A

REPORT ON ESTABLISHMENT OF A NEW VENTURE AT

YOUR LOCALITY

A project report submitted in partial fulfillment of master of business administration

(MBA) in North Eastern Regional Institute of Management (NERIM), Ghy-22.

Organizational Guide: Institutional Guide:

Sri Dilip Kumar Das Mr.Samanoy Baruah
Proprietor, M/S Dilany Leather, Faculty, Nerim
College Road, Bongaon,
Beltola, Ghy-28

Submitted By:
Dipankar Chakraborty
MBA 2nd Sem
 Roll no.13
Sec-A

PREFACE
The over riding reason for anyone to think of establishing a venture
or SSI unit can be summarized in one word- Opportunity. The
opportunity to be one’s own boss, to provide a product or services to
implement one’s own idea, which can generate sufficient surplus reason
to think of starting a venture.
In Assam, the markets for leather goods exist in Guwahati being
cosmopolitan in nature. There is a class of youngsters who have an urge
for fancy sophisticated consumer items. Such People have patronized the
leather goods market. The educated working women buy regularly leather
bags and hand bags.
I hope this small project work will help the budding entrepreneurs
in formulating and modifying their ideas in finding good business
opportunities in this area.
 ACKNOWLEDMENT
At the very outset, I would like to thank the management of M/s
Dilany Leathers for giving me the opportunity to carry out my assigned
project in a proper manner. I owe, my sincere gratitude to Mr. Samanay
Baruah, Faculty NERIM and Mr.Dilip Kr Das, Proprietor, M/s Dilany
Leathers for their expert guidance and inspiration without which, it would
not have been possible to conduct my project work.
My sincere thanks are due to all those employees who have co-
operated with me by making themselves available for consultations
despite all odds.
Finally and by no means least, I express my indebt ness to my
parents and my friends for their support and help in preparing the project
report.

Place: Dipankar Chakraborty

Date: NERIM, Guwahati
 CONTENTS

Chapter I: The enterprise and the entrepreneur.

Chapter II: Economic viability and marketability.

Chapter III: Technical Feasibility.

Chapter IV: Financial projections.

Chapter V: Names and addresses of the suppliers.

Chapter VI: Remarks.

Annexure.
1. Bibliography.
 PROJECT AT A GLANCE

Project title: Establishment of a new venture at your locality.

Organization: M/S. Dilany Leathers.

Organizational Guide: Sri Dilip Kumar Das,

Proprietor M/S. Dilany Leathers.

Institutional Guide: Mr. Samannoy Baruah,

Lecturer of Business Administration, NERIM

Locality of study: Vill: Keotkuchi

P.O. Keotkuchi
P.S Barpeta
Dist. Barpeta (Assam).

Duration of Study: 1st March 2010-31st March 2010.

CHAPTER-I
Chapter I: The Enterprise and the Entrepreneur:

Project report for the manufacture of:

i) Name of the Item/items: Manufacturing unit of leather goods.

ii) Name of the unit and address: M/S. SUPREME LEATHERS.

Vill. Arabari.
P.O. Sonapur.
P.S. Khetri
Dist: Kamrup (Assam).

iii) Telephone no, if any,

Office: N/A.
Factory: N/A.

iv) Name of the promoters.

Sri Dipankar Chakraborty
H-no.4, Harabala path, Bora Service,
Ulubari, Ghy-22.

v) Constitution of the firm: Proprietary.

vi) Qualification of the entrepreneur.

Educational Qualification: BBA from NERIM in 2009.

Other Qualifications:
 Completed the ‘New Enterprise Creation Programme on
Leather Products, Conducted by IIE, Guwahati in2007.

vii) Production/work experience: N/A.

viii) Family Background: Sri B.P. Chakraborty.

ix) Location/proposed location:

Vill. Arabari.
P.O. Sonapur.
P.S. Khetri
Dist: Kamrup (Assam).

x) Name and address of your banker:

Mr. Debashish Dutta
Branch Manager,
Allahabad Bank,
Ulubari,
Guwahati-22.
CHAPTER-II
Chapter II: Economic viability and marketability.

i) Introduction and scope:

M/S SUPREME LEATHERS is a manufacturing unit of leather
goods. At the very beginning it proposed to manufacturing of ladies
bags and school bags. But it will manufacture belts, purse, hand gloves.
In near future which are also very demandable in the market.

ii) Marketability:

In Assam, the market for leather goods exists in Guwahati, which

being cosmopolitan in nature. Apart from Guwahati, other places are
Jorhat, Tezpur, Silchar, etc. are the places where significant market exists
for leather goods. These are being sold in central market places. On a
average annually 1.2 lakhs pieces if ladies bags, 0.50 lakh pieces of ladies
shopping purses and 15 lakh pieces of belts are used in Assam.
CHAPTER III
CHAPTER III: THECHNICAL FEASIBILITY:

i) Manufacturing process:

Sequence of operation (leather goods)

CUTTING

NUMBERING

SKIVING/SPLITING

PASTING

STICHING

BUTTONING

FINISHING

PACKING

ii) Specifications: ISI Mark.

ii) Components to be purchased from outside:

It consists of varieties of finished materials aroused in the goods in
industry. Same of the most commonly using materials are:

a) Leathers: Cow, Buffalo, Sheep and Goat.

i) Mappa finishing.
ii) Snade finishing.
iii) Split finishing.
b) Rexin: Banion, Foam, Rubberriesed, arylon.
c) Jean.
d) Wool
e) Jute
f) Interlining-

i) Cotton fabric.
ii) Polyester fabric.
iii) Satin fabric.
iv) Jacquard fabric.
v) Synthetic fabric.

g) Trimmings: A variety of zippers, fasteners, buttons, buckets,

etc. used in manufacturing certain types of bags using foam,
paper, card board, plastic moulding, etc.
h) Installed capacity: 100%
i) Proposed capacity to be utilized:

1st year – 50%

2nd year – 55%
3rd year – 60%
4th year – 65%
5th year – 70%

j) Motive power requirement (approx) : 2.31 KW

CHAPTER IV
CHAPTER IV: FINANCIAL PROJECTIONS:
Fixed Capital:
1. Land And building.
a) Advance for ten years
(Rent p.m. 1000/- 1000sq. [email protected]) Rs.36,000/-
b) Development cost Rs.14,000/-
Total Rs.50,000/-

2) Details of machinery and equipment.

a) Details of machinery:

Sl.No. Name of Qty Rate Amount

Machine (Rs.)
1 Cylinder Bed 1 1,50,000 1,50,000
single needle
JUKIDDL.245
2 Flat Bed 1 37,000 37,000
single needle
JUKI-5530
3 Skyving 1 37,000 37,000
(Taking)
Machine
T.K-801
4 Flat Bed 1 6,000 6,000
single needle
(Local
domestic)
TOTAL 2,30,000
Eraction 5% 11,000
G.total 2,41,000
b) Plant Expenditure:

i) Preliminary and pre-operative.

a) Preliminary of project - Rs.3000
b) Traveling expenses (initial) - Rs.2000
c) Technician advance - Rs.5000
d) Training (self) - Rs.3000
e) Sample development - Rs.3000
f) Trial room expenses - Rs.2000
g) Deposit with various authority - Rs.1500
(SSI, DRDA, electricity, telephone, insurance)

ii) Electrification - Rs.5000

Total -Rs.38000

c) Other fixed Assets:

i) Ceiling Fan 3 Nos. @ Rs.1200 -Rs.3600
ii) Tube Set 4 Nos. @ Rs.250 -Rs.1000
iii) Filter (water) 1 Nos. @ Rs.600 -Rs. 600
Total -Rs.5200

d) Furniture- Rs.26540

Details of furniture
Sl.no. Particulars Qty Rate Amount (Rs.)
1 Pattern Making 2 2670 5340
Table (6’x4’x4’)
2 Cuttung Table 2 1450 2900
(4’x4’x3’)
3 Pasting Table 4 1650 6600
(4’x4’x4’)
4 Stool (16’x20’) 10 400 4000
5 Office Table 2 2600 5200
(30’x48’)
6 Chair (Plastic) 10 250 2500
Total 26540
e) Tools and Equipments:

Sl.No. Particulars Qty Rate Amount

1 Plastic Container 6 300 1800
2 Punch Hole set 4 200 800
3 Dies set 4 150 600
4 Acritic Sheet 3 50 150
5 Cutting Plier (big/small) 2 75 150
6 Iron box 1 500 500
7 Plastic Tray 12 100 1200
8 Cutting knife 6 10 60
9 Sharpening Stone 3 250 750
10 Measuring Tape 10 10 100
11 Steel Scale 2”, 1” 2 75 150
12 Thread cutter 3 25 75
13 Scissor 10 80 800
14 Hammer 10 50 500
15 Gin Sheet 8 ½”, 4” 2 75 150
16 Set square 1 15 15
17 Marking Wheel 1 15 15
18 Stitch remover 6 15 90
19 Dust Bin 6 25 150
20 Cudappa Stone (Marble) 3 100 300
Total 8390

3. Total fixed capital:

 i) Land & building - Rs.50000
ii) Machinery - Rs.241500
iii) Plant Expenditure - Rs.38000
iv) Other fixed assets - Rs.5200
v) Furniture - Rs.26540
vi) Tools & equipments - Rs.8390
Total - Rs.369630

4. Working Capital:

a) Utility (per month)

i) Power:
Total connected load -1.86 KW
Lighting (Motor) - 2.5 HP

Monthly power consumption in unit

12.23 kw X 8hrsX 25days = 446 units

Monthly power consumption bill

446 units X Rs.4.40 = Rs.1962.42

ii) Fuel:
Machine Oil (Approximate) = Rs.50
Total utility Rs.1962.40+Rs.50 = Rs.2012.40

b) Miscellaneous Expenditure (Per month):

Sl.No. Item Amount (Rs)

1 Rent of house 1000
2 Repair and renewal 500
(Machine & Equipment)
3 Postal and communication 2500
(with telephone)
4 Internal Travel 1000
5 Insurance (per year Rs.3000) 250
6 Publicity & Advertisement 1000
7 Contingency 625
( @10% of the above mentioned amount)
Total 6875

C) Man Power:
Sl.no Process Skilled Semi-skilled Un-skilled Total
1 Cutting/Stitching 1 2 0 3
2 Numbering 0 0 1 1
3 Skyning/Splitting 1 0 0 1
4 Pasting 0 1 2 3
5 Buttoning 0 1 0 1
6 Finishing/Packing 0 0 1 1
Total 2 4 4 10

Monthly Salary Wages (per month):

Sl.No. Type of worker Qty Rate Amount (Rs)

1 Skilled worker 2 2000 4000
2 Semi-skilled 4 1500 6000
3 Un-skilled 4 1000 4000
4 Marketing person (self) 1 2000 2000
Total 11 16000

d) Raw material (per month):

Target of production 300 unit per month

Average materials cost 168 per unit
Total Raw material cost 300 X 168 = Rs.50400

Requirement of raw materials for ladies bag (leather) per unit:

Sl.No. Name of materials Qty Rate Amount (Rs)
1 Cow Nappa printed 359 ft 40 120
2 Lining (Satin fabric) ¾ mtr 40 30
3 Mill Board ¼ board 16 4
4 Piping (plastic mould) 2 mtrs 1.5 3
5 Zip no: 3 Nylon ½ mtr 3 1.5
6 Piping tube 2 mtr 1 2
7 Foam (0.5 mm) ¼ mtr 20 5
8 D’ring (4cm) 2pcs 0.50 1
9 Square ring (4 cm) 2pcs 1.50 3
10 Thread Nylon 400 mtr 40 16
(1000 mtr)

11 Paste 100 ml 20 2
(rubber white 1 litre)

12 Button (nag netic) 1 set 15 15

Total 202.50
Transportation 10% 20.25
G.Total 222.75

Requirement of raw materials for School bags (Rexin with leather patch) per
unit:
Sl.NO. Name of Materials Qty Rate Amount (Rs.)
1 Rexin Rubberised ¼ mtr 60 45
2 Leather cow mappa ¼ sq. ft 40 10
printed
3 Liming (polyester fabric) ½ mtr 30 15
4 Piping tube (1” Nylon) 3 mtr 1 3
5 Handle (plastic moulding) 1 pcs 5 5
6 Buckle (plastic moulding) 1 set 2 2
7 Velcro ( 1” ) 10cm 10 1
8 Zip No.5 (Nylon) 1 mtr 5 5
9 Runner No.5 (silver 4pcs 0.75 3
metallic)
10 Thread Nylon (1000 mtr) 300 mtr 40 12
11 Paste ( white rubber 1 mtr) 50 ml 20 1
12 Chart paper ¼ paper 4 1
Total 103.00
Transportation 10% 10.30
G. total 113.30

Material Cost of article 1 =Rs.228

Material cost of Article 2 =Rs.113

Average Material cost =Rs.336÷2

=Rs.168

5) Total working Capital (per months):

a) Utility = Rs.2010.40
b) Misc. expenditure = Rs.6875.00
c) Manpower = Rs.16000.00
d) Raw materials = Rs.50400.00
Total =Rs.75287.40

6) Working Capital requirements:

Sl.No. Item Stock period Amount (Rs.)
1 Raw material 1 month 50400
2 Work-in-process 10 days 9563
3 Stock of finished product 10 days 29723
4 Bills Receivable 20 days 59446
Total 149132

7) Total Investment:

i) Fixed capital - Rs.369630

ii) Working Capital Requirement - Rs.149132
Total - Rs.518762

8) Means of Finance:

Own Contribution (15%) =Rs.77814.30

Loan from NEDFI (60%) =Rs.311257.20
National Equity Fund (25%) =Rs.129690.00
Total = Rs.518762.00

9) Cost of production:

i) Raw material (MONTHLY 50400) =Rs.604800.00

ii) Manpower (Monthly 16000) =Rs.192000.00
iii) Misc. Expenditure (monthly 6875) =Rs.82500.00
iv) Utilities (monthly 2012.40) =Rs.24148.80
v) Depreciation =Rs.28163.00
vi) Interest =Rs.45521.00
NEDF’S – 43576.00
NEF’S - 1945.00
Total =Rs.977132.00

Cost of production of each average unit =Rs.977132.00÷3600

=Rs.271.42

Increase in other expenses @ 59.61%

Cost of production Article 1:

Material cost+59.61% of material cost 222.75+132.78=355.53
Cost of production Article 2:
Material cost+59.61% of material cost 113+67.35 = 180.35

10) Selling price

Article 1: Cost of production 16%, 355.53+56.88=Rs.412.41
Article 2: Cost of production 16%, 180.35+28.85=Rs.209.20

11) Sales realization:

Article 1 : Unit 1800

Unit rate : 412.41
Total sales : 412.41X1800=742338.00

Article 2 : Unit 1800

Unit rate : 209.20
Total sales : 209.20X1800=376560.00
Total sales : 742338.00+376560.00=1118898.00

12) Profitability Statement:

 Year 10 11 12 13 14
Capacity 50% 55% 60% 65% 70%
Utilization
Unit 3600 3960 4320 4680 5040
A. Sales 1118808 1292306 1480248 1683770 1904011
B. Expenditure
i) Raw materials 604800 698544 800150 911570 1029168
ii) Manpower 192000 201600 211680 222264 233377
iii) Other 94872 99616 104597 109827 115318
expenditure

Total of ‘B’ 891672 999762 1116421 1243661 1377863

C. Operating 227226 295546 363821 440109 526148
Profit
D. Depreciation 28163 25446 22802 20531 18447
E. Profit After 199063 267200 341009 419578 507671
depreciation
F. Interest 44521 36450 27320 18210 9100
G. Profit After 153542 230750 313689 401368 498575
interest
H. Marketing 22378 25896 29605 33675 38080
expense (2%
on sale)
I. Net profit 131164 204904 284084 367693 460401

13. Repayment Schedule:

NEDEF LOAN (Rs. In thousand):

 Year 10 11 12 13 14
Opening 311.26 249.01 186.76 124.50 62.25
Principal repaid 62.25 62.25 62.25 62.25 62.25
Interest repaid 43.57 34.86 26.15 17.43 8.71
Closing 249.01 186.76 124.51 62.51 0.00

NEF LOAN (Rs. In thousand):

Year 10 11 12 13 14
Opening 129.69 103.75 77.81 51.87 25.93
Principal repaid 25.94 25.94 25.94 25.94 25.93
Interest repaid 1.95 1.56 1.17 0.78 0.39
Closing 103.75 77.81 51.87 25.93 0.00

14. BREAK EVEN POINT:

A. Fixed cost:
i) Interest - Rs.45521.00
ii) Depreciation - Rs.28163.00
iii) 40% Man power - Rs.76800.00
iv) 40% Misc. expenses - Rs.33000.00
Total - Rs.183484.00

B. Net profit - Rs.131164.00

B.E.P A X 100÷A+B

B.E.P = (Fixed cost/ selling) ÷variable cost

= 18348400/ 314648= 58.31%

Returns:

i) Incase = Net profit X 100/sales

= 131164 X 100/118898
= 11.72%

ii) On total investment = Net profit X 100/ Total investment

= 131164 X 100/518762.00
= 25.28%
 CHAPTER-V

Chapter- V:
Names and Addresses of Suppliers:
i) Chemofab Industries
RAmbang, S.V.Road, Chenetioli, Malad
Mumbai- 400059 (Centrefuses)

ii) M/S Nestes Boilers Pvt.ltd

55 Dalmal Chambers,17, New Marine Lives
Mumbai- 20 (Boilers)

Annexure:
Bibliography:

i) Entrepreneurship and New venture creation

- A Sanay
V Sharma.
ii) Fundamental of Entrepreneurship and small Business.
- Renu Arora
- S.K.Sood