Center for Entrepreneurship and Small Business Management Maharshi Dayanand Saraswati University, Ajmer
Business Plan Development On KHALSA COLLECTIONS- “SOMERTHING DIFFERENT AND AFFORDABLE”
Submitted To: Mr. Dushyant Bafna
Submitted By: Mohit Jadam Manish
Tailor Gaurav Mawar Amit Tak
BBA (E&FBM) Part-III (Sem-VI)
CONTENTS ACKNOWLEDGMENT CONTENTS Introduction to Khalsa Collections • • • • • • •
Mission Unique Features Objectives Production Time Material Labour Requirement Location
Market Analysis • • •
Market Segmentation Marketing Mix Marketing Strategy
Operational Requirements • •
Internal Working Criteria Transportation
Financial Analysis • Ratios and Depreciation Charged • Profit and Loss Account • Balance Sheet
ACKNOWLEDGMENT It gives us immense pleasure in a submitting this Project of Business Plan Development (BPD) for the Semester VI As the part of BBA in ENTREPRENEURSHIP AND FAMILLY BUSINESS MANAGEMENT. FIRST AND FORMOST, We would like to acknowledge Mr. Dushyant Bafna, Faculty Member of Center for Entrepreneurship and Small Business Management, Maharshi Dayanand Sarswati University, Ajmer. Who has provided this opportunity and enabled us to gain this experience in a business area. Before we explain about our Business Plan, We would express thanks from the core of our heart to Mr. Hemraj Sharma, Who is the owner of HB. Furniture House, Ajmer for suggesting and helping us in preparing this Business Plan. Without there co-operation and help we wouldn’t have been in a position to complete our Business Plan. Mohit Jadam, Manish Tailor, Gaurav Mawar & Amit Tak BBA (E&FBM) Part III Semester- VI
INTRODUCTION Handicrafts are unique expressions and represent a culture, tradition and heritage of a country. The Handicraft Industry is one of the important productive sectors. Various attempts have been made to define this broad and diversified industry. The following definition strives to cover diversity and complexity of Handicraft Industry.
Defining Handicrafts: Definition According to United Nations Educational, Scientific and Cultural Organization/Information
Technology
Community
(UNESCO/ITC)
International Symposium on “Crafts and the International Market: Trade and Customs Codification”, Manila, Philippines, October 1997: Handicrafts can be defined as products which are produced either completely by hand or with the help of tools. Mechanical tools may be used as long as the direct manual contribution of the artisan remains the most substantial component of the finished product. Handicrafts are made from raw materials and can be produced in unlimited numbers. Such products can be utilitarian, aesthetic, artistic, creative, culturally attached, decorative, functional, traditional, religiously and socially symbolic and significant.
Definition according to Govt. of India: Handicraft can be defined, which is made by hand; should have some artistic value; they may or may not have functional utility. Today the people are more aware of furnishing and interiors of their houses, so they ask for a large rang of variety end excellent services which are the main aim of KHALSA COLLECTION- “SOMETHING DIFFERENT AND AFFORDABLE.” This Business Plan Unit is a small retail business aimed at a big time in order to reach its lofty goals and stands for its quality and affordable prices in the markets of its product like Dinning Tables, Single or Double Beds with different features, Dressing Tables, Antics, Show Piece, Wooden Toys, All over Furniture Goods are available in our Furniture Mart. It will be providing the products which already exist in the market and will also provide a new breadth of air in the market through the availability of unique products and services. Our unique selling preposition will target the customers with their unique demands.
MISSION‘Khalsa Collections’ will build its image as a quality first and then will begin earning higher profits.
UNIQUE FEATURES• Different varieties and sizes of products are available under one roof with a unique customer’s service. • The Furniture Goods are altered according to the order. • Our Furniture Goods are also designed and shaped with the help of fully skilled carpenters.
OBJECTIVES• To capture its market share by 25%within a year, by focusing on getting customers from near by areas of Ajmer like nasirabad, beawar. • To provide different varieties of product to the customers by fulfilling their expectation and to achieve a good position in the market.
PRODUCTION TIMEWood carving is a time consuming process. The time needed by Indian craftsmen to create carved wooden handicrafts may range anywhere from a week (for small items) to a few months for large items which require elaborate carving techniques.
LABOUR REQUIRMENTSHandicraft is a labour intensive product and it is all depend upon labour only and all kind of labour requirements are there like in this we need skilled, semi skilled and unskilled workers. So total requirements are as follows:
Employees
Number
Salary (Rs.) Per day
Per month
Annually
Production Supervisor
1
-
5000
60000
Accountant
1
-
5000
60000
Skilled Workers
5
150
4500
54000*5 = 2,70,000
Semi skilled Workers
8
125
3750
45000*8 = 3,60,000
Unskilled workers
3
100
3,000
36000*3 = 1,08,000
Peon
1
-
2,500
30,000
Guard
1
-
2,500
30,000
Total
20
9,18,000
LOCATION AND SITE DEVELOPMENT
The area for setting up a handicraft manufacturing unit is decided after surveying all the potential areas. The location of plant will be at Makarwali Road Vaishali Nagar, Ajmer.
The rate of land is Rs 500sq meters (one side road plot), of area 2,000sq meters or 21529sq ft
Structure and Civil works: S. No.
Particulars
Size
Area
Rate
Amount
1
Factory shed
30”*60”
1800
200
3,60,000
2
2 stock room
18”*20”
360
200
72000
3
Guard room
8”*10”
80
200
16000
4
Power room
8”*10”
80
200
16000
5
Boundary wall
6
Washroom
220000 6”*8”
48
200
9600
12”*10”
120
200
24000*5=120000
5labour quarters 7
Room
8
Washrooms
6”*8”
48
200
9600*5=48000
9.
Office room
15”*12”
180
200
36000
10.
Fire fitting Total
39200 9,36,800
MATERIALSBabool/Aakashiya: This is available in Rajasthan and some part of Gujarat. The rates of babool are Rs.20 / sq ft Shisham: Most of wooden handicraft is made of shisham wood. The highest demand is of shisham made wooden handicraft. This is available in Gujarat,
U.P. & Bihar. This is made available by local wholesale timber merchant. The rates are Rs. 30/sq ft. Pine: Rs. 25 /sq ft. These are less demanded. Teak: Rs. 80 /sq ft Mango: Rs. 25 /sq ft Only Shisham will be used to manufacture wooden handicraft because it is more in demand and suitable for these type of handicrafts.
KEY TO SUCCESS“KHALSA
COLLECTION”-‘SOMETHING
DEFFERENT
AND
AFFORDABLE’ will build an impression in the mind of the customers because the punch line itself explains about the different variet of product. This punch line will also be printed on every poly bag of KHALSA COLLECTIONS.
EXPECTED ACCOMPLISHMENTSThe Business Unit expects to capture an additional 25% of the market share in the second year, following this expansion and another 50% in the following year.
MARKET ANALYSIS-
Geographical Area Makarwali Road Vaishali Nagar, Ajmer
Objective of the survey •
To know about the market potential for the handicraft
•
To analyze the handicraft manufacturing, its competition, customer
preferences and their satisfaction level. •
To find out the major players in the market
Source of Information Primary (Market Survey) and Secondary data
Methodology Adopted: Research plan was developed through conclusive research design using descriptive research analysis methods by survey as detailed below:
Research Approach: 1. Primary data for gathering information regarding manufacturing requirements and facilities available at Ajmer region was collected by personal interview with different manufacturers selected on the basis of random sampling survey method. 2. Secondary data regarding world demand and supply positions, Indian Handicraft status and other relevant information were gathered from different websites.
Research Instruments: Collect the data on both the sensitivity of demand and supply, customer preferences and to know the market potential and future growth. After deciding the research approach and instruments, sampling plan was prepared Sampling Procedure: Simple random sampling method was used for survey on representative basis. Sample Size: 20 handicraft units Contact Method: Personal interview with each of the manufacturer and raw material suppliers was conducted.
STRATEGIC MARKETING PLANWooden handicraft is being an unbranded commodity, so as such the manufacturers incur no promotional expenditure. Sometimes they just increase the commissions or the margins of these, if the targets are achieved enormously. But in order to differentiate the product and capture the existing market and to develop strong customer base, some strategic marketing plan is necessary to be designed and implemented. Various strategies that will be used being a new entrant are:•
Study supply with timely delivery to fulfill the demand of the
domestic area as well as outside area and good quality would be one of the strategic strength of the marketing plan. •
Apart from good quality good designs are an important factor. These
designs will be based on traditional pattern so that it can impress foreign customer. •
Besides from these efforts e-commerce is also a promotional tool for
marketing of this product. So I will do online selling also in order to promote my product. •
So orders will also be taken online apart from fax and
telephonically.
OPERATIONAL REQUIRMENTMachinery Involved S. No.
Particulars
No.
Rate
Amount
1
Chemical treatment plant
1
200000
200000
2
Seasoning plant
1
300000
300000
3
Surface planner
9
30000
270000
4
Grinder(small)
5
2500
12500
5
Grinder(big)
5
7000
35000
6
Driller
2
1500
3000
7
Band show machine)
1
25000
25000
8
Gaze machine
3
30000
90000
9
Ziksha machine
1
3000
3000
10
Sanding machine
1
30000
30000
Total:
(aara
968500
FINANCIAL ANALYSIS
Cost of Project Particulars
Cost in Rs
Land & Site development
10,63,600
Building
9,36,800
Plant & Machinery
9,68,500
Other Fixed Assets
2,30,000
Preoperative Expenses
2,71,995
Preliminary Expenses
1,94,282
Provision for Contingency
1,94,282
WC Margin Total
26,189 38,85,648
Means of Finance Particulars
Cost in Rs.
Promoter's Capital
12,95,203
Long/ medium Term Loan from Banks
25,90,445
Total
38,85,648
Basic Assumptions underlying Financial Projections The profitability and other projections may be prepared on the basis of following assumptions:1.) 2.)
The construction period will last for one year. The company would work for 360 days per year on a 1 shift basis. The installed capacity on this basis works out to 12000.
3.)
The company will start commercial production on July 1, of year 1. The expected capacity utilization will be 60% in first year, 65% in the second year, and 70% for the third year and so on.
4.) Wages and salaries are expected to be Rs 918000. 5.)
Factory overheads expenses will be Rs 32880 for the first year.
6.)
Administration expenses will be Rs 360000 per annum.
7.)
The term loan will be repaid in 14 equal half-yearly installments, with the first installment due at the end starting of first operating year. The interest rate on the outstanding term loan will be 12%. 8.) The bank finance for working capital will cost 12% interest rate. 9.) The depreciation rates for company law purposes are as owes: Building
: 3.34%
Plant and Machinery
: 8%
Miscellaneous Fixed assets : 5%
Annexure: 1 Questionnaire (Manufacturer) Name____________________________ Company Name___________________ Area of production_________________ Year of Establishment___________________ 1) Variety of handicraft item you manufacture? a) Chairs
c) Decorative items
b) Tables
d) Any other
2) From where you acquire the raw material for wooden handicraft? a) Bihar b)
U.P.
c) Gujarat d) Import from other countries
3) At what frequency do you order the raw material stock? a) Weekly
c) Monthly
b) Fortnightly
d) as required
4) Order size a) 400-500 units
c) 700-1000 units
b) 500-700 units
d) 1000 units and above
5) Who bears the transportation cost? a) Supplier
b) Yourself
6) Which type of handicraft item is more in demand? a) Wooden
b) Glass made
c) Metal made 7)
Which type of wood is maximum in demand for manufacturing?
a) Babul/Aakashiya
d) Teak
b) Shisham
e) Mango
c) Pine 8) What level of Inventory you keep? a) 15 days
c) 2 months
b) 30 day
d) 4 months
9) From where you get the skilled workers for the ornamental work? a) Saharanpur
c) Jaisalmer
b) Barmer
d) Locally
Bibliography • www.indianhandicraftexporter.com • www.google.co.in • www.wikipedia.com • www.yahoo.com •
www.ori.nic.in
• www.answers.com • www.handicraftdpr.htm
Annexure: 2
Interest Term Loan
Yea r 1 2 3 4 5 6 7
14 Equal Instalments @ 12% per annum Loan Loan O/S at O/S at Interest the end the end Interest for the Loan O/S of 1st of 2nd for the 2nd at the half half 1st half half beginning year year year year 240541 222038 2590445 3 1 155426 144324 203534 185031 2220381 9 7 133222 122120 166528 148025 1850317 5 3 111019 99917 129522 111018 1480253 1 9 88815 77713 1110189 925157 740125 66611 55509 740125 555093 370061 44408 33306 370061 185029 0 22204 11102
Note: term loan of 25, 90,445 will be paid
Total interest for the term loan 299750 255342 210936 166528 122120 77714 33306
Annexure: 3
Working Capital Requirements Items Raw materials Stock in process Finished goods Book debts Total Current Assets Less: Margin for WC from long term sources (25% of RM CAs) Less: Trade credit for raw materials Bank finance for WC
Norms in days 30.00 1.00 4.00 7.00
1st year 62500 1837 14698 25722
2nd year 67708 1990 15923 27866
3rd year 72916 2143 17148 30009
42.00
104757
113487
122216
26189
28371
30554
62500
67708
72916
16068
17408
18746
1928
2088
2249
INTREST @ 12 %
Annexure: 4 Depreciation A. Asset Valuation for depreciation purpose Share of Share of Basic Preoperative Contingency Asset expenses cost cost margin 106360 Land 0 90435 64596 Building 936800 79655 56896 Plant & machinery 968500 82349 58821 Miscellaneous fixed assets 230000 19556 13969 319890 Total 0 271995 194282 B. Depreciation schedule for company law purposes (SLM) Building 3.34% 40702 Plant & machinery 8% 85868 Miscellaneous fixed assets 5% 114599 16.34 Annual depreciation % 241169 C. Depreciation schedule for income tax purposes (WDV) Assets 1st yr 2nd yr 3rd yr
Total 1218631 1073351 2291982 263525 3665177
Building Plant & machinery & Miscellaneous fixed assets (33.3%) Total
107335
96601
86941
851750 959085
567862 664463
378593 465534
Annexure: 5 Profitability Estimates (Estimates of Working Results) Installed Capacity Production Capacity Utilization A. Sales Realization B. Cost of production *Raw Materials *Power *Wages & Salaries *Factory Overheads C. Admn & Selling Expenses *Admn Expenses *Selling Expenses D. Gross Profit Before interest E. Total Financial Expenses *Interest on Term Loans *Interest on Bank Borrowings F. Depreciation G. Operating Profit H. Preliminary Expenses W/O I. Profit/ Loss Before
1st yr 12000 7200 60 3288000 1322880 750000 60000 480000 32880
2nd yr 12000 7812 65 3562000 1433120 812500 65000 520000 35620
3rd yr 12000 8476 70 3836000 1543360 875000 70000 560000 38360
410000 360000 50000
444167 390000 54167
478333 420000 58333
1555120
1684713
1814307
301678 299750
257430.000 255342
213185.000 210936
1928 241169 1012273
2088 241169 1186114.333
2249 241169 1359952.667
194282 817991
194282 991832.333
194282 1165670.667
Tax J. Provision for Tax K. Profit After Tax L. Retained Profit M .Add: *Depreciation *Preliminary Expenses W/O *N. Net Cash Accruals
30022.50 787968.50 787968.50 241169
170561.400 821270.933 821270.933 241169
282391.500 883279.167 883279.167 241169
194282 1223419.50
194282 1256721.933
194282 1318730.167
Annexure: 6
Tax Calculation 1st yr Profit/ Loss Before Tax 817991 Add: Depreciation for company law purposes 241169 Total 1059160 Less: Depreciation for Tax purposes 959085 Gross Total Income 100075 Total Income 100075
2nd yr 991832
3rd yr 1165670
241169 1233001
241169 1406839
664463 568538 568538
465534 941305 941305
Income Tax @ 30% of Total Income
170561.4 0 282391.50
30022.50
Annexure: 7 Projected Balance Sheet Construction Period End Liabilities Share Capital Reserve & Surplus *Term Loans * WC Adv Current Liabilities & Provisions * Trade Credit Total Assets Fixed Assets * Gross Block * Less: Accumulated Deprecation * Net FA Current Asset Loans & Adv * Raw Materials * Stock in Process * Finished Goods
1st yr
2nd yr
3rd yr
1295203 1609238 1850317 17408
1295203 2492517 1480253 18746
3885661
1295203 787968.50 2220381 16068 1365497.5 0 62500 5685131
1555739 67708 6327918
1745273 72916 7032005
3665177
3665177
3665177
3665177
3665177
241169 3424008
482338 3182839
723507 2941670
62500 1837 14698
67708 1990 15923
72916 2143 17148
1295203 2590445
*Book Debts Cash & Bank Balances *Preliminary Expenses Total
Annexure: 8
25722
27866
30009
26189
2059225
3031592
3968119
194282 3885648
97141 5685131
97141 6327918
7032005
BREAK EVEN POINT FOR THE PROJECT Amount Amount Amount A Sales Realisation 3288000 3562000 3836000 B Variable Costs Raw Materials Interest On Working Capital Power & Water Selling & Distribution Expenses Total
750000 1928 60000 50000 861928
C Fixed Cost Wages And Salaries Repairs And Maintainance Depriciation Administrative Expenses Interest On Term Loan Total
480000 10000 241169 360000 299750 1390919 1390919 1390919
D Contribution(A-B)
2426072 2628245 2830418
p/v ratio
73.7856 4
Break Even Point In Terms Of Volumes Of Sales
1885081
Break Even Point In Terms Of Installed Capacity
57.3321 4
812500 875000 2088 2249 65000 70000 54167 58333 933755 1005582
Break Even Point
YEARS Fixed cost total cost Sales Realization Break Even Point In Terms Of Volumes Of Sales
2010 139091 9 225284 7 328800 0 188508 1
2011 2012 1390919 1390919 232467 239650 4 1 3562000 3836000 188508 188508 1 1
