Court Shoe
| Quality and Standards |
|
| Production Capacity | Quantity : 1,80,000 Pairs (per annum) Value : Rs. 2,40,00,000 |
| Uploaded on | March 2007 |
Introduction
Footwear is the most common and utility-wise important end product of the Leather industry. India, which is one of the largest leather producing countries, is fast getting into shoe trade. Most European Business Executives are formal in their dress, unlike the somewhat casual dress code in the business sector of certain other countries. The location also influences the degree to which formal dress is required, for instance whether it is in the capital or the provinces and, accordingly, the style of footwear has changed. Court Shoe is used mainly in the developed countries and varies the heel height and design.
Market Potential
The manufacture of footwear is one of the traditional industries of India and Leather Footwear has meanwhile became an important product for the Indian and Export markets. Footwear serves to protect the human foot from all kinds of injury and is conveniently classified into open footwear and closed footwear.
The past five years have been a period of rapid growth for the Indian Shoe Industry. Many structural changes have occurred over the years in the footwear industry. More than 90% of footwear is produced by small scale and cottage units, which also accounts for 65% of all exports of leather footwear. 90% to 95% of the total output of the small and cottage industry are produced by manual or semi-mechanised methods.
According to the estimate, the degree of capacity utilisation in the footwear sector was around 60 to 65%. No official statistics exists for production capacities and actual production in the small scale units. However, approximately there are around 2,00,000 units existing in India producing around 400 million pairs of footwear.
Footwear exports have been encouraging during the past few years. The major importers of Indian footwear are the U.S.A, The Federal Republic of Germany, U.K., France and the other EC countries. Many other countries have also expressed interest in purchasing Indian Footwear because of the high quality of the calf and kid leathers. The Indian products also have a price advantage and lower wage costs that means the manufacturing costs are not too high. Other production factors, such as environmental pollution problems in the above countries may lead to greater imports of shoe from developing countries such as India.
Basis and Presumptions
| Working hours/shift | 8hours |
| No. of shift/day | 3 |
| Working days/year | 300 |
| Total no. of working hours | 7200 |
| Working efficiency | 75% |
| Time period for achieving max. cap. Utilisation | 3rd year from the date on which production will be started |
| Labour charges | As per the existing rates in the region |
| Margin Money | 30% of capital investment |
| Rate of interest on fixed and working capital | 12% |
| Land & Building | Own |
| Water Plant | Own(tube well or Borwell) |
| Rate of Electricity | Rs 4 per unit |
| Pay Back Period | 5 years |
Implementation Schedule
The implementation schedule is anticipated to be about one year which is necessary considering the time required for preparation of project report and appraisal, registration, obtaining loan, acquiring land, building, plant and machinery, organising working infrastructure, establishing contacts with buyers and market agencies etc.
Technical Aspects
Process of Manufacture
Presently, there is a tremendous change in the manufacturing of shoes. Various new processes have come up like cemented direct moulding, direct injecting etc. Besides this, unit soles are readily available in the market in different designs and standards with latest shapes for production.
Quality Control and Standards
Following BIS specifications for manufacturing shoes are
| Footwear | IS 2051 |
| Chromed Leather | IS 578 |
| Leather Shoe | IS 11543 |
| Glazed Kid | IS 576 |
| Lining Leather | IS 3840 |
Production Capacity
It is proposed to manufacture 1,80,000 pairs of Court Shoes @ Rs. 500 per pair, total value Rs. 1,30,00,000
| Motive Power | 5 k.Vs |
Pollution Control
In particular, a Leather Shoe unit does not create any environmental hazards, the performance of Production System is through waste minimisation/utilities. It is observed that the waste emanating from 70% of the unit is utilised by the small leather goods (Tiny Sector) industries i.e. Chappal Manufacturing, Small Coin Purses manufacturing and Key Chain Purse Manufacturing units.
Energy Conservation
The Energy is spent in the factory in the form of electricity and fuel. The workers should be properly trained to operate the machines as and when required. They should be cautioned to yield maximum units during the machine operation and should not allow the machine to run by motive power unnecessarily. The electrical lines should be properly made and checked at
regular intervals.
Financial Aspects
Fixed Capital
| Land and Building | |
| Land 700 sq. mtr @ Rs 3500/- per sq.mtr | 2450000 |
| Office building, Lab. Store 100sq.mtr. @ 7000/mtr. | 700000 |
| Floor area construction ,factory shed, Boundary wall etc. 400 sq.mtr. @ Rs 5000/per sqmt | 2000000 |
| Total | 5150000 |
Machinery and Equipments
Description |
Imp./ Ind. |
Qty. Nos. |
Rate (Rs.) |
Value (Rs.) |
| Single Needle Flat Bed Sewing Machine | Imp | 8 | 25000 | 200000 |
| Post Bed Sewing Machine Single Needle | Imp | 3 | 50000 | 150000 |
| Single Needle Cylinder Bed Sewing Machine | Imp | 1 | 80000 | 80000 |
| Hydraulic Sewing Arm Upper Clicking | Imp | 1 | 300000 | 300000 |
| Upper Leather Skiving M/c. | Imp | 1 | 50000 | 50000 |
| Zig-Zag Sewing Machine | Imp | 1 | 48000 | 48000 |
| 4 Station Stuck on Press with Compressor | Ind | 1 | 35000 | 35000 |
| Finishing and Polishing Machine | Ind | 1 | 15,000 | 15,000 |
| Strap Cutting Machine | Ind | 1 | 20000 | 20000 |
| Stamping Machine(Power) | Imp | 1 | 100000 | 100000 |
| Tools and Equipment | LS | 50000 | 50000 | |
| PVC Shoe Last | 400 pairs | 600 | 240000 | |
| Office cum Workshop Furniture | LS | 200000 | ||
| Heat Activator | Ind | 1 | 1500 | 15000 |
| Excise, sales tax & erection and installation charges 40% of total of 1 to 14 | 601200 | |||
| Water systemt (including tube well & over head tank) | 200000 | |||
| Total | 2304200 | |||
Total Fixed Capital |
(Rs.) |
| Land and Building | 5150000 |
| Plant and Machinery | 2304200 |
| Total | 7454200 |
B. Working Capital (per month)
(i) Raw Material (per month)
Description |
Qty. |
Unit |
Rate/unit (Rs.) |
Value (Rs.) |
| Upper Leather, Goat, Softy and Auliva etc. | 270000 | Dcu | 5.50 | 1485000 |
| Lining Leather Softy Fabric | 60000 | SGF | 26 | 1560000 |
| Lining Cloth | 1500 | mtr | 25 | 37500 |
| Lusole, Toepuff, Stiffness Adhesives etc. | 15000 | pairs | 33 | 495000 |
| P.U. Adhesive and Grinderies, Decorative Emblishments | 15000 | 55 | 825000 | |
| Unit Soles P.U., PVC, TPR | 15000 | 50 | 750000 | |
| Packing Material | 10000 | 14 | 140000 | |
| Total | 5292500 | |||
(ii) Staff and Labour (per month)
Description |
No. |
Salary Rs. |
Total (Rs.) |
| Manager | 2 | 20000 | 40000 |
| Designer-cum- Production Manager | 2 | 10000 | 20000 |
| Supervisor | 6 | 8000 | 48000 |
| Accountant-cum-Clerk | 2 | 7000 | 14000 |
| Skilled Worker | 30 | 7000 | 210000 |
| Semi Skilled Worker | 15 | 5000 | 75000 |
| Peon/Watchman | 2 | 3000 | 6000 |
| Sweeper | 2 | 2500 | 5000 |
| Total | 418000 | ||
| 20% Perquisites on Total Salary | 83600 | ||
| Total | 501600 | ||
(iii) Utilities (per month)
Amount (Rs.) |
|
| Power and Water | 50000 |
(iv) Other Contingent Expenses (per month)
Description |
Amount (Rs.) |
| Postage and Stationery | 12000 |
| Consumable Stores | 30000 |
| Telephone | 10000 |
| Packing and Transportation Charges | 20000 |
| Advertisement and Publicity | 20000 |
| Insurance | 7000 |
| Misc. Expenses | 15000 |
| Total | 114000 |
(v) Total Recurring Expenditure (per month)
Description |
Amount (Rs.) |
| Staff and labour | 501600 |
| Raw Material | 5292500 |
| Utilities | 50000 |
| Other Contingent Expenses | 114000 |
| Total | 5958100 |
(vi) Total Working Capital (for 1 ½ Month )
| Rs. 5958100 x 1.5 | = 8937150 |
C. Total Capital Investment
| Fixed Cost | 7454200 |
| Working Capital for 1.5 months | 8937150 |
| Total | 16391350 |
Financial Analysis
Cost of Production (per annum) |
Amount (Rs.) |
| Total Recurring Expenditure | 71497200 |
| Depreciation on Machinery @ 10% | 99800 |
| Depreciation on tool and Equipments @ 20% | 10000 |
| Depreciation on furniture @ 20% | 40000 |
| Depreciation on Building @ 5% | 257500 |
| Interest on total Capital Investment @ 12% | 1966962 |
| Total | 73871462 |
Turnover (per year)
Description |
Qty. |
Rate Rs. |
Value (Rs.) |
| By sales of Court Shoes pair | 180000 | 500 | 90000000 |
Net Profit (per annum)
| Annual Turnover – Cost of Production | |
| 90000000 – 73871462 | |
| 16128538 |
Net Profit Ratio
Net Profit x 100 Turnover per annum |
|
| 16128538x100 | |
| 90000000 | |
| 17.92% |
Rate of Return
Net Profit x 100 Total Capital Investment |
|
| 21.83% |
Break-even Point
Fixed Cost (per annum)
Description |
Amount (Rs.) |
| Depreciation on machinery, tools and furniture | 109800 |
| Interest on Total Investment | 1966962 |
| Depreciation on Building | 257500 |
| 40% of Salary | 2407680 |
| 40% of Other Contingents and Utilities | 513600 |
| Insurance | 84000 |
| Total | 5339542 |
| B.E.P | Fixed Cost x 100 ---------------------------- Fixed Cost + Profit |
| 24.87% |
Addresses of Machinery and Equipment Suppliers
- M/s. Prototype Dev. Training Centre
B/24. Guindy Estate,
Ekkaduthangar,
Chennai –9
- M/s. Cochin Leathers Pvt. Ltd.
Industrial Dev. Area,
Edayar,
Muppathadam P.O.,
Cochin - 683 102 - M/s. Solar
Atur House,
Worli Naka,
Mumbai-400 018 - M/s. Chandra Chemical Ent. Ltd.
5, Naval Hospital Road,
Ist Floor, Periamet,
Chennai -3 - M/s. Valliappa Leather Corporation
3/5, Narayana Chetty Street,
Periamet,
Chennai -3 - M/s. Omega Polymicrons (P) Ltd.
Meerut Road, Mawana - 250401
Distt. Meerut (U.P.)
For further information please contact
Information Manager
TIMEIS Project
E-mail: timeis@ficci.com
