84. Curtains _ Interior Blinds by fanzhongqing

VIEWS: 1 PAGES: 16

									84. PROFILE ON PRODUCTION OF
CURTAINS & INTERIOR BLINDS
                              84-2


                      TABLE OF CONTENTS


                                                  PAGE


 I.    SUMMARY                                    84-3


II.    PRODUCT DESCRIPTION & APPLICATION          84-3


III.   MARKET STUDY AND PLANT CAPACITY            84-4
       A. MARKET STUDY                            84-4
       B. PLANT CAPACITY & PRODUCTION PROGRAMME   84-6


IV.    RAW MATERIALS AND INPUTS                   84-7
       A. RAW & AUXILIARY MATERIALS               84-7
       B. UTILITIES                               84-8


V.     TECHNOLOGY & ENGINEERING                   84-8

       A. TECHNOLOGY                              84-8
       B. ENGINEERING                             84-9


VI.    MANPOWER & TRAINING REQUIREMENT            84-12
       A. MANPOWER REQUIREMENT                    84-12
       B. TRAINING REQUIREMENT                    84-13


VII.   FINANCIAL ANALYSIS                         84-13
       A. TOTAL INITIAL INVESTMENT COST           84-13
       B. PRODUCTION COST                         84-14
       C. FINANCIAL EVALUATION                    84-15
       D. ECONOMIC BENEFITS                       84-16
                                           84-3


I.     SUMMARY


This profile envisages the establishment of a plant for the production of curtain and
interior blinds with a capacity of 150 tonnes per annum.


The present demand for the proposed product is estimated at 85.2 tonnes per annum.
The demand is expected to reach at 527.3 tonnes by the year 2017.


The plant will create employment opportunities for 54 persons.


The total investment requirement is estimated at about Birr 3 million, out of which Birr
233,550 is required for plant and machinery.


The project is financially viable with an internal rate of return (IRR) of 17 % and a net
present value (NPV) of Birr 901,000 discounted at 8.5%.


II.    PRODUCT DESCRIPTION AND APPLICATION


A curtain is a piece of cloth intended to block or obscure light. Curtains are often hung on
the inside of a building’s window to block the travel of light, for instance at night to aid
sleeping, or to stop light from escaping outside the building (stopping people outside
from being able to see inside, often for privacy reasons). In this application they are also
known as “draperies.” Curtain come in a variety of shapes, materials, sizes, colors and
patterns, and they often have their own sections with in department stores, while some
shops are completely dedicated to selling curtains. An adaptation of the curtain may be a
blind or, in warmer countries, wooden shutters that are fixed to the outside of the building
to provide privacy and still keep the building cool inside.


Curtains are a form of window treatment, and complete the overall appearance of the
house. Window treatment helps control the ambience and flow of natural light into the
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room. The effect of drapery or curtains, is best in daylight, and with proper indoor light
positioning, it can look attractive even at night.


The project is resource based. Moreover, currently the demand for the products is met
through both local production and import therefore, the project is also aimed at
substituting import. The products under consideration have a substantial export potential.




III.   MARKET STUDY AND PLANT CAPACITY


A.      MARKET STUDY


1.     Past Supply and Present Demand


A curtain is a piece of cloth hung on the inside of building’s windows to block or obscure
light. They also provide visual separation in halls or rooms.


Curtain supply is both from the domestic producers as well as import. Imported supply
of curtains and interior blinds annual average in the years 1997-2006 was 127 tons.
However import figures recorded for 1999 and 2004 were much higher for consideration.
Excluding 1999 and 2004 imports the average for 1997-98, 2000-2003 and 2005-2006
respectively were 48, 46 and 57 tons, indicating a stabilized supply. The average supply
of imported curtains and interior blinds of the eight years was 50 tons with an average
annual growth rate of 20%.


Even though the domestic supply of curtains is not officially recorded, most households
use domestic curtains. According to retailers in the field the domestic supply covers
about 30% of the total supply of curtains.


The current effective demand based on the eight years annual average import and growth
rate is estimated at 85.2 tons.
                                          84-5



                                        Table 3.1
                IMPORTED CURTAINS AND INTERIOR BLINDS


                                   Year                Tons
                                   1997                  42.4
                                   1998                  52.8
                                   1999                 200.4
                                   2000                  38.9
                                   2001                  81.8
                                   2002                  38.1
                                   2003                  24.6
                                   2004                 682.9
                                   2005                  44.4
                                   2006                  69.3


                               Source: Customs Authority


2.     Demand Projection


The demand for curtains and interior blinds is derived form buildings and household
mirror windows. High rising buildings are inclined to imported variety of curtains and
interior blinds. Residential houses on the other hand use domestic products.


Increasing housing demand and the construction of buildings particularly for residential
purposes will create a growing demand for curtains. Assuming 20% annual growth rate
attained on the imported supply of curtains the demand projection is made for the next
ten years.


Projected demand for curtains and interior blinds is presented in Table 3.2.
                                          84-6



                                         Table 3.2
       PROJECTED DEMAND FOR CURTAINS AND INTERIOR BLINDS


                                  Year               Tons
                                  2008               102.2
                                  2009               122.7
                                  2010               147.2
                                  2011               176.6
                                  2012               211.9
                                  2013               254.3
                                  2014               305.2
                                  2015               366.2
                                  2016               439.4
                                  2017               527.3


3.     Pricing and Distribution


According to Customs authority records the cheapest curtain material with rail of size 2.1
X 2.77 m2 was Birr 30. For the same size of curtain a factory get price of Birr 22 is
recommended for the new project. The product will find its outlet through existing retail
channels.


B.     PLANT CAPACITY AND PRODUCTION PROGRAMME


1.     Plant Capacity


The envisaged curtains and interior blinds making plant will have a production capacity
of 150 tones per year working 300 days, single shift of eight hours a day.
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2.     Production Programme


The plant is assumed to start production at 75% of its capacity in the first year, 85% in
the second year, and at 100% in the third year and thereafter.


IV.     MATERIALS AND INPUT


A.      RAW AND AUXILIARY MATERIALS


The main raw materials of curtains and interior blinds making plant are synthetic or
cotton fabric, blind curtain material (vane),mandrel, chain etc. The fabrics are locally
availabil while blind curtain material (vane),mandrel, chain etc have to be imported.




The annual raw and auxiliary materials required and the corresponding cost at full
capacity production are presented in Table 4.1.


                                           TABLE 4.1
     RAW MATERIALS REQUIREMENT AT FULL CAPACITY OPERATIONS


Ser.                                          Qty.     Unit cost              Total cost ('000 Birr)
                 Description
No.                                          (tones)   ('000 Birr)       FC           LC          Total
 1     Fabrics                                100              35         -           3,500            3,500
       Vane      (Curtain      material)
 2     including “U” shape mandrel,            50             400       2,000              -           2,000
       chain, and other accessories
 3     Miscellaneous                           LS                  -      -                -     155,000
                  TOTAL                                                2,000.00 3,500.00         5,500.00
                                          84-8


B.     UTILITIES


The major utilities required by the plant are electricity and water. The estimated annual
requirement of utilities of the plant at 100% capacity utilization rate and their estimated
costs are given in Table 4.2.


                                        Table 4.2
                                UTILITIES REQUIREMENT
                                                              Cost ‘000 Birr
               Description                 Qty         F.C         L.C         Total
Electricity , kwh                          75,000                    35.52       35.52
           3
Water, m                                    1,000                    10.00       10.00


                 Total                                               45.52       45.52


V.     TECHNOLOGY AND ENGINEERING


A.     TECHNOLOGY


1.     Production Process


The production process of curtains and interior blinds making plant involves the
following major manufacturing operations:


The major curtains production involves designing, cutting, and sewing, eyeleting,
stitching and finishing process.


The process for manufacturing interior blinds, the method yielding a blind which has
curtain material located between the vanes, so that when the blind is deployed across an
opening, the vanes may be arranged perpendicularly with respect to the curtain material
to allow light into the room or the vanes may be aligned so that they are parallel and
                                           84-9


overlapping one another, in which case a privacy product results. The method includes
preparing discrete pieces of a three component strip having a center portion. Adhesive is
applied to one or both of the vane portions and the discrete pieces are placed on a U-
shaped mandrel, inverted so that the opening of the “U” faces downwardly. The curtain
material portion lies over the round top of the mandrel and the vane portion lies against
the sides of the mandrel. The mandrel is indexed, another mandrel replaces it and the
process is repeated.


2.     Source of Technology


The technology for curtains and interior blinds making plant can be obtained from the
following companies.


THE ARTISTIC BLIND COMPANY
115 Staple Hill Road, Fishponds, Bristol
BS16 5AD, ENGLAND
Tel: (UK+44) 0117 9109888
Fax: (UK+44) 0117 9109890


B.     ENGINEERING


1.     Machinery and Equipment


Plant machinery and equipment required for curtains and interior blinds making plant is
presented in table 5.1. The total investment cost of plant machinery and equipment is
estimated at Birr 233,550.00. All machinery and equipment have to be imported.
                                          84-10


                                         Table 5.1
 LIST OF MACHINERY AND EQUIPMENT FOR CURTAINS AND INTERIOR
                               BLINDS MAKING PLANT


Sr.                                          Qty.                     Cost (Birr)
                Description
No.                                         (Pcs)          LC             FC            Total
 1     Sewing Machine                         35           30,625        122,500         153,025
 2     Cutting Machine                        5              1,875            7,500            9,375
 3     Riveting Machine                       15             2,610         10,440            13,050
 4     Pressing Machine                       6              9,600         38,400            48,000
 5     Assembly Tools                                            -         10,000            10,000
                     TOTAL                                               188,840      188,840.00
     INSURANCE, CUSTOMS DUTY, INLAND
                                                          44,710-         -            44,710.00
      TRANSPORT, BANK CHARGE, ETC.
                GRAND TOTAL                               44,710-        188,840      233,550.00


2.      Land, Building and Civil Works


The envisaged plant will require a total land area of 1,000m2. The total land lease value
for 80 years at the rate of Birr 0.4967 per m2 is therefore Birr 39,736. The floor space
required for the building of and other facilities will be about 750m2. The total estimated
cost of building and civil works at the rate of Birr 1,500 per m2 is about Birr 1,125,000.


Therefore, the total cost of land, building and civil works is estimated at Birr 1,164,736.-


3.      Proposed Location




Factors that influence the location of manufacturing industry in general include
availability or raw material, availability of Infrastructure, easy access to market and
availability and cost of labour.
                                           84-11



The weight given for a particular factor differs form industry to industry. In the case of
curtains and interior blinds manufacturing plant the major raw material which is cotton
fabric have to be obtained from Kombolcha or Bahir Dar textile Factories and the target
markets are the urban centers of the country which are the predominant consumers of the
product. Moreover, the product have a significant export potential.


Therefore, as the envisaged plant have to acquire the major raw material required from
Kombolcha or Bahir Dar and distribute its product to urban centers of the country road
connection becomes a critical factor in the selection of possible locations. Moreover,
availability of other infrastructures is also important.


Accordingly on the basis of the above discussions. Three woredas, namely Lemo, Sodo
Zuria and Dale have been identified as a possible locations.


Moreover, after analysing the comparative advantages and disadvantages of the selected
woredas as a location for the envisaged plant the capital of Dall woreda i.e. Yirgalem town
is selected as the best location.




VI.     MANPOWER & TRAINING REQUIREMENT

A.      MANPOWER REQUIREMENT

The curtains and interior blinds making plant will require manpower both for
administration and production activities. The total number of manpower is 88, of which
14 are administration staff and 74 are involved in production activities.

The total number of labor cost is Birr 858,750.-. The detail manpower requirement and
estimated annual salaries are presented in Table 6.1.
                                          84-12



                                         Table 6.1
          MANPOWER REQUIREMENT AND ANNUAL LABOR COST

                                                               Monthly    Annual
Sr.
                          Job Title                      No.   Salary     Salary
No.
                                                                (Birr)    (Birr)
A. Administration
  1   General Manager                                      1      1,500       18,000
  2   Secretary                                            1        650        7,800
  3   Finance and Administration Head                      1      1,200       14,400
  4   Accountant                                           1      1,000       12,000
  5   Store Man                                            1        500        6,000
  6   Clerk                                                1        500        6,000
  7   General Service                                      3        350       12,600
      SUB-TOTAL                                            9                  76,800
B. Production
  8   Production Head                                      1      1,000       12,000
  9   Supervisor                                           2        800       19,200
 10 Quality Control Staff                                  2        700       16,800
 13 Skilled Workers                                       25        650      195,000
 14 Assistant Skilled Workers                             15        450       81,000
SUB TOTAL                                                 45                 324,000
          WORKER'S BENEFIT (25%)                           -                 100,200
GRAND TOTAL                                               54                 501,000


B.     TRAINING REQUIREMENT


The production supervisor and skilled workers need to be given two months training on
production activities, repairing and maintenance activities.


The training cost is estimated to Birr 30,000.-.
                                         84-13


VII.   FINANCIAL ANALYSIS


The financial analysis of the curtain and interior blind project is based on the data
presented in the previous chapters and the following assumptions:-


Construction period                  1 year
Source of finance                    30 % equity
                                     70 % loan
Tax holidays                          3 years
Bank interest                          8%
Discount cash flow                   8.5%
Accounts receivable                  30 days
Raw material local                   30 days
Work in progress                     1 days
Finished products                    30 days
Cash in hand                         5 days
Accounts payable                     30 days


A.     TOTAL INITIAL INVESTMENT COST


The total investment cost of the project including working capital is estimated at Birr 3
million, of which 26 per cent will be required in foreign currency.


The major breakdown of the total initial investment cost is shown in Table 7.1.
                                               84-14


                                              Table 7.1
                                INITIAL INVESTMENT COST


             Sr.                                                       Total Cost
             No.                  Cost Items                          (‘000 Birr)
            1        Land lease value                                      39.7
            2        Building and Civil Work                           1,125.0
            3        Plant Machinery and Equipment                       233.6
            4        Office Furniture and Equipment                      125.0
            5        Vehicle                                             200.0
            6        Pre-production Expenditure*                         267.5
            7        Working Capital                                   1,015.7
                     Total Investment cost                             3,006.5
                                 Foreign Share                               26


* N.B Pre-production expenditure includes interest during construction ( Birr      117.51    thousand )
training (Birr 30 thousand ) and Birr 120 thousand costs of registration, licensing and formation of the
company including legal fees, commissioning expenses, etc.



B.      PRODUCTION COST


The annual production cost at full operation capacity is estimated at Birr 6.21
million (see Table 7.2). The material and utility cost accounts for 89.30 per cent, while
repair and maintenance take 0.32 per cent of the production cost.
                                            84-15


                                           Table 7.2
          ANNUAL PRODUCTION COST AT FULL CAPACITY ('000 BIRR)


                                Items                   Cost              %
                    Raw Material and Inputs              5,500.00           88.56
                    Utilities                               45.52             0.73
                    Maintenance and repair                      20            0.32
                    Labour direct                           194.4             3.13
                    Factory overheads                          64.8           1.04
                    Administration Costs                    129.6             2.09
                    Total Operating Costs                5,954.32           95.88
                    Depreciation                           162.11             2.61
                    Cost of Finance                         93.75             1.51
                    Total Production Cost                6,210.18             100




C.        FINANCIAL EVALUATION


1.        Profitability


According to the projected income statement, the project will start generating profit in the
first year of operation. Important ratios such as profit to total sales, net profit to equity
(Return on equity) and net profit plus interest on total investment (return on total
investment) show an increasing trend during the life-time of the project.


The income statement and the other indicators of profitability show that the project is
viable.
                                          84-16



2.     Break-even Analysis


The break-even point of the project including cost of finance when it starts to operate at
full capacity ( year 3) is estimated by using income statement projection.


                               BE =          Fixed Cost       = 32 %
                                      Sales – Variable Cost


3.     Pay Back Period


The investment cost and income statement projection are used to project the pay-back
period. The project’s initial investment will be fully recovered within 6 years.


4.     Internal Rate of Return and Net Present Value


Based on the cash flow statement, the calculated IRR of the project is 17 % and the net
present value at 8.5% discount rate is Birr 901,000.


D.     ECONOMIC BENEFITS


The project can create employment for 54 persons.             In addition to supply of the
domestic needs, the project will generate Birr     1.02   million in terms of tax revenue.
The establishment of such factory will have a foreign exchange saving effect to the
country by substituting the current imports. The project have a considerable export
potential.

								
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