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Transcript of Oak Fashions Final
PEARL ACADEMY OF FASHION
Oak Fashions Project Plan:- Setting up of a Manufacturing
Unit
Nikhil Mehra
12/7/2011
PG-Garment manufacturing
Oak Fashions
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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
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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
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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 .
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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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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
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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
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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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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
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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
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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.
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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
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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
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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.
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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)
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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
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- 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
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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
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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
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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
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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
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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)
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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
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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