Project businesss plan


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Project businesss plan

  1. 1. Project Report: Business 1 plan of The industry garment ofMillenium 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-2011Project ASA University BangladeshManagement (ASAUB)
  2. 2. Agenda2 Millenium Garments ltd  Project summary (introduction)  Overview of the industry and promoter  Overview of the project  Project proposal  Findings and recommendation  conclusion
  3. 3. Project Summary3 Millenium Garments ltd
  4. 4. Overview of the Industry and Promoter4 Millenium Garments ltdInformation of garments industryContribution of RMG to our national economyExport Earning (Region wise)Factors helping our RMG and Textile sector tocontinue its growthKey issues and challenges that face the RMGsectorProfile of the Millenium Garments Ltd.
  5. 5. Information of the garments industry.5 Millenium Garments ltd 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.
  6. 6. Contribution of RMG to our national economy and GDP:6 Millenium Garments ltd 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
  7. 7. Export Earning (Region wise)7 Millenium Garments ltd 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
  8. 8. Factors helping our RMG and Textile sector to continue its growth:8 Millenium Garments ltd 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.
  9. 9. Key issues and challenges that face the RMG sector9 Millenium Garments ltd 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.
  10. 10. Profile of the Millenium Garments Ltd.10 Millenium Garments ltd Established in: 1998 Products: mens shirts, pants, sweater etc Exports its garments :Canada, Germany, Belgium and Netherlands Founder & The Managing Director : Nomare Sattar. a Canadian citizen.
  11. 11. Overview of the Project11 Millenium Garments ltd  Details of the projects  Products  Target customer, pricing strategy, competitive advantage and constraints of this project
  12. 12. Details of the project12 Millenium Garments ltd 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
  13. 13. Products13 Millenium Garments ltd (Extension Unit) produce knit basic sweater to designed highly fashionable ones including woolen jumper, muffler, full sleeve, t-shirt, mens shirt etc. Some product of the Millenium Garments ltd. is given below:
  14. 14. Target customer, pricing strategy, competitiveadvantage and constraints of this project14 Millenium Garments ltd 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.
  15. 15. Project proposal15 Millenium Garments ltd  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
  16. 16. Planning: Land, Capital, Resource and Equipment16 Millenium Garments ltd 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.
  17. 17. Timeframe and duration of projects17 Millenium Garments ltd  high-level schedule milestones here Phase 1(PBP) Phase 2 Phase 3 1yr 2yr 3Yr 4Yr 5Yr 6Yr 7Yr 8yr 9yr 10yr goal
  18. 18. Analysis: (Market analysis)18 Millenium Garments ltd 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
  19. 19. 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
  20. 20. Technical analysis20 Millenium Garments ltd  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
  21. 21. Analysis: (Financial analysis)21 Millenium Garments ltd 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
  22. 22. Capital Budgeting tools22 Millenium Garments ltd 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)
  23. 23. Our own decision (As a Project Manager):23 Millenium Garments ltd 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.
  24. 24. Risk and Uncertainty:(Sensitivity analysis)24 Millenium Garments ltd Investment Range NPV Figures in‘000 TakaVariables Pessimistic Expected Optimistic Pessimistic Expected OptimisticInvestment 70,000 59306 50,000 13,270 23,964 33,270Sales 1,50,000 197400 2,00,000 63,081 23,964 60,964Variable 80% 70% 65A% 14,011 23,964 87,651costFixed 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.
  25. 25. Economic analysis (SCBA)25 Millenium Garments ltd Contribution to GDP: On completion, the project will add Tk. 7,83,73,000 to the GDP. Project estimated cost: 5,93,06,000UNIDO(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.
  26. 26. FRICTO & Implementation & Review26 Millenium Garments ltd 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.
  27. 27. The Millenium Garments ltd.27 Millenium Garments ltd FINDINGS AND RECOMMENDATION
  28. 28. Findings:28 Millenium Garments ltdAfter 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;
  29. 29. Recommendation:29 Millenium Garments ltd 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.
  30. 30. Conclusion30 Millenium Garments ltdThe 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.
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