Project businesss plan

Project Report: Business 1

plan of The
industry
garment
of

Millenium Garments Ltd. Bangladesh
been the
has
key
export division
and a main source
of foreign
exchange for the
last 25 years. At
present, the
country generates
about $5 billion
worth of products
each year by
exporting
garment.
December-2011

Project ASA University Bangladesh
Management (ASAUB)

Agenda
2 Millenium Garments ltd

 Project summary (introduction)
 Overview of the industry and promoter

 Overview of the project

 Project proposal

 Findings and recommendation

 conclusion

Project Summary

Overview of the Industry and Promoter

Information of garments industry
Contribution of RMG to our national economy
Export Earning (Region wise)
Factors helping our RMG and Textile sector to
continue its growth
Key issues and challenges that face the RMG
sector
Profile of the Millenium Garments Ltd.

Information of the garments industry.

 a main source of foreign exchange for the
last 25 years.
 The vibrant growth in this sector has been
possible due to quota restriction in
the USA, Canada under Multi-fibre
Arrangement regime and Preferential GSP
facilities in the EU market.
 Under the MFA system, Bangladesh enjoyed
an ensured market restricted by quota limit
to our competitors.

Contribution of RMG to our
national economy and GDP:
 the country generates about $5 billion worth of
products each year by exporting garment.
 Over 1.8 millions workforces are directly
employed in this sector,
 80% of whom are women

Export Earning (Region wise)

 Total export in RMG sector during 2004-2005 amounted to
U.S. Dollar 6.4 billion.
 The major destination of our RMG products is
EU, USA, Canada, Japan, and Australia.
2004 - %
Countries 2003 -2004 %
2005
EU 3653.59 64.25 3921.93 61.11
USA 1628.18 28.64 2023.96 31.54
Canada 256.70 4.51 307.25 4.79

Others 147.62 2.60 164.53 2.56

G. Total 5686.09 100 6417.67 100

Factors helping our RMG and Textile
sector to continue its growth:
 Duty free import of capital machinery & raw materials
for export oriented RMG & Textile Industries.
 Continuation of cash incentive in export of RMG &
Textile products.
 One-Stop-Service for FDI.
 Reduction of interest rates in export credit & port
charge.
 Permission to set up RMG industries in EPZ area
with 100% foreign investment.
 Initiatives of both the Government & exporters’
associations in collaboration with different
development partners to make the sector compliant.

Key issues and challenges that face the RMG
sector

 They demand that minimum labor standards, occupational
safety measures and other environmental concerns are properly
addressed by the suppliers.

 As a result, compliance issue has come out as a major threat to
our RMG sector.

 All the big and medium range buyers are setting different
conditions (code of conduct) as precondition to secure order.
 Price fall against volume of export.
 A core labour standard which covers wages, working
hours, overtime, safety, job-security, right to form trade
unions, environment and social security are being negotiated
under compliance issues.

Profile of the Millenium Garments Ltd.

 Established in: 1998
 Products: men's shirts, pants, sweater etc
 Exports its garments :Canada, Germany, Belgium
and Netherlands
 Founder & The Managing Director : Nomare Sattar.
a Canadian citizen.

Overview of the Project

 Details of the projects
 Products

 Target customer, pricing

strategy, competitive advantage and
constraints of this project

Details of the project

Millenium Garments Ltd.
Name of the Project : Business plan of Millenium
Garments ltd.(extension unit)
Location of the Project : Delwar Complex ,26, Hatkhola
Road, Shahid Nazrul Islam Aveneue , Dhaka-1203

 Mission: producing high quality garments at
competitive prices using a skilled workforce, superior
raw materials and complying with social standards.
 Vision: seeks to achieve the objectives set out by the
most economical way of using its available resources

Products
(Extension Unit) produce knit basic sweater to
designed highly fashionable ones including
woolen jumper, muffler, full sleeve, t-shirt, men's
shirt etc. Some product of the Millenium
Garments ltd. is given below:

Target customer, pricing strategy, competitive
advantage and constraints of this project

 Target Customer: Canada, , EEC, UK, France
, Germany, Belgium and Netherlands etc.
 Pricing strategy: FOB or C&F basis or on CM basis
 Competitive Advantage: Tax holiday benefit of 5
years for newly set-up export oriented industries,
 Cheaper infrastructural facilities,
 Possibilities of getting duty and quota free access to
EEC ,USA, Canada and Japan
 Constraints: Incompetent ports, entry/exit
complicated and loading/unloading takes much time.

Project proposal

 Planning: land, capital, resource and equipment
 Timeframe and duration of projects
 Analysis (market, technical, financing, capital
budgeting tools, risk and uncertainty analysis)
 Economic and Ecological analysis (SCBA)
 FRICTO analysis
 Implementations
 Review

Planning: Land, Capital, Resource
and Equipment

 land-The project is proposed to be located at
Hatkhola Road,
 Installation expense: estimated TK.7,00,000
 Start-up Finance: estimated at Tk.5,93,06000 only
including a net working capital of TK. 1,05,00,000.
 13 Nos Computerized Jacquard Knitting Machines
 120 Nos Hand Driven Flat Knitting Machines,
 90 Nos Linking Machines,
 4 Nos Winding Machines,
 01 No Hydro Extractor (200 Lbs),
 01 No 165 KVA Diesel Generator,
 03 Nos 50 KVA UPS.

Timeframe and duration of projects

 high-level schedule milestones here

Phase 1(PBP)
Phase 2
Phase 3

1yr 2yr 3Yr 4Yr 5Yr 6Yr 7Yr 8yr 9yr 10yr goal

Analysis: (Market analysis)

 Market analysis: business within existing and future
markets plan presents a market-research survey, locating
your business in the market environment. They analyze-
 Participants in this industry

 Distribution patterns

 identify the main competitors.

Analyze the strengths and weaknesses of the offers of
competitors by comparing their offers to customer.
Our own decision (As a Project Manager):we will
conduct:
Internet Search Requests & Online Competitor Research

Analysis: (Technical analysis)
19 Millenium Garments ltd Flow of manufacturing process
Imported Yarn(hank from) in boned warehouse
Winding into cone form by winding machine
Knitting into fabric by flat knitting machine
Inspecting by qualified staff
Washing by washing machine
Drying by drying machine
Ironing
Packing
shipping

Technical analysis

 Our own decision (As a Project Manager):
As a project manager we conduct the technological
analyzes as –
First select the modern technology
Consider the alternatives
Hire the experienced technical expert
Provide the clear idea about plant capacity and
functional layout.
Create the web address

Analysis: (Financial analysis)

Financial Estimates and Projections:
Cost of Project : The total cost of project is
Tk.5,93,06,000
Working Capital : The working capital of Tk. 1,05,000
Means of financing : Debt &equity financing Figures in‘000
Taka
Sales Revenue 1,97,400
Total Production Cost 1,58,449
,administration expense
Cash inflow of project 1st yr- 25583 2nd yr- 28919 3rd yr- 28228
Analysis of total Cost Total cost Fixed Cost Variable Cost
Total 1,58,449 18,784 1,39,665

Capital Budgeting tools

Capital budgeting tools in this projects: PBP, ARR,
NPV, IRR AND Profitability index
Capital Year Net Internal Accounting Profitability Pay
investment present Rate of Rate of index(PI) back
of this value Return Return period
project (NPV) (IRR) (ARR) (PBP)
5,93,06,000 10 668200 18.34% 46.49% 1.01 2.37
0 (year)

Our own decision (As a Project Manager):

As a project manager we will also used the same tool they used. But as a
project manager we used many tools for feasibility to the finance.

Decision criteria Accept if PROJECT IS
ACCEPTABLE
Pay back period PBP < Target period 2.37 < target period
Accounting rate of ARR > Target Rate 46.49 % > target rate
return is 15.56
Net present value NPV > 0 6682000 > 0
Internal rate of return IRR > Cost of Capital 18.34% > cost of
capital
Benefit of ratio BCR > 1 1.0 1> 1
The above information ensures project profitability.

Risk and Uncertainty:(Sensitivity analysis)
Investment
Range NPV Figures in‘000
Taka
Variables Pessimistic Expected Optimistic Pessimistic Expected Optimistic

Investment 70,000 59306 50,000 13,270 23,964 33,270

Sales 1,50,000 197400 2,00,000 63,081 23,964 60,964
Variable 80% 70% 65A% 14,011 23,964 87,651
cost
Fixed cost 12,000 10,000 8,000 58,130 23,964 68,078

Decision: Variable cost is the most sensitive in this project;
because it has more deviates of pessimistic as well as
optimistic situation of expect NPV.

Economic analysis (SCBA)

 Contribution to GDP: On completion, the project will
add Tk. 7,83,73,000 to the GDP.
 Project estimated cost: 5,93,06,000
UNIDO(Difference between Social value-Economic value)
Project market value: BDT-5.7Core
Adjusted factor[ (sv/mp)-1):(145/100)-1=.45
Adjustment factor*market price=2.25
Social value= 8.28
Social Benefit > cost
We found it’s a ecologically friendly project.

FRICTO & Implementation & Review
 flexible financing condition because they financing
their debt by providing 9.5% interest to the Agrani
bank.
 Risk-more buyers response and getting more revenue

so they can easily recover their debt.
 Control have the full power to take decisions and
implement all relevant decisions.
Implementation: This project will start commercial
operations within three months from the date of
installation of the machines.
Review: They have continues review to their project.
Corrective initiative if any uncertainty occur.

The Millenium Garments ltd.

FINDINGS
AND
RECOMMENDATION

Findings:

After completing all required part we found some
problems. These are given below:
 Lack of research & development;

 Lack of experienced people;

 Lack of energy supply;

 External raw materials supply;

 Negative image of Bangladesh in the international

market for less concern on human and social issues;
 Time-consuming custom clearance;

Recommendation:

For solve above problems we draw some
recommendation:
 The Millenium Garments ltd. need to be
develops research and development division. To
introduce new product to the buyers;
 They have to be analyze market in proper way;
 Provide training facility to workers for the
improvement ;
 Satisfy workers and provide a helpful working
environment;
 Provide fastest delivery to the buyers.

Conclusion
The Ready-Made Garments (RMG) industry occupies a unique
position in the Bangladesh economy. It is the largest
exporting industry in Bangladesh, which experienced
phenomenal growth during the last 25 years.
By taking advantage of an insulated market under the
provision of Multi Fibre Agreement (MFA) of GATT, it
attained a high profile in terms of foreign exchange earnings,
exports, industrialization and contribution to GDP within a
short span of time.
By this project they create employment opportunity. They have
many competitors in this field. But they always provide
better service more than their rivals. They are trying their
level best to do the business successfully.

Project businesss plan

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