Start a Leather Travelling Bag Making Unit

        
(240) Start a  Leather Travelling Bag Making Unit
           

Product Code	:	293101000
Quality and Standards	:	As per buyers specification
Production Capacity	:	Quantity: 30000 pieces (per annum) Value: Rs. 32400000
Uploaded on	:	March 2007

Introduction 

Travelling bag is one of the convenient goods used for carrying the belongings such as clothes, daily-use articles and other essentials during travelling from one place to other. Some other types of products are also used for carrying important documents and office use equipments by the executives and high profile personnel. Although this product is manufactured from various types of materials such as textile, jute, coated fabrics, yet leather travelling bag is having wider acceptance due to its superior strength, aesthetic look and up-man-ship among middle and high-income group people. A wide range of travelling bags are in use for various purposes. The cost of the leather bags depends upon the type of leather, space and/or style of it. This project aims at manufacturing two types of bags i.e.:

(i)	Bags of single large pocket with one or two zips usually made from heavy cow or buffalo leather and
(ii)	Bags of multi pockets with interlining and re-enforcement, flap type, fitted with magnetic press buttons, commonly made from cow nappa leather.

Market Potential

The demand of the leather travelling bag is increasing day-by-day in tune with the growth of industrialization, economic standards of people, tourism and fashion consciousness. The important customers of such products are medium and high-income group people belonging to service, business and executive classes. The products with a price range of Rs. 400 to Rs. 2,500 are commonly seen in the market. The proposed product with the price of about Rs. 600 to Rs. 800 is felt quite acceptable with reasonable quality. Further, export worthiness of this product is quite substantial with qualitative and latest designed ones. A small manufacturer can have tie-up with any exporter merchant in the country for executing the order as per the specified design. There is an ample scope of leather travelling bag units with easy and considerably cheaper availability of indigenous raw material and skilled manpower.

Basis and Presumptions

This project profile has been prepared on the basis of following assumptions:

1.	Working Hours	:	Double shift(8 hour per shift) of 16 hours a day for 300 working days in a year
2.	Capacity Utilisation	:	60% during first year 70% during second year 80% during 3rd year and onwards
3.	Entrepreneur	:	Anybody having knowledge/experience of leather goods and/or venture to start leather based units.
4.	Location	:	Anywhere in India, preferably nearby any tannery pocket or export facility zone.
5.	Land and Building	:	Own
6.	Raw Materials	:	Chrome tanned heavy cow or buffalo bag leather and softy cow nappa leather.
7.	Salary and Wages	:	All employees are paid on monthly basis at prevailing rates of leather industry
8.	Transportation and Taxes on purchase	:	Not Included in purchase price.
9.	Power Charges	:	Rs. 4 per KWH from power supply source
10.	Depreciation	:	5% on building and civil construction 10% on plant and machinery 25% on tools and equipments 20% on furniture and fixture 10% on other fixed assets
11.	Margin Money	:	30% of total capital investment
12.	Interest Charges	:	15% has been calculated on total capital investment considering the opportunity cost of margin/equity money.
13.	Fixed Cost for BEP Analysis	:	100% rent, insurance, interest and depreciation 40% of total salary and wages 40% of total utilities and other Contingent expenses excluding rent and insurance.

Implementation Schedule

Sl. No.	Activity	Period (in months)
1.	Site selection, negotiation with landlord, market survey preparation of project report and other formalities	2
2.	Seeking quotation of machines, purchase and installation	2
3.	Trial production, arranging working capital, Procurement of raw material and market tie up	2
	Total period required for commencing commercial production	6

Technical Aspects

Process of Manufacture

The leather travelling bags proposed to be manufactured in this project are mainly of two types. One is of single large pocket with a space of 3 to 6 ft. fitted with one or two fasteners and a long strap handle and other one is of multi-pockets (3 to 5) fitted with different types of fasteners like zips, velcro or press buttons. While heavy cow or buffalo bag leather with the thickness of 2.0 to 2.5mm without lining is preferred for making the former, the softy type of leather like cow nappa leather with the inter-lining and reinforcement is usually used for the later.

First of all the components are cut from suitable materials. The basic raw material is the finished leather, which is not uniform, irregular in shape and size, variation with grain structure and presence of defects on the surface. On the other hand, the components are generally regular or rectangular shape and the adjacent components should have similar shade and structure. Therefore, necessary care should be taken in cutting the components. The cut components are then skived to the edges for ease of folding and/or stitching. The edges are then beaded and the zips and other fasteners attached as per the specification. The outer surface (leather), the inner surface (lining) and the re-enforcement materials if required so, are attached first with the adhesive and then by stitching. The linings and thread-ends are trimmed and sealed. The surface is cleaned and polished and made ready for packing.

Quality Control and Standards

The quality of this product has to be maintained as per buyer's specification. However, the main criteria for quality control are selection of suitable materials, (especially the leather with required thickness, shade, strength and softness) cutting components from suitable portions of leather, uniform folding, fastener attachment, regular stitching with suitable thread with
specified stitch length and finishing.

Production Capacity (per annum)

i)	Leather travelling bag single pocket with one long and two small handles (20"x5"x18")	18000 Pcs. of Rs 18000000.
ii)	Leather travelling bag-multi pocket flap type with one longand two small handles (18"x5"x15")	12000 Pcs. of Rs. 14400000

Motive Power

10 HP.

Pollution Control

The proposed unit does not produce any effluent. However, the scraps of leather and other materials are to be collected and disposed-off at appropriate place or are burnt at an isolated place.

Energy Conservation

All machines are power driven and are run individually, whenever required.

Financial Aspects

A. Fixed Capital

(i) Land and Building	Amount (In Rs.)
(i) Land 3000 sq. ft. @ Rs. 500 per sq. ft including registration	1500000
(ii) Total built-up area 2000 sq. ft. @ Rs 1000 per sq ft	2000000
Water System (including Bore Well + over head tank etc)	100000
Total civil cost= cost of land + building	3600000

(ii) Machinery and Equipments

Sl. No.	Description	Imp./Ind.	Qty.	Rate (Rs.)	Value (Rs.)
1.	Strap cutting machine Straight (12 knives)	Ind.	1	70,000	70000
2.	Pneumatic stamping machine-stamping wheel (0-9 nos.) (A-Z)	Ind.	1	95,000	95000
3.	Upper Skiving machine	Ind.	1	55,000	55000
4.	Flat bed single needle sewing machine	Ind.	3	25,000	75000
5.	Heavy duty flat bed single needle sewing machine	Ind.	1	40,000	40000
6.	Cylinder bed sewing Single	Ind.	2	90,000	180000
7.	Combined finishing machine	Ind.	1	85,000	85000
8.	Rivetting machine	Ind.	1	10,000	10000
9.	Taxes,Electrification and erection of machine @ 40% on machine cost				244000
	Total				854000

(iii) Tools and Equipments and Other Fixed Assets

Sl. No.	Description	Imp. Ind.	Qty.	Rate (Rs.)	Value (Rs.)
1.	Leather goods makers tool kit	Ind.	3 sets	5000	15000
2.	Machine maintenance and electricians tool kit	Ind.	1 set	L.S.	5000
3.	Testing equipments-thickness gauge, measuring scales etc.	Ind.	-	L.S.	5000
4.	Workshop working tables, racks etc.	Ind.	-	L.S.	80000
5.	Office furniture and equipments	Ind.	-	L.S.	100000
6.	Misc. equipments	Ind.	-	L.S.	10000
	Total				215000
	Total [ii +iii]				1069000

(iv) Pre-operative Expenses		(Rs.)
1.	Preparation of project report and consultancy	40000
2.	Administrative expenses	10000
3.	Travelling, Market development and tie-up	20,000
4.	Other formalities and expenses prior to production	10,000
	Total	80000
	Total Fixed Capital [i+ii+iii+iv]	4749000

B. Working Capital (per month)

(i) Staff and Labour (per month)

Sl. No.	Designation	No.	Salary (Rs.)	Total (Rs.)
1.	Manager	1	20000	20000
2.	Supervisor cum Designer	10	10000	100000
3.	Skilled Worker	10	7000	70000
4.	Semi-skilled workers	6	6000	36000
5.	Unskilled worker	4	4000	16000
6.	Electrician and mechanic	1	5000	5000
7.	Accountant cum Cashier	1	6000	6000
8.	Store keeper cum assistant	1	5000	5000
9.	Attendant	1	3000	3000
	Total			261000
	Add perquisites @ 22% on Salary			57420
	Total			318420

(ii) Raw Material Including Packaging Materials Per Piece of Bag (per month)

Sl. No.	Description	Quantity	Rate (Rs.)	Total (Rs.)
				Bag SP	Bag MP
1.	Heavy cow or buffalo Chrome tanned Bag Leather (2.0 mm)	8.5 Sq. ft.	70	595	-
2.	Cow nappa/softee leather (1.4 mm)	9.0 Sq. ft.	80	-	720
3.	Linings and reinforcements	LS		20	70
4.	Magnetic press buttons	LS		-	50
5.	Zips, Threads, adhesive, Finishing and other misc. materials	LS		25	38
6.	Packaging materials	LS		9	14
	Total			649	892
	Total materials requirement (per month) (456 x 750 + 622 x 500)				1865500

(iii) Utilities (per month)

Sl. No.	Description	Amount (Rs.)
1.	Electricity bill LS	10000
	Total	10000

(iv) Other Contingent Expenses (per month)

Sl. No.	Description	Amount (Rs.)
2.	Repair and maintenance	10000
3.	Other consumable	10000
4.	Insurance	2000
5.	Telephone, fax and other postal expenses	6000
6.	Stationery and printing	5000
7.	Other misc. expenditure	10000
	Total	43000

(v) Total Recurring Expenses (per month)

Sl. No.	Description	Amount (Rs.)
1.	Staff and Labour	318420
2.	Raw Materials	1865500
3.	Utilities	10000
4.	Other contingent expenditure	43000
	Total	2236920

(vi) Total Working Capital Requirement		(Rs.)
i.	Raw material stock-one month	1865500
ii.	Stock in process-2 days	124367
iii.	Finished goods stock-Half month	932750
iv.	One month expenses:
	a. Salary and wages	318420
	b. Utilities	10000
	c. Other Contingent expenses	43000
	Total	3294037

(vii) Total Working Capital Requirement		(Rs.)
v.	Receivables (One month credit sale)	2700000
	Total	5994037

C. Total Capital Investment

Sl. No.	Description	Amount (Rs.)
1.	Fixed Capital	4749000
2.	Working capital	5994037
	Total	10743037

Financial Analysis

(1) Cost of Production (per year)

Sl. No.	Description	Amount (Rs.)
i)	Total recurring cost	26843040
ii)	Depriciation on Building 5 %	180000
iii)	Depreciation on machinery and equipments @ 10%	85400
iv)	Depreciation on tools and equipments @ 25%	28750
v)	Depreciation on Furniture and Fixture @ 20%	22000
vi)	Interest on Total Capital Investment @ 12%	1289164
	Total	28448354

(2) Turnover (per year)

Sl. No.	Items	Quantity/pieces	Rate (Rs.)	Value (Rs.)
1.	Leather travelling bag-Single pocket	18000	1000	18000000
2.	Leather travelling bag-Multi pockets	12000	1200	14400000
	Total			32400000

(3) Net Profit (Before Taxation) (per year)

Turnover - Cost of Production

32400000 - 28448354

= 3951646

(4) Net Profit Ratio
		Net Profit per year x 100
	=	———————————
		Turnover per year
		3951646 x 100
	=	————————
		32400000
	=	12.2
(5) Rate of Return on Total Investment
		Net Profit Per year x 100
	=	———————————
		Total Investment
		3951646 x 100
	=	————————
		10743037
	=	36.78%

(6) Break-even Point Fixed cost

Sl. No.	Description	Amount (Rs.)
a)	Depreciation on Building @ 5 %	180000
b)	Total depreciation on plant machinery tools fixtures office equipments	136150
c)	Interest on capital investment	1289164
d)	Insurance	24000
e)	40% of Salary and Wages	1528416
f)	40% of other contingent expenditure and utilities	51000
	Total	3208730

B.E.P.
		Fixed cost x 100
	=	—————————
		Fixed cost + Net Profit
		3208730 x 100
	=	——————————
		3208730 +3951646
	=	44.81%

Addresses of Machinery and Equipment Suppliers

1. NSIC Technical Service Centre
Sector B-24, Guindy Indl. Estate,
Ekkaduthangal,
Chennai-32.

2. M/s. Atlanta Trading (P) Ltd.
Atur House,
Worli Naka,
Mumbai-18.

3. M/s. Twin Star Engineering
No. 98, Pammal Main Road,
Pammal,
Chennai-75.

4. M/s. Raj Machine Home
Opp. New Jyoti Building,
35/44, Karabala Road,
Agra-5.

Raw Material Suppliers

1. M/s. Alpha Global
445/1,6th Cross, 7th Block,
Jayanagar KPM Road,
Bangalore-560 082.

2. M/s. Amjad Finished Leather Co.
54, Maddox Street, Choolai,
Chennai-112.

3. M/s. Arkay Leathers
No. 3, Third Floor, Crown Court,
34, Chathedral Road,
Chennai-86.

4. M/s. Mow Chung Tannery Pvt. Ltd.
47, South Tangra Road,
Kolkata-46.

5. M/s. Pidilite Industries Ltd.
J.B. Marg, Nariman Point,
Mumbai
(for adhesive)

6. M/s. APL Poly Fab Pvt. Ltd.
48 C, Matheswar Tala Road,
Kolkata-46
(for lining)

7. M/s. Coats India Ltd.
144, M.G. Marg,
Bangalore-1
(for stitching thread)

8. M/s. Asia International
1523, Qasimjan Street,
Lal Kuan, New Delhi
(for fasteners)

9. M/s. Bharani Agencies
No. 126, Thambu Chetty Street,
III Floor, Chennai-1
(for fasteners)

10. M/s. Hyde Park India Pvt. Ltd.
C-21, Sector-7, Noida,
Ghaziabad Distt., U.P.
( for fasteners)