Leather Chappals

Product Code	N.A.
Quality and Standards	As per Buyers requirement.
Production Capacity	Qty. : 90,000 Pair chappals (per annum) of Rs 22500000
Uploaded on	March 2007

Introduction

Since time immemorial man has been using footwear of different kinds to protect feet from the extremities of weather and external injuries. In addition to functional utility chappal has also become an item of fashion and also forms a part of dress. Today chappals are used by simple villagers, farmers, common people of urban areas and also by the rich people. To cope with the requirement of different users chappals are made of different type of materials.

Market Potential

Leather Chappals are being used by the people from all categories due to their low cost in comparison to the closed shoes. These Chappals are very much in demand by ladies, gents and children because of the climatic conditions and high temperature prevailing in most of the parts of our country. The demand of such Chappals is increasing rapidly due to the increase in population every year. Apart from this, the increase in demand is also due to the fashion consciousness created among young generation as most of the youth have started using Chappals as a part of their dress.

Since the demand of Gents/Ladies Chappals is increasing day by day, the demand of Leather straps is automatically increasing not only for new Chappals but for replacement market also.

Basis and Presumptions

• The basis of production is based on double shift, where shift duration is of 8 hours a day and 300 working days in a year.
• The salary and wages for the personnel/labour are based on the prevailing pattern in the leather industry. and Minimum Wages Act.
• Interest rate is calculated @ 12% per annum on total investment on total capital investment.
  
• Land and Building own.
  
• Power tariff @ Rs. 4.5 unit.

Implementation Schedule

Activity	Period (in month)
Selection of site	1
Registration of SSI from DIC	1
Sanction of loan from financial Institutions	2
Procurement of machinery	1
Electrification and Installation of machine	1
Trial production and procuring confirm orders	1
Total	7

Technical Aspects

Process of Manufacture

As per the graded patterns of various sizes of both upper and bottom, the components are cut. The edges of cut components are skived and stitched. After the completion of stitching operation, decorative treatment on the upper such as punching, fixing of buttons, metal fittings etc. is done either by hand or machine. The straps of the upper are inserted in the slots of the insoles. The inserted portion of the straps and its corresponding portion in the flesh side of the insole are roughened and cemented. Finally the flesh sides of both the insole and bottom sole are roughened and the adhesive is applied. The cemented soles and insole are stuck and pressed in Cementing press to make the bond permanent.

The next operation is finishing in which the edges of sole and heel are trimmed, inked and set on the machine or by hand. The upper is cleaned and dressed before packing into boxes.

Quality Control and Standards

Standard product as per ISI specification.

• IS 578:1964 for Upper leather.
• IS 5867:1979 for leather board.
• IS 1741:1960 for synthetic rubber sheet.
• IS 4663:1968 for adhesive.

Production Capacity

The unit is proposed to produce 90,000 pairs Chappals in a year.

Motive Power

6 H.P.

Pollution Control

This industry does not come under the category of polluting industry.

Financial Aspects

Fixed Capital

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

Machinery and Equipments

Description	Qty.	HP	Rate (Rs.)	Amount (Rs.)
Strap Cutting Machine 300 mm hand operated	2		20000	40000
Upper Sewing machine Power operated	2	2	15000	30000
Sole Cementing press, 4 bed operated with Air Compressor with Motor	1	1	40000	40000
Double ended buffing machine with exhaust motor	1	1	20000	20000
Trade mark embossing machine with heating device	1		15000	15000
Taxes, Electrification and installation of machine @ 40% on cost of machine				58000
Wooden Cast pairs	150			30000
Tools and Equipments				30000
Cost of office equipments and furniture				100000
Total				363000

Pre-operative Expenses	40000
Total Fixed Capital	4003000

B. Working Capital (per month)

(i) Personnel/Technical (per month)

Designation	No.	Salary (Rs.)	Total (Rs.)
Manager (Self)	1	20000	20000
Designer-cum-Supervisor	1	10000	10000
Skilled Worker	10	7000	70000
Machine Operator	10	7000	70000
Semi Skilled Worker	10	5000	50000
Un-skilled Worker	15	3000	45000
Accountant-cum-Store Keeper	1	7000	7000
Clerk-Cum-Typist	1	4000	4000
Watchman	1	3000	3000
Sweeper	2	3000	6000
Total			285000
Add perquisites @ 22% on Salary			62700
Total			347700

(ii) Raw Materials 3000 Nos. Portfolio Bag.

Description	Qty.	Unit	Rate	Value (Rs.)
Upper leather @ 1.5 Sq.ft./pair	11250	Sq.ft	40	450000
Lining Leather @ 1 Sq.ft./pair	7500	Sq.ft	40	300000
Insole	7500	pair	18	135000
Sole and heels (Rubber)	7500	pair	20	150000
Grinderies	7500	pair	10	75000
Packing materials	7500	pair	8	60000
Total				1170000

(iii) Utilities (per month)

	Amount (Rs.)
Power	10000
Total	10000

(iv) Other Contingent Expenses (per month)

Description	Amount (Rs.)
Postage and Stationery	10000
Repair and Maintenance	15000
Transportation	20000
Telephone	10000
Sales Expenses	20000
Consumable stores	15000
Other contingent Expenses	10000
Total	100000

(v) Total Recurring Expenditure (per month)

Description	Amount (Rs.)
Raw Materials	1170000
Staff and Labour	347700
Utilities	10000
Other contingent expenses	100000
Total	1627700

vi) Working Capital for 1.5 months

1627700 x 1.5

2441550

C. Total Capital Investment

Fixed Capital	4003000
Working capital	1627700
Total	5630700

Financial Analysis

Cost of Production (per annum)	Amount (Rs.)
Total recurring cost	19532400
Depreciation on Building @ 5 %	180000
Depreciation on machinery @ 10%	20300
Depreciation on tools and last @ 25%	15000
Depreciation on office equipment @ 20%	20000
Interest on Total Capital Investment @ 12%	675684
Total	20443384

Turnover (per year)

Items	Qty.in pairs	Rate (Rs.)/pair	Amount (Rs.)
Leather Chappals	90,000	250	22500000
Total			22500000

Net Profit (per year)

	Total Sales -Cost of Production
	22500000 - 20443384
	= 2056616

Net Profit Ratio

	Net Profit per year x 100 ------------------- Turnover per year
	2056616 x 100
	22500000
	9.14

Rate of Return on Total Investment

	Net Profit per year x 100 ------------------- Turnover per year
	2056616 x 100
	5630700
	36.53%

Break-even Point

Fixed Cost

Description	Amount (Rs.)
Depreciation on Building	180000
Depreciation on machinery @ 10%	20300
Depreciation on tools and last @ 25%	15000
Depreciation on office equipment @ 20%	20000
Interest on Total Capital Investment @ 12%	675684
40% on Salary of Staff and Labour	1668960
40% on Utilities and Others Contingent expenses	528000
Total	3107944

B.E.P	Fixed cost x Profit ---------------------------- Fixed cost + Net Profit
	3107944x 100
	3107944 + 2056616
	60.18%

Addresses of Machinery and Equipment Suppliers

• M/s. Peelu Sales Corporation,
  6/38, Galib Pura Kalan,
  Nai Ki Mandi,
  Agra-282010.
  
• M/s. Prototype Development and Training Centre,
  B-24, Guindy Industrial Estate,
  P.O. Ekkaduthangal,
  Chennai-600 097.
• M/s. Masa Engineering (India),
  4/H/4, Rifle Range Road,
  Kolkata - 700 017.
• M/s. Industrial Machines (Delhi) Pvt. Ltd.
  1/23-B, Asaf Ali Road,
  New Delhi-110002.
• M/s. S.P. Engineering Works
  Dayal Bagh Road, New Agra,
  Agra-282 005.

Raw Material Suppliers

Raw material required for the production can be procured locally.

For further information please contact

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