are highly professional and have BBIS degree with few year of experience in the respected field of finance, marketing, human resource, production, administrative. Because of their knowledge in different field and their year of experience it is the plus point for the success of organization.

3.4 Pre-Operating Activities Activities Registration of business Preparing business plan Applying for a loan an approval Contracting equipment supplier Hiring labor Installing the new equipment Sourcing raw material Trial production Total pre- operating activities Duration 2 weeks 4 weeks 4 weeks 2 weeks 1 weeks 1 weeks 4 weeks 1 weeks Cost 75,000 35,000 25,000 50,000 3,185,000 1,000,000 1,752,500 877500 7000,000

3.5 Office Equipment The total office equipment is around four lakhs i.e. chair, table, calculator, computer, fans, printer, scanner. The life of the office equipment will be five years with the scrap value 40,000.

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3.6 Administrative Expenses

Description General managers salary Marketing managers salary Production managers salary Finance and accounting managers salary Human resource managers salary Administrative managers salary Supervisors salary Workers salary Supplies and communication Rent, land and building Miscellaneous expenses Total administrative expenses per year Add Deprecation Total

Amount/Month 35000 30000 28000 25000 25000 25000 15000 8000 5000 200000 10000 406,000*12 =4,872,000 1,000,000 5,872,000

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Financial Plan

4.1

Total Capital Requirement

Particular Fixed capital Pre-operating expenses Working capital Total capital

Amount 84,566,004 7,000,000 57,533,996 150,000,000

4.2

Financial Plan and Loan Requirement

Particular A 1 2 3 4 5 6 B C Fixed Capital Land Building

Owners equity

Loan

Total

30,000,000 15,000,000 10,000,000 10,000,000 7,000,000 12,533,996 70,000,000 45,000,000 80,000,000

30,000,000 15,000,000 20,000,000 10,000,000 466,004 10,000,000 7,000,000 57,533,996 150,000,000

Machinery and Equipment 10,000,000 Office Equipment Furniture Vehicle Pre-operating Activities Working Capital Total 10,000,000 466,004

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4.3 Year 1 2 3 4 5

Loan Amortization Loan Amount 80,000,000 66896275 52482177 36626669 19185610 Interest (10%) 8,000,000 6689627 5248217 3662666 1918561 Payment 21103725 21103725 21103725 21103725 21103725 Principle Amount 13103725 14414098 15855508 17441059 19185610

4.4
Particulars

Profit and Loss Statement


1st Year 80% 216000 2nd Year 90% 243000 3rd Year 100% 270000 4th Year 100% 270000 5th Year 100% 270000

1. Sales forecast of total pieces Pashmina Trousers and skirts T-shirts 2. Total sales A Raw materials B Direct labor C Indirect labor 3. Total factory overhead (A+B+C) 4. Gross profit (2-3) 5. Other expenses Administrative expenses

96000000 65280000 67200000 228,480,000 16,824,000 29280000 1296000 47,400,000

108000000 73440000 75600000 257,040,000 18,927,000 32940000 1458000 53,325,000

120000000 81,600,000 84,000,000 285,600,000 21,030,000 36,600,000 1,620,000 59,250,000

120,000,000 81,600,000 84,000,000 285,600,000 21,030,000 36,600,000 1,620,000 59,250,000

120,000,000 81,600,000 84,000,000 285,600,000 21,030,000 36,600,000 1,620,000 59,250,000

181,080,000

203,715,000

226,350,000

226,350,000

226,350,000

4857600

5464800

6072000

6072000

6072000

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Selling cost 6. Total Administrative Cost 7. EBIT 8. Interest 9. EBT TAX 20% 10. Accumulated Profit

168000 5025600

189000 5653800

210000 6283000

210000 6283000

210000 6283000

176,054,400 8,000,000 168,054,400 33,610,880 134,443,520

198,061,200 6689627 191,371,573 38,274,315 153,097,258

220,067,000 5248217 214,818,783 42,963,757 171,855,026

220,067,000 3662666 216,404,334 43,280,867 173,123,467

220,067,000 1918561 218,148,439 43,629,688 174,518,751

4.5 Cash Flow Statement


Particular Cash inflow Equity Loan Sales Total cash from sales Total Cash Inflow Cash Outflow Pre-operating Expenses Purchase of fixed assets Administrative (less)depreciation Selling and distribution Interest expenses 7,000,000 150,000,000 70,000,000 80,000,000 228480000 226913000 226913000 257040000 2554773000 2554773000 285600000 284033000 284033000 285600000 284033000 284033000 285600000 284033000 284033000 PreOperating 1st 2nd 3rd 4th 5th

85506004

4872000

4872000

4872000

4872000

4872000

168000

189000

210000

210000

210000

8,000,000

6689627

5248217

3662666

1918561

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Loan amortization Total Cash Outflow Net cash flow Opening Cash Balance End 57493996 92506004 57493996

13103725 26143725 200769275 57493996

14414098 26164725 2528608275 258263271

15855508 26185725 257847275 2786871546

17441059 26185725 257847275 3044718821

19185610 26186171 257846829 330256609 6 356041292 5

258263271

2786871546

3044718821

3302566096

4.6

Balance Sheet
Pre operating

Particular Assets: Cash A/c receivable Total gross fixed assets Less: Acc.dep Net fixed Assets Pre-operating expenses Total assets Liabilities:

1st

2nd

3rd

4th

5th

57493996

258263271 1567000

2786871546 1567000

3044718821 1567000

3302566096 1567000

3560412925 1567000

85506004

85506004 (3,750,000) 89256004

85506004 (7,500,000) 93006004

85506004 (11250000) 96756004

85506004 (15000000) 100506004

85506004 (18750000) 104256004

85506004

7,000,000

7,000,000

7,000,000

7,000,000

7,000,000

7,000,000

150000000

356086275

2888444550

3150041825

3411639100

3673235929

Long term loan 8,000,000 payable Equity Acc. profit Overdraft 70,000,000

6689627

5248217

3662666

1918561

70,000,000 134,443,520 144,953,128

70,000,000 153,097,258 2660099075

70,000,000 171,855,026 2904524133

70,000,000 173,123,467 3166597072

70,000,000 174,518,751 3428717178

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Total liabilities and owners equity

150000000

356086275

2888444550

3150041825

3411639100

3673235929

4.7

Break-even Point, Return on Investment and Return on Equity 1st Year BEP (FC/TS-VC) Return on investment (ROI) Return on equity (ROE) 27% 30% 70% 2nd Year 20% 33% 73% 3rd Year 18% 36% 75% 4th Year 18% 40% 75% 5th Year 18% 47% 75%

4.8

Financial Projection and Analysis BEP Analysis: The expected profit is obtained from the first year, as our sales started from first year. The BEP at the third year is 18% which is low and at the same time attracted from the companys point of view. Lower BEP means contribution margin is much higher as compared to fixed cost expenses. According to the figure the BEP decreases from 27 percent to 18 percent. ROI: The projected ROI at the end of fifth year is 47% which is quite beneficial for the company, which means we are getting back 47 percent of our investment in the fifth year. This is due to increase in both net profit and assets. ROE: The projected ROE at the end of fifth year is 75 percent this means that we will be earning 75 percent of total equity investment which is favorable for the business, because of high accumulated profit.

4.9 Project feasibility Once the Abhushan company is established the company will give employment to many people and helps in local economy. Considering the products better quality and affordable price, it will be able to satisfy the customers needs. The qualified and experience entrepreneur and the sound financial position from the first year are able to make the project feasible.

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SWOT Analysis

Strengths Quality products Well trained staff Good management skills Good production location Branches in different parts of country and world Variety of products Attractive product designs High market demand

Weaknesses Regular marketing required to keep the brand recognized High overhead cost (rents of different branches, salaries of many staff, advertisement etc.)

Opportunities Threats Increase in employment opportunity Instable Political situation Increasing Tourism Increasing numbers of competitors Trend of wearing pashmina, t-shirts, etc Instable market price of raw materials never outdated Unpredictable changes in supply of raw materials Increasing demand of pashmina and cotton garments Increasing Labor cost Growing income level of potential Decreasing number of labors customers Frequent visits by extortionists Increasing population (for donation, providing security etc) Can be used as both casual and formal wear

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