Leather Travelling Bag
| Product Code | 293101000 |
| Quality and Standards | As per buyers specification |
| Production Capacity | Quantity: 30000 pieces (per annum) Value: Rs. 32400000 |
| Uploaded on | March 2007 |
Introduction
Travelling bag is one of the convenient goods used for carrying the belongings such as clothes, daily-use articles and other essentials during travelling from one place to other. Some other types of products are also used for carrying important documents and office use equipments by the executives and high profile personnel. Although this product is manufactured from various types of materials such as textile, jute, coated fabrics, yet leather travelling bag is having wider acceptance due to its superior strength, aesthetic look and up-man-ship among middle and high-income group people. A wide range of travelling bags are in use for various purposes. The cost of the leather bags depends upon the type of leather, space and/or style of it. This project aims at manufacturing two types of bags i.e.
| Bags of single large pocket with one or two zips usually made from heavy cow or buffalo leather and |
| Bags of multi pockets with interlining and re-enforcement, flap type, fitted with magnetic press buttons, commonly made from cow nappa leather. |
Market Potential
The demand of the leather travelling bag is increasing day-by-day in tune with the growth of industrialization, economic standards of people, tourism and fashion consciousness. The important customers of such products are medium and high-income group people belonging to service, business and executive classes. The products with a price range of Rs. 400 to Rs. 2,500 are commonly seen in the market. The proposed product with the price of about Rs. 600 to Rs. 800 is felt quite acceptable with reasonable quality. Further, export worthiness of this product is quite substantial with qualitative and latest designed ones. A small manufacturer can have tie-up with any exporter merchant in the country for executing the order as per the specified design. There is an ample scope of leather travelling bag units with easy and considerably cheaper availability of indigenous raw material and skilled manpower.
Basis and Presumptions
This project profile has been prepared on the basis of following assumptions
| Working Hours | Double shift(8 hour per shift) of 16 hours a day for 300 working days in a year |
| Capacity Utilisation | 60% during first year 70% during second year 80% during 3rd year and onwards |
| Entrepreneur | Anybody having knowledge/experience of leather goods and/or venture to start leather based units. |
| Location | Anywhere in India, preferably nearby any tannery pocket or export facility zone. |
| Land and Building | Own |
| Raw Materials | Chrome tanned heavy cow or buffalo bag leather and softy cow nappa leather. |
| Salary and Wages | All employees are paid on monthly basis at prevailing rates of leather industry |
| Transportation and Taxes on purchase | Not Included in purchase price. |
| Power Charges | Rs. 4 per KWH from power supply source |
| Depreciation | 5% on building and civil construction 10% on plant and machinery 25% on tools and equipments 20% on furniture and fixture 10% on other fixed assets |
| Margin Money | 30% of total capital investment |
| Interest Charges | 15% has been calculated on total capital investment considering the opportunity cost of margin/equity money. |
| Fixed Cost for BEP Analysis | 100% rent, insurance, interest and depreciation 40% of total salary and wages 40% of total utilities and other Contingent expenses excluding rent and insurance. |
Implementation Schedule
Activity |
Period (in months) |
| Site selection, negotiation with landlord, market survey preparation of project report and other formalities | 2 |
| Seeking quotation of machines, purchase and installation | 2 |
| Trial production, arranging working capital, Procurement of raw material and market tie up | 2 |
| Total period required for commencing commercial production | 6 |
Technical Aspects
Process of Manufacture
The leather travelling bags proposed to be manufactured in this project are mainly of two types. One is of single large pocket with a space of 3 to 6 ft. fitted with one or two fasteners and a long strap handle and other one is of multi-pockets (3 to 5) fitted with different types of fasteners like zips, velcro or press buttons. While heavy cow or buffalo bag leather with the thickness of 2.0 to 2.5mm without lining is preferred for making the former, the softy type of leather like cow nappa leather with the inter-lining and reinforcement is usually used for the later.
First of all the components are cut from suitable materials. The basic raw material is the finished leather, which is not uniform, irregular in shape and size, variation with grain structure and presence of defects on the surface. On the other hand, the components are generally regular or rectangular shape and the adjacent components should have similar shade and structure. Therefore, necessary care should be taken in cutting the components. The cut components are then skived to the edges for ease of folding and/or stitching. The edges are then beaded and the zips and other fasteners attached as per the specification. The outer surface (leather), the inner surface (lining) and the re-enforcement materials if required so, are attached first with the adhesive and then by stitching. The linings and thread-ends are trimmed and sealed. The surface is cleaned and polished and made ready for packing.
Quality Control and Standards
The quality of this product has to be maintained as per buyer's specification. However, the main criteria for quality control are selection of suitable materials, (especially the leather with required thickness, shade, strength and softness) cutting components from suitable portions of leather, uniform folding, fastener attachment, regular stitching with suitable thread with
specified stitch length and finishing.
Production Capacity (per annum)
| Leather travelling bag single pocket with one long and two small handles (20"x5"x18") | 18000 Pcs. of Rs 18000000. |
| Leather travelling bag-multi pocket flap type with one longand two small handles (18"x5"x15") | 12000 Pcs. of Rs. 14400000 |
| Motive Power | 10 HP. |
Pollution Control
The proposed unit does not produce any effluent. However, the scraps of leather and other materials are to be collected and disposed-off at appropriate place or are burnt at an isolated place.
Energy Conservation
All machines are power driven and are run individually, whenever required.
Financial Aspects
Fixed Capital
| (i) 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 |
(ii) Machinery and Equipments
Description |
Imp. Ind. |
Qty. |
Rate (Rs.) |
Value (Rs.) |
| Strap cutting machine Straight (12 knives) | Ind. | 1 | 70,000 | 70000 |
| Pneumatic stamping machine-stamping wheel (0-9 nos.) (A-Z) | Ind. | 1 | 95,000 | 95000 |
| Upper Skiving machine | Ind. | 1 | 55,000 | 55000 |
| Flat bed single needle sewing machine | Ind. | 3 | 25,000 | 75000 |
| Heavy duty flat bed single needle sewing machine | Ind. | 1 | 40,000 | 40000 |
| Cylinder bed sewing Single | Ind. | 2 | 90,000 | 180000 |
| Combined finishing machine | Ind. | 1 | 85,000 | 85000 |
| Rivetting machine | Ind. | 1 | 10,000 | 10000 |
| Taxes,Electrification and erection of machine @ 40% on machine cost | 244000 | |||
| Total | 854000 | |||
(iii) Tools and Equipments and Other Fixed Assets
Description |
Imp. Ind. |
Qty. |
Rate (Rs.) |
Value (Rs.) |
| Leather goods makers tool kit s | Ind. | 3 sets | 5000 | 15000 |
| Machine maintenance and electricians tool kit | Ind. | 1 set | L.S. | 5000 |
| Testing equipments-thickness gauge, measuring scales etc. | Ind. | L.S. | 5000 | |
| Workshop working tables, racks etc. | Ind. | L.S. | 80000 | |
| Office furniture and equipments | Ind. | L.S. | 100000 | |
| Misc. equipments | Ind. | L.S. | 10000 | |
| Total | 215000 | |||
| Total [ii +iii] | 1069000 |
(iv) Pre-operative Expenses
(Rs.) |
|
| Preparation of project report and consultancy | 40000 |
| Administrative expenses | 10000 |
| Travelling, Market development and tie-up | 20000 |
| Other formalities and expenses prior to production | 10000 |
| Total | 80000 |
| Total Fixed Capital [i+ii+iii+iv] | 4749000 |
B. Working Capital (per month)
(i) Staff and Labour (per month)
Designation |
No. |
Salary (Rs.) |
Total (Rs.) |
| Manager | 1 | 15000 | 15000 |
| Supervisor cum Designer | 2 | 8000 | 16000 |
| Skilled Worker | 10 | 6500 | 65000 |
| Semi-skilled workers | 1 | 6000 | 6000 |
| Unskilled worker | 4 | 4000 | 16000 |
| Electrician and mechanic | 1 | 5000 | 5000 |
| Accountant cum Cashier | 1 | 6000 | 6000 |
| Store keeper cum assistant | 1 | 5000 | 5000 |
| Attendant | 1 | 3000 | 3000 |
| Total | 261000 | ||
| Add perquisites @ 22% on Salary | 57420 | ||
| Total | 318420 | ||
(ii) Raw Material Including Packaging Materials Per Piece of Bag (per month)
Description |
Qty. |
Rate (Rs.) |
Total (Rs.) |
|
| Bag SP | Bag MP | |||
| Heavy cow or buffalo Chrome tanned Bag Leather (2.0 mm) | 8.5 Sq. ft. | 70 | 595 | |
| Cow nappa/softee leather (1.4 mm) | 9.0 Sq. ft. | 80 | 720 | |
| Linings and reinforcements | LS | 20 | 70 | |
| Magnetic press buttons | LS | 50 | ||
| Zips, Threads, adhesive, Finishing and other misc. materials | LS | 25 | 38 | |
| Packaging materials | LS | 9 | 14 | |
| Total | 1.20 | 1.20 | ||
| Logo/Monogram Printing | 649 | 892 | ||
| Total materials requirement (per month) (456 x 750 + 622 x 500) | 1865500 | |||
(iii) Utilities (per month)
Amount (Rs.) |
|
| Electricity bill LS | 10000 |
| Total | 10000 |
(iv) Other Contingent Expenses (per month)
Description |
Amount (Rs.) |
| Repair and maintenance | 10000 |
| Other consumable | 10000 |
| Insurance | 2000 |
| Telephone, fax and other postal expenses | 6000 |
| Stationery and printing | 5000 |
| Other misc. expenditure | 10000 |
| Total | 43000 |
(v) Total Recurring Expenses (per month)
Description |
Amount (Rs.) |
| Staff and Labour | 318420 |
| Raw Materials | 1865500 |
| Utilities | 10000 |
| Other contingent expenditure | 43000 |
| Total | 2236920 |
vi) Total Working Capital Requirement
| Raw material stock-one month | 1865500 |
| Stock in process-2 days | 124367 |
| Finished goods stock-Half month | 932750 |
| One month expenses | |
| a. Salary and wages | 318420 |
| b. Utilities | 10000 |
| c. Other Contingent expenses | 43000 |
| Total | 3294037 |
(vii) Total Working Capital Requirement
| Receivables (One month credit sale) | 2700000 |
| Total | 5994037 |
C. Total Capital Investment
| Fixed Capital | 4749000 |
| Working capital | 5994037 |
| Total | 10743037 |
Financial Analysis
Cost of Production (per annum) |
Amount (Rs.) |
| Total recurring cost | 26843040 |
| Depriciation on Building 5 % | 180000 |
| Depreciation on machinery and equipments @ 10% | 85400 |
| Depreciation on tools and equipments @ 25% | 28750 |
| Depreciation on Furniture and Fixture @ 20% | 22000 |
| Interest on Total Capital Investment @ 12% | 1289164 |
| Total | 28448354 |
Turnover (per year)
Items |
Quantity/pieces |
Rate (Rs.) |
Value (Rs.) |
| Leather travelling bag-Single pocket | 18000 | 1000 | 18000000 |
| Leather travelling bag-Multi pockets | 12000 | 1200 | 14400000 |
| Total | 32400000 |
Net Profit (Before Taxation) (per year)
Turnover - Cost of Production |
|
| 32400000 - 28448354 | |
| = 3951646 |
Net Profit Ratio
Net Profit per year x 100 Turnover per year |
|
| 3951646 x 100 | |
| 32400000 | |
| 12.2 |
Rate of Return on Total Investment
Net Profit Per year x 100 Total Investment |
|
| 3951646 x 100 | |
| 10743037 | |
| 36.78% |
Break-even Point
Fixed Cost
Description |
Amount (Rs.) |
| Depreciation on Building @ 5 % | 180000 |
| Total depreciation on plant machinery tools fixtures office equipments | 136150 |
| Interest on capital investment | 1289164 |
| Insurance | 24000 |
| 40% of Salary and Wages | 1528416 |
| 40% of other contingent expenditure and utilities | 51000 |
| Total | 3208730 |
| B.E.P | Fixed cost x 100 ---------------------------- Fixed cost + Net Profit |
| 3208730 x 100 | |
| 3208730 +3951646 | |
| 44.81% |
Addresses of Machinery and Equipment Suppliers
- NSIC Technical Service Centre
Sector B-24, Guindy Indl. Estate,
Ekkaduthangal,
Chennai-32.
- M/s. Atlanta Trading (P) Ltd.
Atur House,
Worli Naka,
Mumbai-18. - M/s. Twin Star Engineering
No. 98, Pammal Main Road,
Pammal,
Chennai-75. - M/s. Raj Machine Home
Opp. New Jyoti Building,
35/44, Karabala Road,
Agra-5.
Raw Material Suppliers
- M/s. Alpha Global
445/1,6th Cross, 7th Block,
Jayanagar KPM Road,
Bangalore-560 082. - M/s. Amjad Finished Leather Co.
54, Maddox Street, Choolai,
Chennai-112. - M/s. Arkay Leathers
No. 3, Third Floor, Crown Court,
34, Chathedral Road,
Chennai-86. - M/s. Mow Chung Tannery Pvt. Ltd.
47, South Tangra Road,
Kolkata-46. - M/s. Pidilite Industries Ltd.
J.B. Marg, Nariman Point,
Mumbai
(for adhesive) - M/s. APL Poly Fab Pvt. Ltd.
48 C, Matheswar Tala Road,
Kolkata-46
(for lining) - M/s. Coats India Ltd.
144, M.G. Marg,
Bangalore-1
(for stitching thread) - M/s. Asia International
1523, Qasimjan Street,
Lal Kuan, New Delhi
(for fasteners) - M/s. Bharani Agencies
No. 126, Thambu Chetty Street,
III Floor, Chennai-1
(for fasteners) - M/s. Hyde Park India Pvt. Ltd.
C-21, Sector-7, Noida,
Ghaziabad Distt., U.P.
( for fasteners)
For further information please contact
Information Manager
TIMEIS Project
E-mail: timeis@ficci.com
