Name: Ayman Hussain Jiwani ID: 22155 Assignment: Pre-Feasibility Report Faculty: Sir Sardar M.Nawaz

Pre-feasibility Study Clothing manufacture Company
NAME: AYMAN HUSSAIN JIWANI
ID: 22155
ASSIGNMENT: PRE-FEASIBILITY REPORT
FACULTY: SIR SARDAR M.NAWAZ
August 27, 2020

Pre-Feasibility Report
JIWANI TRADERS
Clothing manufacturing company
Government of Pakistan
www.smeda.org.pk
August 27, 2020

Contents
DISCLAIMER .............................................................................................................................................. 4
2. EXECUTIVE SUMMARY....................................................................................................................... 6
3. INTRODUCTION TO SMEDA: .............................................................................................................. 6
4. PURPOSE OF THIS DOCUMENT: ........................................................................................................ 7
5. BRIEF DESCRIPTION OF PROJECT & PRODUCT:............................................................................ 7
5.1 PRODUCTION PROCESS FLOW .................................................................................................... 8
5.2 Operation Capacities: .......................................................................................................................... 9
Operation Capacities : Table 1 .............................................................................................................. 9
6. CRITICAL FACTORS OF THIS .......................................................................................................... 10
7. Geographical Potential For Investment: ................................................................................................. 10
8. POTENTIAL TARGET CUSTOMERS / MARKETS .......................................................................... 10
9. PROJECT COST SUMMARY: .......................................................................................................... 11
9.1 Project Economies: ..................................................................................................................... 11
Table 2: Project Economics ................................................................................................................ 11
9.2 Project Financing ........................................................................................................................ 11
Table 3: Project Financing .................................................................................................................. 11
9.3 Project Cost ................................................................................................................................. 12
Table 4 (Project Cost) ......................................................................................................................... 12
9.4 Space Requirement ..................................................................................................................... 12
Table 5: Space Required ..................................................................................................................... 13
9.5 Machinery and Equipment Requirement: ................................................................................... 13
Table 6: The Requirement of Stitching Machinery............................................................................. 13
9.6 Furniture Required ............................................................................................................................ 14
Table 7: Furniture Required: ............................................................................................................... 14
9.7 Requirement of Office Equipment: ............................................................................................. 14
Table:8 Office Equipment Required ................................................................................................... 14
9.8 Office Vehicle: ............................................................................................................................ 15
Table : 9 Office Vehicles Requirement:- ............................................................................................ 15
9.9 Raw Material Requirements:- ........................................................................................................... 15
August 27, 2020

9,10 Human Resource Requirement ....................................................................................................... 15

Table 10: HR requirement................................................................................................................... 15
9.11 Utitlity Cost..................................................................................................................................... 16
9.12 Revenue Generation ........................................................................................................................ 16
Table 11: Revenue Generation of year 1 ................................................................................................ 16
10 Contact Details: ............................................................................................................................... 16
10.1 Machinery Requirment ................................................................................................................... 16
11. ANNEXURES ...................................................................................................................................... 17
11.1 Income Statement............................................................................................................................ 17
12.2 Balance Sheet .................................................................................................................................. 18
13. Key Assumptions ................................................................................................................................... 19
13.1 Product Cost Assumptions:- ............................................................................................................ 20
13.3 Revenue Assumptions:........................................................................................................................ 20
13.4: Financial Assumptions....................................................................................................................... 21
DISCLAIMER
This information memorandum is to introduce the subject matter and provide a general
idea and information on the said matter. Although, the material included in this document
is based on data / information gathered from various reliable sources; however, it is based
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upon certain assumptions, which may differ from case to case. The information has been
provided on as is where is basis without any warranties or assertions as to the correctness
or soundness thereof. Although, due care and diligence has been taken to compile this
document, the contained information may vary due to any change in any of the concerned
factors, and the actual results may differ substantially from the presented information.
SMEDA, its employees or agents do not assume any liability for any financial or other
loss resulting from this memorandum in consequence of undertaking this activity. The
contained information does not preclude any further professional advice. The prospective
user of this memorandum is encouraged to carry out additional diligence and gather any
information which is necessary for making an informed decision, including taking
professional advice from a qualified consultant / technical expert before taking any
decision to act upon the information.
For more information on services offered by SMEDA, please contact our website:
www.smeda.org.pk
August 27, 2020

2. EXECUTIVE SUMMARY
Clothing manufacturing company comes under textile industry and it is the whole part in the
garment industry. This business is currently run in Pakistan and Pakistan has a great potential to
produce great quality of clothes for local wear and export. This pre-feasibility report gives
information about garments stitching which includes t-shirts, polo shirts, trousers, Shorts and
some other products in Pakistan produced in Karachi, Lahore Sialkot.
This business is located in Karachi, Pakistan. This unit has a capacity of producing 100 T shirts &
Trousers on Daily basis. Other products like Shorts, and other stuffs are produced on Friday and
Saturday Only. T shirts include Round Neck, Polo Shirts, V-neck Shirts. The production capacity
is showing promising results and fulfilling the daily demand by producing it. Producing great
quality product in the Unit helps to gain more and more orders on daily basis and producing it.
Total investment on this Unit is 1M PKR and it is giving great revenue as all these costs are
covered in the two years and now it is giving good profit. This Company already giving
opportunity to earn as many people are employed here but due to increase in demand it will
increase more employment opportunities. It is a Sole proprietor Company.
3. INTRODUCTION TO SMEDA:
The Small and Medium Enterprises Development Authority (SMEDA) was established in October 1998
with an objective to provide fresh impetus to the economy through development of Small and Medium
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August 27, 2020

Enterprises (SMEs). With a mission "to assist in employment generation and value addition to the
national income, through development of the SME sector, by helping increase the number, scale and
competitiveness of SMEs", SMEDA has carried out ‘sectorial research’ to identify policy, access to
finance, business development services, strategic initiatives and institutional collaboration and networking
initiatives. Preparation and dissemination of prefeasibility studies in key areas of investment has been a
successful hallmark of SME facilitation by SMEDA. Concurrent to the prefeasibility studies, a broad
spectrum of business development services is also offered to the SMEs by SMEDA. These services
include identification of experts and consultants and delivery of need based capacity building programs of
different types in addition to business guidance through help desk services.
4. PURPOSE OF THIS DOCUMENT:
The objective of the pre-feasibility study is primarily to facilitate potential entrepreneurs in project
identification for investment. The project pre-feasibility may form the basis of an important investment
decision and in order to serve this objective, the document/study covers various aspects of project concept
development, start-up, and production, marketing, finance and business management. The purpose of this
document is to provide information about the clothing manufacturing Company by providing with a
general understanding of the Clothing business with the intention of supporting potential investors in the
investment decisions. The need to provide this document is to give knowledge to the investors about the
potential growth of the garments industry which includes clothing manufacture sector.
5. BRIEF DESCRIPTION OF PROJECT & PRODUCT:
August 27, 2020

Clothing manufacturing company comes under garments textile sector, and it’s one of the sector which is
used domestically and its exports are high too. Starting with Raw material to finished goods. It’s a great
industry to work in and those who wants to become an entrepreneur have a great opportunity to start this
work. T-Shirts, Polo Shirts can be wear formally and casually depends on its design. It has a vast variety
of designs according to the fashion, its style stitching design. This document will provide the information
about setting up clothing manufacturing unit. This unit will target the local market as well as the export
market for higher profit margins. This document is totally based on the product on clothing items. This
unit not only manufactures its own clothing but also other companies provides demands for clothes at this
unit and international buyers too. It is a sole proprietorship business.
5.1 PRODUCTION PROCESS FLOW
The process of clothing manufacturing start with the design provided by the customer. Specifications,
samples and designs are being provided the customers of what he needs they the unit will quote the price
and starts working. Specifications include color, size, design, fabric, stitching styles, and some other
necessary information. Company then starts working and makes a sample for the customer.
Once everything is approved by the customer then the company start working on the product and fulfill
the given demand on time. The clothes are being stitched on very good durable machines with stitching
guarantee.
After all the stitching the clothes are being double checked by the team so that there would be no quality
issues and customers then return back to the company for new order. The packing is done in a very good
way to retain the customer.
August 27, 2020

Raw material Cutting Stitching
Inspection to
double check Packing Delivery
after stitching
5.2 Operation Capacities:

The unit is based on 10 Stitching machines and capacity of 100 T shirts and Trousers a day on 8 hours
working time. It is showing growth in the recent times an employees are working hard and trying to
produce extra 20 T shirts and Trousers a day.
Operation Capacities : Table 1
DESCRIPTION PRODUCT MIX CAPACITY
T SHIRTS 50% 120 PIECES
TROUSERS 50% 100 PIECES
TOTAL 100% 220
August 27, 2020

6. CRITICAL FACTORS OF THIS
1. Developing great relations with the company’s supplies and customers for better relationships.
2. Time management is a important factor
3. Delay in deliviers will shift the customer to another supplier.
4. Maintain domestic and International quality standards.
5. Cost should be good in order to compete
6. Should have knowledge about the latest fashion in the market.
7. Staff should be trained and experienced.
7. Geographical Potential For Investment:
Cities including Karachi, Lahore and Sialkot are the main areas of garments industry. Skilled labor are
important and all these cities have skilled labor plus resources and also raw material and the
infrastructure. Therefore the stitching units must be located in these types of cities so that no problem can
occur.
8. POTENTIAL TARGET CUSTOMERS / MARKETS
Pakistan is ranked on number 4th in garments exporting country with higher contrubition in the GDP.
UK, USA, Geermany and some other countries are biggest buyer of garments from different areas of
Pakistan. So better to target these countries as Pakistan has a very good reputation of high quality clothes.
It can also look for new market and capture the opportunity like france, Italy, U.A.E etc.
10
August 27, 2020

9. PROJECT COST SUMMARY:

A detailed information is to be provided in which the costing, revenue and sales are mentioned in the
balance sheet, income statement etc. All the assumptions of cash flow and other financial activites are
recorded in it.
9.1 Project Economies:

All of the figures included are calculated for estimate sales of Rs 25 Lac in the year one. Utilization
of upto 90-95% in the year one. The following table shows the payback value and current position of
the venture.
Table 2: Project Economics

Description Details
(IRP) 29%
Payback Period 2.7
Net Present Value 208,920
9.2 Project Financing

Following table provide the variables of the loans,
Table 3: Project Financing

Description Details
Total Equity (50%) 500,000
Bank Loan (50%) 500,000
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August 27, 2020

Markup to the Borrower % per annum 10%
Tenure of the loans (Years) 4
9.3 Project Cost

Fixed and Working capital costs are as follows,
Table 4 (Project Cost)

DESCRIPTION AMOUNT
CAPTIAL COST
Stitching Machines and equipment 250,000
Furniture 150,000
Office Vehicles 350,000
Office Equipment 50,000
Total Capital Cost 800,000
Working Capital
Spare Parts for Machine 30000
Raw Material Inventory 100000
Unit Rent 20000
Cash 50000
Total Working Capital 200000
Total Investment 10,00,000
9.4 Space Requirement
The space required for the manufacturing of Clothes depends on the area covered by the machines and
space covered for the stock inventory. Inventory keeping and area for finished stock. Around2500 square
feet area is acquired for all this. The details are given below
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August 27, 2020

Table 5: Space Required

Description Area (Sq ft)
Fabric stock room 300
Cutting Room 400
Stitching Room of Clothes 900
Packaging Room 300
Finished Products keeping Room 250
Meeting Small Cubic 350
Total Area Required 2500
Currently this place is on rent as to avoid investment in a unit the company use a rental unit at it is taken
as 65,000 rent monthly and an amount of 20-30 thousand used in every 6 month for renovation and
maintainance of the Uint.
9.5 Machinery and Equipment Requirement:
The Proposed machine and Equipment Required;
Table 6: The Requirement of Stitching Machinery
Description Quantity Unit Cost Total Cost

(Rs.) (Rs)
Over lock Machine Jack 2 40,000 80,000
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August 27, 2020

Machine Oils 20 45 900
Button Stitching Machines 1 65,000 65,000
Needle Lock Jack 1 54,000 54,000
Stitching Needle 50 10 500
Thread to stitch 50 5 250
Cloth cutting Machine 1 50,000 50,000
Total Requirement 250000
9.6 Furniture Required
Details are the furniture Required are as follows,
Table 7: Furniture Required:
DESCRIPTION QUANTITY UNIT PRICE TOTAL

(rs) COST (rs)
Ceo Table and Chair for Office and meeting 1 15,000 15,000
purpose
Chairs for Chairs for Customers/Visitors 5 2,500 12,500
Working Tables 4 8,000 32,000
Chairs for Workers 10 2,500 25,000
Fan and light 5-5 10,000
A/C in Ceo’s Room 1 45,500 4,5500
Renovation cost set a side 1 10,000 10,000
Total Furniture Cost Required 150,000
9.7 Requirement of Office Equipment:

Table:8 Office Equipment Required
Description Quantity Unit Cost Total Cost
Laptops 1 20,000 20,000
Printer 1 8,000 8,000
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Office Phone 1 5,000 5,000
Cameras for Security 1 17,000 17,000
Total Equipment Required 50,000
9.8 Office Vehicle:
Table : 9 Office Vehicles Requirement:-

Description Quantity Unit Total Cost
Cost
Bike 1 40,000 40,000
Second Hand Suzuki 1 300,000 300,000
Maintaiance Cost 10,000
Total Cost 350,000
9.9 Raw Material Requirements:-
Raw material requirements for clothing manufacturing unit are,

1. Cloth fabric
2. Thread to stitch
3. Size Tags
4. Buttons for Polo
5. Pockets for Trouser
9,10 Human Resource Requirement
Table 10: HR requirement

DESCRIPTION NO OF SALARY
EMPLOYEESS PER
MONTH
Ceo 1 50,000
Product Inspector 1 20,000
Master 1 15,000
Packing staff 2 10,000
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August 27, 2020

Driver 1 12,000
Guard 1 12,000
Technician 1 7,000
Total 8
9.11 Utitlity Cost

Utility costs are around 2.4 lacs per annum.
9.12 Revenue Generation
Table 11: Revenue Generation of year 1

Descriptions Sale product price Revenue
T shirts 2000X175 3,50,000
Trouser 1800X400 7,20,000
Total 10,70,000
10 Contact Details:
In order to guide everyone especially the potential customers the contact details are as follows
10.1 Machinery Requirment
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August 27, 2020

Farhan
03462068042
Located in Karachi
11. ANNEXURES
11.1 Income Statement
Revenue Year X
35,00,000
Cost of Sales
Raw material Cost 100,000
Stitching Cost 50,000
Machine Maintainence 25,000
Electricity Cost 20,000
Total Cost of Sales 195,000
Gross Profit 3,305,000
General Expenses
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August 27, 2020

Electricity Expense 2,40,000
Rental Expense 7,80,000
Travelling Expense 1,50,000
Office Vehicles Expense 1,20,000
Internet Expense 30,000
SUBTOTAL 13,20,000
Operating Income 1985000
TAX (2,10,000)
NET PROFIT (AFTER TAX) 1775000
12.2 Balance Sheet

CURRENT ASSETS
Cash 350,000
Account Receivable 1,50,000
Pre-paid Building Rent ( 3-months) 1,95,000
Total Current Assets 6,95,000
Fixed Assets
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August 27, 2020

Machinery 1,50,000
Furniture 1,50,000
Office Vehicles 3,50,000
Office Equipment 50,000
Total Fixed Assets 700,000
Total Assets 13,95,000
Liabilities
Current Liability
Accounts Payable 500,000
Total Current Liabilities 500,000
Other Liabilities
Long Term Debt 375,000
Short Term Debt 1,60,000
ShareHolder Equity
Retained Earnings 3,60,000
Total Liabilities and Capital 13,95,000
13. Key Assumptions
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13.1 Product Cost Assumptions:-
Description Per kg Price of A Piece
Raw Material Cotton P.C
Fabric 450 650
Stitching Thread 10 50
Collar 15 25
Packing plastic 10 10
Total 485 735
Stitching 80 100
Total Cost 565 835
13.3 Revenue Assumptions:
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August 27, 2020

Description Details
Sales price Growth 2%
Operational Days 300
Production Capacity 60-70%
Maximum Production Capacity 90%
13.4: Financial Assumptions
Description Details
Debt 50% (500,000)
Equity 50% (500,000)
Debt Tenure 4 years
Debt period year 2
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August 27, 2020

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Pre-feasibility Study Clothing manufacture Company

NAME: AYMAN HUSSAIN JIWANI

ASSIGNMENT: PRE-FEASIBILITY REPORT

FACULTY: SIR SARDAR M.NAWAZ

August 27, 2020

August 27, 2020

August 27, 2020

9,10 Human Resource Requirement ....................................................................................................... 15

August 27, 2020

August 27, 2020

August 27, 2020

4. PURPOSE OF THIS DOCUMENT:

5. BRIEF DESCRIPTION OF PROJECT & PRODUCT:

August 27, 2020

5.1 PRODUCTION PROCESS FLOW

August 27, 2020

Raw material Cutting Stitching

5.2 Operation Capacities:

Operation Capacities : Table 1

DESCRIPTION PRODUCT MIX CAPACITY

T SHIRTS 50% 120 PIECES

TROUSERS 50% 100 PIECES

TOTAL 100% 220

August 27, 2020

6. CRITICAL FACTORS OF THIS

7. Geographical Potential For Investment:

8. POTENTIAL TARGET CUSTOMERS / MARKETS

August 27, 2020

9. PROJECT COST SUMMARY:

9.1 Project Economies:

Table 2: Project Economics

9.2 Project Financing

Table 3: Project Financing

Total Equity (50%) 500,000

Bank Loan (50%) 500,000

August 27, 2020

Markup to the Borrower % per annum 10%

Tenure of the loans (Years) 4

9.3 Project Cost

Table 4 (Project Cost)

Stitching Machines and equipment 250,000

Office Vehicles 350,000

Office Equipment 50,000

Total Capital Cost 800,000

Spare Parts for Machine 30000

Raw Material Inventory 100000

Unit Rent 20000

Total Working Capital 200000

Total Investment 10,00,000

9.4 Space Requirement

August 27, 2020

Table 5: Space Required

Fabric stock room 300

Cutting Room 400

Stitching Room of Clothes 900

Packaging Room 300

Finished Products keeping Room 250