Cane and Bamboo Handicraft

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Uploaded on : November 2019


1.0 Product and Its Applications

 

Cane and Bamboo based industries have been identified as potential sunrise industries in India. Cane is mostly used for furniture making, whereas bamboo is used for making variety of decorative items. These eco-friendly products are light in weight and have their own style and elegance. These products have a high life with minimum maintenance equivalent to wooden products. Strips of bamboo and various types of canes are extensively used to manufacture different utility and decorative items. Mats, lamp shades, trays, baskets are weaved and knitted by the skilled hands of the artisans. Cane and bamboo can also be converted into strong and unique furniture, which are very popular now. Jewellery, bags and handbags are the other popular items of this craft.

 

This project profile is for setting up of a cane and bamboo furniture and household decorative items unit, based on 300 working days per annum and 8 working hours per day. The installed production capacity of the unit per annum is as follows;

 

Bamboo Furniture's --------240 Nos.

Cane Furniture's------------- 240 Nos.

Cane & Bamboo Decorative Items- ------360 Nos.

 

Cane and Bamboo decorative items would include flower basket, light stand, napkin holder, fruit tray, wall hanging etc.

 

2.0 Market Potential

 

Cane and bamboo have a wide variety of products ranging from baskets, musical instruments to utility items like pen stand, mugs, hair clips, vases, containers. Household furnitures like chairs, sofa sets, moorahs (small stools) are also made out of cane and bamboo. There is tremendous demand of the products in domestic as well as in international market. Furniture and utility items of various designs are exported to the foreign countries as well. Nowadays, the products are also used for Interior Decoration of houses, hotels and offices etc.

 

3.0 Process Details

 

The production process comprises of the following different process.

Selection of Cane & Bamboo- There is not much problem in selecting the cane & bamboo for the work by the handicraft people. Bamboo is easily available in the market & in many forests in Assam. For making different furnishing & decorative items different types of bamboo are used. For making items like Japi, Saloni, Dala, Duli, Tukuri etc different bamboos are used. By using cane many furniture are made with the combination of bamboo.

 

Cutting as per required size- The bamboos are cut into different shapes & sizes as per required designs. The bamboo is first selected and then it is cut into sizes which are required by the workers to make different items from it. The workers normally cut the bamboo in various lengths as per requirement.

 

Drying-After the bamboo and canes are selected then it is first dried in the sun. As there is moisture present in the bamboo so it is dried for a period and then the actual work is carried out. If the bamboo are not dried properly then it may get damaged by some insects, so first of all this must be properly dried.

 

Surface decoration- Surface decoration is very important for bamboo products. After the product is completed the surface is decorated which gives an attractive look to the product. The surface is decorated by various means like burning the sides of a bamboo item & colouring it to give a fascinating look. All these ways helps to attract the eyes of the customers.

 

Framing & binding as per design (shape)- To make a product it is very important to cut the bamboo & cane into required size & shapes as per the design of the product. The bamboo is cut into pieces required by the workers & then the different sizes of bamboos are joined or bind together by the means of nails or some adhesive.

 

Application of polishing- Polishing is an important application which is required to give to the finished goods. After polishing the product gives a bright look. When the product is prepared then it is sent for polishing, then it can be sent for marketing. After polishing the furniture or decorative items, they become more smooth.

 

4.0. Cost of the Project

 

The estimated project cost is given below:

 

Particulars

Amount (Rs. in lacs)

Land & Site development

Own Land/On Lease

Building & civil works

3.63

Plant & Machinery

1.54

Misc. Fixed assets

0.50

Preliminary & pre-operative expenses

0.42

Contingencies & escalation @ 3%

0.17

Working capital

0.64

Total

6.90

 

4.1 Land & Site Development:

 

Nil. Total Land: 3,000 Sq. Ft. ; Covered Area: 1,200 Sq. Ft.

 

4.2 Building & Civil Works: Details of building & civil works are given below.

 

Particulars

Area (Sqft)

Rate (Rs)

Amount (Rs)

Work-shed, Store and Showroom (Concrete floor with GI Sheet Roofing)

1200

275

330000

Sub total

330000

Add: Electrification including Load Security and Sanitation @ 10%

33000

Total

363000

Say (Rs. in lacs)

3.63

 

4.3 Plant & Machinery: Details of plant & machinery are given below.

 

Particulars

Qty

Amount (Rs)

Bamboo & Cane Cutter

2

120000

Splitter

2

Pipes for bending

10

Circular Saw

1

Blow Lamp

10

Planner

2

Hand Drill

1

Tools and equipments like Hand Saw, Pliers, Hammers etc

1

Miscellaneous items

LS

20000

Sub total

140000

Add: Installation, transportation, etc @ 10%

14000

Total

154000

Say (Rs. in lacs)

1.54

 

4.4 Misc. Fixed assets:

 

Details of miscellaneous fixed assets are given below.

 

Particulars

Qty

Rate (Rs)

Amount (Rs)

Furniture & Fixtures

LS

--

25000

Miscellaneous items

LS

--

20000

Sub total

45000

Add: Installation, transportation, etc @ 10%

4500

Total

49500

Say (Rs. in lacs)

0.50

 

4.5 Contingencies & escalation:

 

Contingencies & escalation has been assumed at 3% of the cost of land & site development, building & civil works, plant & machinery and miscellaneous fixed assets.

 

4.6 Preliminary & pre-operative expenses:

 

Details of preliminary & pre-operative expenses are given below.

 

Particulars

Amount (Rs)

Travelling expenses

6000

Professional & other fees

10000

Interest during implementation

11330

Miscellaneous expenses

15000

Total

42330

Say (Rs. in lacs)

0.42

 

4.7. Working capital:

 

Details of working capital are given below.

 

 


Period (Days)

Total Current Assets (Rs. in lacs)

Year 1

Year 2

Year 3

Raw Materials

15

0.25

0.29

0.33

Power & Utility

30

0.01

0.01

0.01

Salary

30

0.38

0.39

0.39

Finished Goods

15

0.45

0.50

0.54

Receivables

15

0.50

0.59

0.67

Total

 

1.60

1.77

1.94

Working capital margin in Year 1 (40%) 0.64

 

5.0 Means of Finance

 

The means of finance for the project is estimated as below.

 

Particulars

Percent

Amount (Rs. in lacs)

EQUITY

 

 

•  Equity from Promoters

40%

2.76

•  Subsidy from Central/State Govt.

 

 

DEBT

 

 

Term Loan from Banks/Financial Institutions

60%

4.14

Total

100%

6.90

 

6.0 Profitability Statement

 

 

(Rs. in lacs)

Particulars

Yr 1

Yr 2

Yr 3

Yr 4

Yr 5

•  INCOME

 

 

 

 

 

Production capacity (Nos./annum)

840

840

840

840

840

Capacity utilisation

60%

70%

80%

80%

80%

Production/annum at capacity utilisation

504

588

672

672

672

Total income/annum

12.24

14.28

16.32

16.32

16.32

•  OPERATING EXPENSES

 

 

 

 

 

Raw Materials

6.01

7.01

8.02

8.02

8.02

Power & Utility

0.14

0.16

0.18

0.18

0.18

Salary

4.68

4.70

4.73

4.75

4.77

Repair & Maintenance

0.07

0.08

0.08

0.08

0.08

Other Expenses

0.12

0.14

0.16

0.16

0.16

Total Operating Expenses

11.03

12.10

13.17

13.19

13.22

Operating profit

1.21

2.18

3.15

3.13

3.10

•  FINANCIAL EXPENSES

 

 

 

 

 

Depreciation

0.23

0.23

0.23

0.23

0.23

Interest on Term Loan

0.32

0.26

0.19

0.11

0.04

Interest on Working Capital Loan

0.08

0.09

0.09

0.09

0.09

Net Profit

0.58

1.60

2.64

2.69

2.74

Net cash accruals

0.81

1.84

2.87

2.92

2.97

Principal Repayment

0.46

0.92

0.92

0.92

0.92

 

6.1 Production Capacity and Sales Realisation:

 

Total production of Cane and Bamboo Products at 100% capacity utilization is estimated as below.

 

Products

Qnty

Bamboo Furnitures

240 Nos.

Cane Furnitures

240 Nos.

Cane & Bamboo Decorative Items

360 Nos.

Total production per annum at 100% capacity

840 Nos.

 

Products

Qnty

Average Rate Per Unit (Rs.)

Amount (Rs)

Bamboo Furnitures

240 Nos.

3200

768000

Cane Furnitures

240 Nos.

3500

840000

Cane & Bamboo Decorative Items

360 Nos.

1200

432000

Total Sale Turnover per annum at 100% capacity

2040000

 

6.2 Raw materials:

 

Total expenses on raw materials at 100% capacity utilization are estimated as below.

 

Products

Qnty

Average Rate Per Unit (Rs.)

Amount (Rs)

Cane of Various Sizes

25000 Nos.

18

450000

Bamboo of Various Sizes

8400 Nos.

30

252000

Consumables like Sand Paper, Varnish, Nails, Adhesives, Tapes, Plywoods, Glass etc.

LS

Rs. 25000
Per Month

300000

Expenses on Raw Material at 100% capacity (Rs)

 

 

1002000

 

6.3 Power & utility:

 

Total expenses on power & utility at 100% capacity utilization is estimated as below.

 

Particulars

Quantity

Power (Kw)

Total (Kw)

Plant & Machinery

--

1.50

1.50

General Lighting

5

0.10

0.50

Total power requirement/ day (Kw)

2.00

No. of hrs/day

8

No. of days per annum

300

Annual power requirement (kwh)

4800

Rate per unit (Rs)

3.50

Expenses on power (Rs)

16800

Expenses on Other Utility (Rs)

6000

Expenses on power & utility at 100% capacity (Rs)

22800

 

6.4 Salary:

 

Total expenses on salary in the 1 st year are estimated as given below. It is assumed that salary expenses will increase @ 0.5% every subsequent year.

 

Particulars of Employees

Numbers

Salary/ Month (Rs)

Cost/ annum (Rs)

Manager

1

5000

60000

Skilled Workers

5

4000

240000

Semi-skilled workers

4

2500

120000

Unskilled workers

2

2000

48000

Expenses on salary in the 1st year (Rs)

468000

 

6.5 Repair & Maintenance:

 

Total expenses on repair & maintenance in the 1 st year is estimated as given below. It is assumed that expenses on repair & maintenance will increase @ 2% every subsequent year.

 

Particulars

Cost (Rs)

Rate

Amount (Rs in lacs )

Building & civil works

3.63

1.00%

0.04

Plant & Machinery

1.54

2.00%

0.03

Misc. Fixed assets

0.50

1.50%

0.01

Expenses on repair & maintenance in year 1

0.07

 

6.6 Other Expenses:

 

Other expenses have been assumed at 1% of sales realisation.

 

6.7 Depreciation:

 

Depreciation has been calculated by straight line method. The details of calculation are given below.

 

Description

Cost (Rs)

Rate

Amount / annum (Rs)

Building & Civil works

3.63

3.34%

0.12

Plant & Machinery

1.54

5.28%

0.08

Misc. Fixed assets

0.50

6.33%

0.03

Total

 

 

0.23

 

6.8 Interest on term loan & principal repayment:

 

Interest rate has been assumed at 8%. Duration of Loan repayment has been considered for a period of 5 years including moratorium period of 6 months with equal monthly instalments. The details of calculation are given below.

 

 

(Rs in lacs)

Month

Year

1

2

3

4

5

Month 1

Opening balance

4.14

3.68

2.76

1.84

0.92

 

Repayment

0.00

0.08

0.08

0.08

0.08

 

Interest (8%)

0.03

0.02

0.02

0.01

0.01

 

Closing balance

4.14

3.60

2.68

1.76

0.84

Month 2

Opening balance

4.14

3.60

2.68

1.76

0.84

 

Repayment

0.00

0.08

0.08

0.08

0.08

 

Interest

0.03

0.02

0.02

0.01

0.01

 

Closing balance

4.14

3.53

2.61

1.69

0.77

Month 3

Opening balance

4.14

3.53

2.61

1.69

0.77

 

Repayment

0.00

0.08

0.08

0.08

0.08

 

Interest

0.03

0.02

0.02

0.01

0.01

 

Closing balance

4.14

3.45

2.53

1.61

0.69

Month 4

Opening balance

4.14

3.45

2.53

1.61

0.69

 

Repayment

0.00

0.08

0.08

0.08

0.08

 

Interest

0.03

0.02

0.02

0.01

0.00

 

Closing balance

4.14

3.37

2.45

1.53

0.61

Month 5

Opening balance

4.14

3.37

2.45

1.53

0.61

 

Repayment

0.00

0.08

0.08

0.08

0.08

 

Interest

0.03

0.02

0.02

0.01

0.00

 

Closing balance

4.14

3.30

2.38

1.46

0.54

Month 6

Opening balance

4.14

3.30

2.38

1.46

0.54

 

Repayment

0.00

0.08

0.08

0.08

0.08

 

Interest

0.03

0.02

0.02

0.01

0.00

 

Closing balance

4.14

3.22

2.30

1.38

0.46

Month 7

Opening balance

4.14

3.22

2.30

1.38

0.46

 

Repayment

0.08

0.08

0.08

0.08

0.08

 

Interest

0.03

0.02

0.02

0.01

0.00

 

Closing balance

4.06

3.14

2.22

1.30

0.38

Month 8

Opening balance

4.06

3.14

2.22

1.30

0.38

 

Repayment

0.08

0.08

0.08

0.08

0.08

 

Interest

0.03

0.02

0.01

0.01

0.00

 

Closing balance

3.99

3.07

2.15

1.23

0.31

Month 9

Opening balance

3.99

3.07

2.15

1.23

0.31

 

Repayment

0.08

0.08

0.08

0.08

0.08

 

Interest

0.03

0.02

0.01

0.01

0.00

 

Closing balance

3.91

2.99

2.07

1.15

0.23

Month 10

Opening balance

3.91

2.99

2.07

1.15

0.23

 

Repayment

0.08

0.08

0.08

0.08

0.08

 

Interest

0.03

0.02

0.01

0.01

0.00

 

Closing balance

3.83

2.91

1.99

1.07

0.15

Month 11

Opening balance

3.83

2.91

1.99

1.07

0.15

 

Repayment

0.08

0.08

0.08

0.08

0.08

 

Interest

0.03

0.02

0.01

0.01

0.00

 

Closing balance

3.76

2.84

1.92

1.00

0.08

Month 12

Opening balance

3.76

2.84

1.92

1.00

0.08

 

Repayment

0.08

0.08

0.08

0.08

0.08

 

Interest

0.03

0.02

0.01

0.01

0.00

 

Closing balance

3.68

2.76

1.84

0.92

0.00

 

 

 

 

 

 

 

Principal Repayment

0.46

0.92

0.92

0.92

0.92

Interest

0.32

0.26

0.19

0.11

0.04

 

7.0 Debt Service Coverage Ratio (DSCR)

 

 

 

 

 

 

(Rs. in lacs)

Year

1

2

3

4

5

Profit After Tax (Net Profit)

0.58

1.60

2.64

2.69

2.74

Depreciation

0.23

0.23

0.23

0.23

0.23

Interest

0.32

0.26

0.19

0.11

0.04

Total

1.14

2.10

3.06

3.04

3.01

Interest

0.32

0.26

0.19

0.11

0.04

Loan repayment

0.46

0.92

0.92

0.92

0.92

Total

0.78

1.18

1.11

1.03

0.96

DSCR

1.45

1.78

2.77

2.94

3.14

 

Average DSCR = 2.44

 

8.0 Break Even Point (BEP)

 

 

(Rs. in lacs)

Year

1

2

3

•  Net sales

12.24

14.28

16.32

•  Variable cost

 

 

 

Raw Materials

6.01

7.01

8.02

Power & Utility

0.14

0.16

0.18

Other expenses

0.12

0.14

0.16

Interest on Working Capital Loan

0.08

0.09

0.09

Total variable cost

6.35

7.40

8.45

•  Contribution (A-B)

5.89

6.88

7.87

•  Fixed & Semi-fixed Costs

 

 

 

Salary

4.68

4.70

4.73

Repair & maintenance

0.07

0.08

0.08

Interest on Term Loan

0.32

0.26

0.19

Depreciation

0.23

0.23

0.23

Total fixed cost

5.31

5.27

5.23

•  BREAK EVEN POINT

90.15%

76.67%

66.44%

•  BEP at operating capacity

54.09%

53.67%

53.15%

•  Cash BEP

51.71%

51.29%

50.77%

 

9.0 Internal Rate of Return (IRR)

 

 

(Rs. in lacs)

Year

0

1

2

3

4

5

CASH OUTFLOW

 

 

 

 

 

 

Capital Expenditure

5.83

0.00

0.00

0.00

0.00

0.00

Working Capital

0.00

1.60

0.17

0.17

0.00

0.00

Total (A)

5.83

1.60

0.17

0.17

0.00

0.00

CASH INFLOW

 

 

 

 

 

 

Profit After Tax

 

0.58

1.60

2.64

2.69

2.74

Add: Depreciation

 

0.23

0.23

0.23

0.23

0.23

Add: Interest

 

0.32

0.26

0.19

0.11

0.04

Add: Salvage Value

 

 

 

 

 

 

Total (B)

0.00

1.14

2.10

3.06

3.04

3.01

Net Flow (B-A)

-5.83

-0.46

1.93

2.89

3.04

3.01

 

IRR = 30%

 

Source:

 

North Eastern Development Finance Corporation Limited, Guwahati

 

 

For further information please contact

Information Manager
TIMEIS Project
E-mail: timeis@ficci.com