PEARL ACADEMY OF FASHION

Oak Fashions Project Plan:- Setting up of a Manufacturing

Unit

Nikhil Mehra

12/7/2011

PG-Garment manufacturing

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Authorization Letter

This report is submitted as partial fulfilment of the requirement of Post

Graduation Garment Manufacturing program of PSB, Naraina. The report

on the title “INDIAN APPERAL INDUSTRY“ is an original work and has not

been submitted to any other institution or university for the award of any

degree or diploma.

Place: Delhi-Naraina

Date: December 7, 2011

Nikhil Mehra

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Letter of Transmittal

Dear Sir,

I am submitting the report, due April 28, 2011, that you requested. The

report is entitled Economic factors affecting Aviation Industry. The purpose

of the report is to inform you of the current scenario, recent trends, and

opportunities in aviation industry. The content of this report concentrates

on the holistic study of the aviation industry in perspective of models such

as Porter’s 5 Force Model, SWOT analysis etc., thus gain a multidimensional

insight of the industry.

I hope that this report will merit your approval.

Yours truly,

Pearl School of Business Student

Nikhil Mehra

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Acknowledgement

Apart from the efforts of us, the success of any project depends largely on

the encouragement and guidelines of many others. We take this

opportunity to express our gratitude to the people who have been

instrumental in the successful completion of this project.

We would like to show our deepest appreciation to Mr Tarun Pandey,

Suranjan Lahiri, Rahul Jain, Priyanka Agarwal, Tejram Gupta, SC Kapoor,

Naresh Sharma, Mehboob Anwar, Preeti Deewan who has the attitude and

substance of a genius. They continually and convincingly conveyed a spirit

of adventure and excitement in regards to teaching. We can’t say thank you

enough for their tremendous support and help. We feel motivated and

encouraged every time they guided us. Without their encouragement,

guidance and persistent help this project would not have materialized.

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Executive Summary

Oak Fashions. is a garment manufacturing company offering product

range in shirts and t-shirts for domestic market in India. Production will

be done for apparel brand like Lee, Levi’s, Wrangler, Pepe, Etc.Our

future growth strategy is online selling and to open retail store of

apparels in Delhi-ncr, selling products especially for college students at

economic prices.

Name of Company- Oak Fashions

Corporate Status Sole Proprietorship

Owner Nikhil Mehra

Year of Establishment 2012-13

Address Oak Fashions, Sector-7, Noida,

Nature of Business Garment Manufacturer

Projected Turnover 8 to 11 Crores annually

Annual Production Capacity 2,60,000-6,60,000 pcs annually

No. of Machines 90

Manpower 165 employees

Major products T-shirts, Shirts

Average FOB Rs 238

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Table of Contents

S.No. Description Page No.

1 Chapter-1 8

Introduction

2 Chapter-2 10

Market Research

Marketing Mix- 4 P’s

3 Chapter-3 18

Environmental Analysis

SWOT, Competitor analysis, PEST

4 Chapter-4 20

Human Resource Plan

Importance of HR

Labour Laws

Organisational Structure

Job Description

5 Chapter-5 34

Production Plan

Machinery

Special feature

Departments

Operation break down

6 Chapter-6 53

Financial Plan

Prime Cost

Sales Budget

Initial Investments

Depreciation

Employee Cost

Overheads

Electricity Consumption

Preliminary Expenses

Income Statement

Profitability Ratio

Break Even analysis

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7 Chapter-7 67

Project Plan

Description, Scope, limitations

Scoping Form

PERT

Data Analysis Tool

8 Layouts 72

9 Reflection 74

10 Exit Plan 75

11 References 76

12 Annexure 77

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Chapter 1

Introduction

Oak fashions is an apparel manufacturing unit dealing in casual clothes

(knitted and woven). Speciality of Oak fashions is high quality shirts and

t-shirts for coping up with the rising quality standard of the domestic

market and changing preferences of the youth.

Oak Fashions will work on latest methods that the garment export

houses are using like Industrial Engineering, CAD, and latest machinery

to deliver excellent quality.

Strategy

The project is all about setting up an apparel manufacturing unit in Noida

catering to the upper middle segment brands like Lee, Wrangler, Pepe,

Levi’s, etc. Major reason for catering these brands is that they are the

most popular brands among youngsters for casual clothing. The factory

will be having stitching area working on the norms of industrial

engineering for the best utilisation of resources and the most important

time. The quality measures will be very strict as motto of Oak fashions is

for delivering quality. There will be an in house pigment printing machine

as well as computerized embroidery machine for time saving.

USP

Oak Fashion has in-house Printing as well as Embroidery machine to

cater small orders of value added high quality garments in very short

lead time.

Mission

Maintain quality standards with best possible utilization of the resources

indirectly contributing to health environment

Vision

Expansion is our forte- Venturing into retail and building our own brand

for casual clothing

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Objectives

The first and the foremost objective of Oak fashion is to deliver

excellence with the best quality products in the shortest lead time.

Secondly, considering the environment we will ensure the best utilization

of the resources.

Thirdly, creating job opportunities by expanding the business and

contributing for national as well as personal growth.

Location

Location of the factory is very important in terms of availability of raw

materials, labour as well as other basic amenities. So considering all the

things we have decided to open the factory in Noida Sec-7, which is just

5 minutes from Delhi, as well as labour is readily available as there are

too many garment factories are situated in the neighbourhood.

As well as the minimum wages in Noida is also much less as compared

to Delhi.

Product

Oak Fashions deals in value added garments (basically Fashion Basics)

like Casual Shirts and printed T-Shirts. The products that we have

selected have a developing market and the demand in future for casual

garments will be very high.

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Indian textile and apparel market

(3,01,500 cr)

Domestic Market

(Rs 2,02,500 cr)

Textile

(Rs. 54,000 cr)

Apparels

(Rs. 1,48,500 Cr)

Export

(Rs. 99,000 cr)

Textile

(Rs.54,000 cr)

Apparels

(Rs. 45,000 Cr)

Chapter-2

Market Research

Current Status of Indian apparel and textiles market

The Indian textile and apparel industry has witnessed tremendous

growth in the last 2 decades and its market size today stands at US$ 67

billion. India has positioned itself as a manufacturing destination with

cheap labour, cotton-based raw material and easy access to US and

Europe markets. With the abolition of quotas, India surged ahead of

other non-competitive countries and positioned itself as

a value-added manufacturer with a varied material base, an educated

and English-speaking class of executives with high product development

and design orientation. While textile and garment exports

have been growing at an average pace of 8 percent, it is the domestic

market that presents itself as a larger opportunity, hence firing the

imagination of manufacturers, entrepreneurs and marketers. The Indian

domestic apparel market size is US$ 33 billion of which only 16 per cent

is organised.

Figure 1- Source Technopak analysis estimated exports -2009

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Textiles and apparels contribution to India’s GDP

As per the research done Indian textiles and apparel sector is about Rs

3,00,000 Crores and is expected to grow at a rate to 11%(Compound

annual growth rate) and reach Rs 10,32,000 crores

Indian domestic apparel market

In 2010 Domestic apparel and textile market was of US$ 47 Billion and is

expected to grow at a rate of 11% annually to reach US $140 billion.

Graphs above clearly shows that the organised market is going to hold a

quite good share of the whole domestic market. So the number of MBO’s

Food & Beverages

38%

Housing and Household

Fuels 12%

Apparels 4%

Household goods and services

4%

Health 5%

Transport and communication

19%

Leisure and education

4% Others

14%

% share of sectors contributing for GDP

Organised

17%

Unorganised 83%

2010

Organised

40% Unorgani

sed 60%

2020

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and brands will be increasing in the coming years and mall culture will

boom.

Why domestic market

A number of factors are expected to fuel the growth of the

domestic market in spite of the many challenges faced by this

industry. Growth drivers include increased incomes, high growth of

GDP leading to rapid urbanisation, growth of organised retail with

the entry of a large number of domestic and international players,

and a growing awareness of global trends along with the need to

look fashionable

Change in demography-

GDP of Indian economy is growing at a rate of 6% per annum

which has raised the discretionary expenditure of the population

and there is a rise in literacy level which is expected to reach 90%

in 2013 from 70%.

Change in Indian consumer Preferences-

Indian consumer is evolving and spending is shifting from basic

needs to discretionary. Indian consumer is not spending just for

the basic need but they are looking for quality, convenience,

consistency, innovation as well as experience.

Big market size(croer than Rs2,00,000 crores)- as the market size

is big so the opportunity is more in the domestic market as the

major consumption of apparels is in the domestic market only.

Branded Products- Due to globalisation all the foreign brands have

their set up in India and they are changing the preferences of the

consumer by giving quality products. s

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Segment wise market size

Currently men’s wear has the largest market share, however women’s

wear is growing faster than any other apparel segment.

Why Casual Wear?

Casual wear segments are expected to grow between 10-15% as

compare to 9% growth of overall Indian Apparel Market. More than 50%

of the clothes in this category are bought by youth (age13-30)

Increase of buying frequency of casual wear is spurred by:-

• Preference for more comfort

• Increase in employability

• Acceptance of Casual wear in work places

The chart below shows the for 2008 market for casual wer and sice then

the market is growing at a rate of 11% approximately.

Men's Wear 43%

Women's wear

38%

Boy's wear 10%

Girl's wear 9%

Year 2009

Men's Wear 37%

Women's wear

43%

Boy's wear 10%

Girl's wear 10%

Year 2020

Casual wear Men’s Wear(Rs crore) Women’s wear(Rs Crore)

Shirts 3290 690

Trouser 2280 150

T-shirt 3300 1300

Jeans 2840 1240

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Product Price

Place Promotion

Marketing Mix

Marketing Mix

Product

Oak Fashions is dealing with the value addition products like casual

shirts and t-shirts (in small quantities) which are always in demand and

is being expected that the market for casual clothes will be bigger than it

is today.

Description of Products-

Category- Casual garments

Product- Men’s Shirts

Sizes- Medium, Large and Extra Large

Material- 100% cotton, Poplin

FOB Price- Rs 329

Category- Men’s Casual

Product- T-shirt

Sizes- Medium, Large and Extra Large

Material- 100% cotton, Single Jersy

FOB- Rs 129

Category- Men’s Casual

Product- Polo t-shirt

Sizes- Medium, Large and Extra Large

FOB- Rs. 206

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Prices-

Prices will subject to buyer’s order and requirement

Pricing Strategies -

Competitive Pricing- In this the prices are set keeping in mind what

is the market price going on and at what price the competitor is

selling

Target Pricing- As the competition is very high target pricing is the

method that is used to increase sales. In this the prices are given

by the buyer and we have to achive that.

Place-

Oak Fashions being a manufacturer of apparels, will be producing the

products to organised retail sector that includes brands like lee jeans,

levi’s,wrangler,PepeJeans,UCB,etc.

Distribution Channel- Finished products will be supplied to the

authorised distributors or the company ware house.

Supply Chain Drivers-

Inventory- Inventory is all about managing the inventory holding. Oak

Fashions is holding the factory in-house so there will be no time wastage

for the transportation. The raw- materials will be stored in in-house store.

Suppliers

Transport

Oak Fashions

Production

Transport

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Transportation- Either Roadways or Railways. It will basically depend

on the buyers requirement as well as the need of the hour.

Facilities- Facilities is the actual physical location in the supply chain

network where the product are stored , assembled or fabricated.

Factories are built on one of the two approaches-

Product focus-A factory that takes product focus performs differ

operations required to make a given product line from fabrication

of different product parts to assembly of these parts

Functional focus- This focus on performing just few operations

such as only making a select group of parts to assembly of these

parts

Oak fashions is concentration on the second approach that is functional

approach as we are sourcing the raw materials from outside and

making the garments.

Information- Information is a very important driver as in needs to to be

transmitted correctly and in right time without any negligence otherwise

there can be a great damage to the company.

So Oak fashions has installed computers in all the departments and a

server for sharing information of all the activities happening through e-

mails

Sourcing- The raw materials (i.e. fabrics , accessories ,trims, packaging

material)are outsourced. And supplier will be selected according to the

prices as well as the location (lead time).

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Promotion-

- Promotion techniques that we are using are personal marketing.

We have hired marketing personnel to promote our business and

getting the maximum orders. We will develop our catalogue as well

as samples of own design with the help of in-house designing

team to attract buyers

- Free sample distribution to buyers.

- The other way of promoting the business is by listing Oak

Fashions on various B2B websites i.e. fiber2fashion.com,

alibaba.com, Just-dial, etc, linked in.

- Own Website

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Strength

Quality management

Industrial Engineering

In-house pigment printing

Latest machinery

Weakness

Limited Capacity

Lack of funds

Opportunity

Growing Casual wear market

Changing taste prefreces of the

youth

Craze of big brands

Threat

Too many factories working for

domestic market

Chapter-3

Environmental analysis

SWOT

Competitor Analysis

Anubhav Apparels Pvt Ltd

Location- B-172 Phase2, Noida

Products- Jeans, t-shirts

Basis Oak Fashions Anubhav apparels

In-house Embroidery Yes No

In- House Printing Yes No

CAD Yes Yes

Experience No Yes

Industrial Engineering No Yes

Compliance Yes Yes

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PEST

Political Factors-

- Change in taxation policies of govt.

- Change in interstate transportation tariffs

- Change in loan policies

Economic Factor-

- Hike in fabric prices

- Hike in interest rates

- Inflation

Social factors-

- Change in market trends (less demand of casual clothes)

- Change in taste and preference of the consumer

Technological factors-

- Advancement in machinery

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Chapter-4

Human resource Plan

Human Resource Management

HRM is very important particularly in a Garment Manufacturing unit

because this segment of industry is yet in the phase of getting

professional for this aspect of management and the problem of this

industry from the labour point of view are a bit different than other forms

of industry. So, from this point of view special understanding of HR

procedures and practices will be given special attention.

HRM is the strategic and coherent approach to the management of an

organization's most valued assets - the people working there who

individually and collectively contribute to the achievement of the

objectives of the business. The terms "human resource management"

and "human resources" (HR) have largely replaced the term "personnel

management" as a description of the processes involved in managing

people in organizations. Human Resource management is evolving

rapidly. Human resource management is both an academic theory and a

business practice that addresses the theoretical and practical techniques

of managing a workforce.

The Human Resources Management (HRM) function includes a variety

of activities, and key among them is deciding what staffing needs you

have and whether to use independent contractors or hire employees to

fill these needs, recruiting and training the best employees, ensuring

they are high performers, dealing with performance issues, and ensuring

your personnel and management practices conform to various

regulations. Activities also include managing your approach to employee

benefits and compensation, employee records and personnel policies.

Usually small businesses (for-profit or non-profit) have to carry out these

activities themselves because they can't yet afford part- or full-time help.

However, they should always ensure that employees have and are

aware of -- personnel policies which conform to current regulations.

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These policies are often in the form of employee manuals, which all

employees have.

Note that some people distinguish a difference between HRM (a major

management activity) and HRD (Human Resource Development, a

profession). Those people might include HRM in HRD, explaining that

HRD includes the broader range of activities to develop personnel inside

of organizations, including, eg, career development, training,

organization development, etc.

There is a long-standing argument about where HR-related functions

should be organized into large organizations, eg, "should HR be in the

Organization Development department or the other way around?"

The HRM function and HRD profession have undergone tremendous

change over the past 20-30 years. Many years ago, large organizations

looked to the "Personnel Department," mostly to manage the paperwork

around hiring and paying people. More recently, organizations consider

the "HR Department" as playing a major role in staffing, training and

helping to manage people so that people and the organization are

performing at maximum capability in a highly fulfilling manner.

Features of human resource management

HRM involves management functions like planning, organizing,

directing and controlling.

It involves procurement, development, maintenance of human

resource

It helps to achieve individual, organizational and social objectives

HRM is a mighty disciplinary subject. It includes the study of

management psychology communication, economics and

sociology.

It involves team spirit and team work.

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SCOPE OF HUMAN RESOURCE MANAGEMENT (HRM)

The scope of HRM refers to all the activities that come under the banner

of HRM. These activities are as follows

1. Human resources planning :-

Human resource planning or HRP refers to a process by

which the company to identify the number of jobs vacant, whether

the company has excess staff or shortage of staff and to deal with

this excess or shortage.

2. Job analysis design :-

Another important area of HRM is job analysis. Job analysis

gives a detailed explanation about each and every job in the

company. Based on this job analysis the company prepares

advertisements.

3. Recruitment and selection :-

Based on information collected from job analysis the

company prepares advertisements and publishes them in the news

papers. This is recruitment. A number of applications are received

after the advertisement is published, interviews are conducted and

the right employee is selected thus recruitment and selection are

yet another important area of HRM.

4. Orientation and induction :-

Once the employees have been selected an induction or

orientation program is conducted. This is another important area of

HRM. The employees are informed about the background of the

company, explain about the organizational culture and values and

work ethics and introduce to the other employees.

5. Training and development :-

Every employee goes under training program which helps

him to put up a better performance on the job. Training program is

also conducted for existing staff that have a lot of experience. This

is called refresher training. Training and development is one area

where the company spends a huge amount.

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6. Performance appraisal :-

Once the employee has put in around 1 year of service,

performance appraisal is conducted that is the HR department

checks the performance of the employee. Based on these

appraisal future promotions, incentives, increments in salary are

decided.

7. Compensation planning and remuneration :-

There are various rules regarding compensation and other

benefits. It is the job of the HR department to look into

remuneration and compensation planning.

8. Motivation, welfare, health and safety :-

Motivation becomes important to sustain the number of

employees in the company. It is the job of the HR department to

look into the different methods of motivation. Apart from this

certain health and safety regulations have to be followed for the

benefits of the employees. This is also handled by the HR

department.

9. Industrial relations :-

Another important area of HRM is maintaining co-ordinal

relations with the union members. This will help the organization to

prevent strikes lockouts and ensure smooth working in the

company.

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SIGNIFICANCE / IMPORTANCE / NEED OF HUMAN RESOURCE

MANAGEMENT (HRM)

HRM becomes significant for business organization due to the following

reasons.

1. Objective :-

HRM helps a company to achieve its objective from time to

time by creating a positive attitude among workers. Reducing

wastage and making maximum use of resources etc.

2. Facilitates professional growth :-

Due to proper HR policies employees are trained well and

this makes them ready for future promotions. Their talent can be

utilized not only in the company in which they are currently working

but also in other companies which the employees may join in the

future.

3. Better relations between union and management :-

Healthy HRM practices can help the organization to maintain

co-ordinal relationship with the unions. Union members start

realizing that the company is also interested in the workers and will

not go against them therefore chances of going on strike are

greatly reduced.

4. Helps an individual to work in a team/group :-

Effective HR practices teach individuals team work and

adjustment. The individuals are now very comfortable while

working in team thus team work improves.

5. Identifies person for the future :-

Since employees are constantly trained, they are ready to

meet the job requirements. The company is also able to identify

potential employees who can be promoted in the future for the top

level jobs. Thus one of the advantages of HRM is preparing people

for the future.

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6. Allocating the jobs to the right person :-

If proper recruitment and selection methods are followed, the

company will be able to select the right people for the right job.

When this happens the number of people leaving the job will

reduce as the will be satisfied with their job leading to decrease in

labour turnover.

7. Improves the economy :-

Effective HR practices lead to higher profits and better

performance by companies due to this the company achieves a

chance to enter into new business and start new ventured thus

industrial development increases and the economy improves.

Labour Laws

Factories Act 1948

OBJECTIVE

Protecting workers against industrial and occupational hazards. To

provide health, safety, welfare, provision for health, safety, welfare,

provisions for workers and regulate working hours

Applicability of the Act

Any premises whereon 10 or more persons with the aid of power or 20

or more workers are/were without aid of power working on any dayd

preceding 12 months, wherein Manufacturing process is being carried

on.Sec.2(ii)

The Industrial Employment (Standing Orders) Act, 1946

OBJECTIVES

Object of the act is to require employers in industrial establishments to

formally define conditions of employment under them

Applicability of the Act

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Every industrial establishment wherein 100 or more (in many States it

is50 or more). Any industry coveredby Bombay Industrial Relations Act,

1946.Industrial establishmentcovered by M.P.Industrial Employment

(Standing Orders) Act, 196

EMPLOYEES’ STATE INSURANCE ACT, 1948 & the SCHEME

OBJECTIVE

Benefits in case of sickness, maternity and employment injury and to

make provisions for related matters

Applicability of the Act & Scheme

Is extended in area wise to factories using power and employing 10 or

more persons and to non-power using manufacturing units and

establishments employing 20 or more person upto Rs.7500/- per month

w.e.f. 1.4.2004. It has also been extended upon shops, hotels,

restaurants, roads motor transport undertakings, equipment

maintenance staff in the hospitals.

PAYMENT OF GRATUITY ACT, 1972 & THE RULES

OBJECTIVE

Payment of gratuity on ceiling to hold office

Sec. 2(s) Wages for Calculation @ 15 days’ wages for every

completed year as if the month comprises of 26 days at the last drawn

wages. If completed more than 6 months, it will be treated as full year .

Applicability of the Act & Scheme

Is extended in area wise to factories using power and employing 10 or

more persons and to non-power using manufacturing units and

establishments employing 20 or more person upto Rs.7500/- per month

w.e.f. 1.4.2004. It has also been extended upon shops, hotels,

restaurants, roads motor transport undertakings, equipment

maintenance staff in the hospitals.

1.Sec. 1

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EMPLOYEES’ PROVIDENT FUNDS & MISC. PROVISIONS ACT, 1952

& THE SCHEMES

Eligibility

Any person who is employed for work of an establishment or employed

through contractor in or in connection with the work of an establishment.

Applicability

• Every establishment which is factory engaged in any industry specified

in Schedule 1 and in which 20 or more persons are employed.

• Any other establishment employing 20 or more persons which Central

Government may, by notification, specify in this behalf.

• Any establishment employing even less than 20 persons can be

covered voluntarily u/s 1(4) of the Act.

PAYMENT OF BONUS ACT, 1965 & THE RULES

Applicability of Act

Every factory where in 10 or more persons are employed with the aid of

power or an establishment in which 20 or more persons are employed

without the aid of power on any day during an accounting year

TRADE UNIONS ACT, 1926

Trade Union: It means combination whether temporary or permanent

formed primarily for the purpose of

– regulating the relations

– for imposing restrictive condition on the conduct of any trade

or business,

– can be between workmen and employers or between

workmen and workmen, or between employers and

employers

It can include any federation of two or more Trade Unions. Object of the Act

To provide for the registration of Trade Union and in certain respects to

define the law relating to registered Trade Unions

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Owner

Sampling

Merchandiser

Pattern Master

CAD Operator

Cutting

Cutting master

Helpers

Production

Production Assistant

Supervisors

Opereators

IE Manager

Stores

Fabric Manager

Helpers

Accesory Managet

Helpers

Finishing & Packaging

Pressman Helpers

Quality Control

QA

QCs

INDUSTRIAL DISPUTES ACT, 1947

Object of the Act

Provisions for investigation and settlement of industrial disputes and for

certain other purposes.

MINIMUM WAGES ACT, 1948

Object of the Act

To provide for fixing minimum rates of wages in certain employments

Fixation of Minimum Rates of Wages

• The appropriate government fixes minimum rate of wages.

• It must be reviewed at such intervals which should not exceeding five

years

Note- For detailed description of laws, see Annexure

Organisational Structure

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Job Descriptions

Job Description- Marketing Personal

Role: Marketing Manager

Report to- Owner

Objective- The main objective of the profile is to handle the marketing

processes of the company and aims to integral growth.

Responsibilities-

Have to visit different buyers office and market the product using

personal skills

Handle online marketing

Find out more buyers

Specifications Required-

Should be very thorough with the garment industry

Good communication skills

Thorough with the fabrics

Thorough with the current affair

Educational Qualifications- Graduation in any field, and Post

Graduation in Marketing

2-3 yrs experience in marketing field (Garment Industry)

Computing skills(MS word, Excel, Internet)

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Job Description- Merchandiser

Role- Fashion Merchandiser

Report to - Owner

Objective- Coordination with the buyers and internal production

department.

Responsibilities-

Get the samples made as per the buyer’s requirement

Coordinate with the buyers and production department

Order fabrics and accessories

Handle sampling department

Specifications Required-

Good Communication Skills

Knowledge about production

Thorough with fabric identification

Thorough with garment costing

Educational Qualifications- Graduation (in any field), Post

Graduation ( Fashion merchandising or designing- preferably- from

NIFT/ Pearl academy of fashion)

Experience- 2-3 yrs as a Merchandiser

Computing Skills (MS Word, Excel, Corel Draw, Photoshop)

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Job Description- HR Manager

Role- Human resource Manager

Report to- Owner

Objective- Handle Recruitments and maintain legal laws within the

factory

Responsibilities-

Recruitment of the factory workers( operators, supervisors, QC,

QA, Cutter, Spreaders, helpers, Pressman, etc)

Maintain the legal laws and policies within the factory

Handle Performance appraisals

Maintain integrity

Payroll inputs

Specifications required-

Excellent in maintaining Personal relations

Should be very thorough with the garment factory policies and

laws

Should know the procedures of recruiting labour

Good Knowledge of Garment Factories

Computing skills ( MS Word, Excel, Internet)

Educational Qualifications- Graduate(Any Field), PG(HRM)

Experience- Minimum 5-10 years

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Job Description- Fashion Designer

Role- Fashion Designer

Report to- Owner

Objective- Product development

Responsibilities-

Develop new designs following latest fashion

Visit stores and collect new designs for inspiration

Develop product for capturing new buyers

Identify target markets for designs, looking at factors such as age,

gender, and socioeconomic status.

Specifications required-

Excellent Designing skills

Pattern Making and technical of a garment

Originality in designs

Excellent Fabric Knowledge

Educational Qualifications- Graduation( Fashion designing-

Preferably NIFT/ Pearl Academy of Fashion)

Oak Fashions

33 | P a g e

Job description- Industrial Engineer

Role- Industrial Engineer

Report To- Owner

Objective- Managing Production Floor efficiency

Responsibilities-

Operation Breakdown of the garment

Line Setting

Maintaining Efficiency using lean manufacturing techniques

Maximize production

Specifications Required-

Excellent Knowledge of production Systems and Industrial

Engineering

Outstanding analytical abilities

Techniques of handling operators and labour

Computing skills (MS Word, Excel, Internet)

Educational Qualification- Graduation(Any Field), PG(Garment

Manufacturing)

Experience- Minimum 2yrs or above

Oak Fashions

34 | P a g e

Job Description- Production Manager

Role- Production Manager

Report to- Owner

Objective- Maximize Production and optimum utilization of Resources

Responsibilities-

Production Planning

Maximizing production capacity

Managing production floor and labour

Helping in recruitment of operators as well as their grading

Specifications required-

Excellent managerial skills

Manpower planning

Aggressive and energetic

Thorough with the production systems

Should know how to tackle labour

Garment technical and familiar with attachments used on

production floor

Educational Qualification- Graduate(any Field)

Experience- Minimum 4yrs or above

Oak Fashions

35 | P a g e

Performance Appraisal

For Operators and Helpers-

Star Performer of the month- If the operator and helpers works well

and achieve the targets given he will be nominated as the star

performer. If he continues working the same pace he will be given

incentives in cash or kind.

The star performers will be given in all the departments

If the operators don’t take extra leaves and performs well, he will

be given cash prize after 6 month

There will be a a minimum 5% increment in the beginning of new

financial year(as per the track record and perfomence)

Diwali bonus( as per the financial condition)

For Managers-

Incentives(cash or kind) will be given quarterly according to the

performance and target achieving rate

Yearly salary appraisals as per the track record and performance .

Oak Fashions

36 | P a g e

Chapter-5 Production Plan

Machinery

As we are entering into a new business and we are catering renouned

global brands, so to follow as per compliance infrastructure and to attract

buyer we Oak Fashions is using best machinery brands like Juki,

Yamato, Pegasus, etc.

Special Features

CAD- For making patterns and marker.

The setup for CAD is arranged for making patters and marker that will

save a lot of time in making multiple patterns and it will ultimately lead to

efficient work and quality product.

The set-up of CAD is for Rs 6 Lakh, though it will increase in fixed

investment but the cost benefit is shown below-

Manual Marker Efficiency varies 65-70%

CAD Marker Efficiency varies- 75- 95%

Single Needle Lock stitch 50

Double Needle Lock Stitch 3

4 thread Over Lock 4

Multi needle chain stitch 9

5 thread Flat lock 16

Single needle chain stitch 1

3 thread flat lock 2

Feed of the Arm 2

Button Hole 1

Button Attach 2

Total 90

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37 | P a g e

Since the 85% cost of the garment is the cost of the fabric so CAD

marker is very beneficial as it saves 10-20% of the fabric which will

ultimately reduce the cost.

Secondly- CAD marker will take half the time in cutting than manual

marker as in manual individual patters are kept and then marked which

takes a lot of time. Ultimately CAD is efficient and saves time as well as

money.

In-house Printing-

As per the pattern of the domestic garment industry the demand for the

printed t shirts is very high. So considering the need of the hour we have

made our Printing in-house. Oak Fashions has Heat transfer printing

machines to cater to very short lead time as we will save upon the

transportation time for printing as well as the cost of benefit working is

shown below-

We have two heat setting Transfer printing machines which can do

printing on around 350-400 t-shirts and shirts.

If outsourcing, a print on t-shirt will cost us around Rs 15-20, while the

same will cost us Rs 10-15 if we are doing in-house printing.

So, savings per print = Rs 5

Printing is to be done on 10000 garments per month.

So, total savings in a year = 10000 x 5 x 12 = Rs. 600000

Oak Fashions

38 | P a g e

In-house computerizes Embroidery Machine(6-Head)-

As we see today every brand has its on embroidered logo made on their

garments. So looking after the need of the buyer we are doing

embroidery inhouse to save upon the time as well as cost. Oak Fashions

has 6-head embroidery machine to handle a good amount of production.

The cost of benefit working is shown below-

We have one 6-head automatic embroidery machine that can do around

1600000-1700000 stitches in a shift of 8 hours per day.

Cost/1000 stitches is between 40-75 paisa in-house and while

outsourcing it will cost around 55-90 paisa depending on the style of

embroidery.

So, we will be saving 15 paisa/1000 stitches.

Saving in a day= 1600000 stitches x 15 paisa/1000 stitch = Rs 250

Add cost of carriage if we are outsourcing= 150 Rs/day

So total saving/day = Rs 400

Total savings in a year = 400 x 26 x 12 = Rs 124000

Oak Fashions

39 | P a g e

Order Generation

Sampling

Precurement of Raw Material(Stores)

Production Planning

Cutting

Production

Fnishing & Packaging

Dispatching

Production Process

The Production process in Oak fashions flows like any other

manufacturing unit-

Oak Fashions

40 | P a g e

Merchandising dept.

Marketing Merchandiser

Sampling Merchandiser

Pattern Master

Sampling Tailors CAD Operators

Merchandising & Sampling Department-

The Functioning of the sampling department starts when the Marketing

Merchandiser gets the order.

Sampling merchandiser needs to

follow up with the order and get

the sample made and approved

by the buyer for further

processing on the production floor.

The process for the sampling flows like

1. Order Fabric for sampling

2. Proto samples are made for buyer’s approval and samples are

made for testing purposes

3. The reports and garments are sent to the buyer for approval

4. Order for fabric for bulk production

5. Fit samples are made as per the changes required.

6. Final approval

7. Order processed to the production department for production

Manpower in Sampling Department-

5 Sampling Tailors

1 Sampling Merchandiser

1 Marketing Merchandiser

2 Designers

1 Pattern Master

1 CAD Operator

1 Helper

Designers-

Oak Fashions has 2 designers for the product development. They will

develop the product considering the trend in the market and sampling for

those designs will be done in the sampling department. This will help in

capturing buyers as we’ll make our own catalogue to show to buyers of

our own designs developed.

Sampling Target Productivity- 10 garments per day

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41 | P a g e

Store

Sourcing Incharge

Helpers

Stores-

The store manger works with the sampling merchandiser to procure the

correct raw materials.

Items procured by the store manager are-

- Fabrics

- Buttons

- Laces

- Fusing

- Stationery items

- Thread

- Mobilon tape

- Needles

- Attachments

- Zippers

- Labels

Fabrics Details-

Poplin- 40’s Yarn died check

100% cotton

Yarn Count- 40*40

Weight- 120 GSM

Density- 154*78

Width- 57/58”

Single Jersy- 32’s Yarn Died

100% cotton

Yarn Count- 32s

Weight- 130/140 gsm

Width- 53/54”

Pique- 40’s Yarn Died

100% Cotton

Yarn Count- 40’s

Weight- 210/220 gsm

Oak Fashions

42 | P a g e

Functions performed by the store-

- Procure raw material

- Segmentation and storage

- Maintaining the inflow and outflow record of the material

- Maintaining record and challan slips

S.No Description Supplier 1 Supplier 2 Supplier3

1 Woven Fabrics Ginni Filament

Ltd.- Rajender

Place-

25735852

Tanish Tex

Styles- Nehru

Place-

26280654

SK Weaving-

ansari Road-

9811071013

2 Knitted Fabrics Jujan Markfin-

Noida.

01204322583

Pariwal

Hosiery-

Noida,

01202583975

Arn- Exports-

Noida,

8826600860

3

Thread P Kumar Bros-

Delhi-

9811038078

Royal stitch-

Rohini,

27261702

Mohan thread

Mills- Noida,

01203261100

4 Trims and

accessories

Kailash ribbon-

Mayapuri,

28113205

Arikav textile-

Grater Noida,

9212436911

Kay Dee

Creations-

Noida,

951205311181

5 Labels Jain Labels-

Delhi,

8119220341

Star Shrink

Labels- Delhi,

9990494900

PR Labels

Prints- Noida,

66228131

6 Tags Viable

sources- Okhla

Industrial Area

43068034

Bar-tech

Systems and

automation-

Delhi,

25334126

Perfect

Graphics-

Naraina,

7 Buttons Preet buttons

and fasteners-

Delhi,

9810039681

Anand

buttons ltd-

karol bagh,

9810535301

Eureka

polygems- Gzb

ind. area,

9810179055

Oak Fashions

43 | P a g e

Cutting Dept

Cutting mater

Spreadermen Helpers

Documentation& MIS-

Challan for receiving raw materials

Quality Check Form

Issuance of raw material form

Cutting-

The cutting dept is headed by the Cutting master.

Functions performed in the cutting department-

- Layering the fabric (The check fabric

will be layered face up and down)

- Marker laying

- Cutting

- Bundling

- Maintaining record of the inflow and outflow of the fabric

- Maintaining layer list form to keep a track on fabric

Layering Details-

Layering is done as per the nap of the fabric(nap one way, either way).

The general layering will be done nap one way- face up for all the plain

fabrics and knits.

Check fabric will be layered nap one way- face up and down.

Cutting- Cutting is done by the cutting marker using straight knife as

well as band knife for re-cutting and for small parts.

Bundling- Bundle size will be small from 5-10 pcs.

Oak Fashions

44 | P a g e

Marker- Marker will be made on CAD as it gives better efficiency than

manual setting of marker.

Shirt Marker- 2pc (Medium 7 Large), Efficiency- 80.22%

Spreading mode- Nap one Way- Face Up

Marker mode- Nap Either way

Oak Fashions

45 | P a g e

Production Dept

Production Executive

Supervisors

Operators Helpers

Checker

Industrial Engineer

Documentation/ MIS

Layer List Form- Cutting layer list will be a form that layer-man

has to fill so as to keep a record of the fabric used as well as for

identifying lots of different colours.

Cutting Details Form- This will include the details of the cutting

layer( style no., no. of layers, no. of patters, etc)

Quality check chart

Production & Industrial Engineering

Production floor is managed by a production

assistant and an industrial engineer.

Function to be performed by productions

department-

- Production planning to meet short

lead time

- Line setting as per the industrial

engineering norms

- Production

- Proper utilization of

attachments to enhance

production quality and quantity

- Maintaining quality

Production Systems- Oak fashions will work on principles of lean

manufacturing –

1) Team Work- Team work is very beneficial an individual’s work.

When we work in team the output is more desirable and

working gets more efficient.

2) Kaizen- Kaizen means continuous improvement as a team.

Basically it means we should improve our self with respect to a

team for efficient working environment.

3) Total Productivity maintenance- Total productivity can be

maintained by

- Improving the productive time of the machines.

Oak Fashions

46 | P a g e

- Improving equipment effectiveness

- Improving maintenance efficiency and effectiveness.

- Early equipment management and maintenance

management

- Training to improve skills of all people involved.

- Involving operators in routine maintenance.

4) Mistake proofing-

Improves the process to reduce the defect occurrence.

5) Jidoka-

It is a stopping culture, i.e. where ever you see a wrong thing

happening or u have any doubts about anything, just stop the

production and clear the doubts first. This reduces double work

and increases the quality.

6) Quick Change over-

It means minimization of the time lost because of the change

over in the production. It happens when a running style is over

and the operators are waiting for the new style to start. This is a

management mistake.

7) Standardization-

Standardization is a way to achieve the best quality. It means

making standards and nothing less than the standard is not

acceptable

8) Virtual Control system-

It is to control the system by visual signals, like if cutting is over

in a line and it needs to be fed so daffodils have a system that

they just have to press the button to raise the alarm for the

cutting department to provide cutting.

9) Kanban-

Kanban means every 1 bundle and maximum 3 bundles should

be in a stitching line.

10) 5S-

- Seiri- Sort, separate necessary and unnecessary things

- Seiso- Shine, Keep the place always clean

- Shitsuke- Enjoy the changes and sustain

Oak Fashions

47 | P a g e

Quality Dept

QA Supervisor

Quality Checkers

INSPECTION

DETECTION OF

DEFECTS

FEEDBACK

TO

RELEVANT

DEPARTMENT

DETERMINATION

OF

CAUSE

CORRECTION

OF

DEFECT

- Seiton- Arrange necessary things in order

- Seiketsu- Standardization, Standardise the method and

maintain.

Quality Control

Quality control department is handled by the Quality

assurance supervisor. There are 3 quality checkers in the

factory out of them one QC is permanently placed on the

cutting department to ensure the layering and cutting of the

patterns in the correct manner to ensure quality.

The other 2 QC are for the production floor and finishing dept

for maintaining quality.

Functions to be performed by the quality department.-

- Maintain records of the quality check like measurement check

chart

- Online audit

- Assure the quality of production

Oak Fashions has an in-house testing lab for initial checking of the fabric

as well as the garments.

Oak Fashions

48 | P a g e

Testing Equipments-

Croco-meter

AGSM Cutter

Domestic Washing machine

Elmendrof type tearing test machine

Handy Reed Pick Glass

Fabric Testing Machine- 60 inches

Button snap/pull testing machine

Fabric testing-

As the fabric is procured it will be tested as per the 4-point system.

Cutting Quality-

Marker mode not correct as

per the fabric and garment

Spreading mode not

correct as per the fabric

and garment

Patterns not correctly

replicated in the cutting

Frayed edges-blade problem

Inter ply fusion (knife running too fast and too hot)

Notches and drill marks not proper

Stitching Quality-

Skip stitch- due to a thick place in the fabric

Slipped stitches-made by operator without m/c control

Unbalanced stitch-too tight needle or bobbin thread. also due to

differential stretch or shrinkage of the threads

Variable stitch density-due to pulling back of the fabric (spi not

constant)

Oak Fashions

49 | P a g e

Finshing & Packaging

Supervisor

Pressman Helpers

Staggered stitching-structured yarns in the fabric deflecting the

needle

Structural jamming-wrong choice of the fabric with respect to the

needle

Pattern mismatch

Quality Level-

The Production and finishing department follows the AQL standards for

quality check, and that in-line audits will be performed by the QC.

Alteration Management-

The online alteration will be done by the person who has done the

mistake, so that in future he will work efficiently.

Documentation & MIS-

Quality Check charts(Cutting, Sewing, Finishing)

Measurement Check chart

Online Audit reports

Finishing& Packaging-

Washing- Oak fashions is outsourcing the washing.

Vendors-

New Bharat chemicals- Sec-5 Noida, 0120-

6579246

Wash India- Sec-7 noida, 0120-4261684

Mukul Dyestuff pvt. ltd. 9310130755

The department is responsible of finishing and

packaging of garments and is headed by two

supervisors.

Functions to be performed-

- Thread cutting

- Alteration

- Spotting

- Pressing

Oak Fashions

50 | P a g e

- Folding

- Packaging

- Dispatching

The department has a quality checker for inspection and ensuring

quality.

Breakdown Of Garments

Round Neck

S.No. Operation

Attachment

used SAM Machine Manpower

1

Side Design

stitch M.Guide 0.45 SNCS 0.918367347

2

Sleeve attach

front and back M.Guide 1.6 4- t O/L 3.265306122

3

Neck facing F&B

join M.Guide 0.2 4- t O/L 0.408163265

4

Neck facing

attach@ body M.Guide 0.85 SNLS 1.734693878

5

Neck Facing

Finish 1.1 DNLS 2.244897959

6 Neck binding Binder 0.65 5-T F/L 1.326530612

7

End closing @

binding 0.85 SNLS 1.734693878

8

Side attach with

W/C label 0.8 4- t O/L 1.632653061

9 Bottom fold Folder 0.75 5-T F/L 1.530612245

10 Sleeve fold

Folder 0.9 5-T F/L 1.836734694

11 Main labl attach 0.4 SNLS 0.816326531

Total

8.55

Oak Fashions

51 | P a g e

Polo Neck T-Shirt

S.No. Operation

Attachment

used SAM Machine Manpower

1

Join front and back @

shoulder M.Guide 1 4-T O/L 2.04 2

2 Finish shoulder seam 0.5 3T l/L 1.02 1

3 Attach collar M.Guide 0.6 4-T O/L 1.22 2

4 Finish collar 0.4 SNLS 0.82 1

5 Placket Fusing 0.3 Pressman 0.61 1

6 Placket attach 0.5 SNLS 1.02 1

7

Placket Finish and BOX

Stitch 1.5 SNLS 3.06 3

8 Placket inner finish 0.4 4-T O/L 0.82

9 Attach sleeve rib M.Guide 0.6 4-T O/L 1.22

10 Finish rib M.Guide 0.7 3-T F/L 1.43

11 Attach sleeve @body 0.7 4-T O/L 1.43 3

12 Finish sleeve 0.6 3-T F/L 1.22 3

13 Side seam with W/C label M.Guide 0.8 4-T O/L 1.63 2

14 Bottom Hem Folder 0.7 5T F/L 1.43

15 Side Slit Finish 0.8 5T F/L 1.63 3

16 Attach main label 0.45 SNLS 0.92 1

Total- 10.55mins

Oak Fashions

52 | P a g e

Shirt

S.

No

. Operation Part

Attachm

ent used SAM Machine

Manpo

wer

Combinatio

n of

operations

1

Collar and collar

band fusing Collar 0.6 Pressman 1.2 1

2

Join 2 ply collar

(run stitch) Collar 0.5 SNLS 1.02

3

Finish collar( top

stitch) Collar

Prifile

Stitch 0.4 SNLS 0.81 2

4

join 2 ply collar

band (run stitch) Collar 0.4 SNLS 0.81

5

join collar and

band Collar 0.6 SNLS 1.22 2

6

Finish collar( top

stitch) Collar 0.8 SNLS 1.63 2

7 Cuff fusing Cuff 0.4 Pressman 0.81

8

Join 2 ply cuff

(run stitch) n

turn Cuff 0.45 SNLS 0.91

9

Finish Cuff (top

stitch) Cuff

Profile

Stitch 0.5 SNLS 1.02 2

10

Pocket mouth

hemming Pocket 0.5 SNLS 1.02 1

11

join 2 ply pocket

flap(run stitch) Pocket flap M.Guide 1.2 SNLS 2.44

12

Finish flap(top

stitch) Pocket flap M.Guide 0.8 SNLS 1.63 4

13 Attach pocket

Right and

left front 1 SNLS 2.04

14

Attach pocket

flap

Right and

left front 0.4 SNLS 0.81 4

15

Finish pocket

flap

Right and

left front 0.4 SNLS 0.81

16 placket making Right front M.Guide 0.8 SNLS 1.63

17

attach brand

label Right front 0.6 SNLS 1.22 3

18 Placket pressing Left front 0.5 Pressman 1.02 1

19 Attach placket Left front 0.4

Multi

Needle 0.81 1

20

Attach small

piece in sleeve Sleeves Binder 1 SNLS 2.04 4

21

Attach big piece

on sleeve Sleeves 1 SNLS 2.04

22 Attach cuff Sleeves M.Guide 1 SNLS 2.04

23 Finish Cuff (top Sleeves 0.8 SNLS 1.63 4

Oak Fashions

53 | P a g e

stitch)

24

Attach moon

yoke Back 0.5 SNLS 1.02 1

25

Join f&B

@shoulder Assembly M.Guide 0.5 SNLS 1.02

26 Finish shoulder Assembly 1 SNLS 2.04 3

27

Join sleve with

body Assembly 0.9 SNLS 1.83

28 Finish sleeve Assembly 1.1 SNLS 2.24 4

29 Attach collar Assembly 0.5 SNLS 1.02

30 Finish collar Assembly 0.7 SNLS 1.42 3

31

Side seam with

W/C label Assembly 0.9

Feed of

the arm 1.83 2

32

Bottom

hemming Assembly Folder 0.5 SNLS 1.02 1

33 Button hole Assembly 1

Button

hole 2.04 2

34 Button attach Assembly 1

button

attach 2.04 2

Total- 23 mins

Oak Fashions

54 | P a g e

Chapter-6

Financial Plan

Prime Cost- Polo Neck t-Shirt

Direct Material Cost

Description

Consumpt

ion / piece

Wastage+

Shrinkage

(in %)

Total

Consumptio

n(gms)

Price

(Rs)

Per Unit

cost(Rs)

Fabric

400.00

0.05

420.00

147.00

0.35

Fusing(meter)

0.20

0.05

0.21

0.53

15.00

Polyester buttons

4.00

0.05

4.20

1.46

0.35

Thread

180.00

0.05

189.00

1.13

0.006

Mobilon tape

0.40

0.05

0.45

1.13

2.50

Main Label

1.00

0.05

1.05

1.58

1.50

Wash care

Label(tafta)

1.00

0.05

1.05

0.32

0.30

Price tag

1.00

0.05

1.05

1.58

1.50

Brand Tag

1.00

0.05

1.05

3.15

3.00

Poly bag

1.00

0.05

1.05

2.10

2.00

Carton (12pcs/

carton)

0.08

0.05

0.09

2.63

30.00

TOTAL DIRECT

MATERIAL

162.58

Oak Fashions

55 | P a g e

Cost Per Minute

Direct Labour Cost is calculated using Cost Per minute of the factory-

Direct CPM= Total Direct wages/ (Total direct labour* minutes available in a month)

Total direct Labour= 101

Total minutes available in month= 12480 (26*480)

Total wages = Rs 6,01,958

CPM= 0.48 {6,01,958/ (101*12480)}

Standard minute Value(SMV) of the garment= 10.55 min

Direct Labour cost= SMV * Direct CPM

Direct Labour Cost= Rs 5.03

Direct Expenses (washing)= Rs 5

Prime cost= Direct material garment + Direct Labour cost + Direct expenses

Prime cost= Rs. 172.66 (162.58+5.03+5)

Oak Fashions

56 | P a g e

Prime Cost- Shirt

Direct Material Cost

Description

Consumption

/ piece

Wastage

+

Shrinkag

e (in %)

Total

Consumption

(gms)

Price

(Rs)

Per Unit

cost(Rs)

Fabric

2.20

0.05

2.31

184.80

80.00

Fusing(6 collar/m)

0.45

0.05

0.47

4.73

30.00

Buttons

16.00

0.05

16.80

5.83

0.35

Thread(10000

meter@ Rs40)

400.00

0.05

420.00

1.68

0.004

Main Label

2.00

0.05

2.10

3.15

1.50

Wash care

Label(tafta)

1.00

0.05

1.05

0.32

0.30

Price tag

1.00

0.05

1.05

1.05

1.00

Brand Tag

1.00

0.05

1.05

3.15

3.00

Poly bag

1.00

0.05

1.05

2.10

2.00

Carton (12pcs/

carton)

0.08

0.05

0.09

2.63

30.00

TOTAL DIRECT

MATERIAL

209.43

SMV Of the Garment- 23 min

Direct Labour Cost= Rs. 11 (23*0.48) Direct Expenses (washing)= Rs. 10 Prime Cost= Rs230 (209+11+10)

Oak Fashions

57 | P a g e

Prime Cost- Single Jersy T-shirt

SMV Of the garment- 8.55 mins Direct Labour cost= Rs. 4.08 (8.55*0.48) Direct expenses= Rs. 5 Prime cost of the garment= Rs 117 (107.23+4.08+5)

Direct Material

Cost

Description

Consumptio

n / piece

Wastage+

Shrinkage (in

%)

Total

Consump

tion

(gms)

Price

(Rs)

Per

Unit

cost(R

s)

Fabric(220/kg) 300

0.05 315

94.50

0.30

Thread(10000m@

Rs 40)

180.00

0.05

189.00

0.76

0.004

Mobilon tape

0.04

0.05

0.042

0.11

2.50

Main Label

1.00

0.05

1.05

1.58

1.50

Washcare Label

1.00

0.05

1.050

0.32

0.30

Price tag

1.00

0.05

1.05

1.05

1.00

Brand Tag

1.00

0.05

1.05

4.20

4.00

Poly bag

1.00

0.05

1.05

2.10

2.00

Carton (12pcs/

carton)

0.08

0.05

0.09

2.63

30.00

TOTAL DIRECT

MATERIAL

107.23

Oak Fashions

58 | P a g e

Indirect Cost per minute-

Indirect cost of the factory includes all the overheads and the cost incurred on the

garment other than direct production cost.

Indirect cost per minute (CPM of the factory= Overheads(manufacturing, office&

administration, Selling & transportation) / (total no. of indirect employees * minutes

avail)

Total Overheads= Rs. 17,44,868

Total Indirect employees- 65

Indirect CPM= Rs. 2.15 {17,44,868/ (12480* 65)}

Note- For actual working refer annexure

Sales Budget

Sales Budget is calculated on the average FOB that is being calculated

multiplied with the monthly production of the factory.

PRICING

Description year 1 Year 2

Average Prime Cost 173 190

Add Manufacturing Overheads(indirect cpm@ 1.62) 30 32

Add Mark Up(30%of prime cost) 35 57

Average FOB (In Rs)/Factory Price 238 279

Sales unit for year1 is 30,000 units and for the 2nd year it will be 33,000

units

Year

1(monthly)

Year

1(yearly)

Year 2( yearly)

Average

FOB

238 279

Sales unit 30,000 396000

Sales 71,40,341 8,56,84,098 11,06,22,931

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Initial Investments-

Initial investment in fixed assets is done on the base of calculation of the

fixed assets required.

Initial investment Year 1 Year2

Total initial investment in fixed assets 64,43,150

Total initial investment in Net Working Capital ( 40% of Annual Sales) 34010623.13

Pre operative expenses ( 2% of Fixed Assets) 128863

total capital requirement 4,05,82,636 4,10,20,959

Equity 20582636 17,24,985

Loan 2,00,00,000

Net working capital is taken 40% of the annual sales as the general

pattern of the industry for payments is 45-90 days. So to keep the

factory working capital is required initially.

For Second Year Equity of Rs 17,24,985 is introduces as there is a loss

in 1st year.

Depreciation

DEPRECIATION ON

MACHINERY 13.91% 13.91%

Year 1 Year 2

Gross BOOK VALUE 51,72,300 44,52,833

DEPRECATION 719466.93 619389.08

Net Book Value 44,52,833 38,33,444

DEPRECATION ON

COMPUTER @ 40% @40%

1 2

Gross BOOK VALUE 410000 246000

DEPRECATION 164000 98400

Net Book Value 246000 147600

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DEPRECATION ON AIR

CONDITIONERS @ 13.91% @ 13.91%

1 2

Gross BOOK VALUE 30000 25827 DEPRECATION 4173 3592.5357 Net Book Value 25827 22234.4643

DEPRICIATION OF

FURNITURE AND FIXTURES @ 18% @ 18%

1 2

Gross BOOK VALUE 322350 264327 DEPRECATION 58023 47578.86 Net Book Value 264327 216748.14

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Employee Cost

S.No. MANPOWER Category(Direct/ Indirect)

Department Total Projected salary(RS)

Total Salary

1 Marketing Merchandiser

Indirect Merchandising 1 30,000 30000

2 Designers Indirect Merchandising 2 20,000 40,000 3 Merchandiser Indirect Merchandising 1 25,000 25000 4 HR Personnel Indirect Administration 2 25000 50000 5 Accountant Indirect Merchandising 2 12000 24000 6 IT Indirect Administration 1 15,000 15000 7 Pattern

Master Indirect Merchandising 1 10000 10000

8 CAD Assistant Indirect Merchandising 1 8000 8000 9 Helpers Indirect 22 4000 88000 10 Fabric checker Indirect Store 2 4000 8000 11 In-charge Indirect 4 5000 20000 12 Lab Testing

Personal Indirect Lab 1 15000 15000

13 Cutter Direct Cutting 1 5000 5000 14 Cutting master Indirect Cutting 1 7000 7000 15 Spreader man Direct Cutting 2 4000 8000 16 IE assistant Indirect Production 1 20000 20000 17 Production

assistant Indirect Production 1 20000 20000

18 Supervisor Indirect Quality 3 7000 21000 19 Checker Indirect Production 3 4500 13500 20 Sampling

tailors Indirect Merchandising 5 5000 25000

21 Operators Direct Production 90 4233 380970 22 Quality

Checker Indirect Quality 3 4000 12000

23 Pressman Direct Finishing 5 4200 21000 24 Head

mechanic Indirect Maintenance 1 6000 6000

25 Mechanics Indirect Maintenance 1 4000 4000 26 Electricans Indirect Maintenance 1 4000 4000 27 Sweepers Indirect 2 4000 8000 28 Guard Indirect 2 5000 10000 29 Pantry Indirect 1 5000 5000 30 Printing

operators Direct Printing & Finishing 2 5000 10000

32 Embroidery operator

Direct Printing & Finishing 1 5000 5000

33 TOTAL 166 918470

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Overheads-

Monthly Year 1 Year 2

In Rs.

Manufacturing Overheads

Electricity - Factory 1,08,000 1296000 1425600

Indirect Salary to Factory Employees 264500 3174000 3332700

add PF, ESI, etc 108445 1301340 1366407 Other Manufacturing overheads (7% of Prime cost) 363657 4363882 6034625

Depreciation ( Factory) 63824 765885 6,57,452

Rent 2,50,000 3000000 3300000

Fuel Cost 35,100 421200 442260

Total 11,93,526 14322307 16116784

Office and Administration Overheads

Office Electricity 12000 144000 158400

Salary 2,24,000 2688000 2822400

add PF, ESI, etc 91,840 1102080 1157184

Depreciation ( Office) 9292 111508 107916

Other Office Overheads

Total 3,37,132 40,45,588 4245900

Selling and Distribution Overheads

Advertising (1% of Sales) 71403 856841 1106229

Logistics (1% of Sales) 71403 856841 1106229 Sales Promotion ( 1% of Sales, sales brokerage cost) 71403 856841 1106229

Salaries

Other Selling Overheads

Total 2,14,210 2570523 3318688

Grand Total 17,44,868 20938418 23681372

Note- For 2nd year calculation

Increment in rent- 10%

Increment in Electricity- 10%

Increment in Salary- 5%

Other manufacturing O/H- 1%

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Working Electricity-

The electricity bill is calculated as per the information provided by the other factories.

So we have taken electricity charges- Rs. 1,20,000 per month which is distributed

among 2 heads

Factory Electricity= 80% 0f 1,20,000= Rs 1,08,000

Office Electricity= 20% of 1,20,000= Rs12,000

Working of Electricity Consumption

S.No. Description No. Of M/C

Power

Req/unit

1 Sewing Machines 90 0.44

2 Straight Knife 1 0.33

3 Band Knife 1 1.5

4 Fusing Machine 1 4.5

5 Embroidery M/C 1 2

6 Fabric Inspection 1 1

7 Vacuum Table 8 1.5

8 Washing Machine 1 1.5

9 Bore well 1 1.5

10 Water Cooler 3 1.2

11 Cooler 10 1

12 A/C 2 2.5

13 Lab Equipments 3 2.5

14 Tube Light 100 0.05

15 Fans 50 0.11

16 Computer 11 0.12

17 Boiler 1 5

18 Iron 8 0.4

19 Printer & Scanner 1 0.5

20 Printer 1 0.3

21 Fridge 1 0.8

total(KW)

total(KVA)

Proximity Usage (85%) 94.9025

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Electricity Cost

Particulars Consumption

Supply Availability per Day 8 hrs

Total Power Requirement 100 KW

Total Power required / day 800 KW (100*8)

Cost per day (@ Rs 5 /unit) Rs.4000 (800*5)

Cost Per month Rs. 104000 (4000*26)

Fixed Cost /Month(@115/kw) RS. 11500(115*100)

Total bill Rs. 119000

Fuel Consumption for generator (100KW)

Electricity consumption/hr- 100Kw

Generator usage/ day= 2hrs

Total consumption of fuel/hr= 15 litre

Total consumption of fuel per day= 30 litre(15*2)

Rate of Diesel/ litre= Rs 45

Cos of diesel per month= Rs 35100 (45*30*26)

Salary-

Salary is calculated as per the information collected from factory visits as

well as industry pattern. Salary is also distributed in 2 areas, one is

manufacturing overheads and the other is administration and office

overhead.

For details see HR List

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Preliminary Expenses-

Legal Expenses

Registration(trade mark, pan no) 32500 Central Sales tax redg(tin no) 10000 VAT No. 20000

Excise duty Redg. 20000 82500 Marketing Costs

Website 20000

Listing on Just dial & fiber to fashion 20000 40000 Other Preliminary expenses

Brokerage cost 14000

Security deposit 2,00,000 2,14,000

Miscellaneous

gestation period salaries, electricity, depreciation 3,00,000 3,00,000

Total 6,36,500

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Income Statement

PROJECTED Income

STATEMENTS Year 1 Year 2

Sales 85684098 110622931

Less Cost of Goods Sold : 76663472 91549593

Gross Profit 9020626 19073337

Less

Office and Administration

Overheads 4045588 4245900

Selling and Distribution

Overheads 2570523 3318688

2404515 11508750

=Operating Profit

(EBIT) 4000000 4000000

Less Interest on Loan 129500 129500

Less Preliminary

Expenses ( Written Off) -1724985 7379250

4045588 4245900

EBT 2570523 3318688

Less: Income Tax

@30.99% 2286829

EAT (NET PROFIT) -1724985 5092420

EBIT 2404515 11508750

Less Taxes 0 2286829

Add: depreciation 877394 7,65,368

Add: other non cash expenses (pre operative expenses) 647500 6,47,500

CFAT 3929408 10634788

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Pofitability Ratios

Break even analysis

TOTAL COST (variable + Fixed Cost) Rs.87409083

VARIABLE COST (COGS+ Selling and distribution O/H) Rs.79233995

FIXED COST ( Office & Admin O/H + Interest on loan + Preliminary expenses written Off Rs. 8175088

Contribution Margin= Sales - Variable cost ₹ 64,50,103

Contribution Margin Ratio= Contribution Margin/Sales 7.53%

Break Even Point= fixed cost/contribution margin ratio

456277 units

No. of units Sold in a year 360000 units

Contribution margin/ unit= contribution margin/ no. os selling units ₹ 17.92

Average selling Price Rs. 238

Break Even Sales (Breakeven Point * Avg Selling Price) ₹ 10,85,99,048

Year 1 Year 2

Net present Value(present value of future cash flows- initial investments)

₹ 3,29,,42,604

Internal Rate of Return(IRR) 8%

Net profit margin= net profit/ sales -2.01% 4.60%

Gross profit margin( gross margin/ sales) 10.53%

Return on Fixed assets= (Net Profit/ Total assets)*100 -26.77%

Return on Investments= (Net Profit/ Total investment) -4.22% 11.96%

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Scenario Analysis

Scenario 1 Scenario 2 Scenario 3

I PROJECTED Income STATEMENTS Most likely scenario

Pessimistic Scenario Optimistic scenerio

Year1 Year 2 Year 1 Year 2 Year1 Year 2

Sales 85684098 110622931 79449981 99308009.4 98152331 121937852

Less Cost of Goods Sold : 76663472 91549593 76663472 91549593 76663472 91549593

Gross Profit 9020626 19073337 2786510 7758416 21488859 30388259

Less Office and Administration

Overheads 4045588 4245900 4045588 4245900 4045588 4245900 Selling and Distribution Overheads 2570523 3318688 2570523 3318688 2570523 3318688

Operating Profit 2404515 11508750 -3829602 193828 14872748 22823671

Less Interest on term loan 4000000 4000000 4000000 4000000 4000000 4000000 Less Other non operating expenses 129500 129500 129500 129500 129500 129500 Add other Non operating incomes

EBT -1724985 7379250 -7959102 -3935672 10743248 18694171

Less: Income Tax @30.99% on

EBT 2286829 0 0 3329333 5793324

EAT (NET PROFIT) -1724985 5092420 -7959102 -3935672 7413915 12900848

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Chapter-7

Project Plan

Description of Project

The Project is about making a project plan for setting up of a Garment

Manufacturing unit.

Name- Oak Fashions

Type- Sole Proprietorship

Production Capacity- 3, 60,000 pieces annually

Report Objectives

Better understanding of Classroom study

Applying classroom as well as industry knowledge

Understanding the key points to remember while making Project

Plan

Limitations

Time constraint

Secondary based Data

Authenticity of the project.

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Scoping form

PROJECT NAME PROJECT MANAGER

Oak Fashions Nikhil Mehra

PROBLEM Factory setting plan is on papers so actual source of funding and how it will be executed.

PROJECT GOAL To develop a plan for setting up of a garment manufacturing unit of 100 machines in Noida

OBJECTIVES To develop produce best quality in minimum price

Best possible utilization of the resources

To create job opportunities

To study our competitors and perform better

SUCCESS CRITERIA In- house Printing & Embroidery machine Catering for very short lead- Time

ASSUMTIONS, RISKS, OBSTACLES

SMV of the garments that I have worked upon is hypothetical but very close to the actual

Prices of the resource list items may vary

Working capital required to commence bussiness is calculated at 40% of the assumed sales of 1st year

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PERT

Te= (To+4Tm+Tp) / 6

Activity Particulars To Tm Tp Te

A Project Development & Planning 30 40 50 40

B Land Search 15 20 30 21

C Raising Of Funds 25 30 40 31

D Registration Processes 15 20 30 21

E Procurement of raw material for renovation 5 10 20 11

F Renovation 50 60 80 62

G Procurement of Machinery 20 30 40 30

H Marketing Processes 50 60 80 62

I Set up of furniture and machinery 5 10 20 11

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DATA COLLECTION AND ANALYSIS TOOL

Questionnaires made will be circulated among individuals (women)

customers in the age group of 18-35 years. The questionnaire will

contain questions about their preferences and how do they find this idea.

Based on that analysis we will find suitable venture capitalist that will be

interested in our idea and then finally to the suppliers of raw materials

such as fabrics, trims etc.

There are two methods of collecting data:

1) Primary data

2) Secondary data

Primary Data: Data observed or collected directly from first-hand

experience.

Here, data is collected through suitable questionnaire and interviews for

a limited number of people Customer, venture capitalist and suppliers of

fabrics and other raw materials are major source of primary data. The

primary data are superior to secondary data. Primary data is also

necessary when secondary data are incomplete. Primary data are

needed to be collected from different sources such as survey

observation. The primary data are reliable and are of two types: –

Census: A census is the procedure of systematically acquiring

and recording information about the members of a given

population.

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Sample: Sampling is concerned with the selection of a subset of

individuals from within a population to estimate characteristics of

the whole population.

Secondary Data: Published data and the data collected in the past by

other parties are called secondary data.

It means the data, which is already available. They refer to the data

which has already been collected by and analyzed by someone else.

Secondary data may either be published or unpublished data.

The source published data are available

In various publications of the central, state and local government

Technical and trade journals

Books magazine and newspaper

Reports and publications of various associations connected with

business and industries, stock exchanges etc.

Public records and statistics, historical documents.

There are many sources of unpublished data. They may be found in

diaries, letters, unpublished biographies and may be available with

scholars and research workers, trade associations, other public/private,

individual and organization.

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Layouts

Factory Layout

Ground Floor-

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First Floor

Second Floor-

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Chapter-8

Reflection

Working on this project was a very interesting whereas lifetime learning

experience. Through this project, I have learned the necessary steps to

open my own production unit. From selecting the site, to production

processes, to finding the target market and buyer, to dealing with

financials. I could observe things from the point of view of theory did in

class and apply them while doing the project. I would also like to pay my

gratitude to all my teachers for their immense support and being there as

strength and for their best inputs in the project.

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Chapter-9

Exit Strategy

Sell off the whole set-up to the interested party

is the exit strategy of Oak Fashions

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References - http://www.google.com/imgres?q=polo+pique+fabric&hl=en&

biw=1366&bih=664&tbm=isch&tbnid=hiIkKTmY91NtwM:&img

refurl=http://www.danjoeworkwear.com.au/product_details.ph

p%3FprodID%3D19&docid=JVONcm4f6FsvZM&imgurl=http://

www.danjoeworkwear.com.au/im- image fabric

- http://www.pkumarandbros.com/products.htm- thread

supplier

- http://www.exportersindia.com/indian-

manufacturers/trims.htm- labels

- http://www.exportersindia.com/india/delhi/labels-tags.htm

tags

- http://www.justdial.com/Noida/Garment-Accessories-

Manufacturers-%3Cnear%3E-New-7/ct-51385- accessories

- http://www.justdial.com/Noida/Thread-Polyester-

%3Cnear%3E-New-7/ct-463100- thread

- http://www.justdial.com/Noida/Poplin-Fabric-Manufacturers-

%3Cnear%3E-New-7/ct-51595- fabrics

- http://www.levistrauss.com/sites/default/files/librarydocumen

t/2011/10/levi-strauss-co-factory-list-october-2011.pdf-

Competitor

- http://en.wikipedia.org/wiki/Arvind_Mills

- http://www.slideshare.net/harshalsk/human-resource-

management-hrm

- http://www.fashion-schools.org/fashion-merchandiser.htm

- http://job-descriptions.careerplanner.com/Fashion-

Designers.cfm

- http://finishingschool.pbworks.com/f/INDIAN+GARMENT+IND

USTRY.pdf

- http://www.netmba.com/marketing/pricing/

- https://www.textiletestingequipment.com/

- http://www.slideshare.net/mech.anupam/supply-chain-drivers

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Annexure