PROJECT PROFILE AKWAN

© Moshiur Rahman
PROJECT PROFILE
OF
AKHWAN JUTE SPINNING MILLS LIMITED
Factory: Tongi, Gazipur
Office: Akram Tower, 5th floor, 15/5 Bijoy Nagar, Dhaka - 1000
PREPARED BY:
Business & Credit Development Services Ltd.
Moshiur Rahman - Financial Analyst
May, 2011

© Moshiur Rahman Page 2 of 45
Table of Content
Sl. No. Particulars Page No.
01 Executive Summary 3-4
Location of the Project
Project Overview
Cost of the Project
Means of Finance
Loan Proposal
02 Management Aspects 5-6
Organogram
03 Technical Aspects 6-16
Schedule of Implementation
04 Marketing Aspects 17-32
Introduction
The Environmental Benefits of Jute
Prospects of Jute and Jute goods in the Global Market
Over View of Jute Manufacturing Industry of Bangladesh
Uses of Jute Yarn & Twine
Jute Yarn & Twine Importing and Exporting Countries
Demand & Supply Analysis of Jute Yarn & Twine
World Demand for Jute Yarn
Domestic Demand of Jute Yarn
Total Demand For Jute Yarn
Gap between Demand and Supply
Export of Jute Yarn from Bangladesh and Existing Capacity
Projected Export from Bangladesh
Distribution Channel and Availability of raw materials
Prospective Importer of Jute Yarn & Twine
Opportunities and Threats
Conclusion and Recommendation
05 Financial Aspects 33-46
Production Capacity & Capacity Utilization
Projected Balance Statement
Projected Income Statement
Projected Retained Earnings Statement
Projected Cost of Goods Sold Statement
Working Capital Assessment
Break Even Analysis
Projected Cash Flow Statement
Ratio Analysis
Calculation of Payback Period
Calculation of IRR
Loan Repayment schedule
Fixed Assets and Depreciation Schedule ( projected 5 Years )
Projected Operating expenses

EXECUTIVE SUMMARY
NAME OF THE PROJECT: AKHWAN JUTE SPINNING MILLS LTD.
LOCATION OF THE PROJECT:
Factory: Tongi, Gazipur
Office: Akram Tower, 5th floor, 15/5 Bijoy Nagar, Dhaka - 1000
THE PROJECT:
The project envisages setting up of a 100% export oriented Jute Yarn/Twine manufacturing
unit of 5440 MT per annum production capacity. Bangladeshi Jute Yarn/Twine demand is
mounting steep day by day, so that Jute Yarn/Twine manufacturing is a green herald of titanic
exporting sector in future. Jute sector with prominent support of Jute Yarn/Twine kept its
promise in this regard already by proclaiming second position in top export product of the
country after ―RMG sector‖ by surpassing ―frozen food sector‖. The project is thus designed
to get full utilization of market opportunity with the strength of Akhwan Groups long and
wide experience of multifarious business. Proposed product of the project is a specialized
item which may be considered as diversification approach having wide scope for further
capacity development. The sponsors intend to implement the scheme with financial assistance
from Bank/Financial institution for acquisition of state of the art capital machinery, operating
with efficient and expert management team along with their skilled workforce and a vision to
excellence. It is anticipated that the project will go into commercial operation within 12
months from the date of opening of letter of credit for imported machinery. Total fixed cost
of the project has been estimated at Tk 282,039,495 and a debt-equity ratio of 48:52 with a
promising payback period of 3 years 9 months.
THE PROPOSAL:
Proposal to the Bank for sanction of term loan amounting to Tk. 220,000,000

COST OF THE PROJECT:
The total cost of the project has been estimated at Tk. 338,521,300.
Cost of the project and means of finance has been explained as follows:
Particulars Total
Land
Building & Civil Work
Imported Machinery & Equipment
Local Machinery & Equipment
Erection and Installation
Vehicles
Furniture, Fixture & Equipment
Preliminary & Startup Expenses
65,421,300.00
55,700,000.00
182,984,980.00
23,815,020.00
1,500,000.00
5,100,000.00
2,500,000.00
1,500,000.00
Total Cost of the Project 338,521,300.00
MEANS OF FINANCE:
Particulars Total
Bank loan 220,000,000.00
Sponsor‘s equity 2,500,000.00
Share Money deposit 178,641,161.00
Total equity 181,141,161.00
Total loan and Equity 401,141,161.00

MANAGEMENT ASPECTS
BOARD OF DIRECTORS:
The proposed project will be promoted by the following three directors. The status and the
share of each director are stated below:
Name of the sponsors Status No. of Shares holding
by each subscriber
Md. Nurul Amin Chairman 1000
Md. Sirajul Amin Managing Director 8000
Md. Fakrul Amin Director 8000
Md. Fazlul Amin Director 8000
TOTAL 25000
CORPORATE SET UP:
The sponsors have formed a Private Limited Company registered with the Register of Joint
Stock Companies in the name and style of AKHWAN JUTE SPINNING MILLS LTD on
29th
August 2010 with authorized capital of BDT 50,000,000 (Taka Five Crore) divided into
5,00,000.00 ordinary shares of BDT 100/- (Taka One hundred each) and paid up capital of
BDT 2,500,000.00
ORGANIZATION SET UP:
The overall management of the company would be vested to the board of Directors. The
Chairman will be the chief executive and will be responsible to keep the board and
management organized, informed and on task. As CEO he would be the spokesperson of the
company and lead the management and administration of the company under the board
policy/guidelines of the board of directors. He will exercise those powers which will be
delegated to him by the board of directors from time to time. Besides, the management of the
company will be assisted by a team of qualified and experienced professional personnel

ORGANOGRAM:
DIRECTOR MGT
& ADMIN
DIRECTOR
ACCOUNTS
GENERAL MANAGER
MANAGING DIRECTOR
BOARD OF DIRECTORS
Chief Accountant Sales Purchase
Manager
Production
Manager
Administration
Security, Labor,
Welfare
Maintenance,
Production,
Quality Control
Accounts, Finance,
Costing, Budget,
Salary, Wages

TECHNICAL ASPECTS
PRODUCTION PLANNING AND OPERATION MANAGEMENT:
The project envisages setting up of a 100% export oriented Jute Yarn manufacturing unit.
The demand for Bangladesh origin Jute Yarn is increasing day by day. Proposed product of
the project is a specialized item which may be considered as diversification approach having
wide scope for further cavity development. The sponsors intend to implement the scheme
with financial assistance form Bank/ Financial institution with acquisition within 12 months
from the date of opening of letter of credit for imported machinery. Total fixed cost of the
project has been estimated at BDT 469,737,922.00.
PRODUCTION CAPACITY:
The annual production capacity of Jute Yarn of the project based on three shifts operation of
16 hours each per day and 300 working days in a year and the annual production capacity is
5440 MT. The unit will be designed to produce Jute Yarn/ Twine and will have adequate
flexibility to produce yarn ranging from 4 lbs to 72 lbs.
LAND AND LOCATION:
The project has been proposed to be located at Tongi, Gazipur, 20 Km away from Dhaka city.
The proposed site is very near to power and gas line which passes by the side of the project.
The area of land measures 198 decimals amounting BDT 65.22 million. The sponsors
themselves own the title of the land and have a plan to transfer the land in the name of
AKHWAN JUTE SPINNING MILLS LTD. The land has been selected considering its
suitability for setting up such a project. The land is to be developed and Tk. 198,000 in this
regard has been estimated. The site has all the logistical support like Power, Water, Drainage
and Communication for setting the project having economical labor and raw jute available
around the adjacent areas.

BUILDING & CIVIL WORKS:
The entire civil works of the project comprises 65,000 sqft constructions; it has been
designed and will be supervised by a group of highly qualified Architect and Engineers. The
project will include factory building, office building, guard room and store room, workshop
building, prayer room, raw jute warehouse, assorting shed, security guard colony, etc. the
building will be made of prefabricated steel structure with necessary civil works. The total
cost of civil works has been estimated at BDT 55.7 million.
IMPORTED MACHINERY:
For implementation of the scheme, the project will require state of the art capital machinery.
It will be a complete set of composition of basic operating machinery along with supporting
unit including of machinery and equipment. In selection of machinery, the quality and the
cutting edge technology has been given priority. The plan consists of buying machinery for
Batching, Carding, Spinning, Winding, and Twisting of yarn, Precision winding and Packing.
The machinery of the project has been proposed to be imported. The cost of imported
machinery has been estimated at BDT 182,984,980.
LOCAL MACHINERY:
The unit will require some machinery and equipment that could be bought from local market
directly and no need of importing like generator, sub-station, deep tube well with pump and
motor, material handling trolley, workshop equipment, etc. But here also the plan is to buy
superior quality machinery that estimated to cost around BDT 23,815,020.
ASSEMBLY, INSTALLATION AND TRIAL RUN:
The machinery will be installed, commissioned and will put into trial run under the
supervision of foreign experts deputed by the machinery suppliers. They will be assisted by a
team of a local technicians and skilled workers. The sponsors will bear all the expenses of
commissioning with an estimating expenditure of approximately BDT 1.3 million in local
and foreign currency. Foreign technicians will also provide training to local technical
personnel for smooth operation and maintenance of the plant. Moreover, an amount of BDT 2
million has been estimated for civil, mechanical and electrical installation commissioning.

MANUFACTURING PROCESS:
Manufacturing of Jute Yarn consists of the following stages:
a) BATCHING:
Batching of the different grades of high quality raw jute are fed in the spreader and the
softener and then sprayed emulsion, the mixture of oil, water and emulsifier during
processing the jute through spreader or softener machine for softening and to acquire flexible
properties of the fiber for the subsequent process.
b) PILING:
After the batching process, Jute is kept in pile for condition up to 72 hours for bacterial action
which is required for processing the best quality yarn/twine and to minimize the wastage.
c) CARDING:
Jute fiber is carded in two stages: (I) Breaker Card (II) Finisher Card. Softened jute is fed in
B/C machine first and the delivered jute from B/C is fed in F/C machine. The main function
of card is to convert the reed of jute into a uniform supply of fibrous material which can then
be drafted and finally twisted into yarn. Another function of is to reduce the jute sliver as
required to easy the next process.
d) DRAWING:
The carded fibers are now fed into drawing process for straightening of individual fibers and
make it ready for spinning in the final stage. This is done in three stages i.e. 1st
, 2nd
and 3rd
drawing.
e) SPINNING:
Drawn fibers are now fed in spinning frames for production of single yarn.
f) WINDING:
Single yarns are will into spools or cone as desired in the winding machine.
g) TWISTING:
Single yarn when required by the buyers is twisted in 2 ply/3 ply or 4 ply as per specification.
h) PRECISION WINDING:
As per specification of the buyers, the single or twisted yarn is wound in precision winding
for more compacting.

i) INSPECTION, PACKING & MARKETING:
The Manufactured jute yarn/ twine will be finally inspected/checked and packed for export
marketing. The process flow diagram is detailed below:
PROCESS FLOW DIAGRAM of AKHWAN JUTE SPINNING MILLS LTD
Breaker Card
Finisher Card
1st
Drawing
2nd
Drawing
2nd
Drawing Intermediate
3rd
Finisher Drawing
Spinning
Mackroll Winding
Precision Winding
Packing
(Pallet packing machine)
Twisting
Raw Jute from Market
Raw Jute in Mill Godown
Raw Jute in Factory as
Required
Software/Spreader
Raw Jute in Pile

TECHNICAL SERVICE AND QUALITY CONTROL:
Bangladesh over the past two decades gained expertise in jute yarn manufacturing industry.
So the technical competence, operational expertise and expert in the relevant industry are at
hand today. The jute technologists of the country are fully conversant with the technology
involved in various stages involved in manufacturing of yarn. So that recruiting of
experienced and skilled technical personnel would not be a mammoth task. Besides, the
project will have its own quality control equipment to maintain proper quality control
measures for exporting the quality products.
In order to manufacture High Quality Jute Yarn/Twine, it would be necessary to pay
particular attention to the following quality factors:
Given proper treatment, jute yarn can be mixed with major synthetic/woolen/ acrylic/ cotton
yarn in the twisting / weaving/ finishing process which can be used for the manufacture of
fabrics, backing cloth and other upholstery materials. Production on the use of quality of raw
jute will primarily depend on the use of quality of raw jute and the application of proper
technology subject to strict control of following manufacturing variable etc.
1. Uniformity in the yarn count and evenness of the yarn.
2. Appropriate tensile strength of yarn and uniformity of strength throughout the
yarn length.
3. Minimum hairy surface of yarn.
The quantity of Jute Yarn/Twine to be produced would primarily depend upon the quality of
raw jute to be used in the batch and secondarily depend upon the stillness of the operations,
appropriate machine control and imposition of quality control measures.
In order to control quality and to produce quality product our strategy is to procure quality
jute and adopt cutting edge technology in Jute Yarn/Twine machinery. The back process and
frontward process machinery will be selected in a balanced way and the key machinery has
been planned to import from reputed manufacturer so that production harmony and quality
control assurance could be checked thoroughly.

RAW MATERIALS:
The project will be based on 100 % local raw materials such as raw jute, Jute Batching oil,
emulsifier, etc. The requirements of raw materials are as under:
Year 1st
year 2nd
year 3rd
year 4th
year 5th
year
Raw materials 199299840 130790520 155703000 166083200 183521936
Inventory 90
days
61949034 51250507 58129120 62004395 67338433
Sl. No ITEM UNIT QUANTITY
01 Raw Jute MT 3986
02 Jute Bashing oil Lt/Kg 99127
03 Soap Kg 3304
04 Main label Dozen 310989
05 Core label Dozen
06 Printed polybag Dozen 92325
07 Tag pin Dozen
08 Sewing thread Cone
09 Tissue paper Dozen
10 Scotch tape Roll 821
11 Gum tape Roll 1232
12 Pp brand Roll 411
13 Carton Pcs 38874
14 Soda ash Kg
15 Packing materials Lot (poly) 0.5

UTILITIES:
POWER:
The project will require a connected load of 450 KW for production process and domestic
use. The Maximum demand would be 450 KW. Required power will be met from REB.
Moreover, the project will procure Diesel generators for supply of power in case of power
failure. The cost of generator has been considered with the cost of local machinery.
Power
Connected Load(KWH) 450
Maximum Demand(KWH) 450
Peak Hour 6
Off-Peak Hour 18
WATER:
The project will require 6,000 liters of water per day for domestic and factory use. The
required water will be available premises. The cost of deep tube well has been incorporated in
the local machinery cost.
TRANSPORT:
The project will procure 9 sited microbus and 2 covered van (3 MT carriers Lorry) for
carrying raw materials and officials. The cost of transport vehicles has been estimated BDT
5100000.
FUEL AND LUBRICANTS:
The annual requirement of fuel and lubricating oil and gas has been estimated BDT 113800.
SAFTY PROVISION OTHER ASSETS:
The project will require furniture office equipment and first aid box cost of which has been
estimated at BDT 1.3 million. As Jute Manufacturing unit is susceptible to firefighting

equipment and accessories will be required, cost of which has been estimated BDT 1.2
million.
STORES AND SPARES:
The stores & spares cost has been estimated at TK 169415.97, 338831.93, 38831.933,
338831.93 and 338831.93 of its machinery cost for the 1st, 2nd, 3rd, and 5th year of
operation respectively for a 90 days tried up period.
POLLUTION CONTROL AND WASTE DISPOSAL:
Jute is a green product so that Jute Yarn unit will not pose any pollution and subsequently
there would not be any waste problem. Rather various wastages of the unit will be sold
locally.
WORKFORCE:
The project would require 480 personnel for its operation.
The requirement of technical and other personnel based on three shifts per day has been
estimated as follows:
A. TECHNICAL:
NAME OF THE POST NO OF THE POST
1. MANAGER PRODUCTION
2. MECHANICAL ENGINEER
3. ASST. MECHANICAL ENGINEER
4. ELECTRICAL ENGINEER
5. SENIOR PRODUCTION OFFICER
6. QUALITY CONTROL OFFICER
7. MECHANICAL SUPERVISOR
8. PRODUCTION OFFICER
9. ASST. PRODUCTION SUPERVISOR
10. QUALITY CONTROL SUPERVISOR
11. QUALITY CONTROL ASSISTANT
12. JUTE SUPERVISOR
13. FINISHING SUPERVISOR
14. STORE ASSISTANT
15. TIME KEEPER
01
01
01
01
02
01
02
01
02
01
02
01
01
03
02

16. SUB STATION ATTENDAN
17. LABOUR OFFICER
18. SECURITY OFFICER
19. KOYAL (JUTE)
20. JACHANDER (JUTE)
21. GUARD
22. SWEEPER
02
01
01
01
10
02
01
TOTAL 40
B. WORKER:
1. SKILLED WORKER
2. UN SKILLED WORKER
300
120
TOTAL 410
C. GRENERAL AND ADMINISTRATIVE:
1. GENERAL MANAGER
2 MANAGER (ADMIN & PERSONNEL)
3. MANAGER (MARKETING)
4. CHIEF ACCOUNTANT
5. MANAGER (COMMERCIAL)
6. PURCHASE OFFICER
7. STORE OFFICER
8. ASST. STORE OFFICER
9. ASST. PURCHASE OFFICER
10. COMMERCIAL OFFICER
11. ASST. ACCOUNTANT
12. P.A. TO M.D.
13. ACCOUNTS CLERK
14. SECURITY INSPECTOR
15. CASHIER
16. WAGES CLERK
01
01
01
01
01
01
01
02
01
02
02
02
02
01
01
01

17. TELEPHONE OPERATOR
18. DRIVER
19. PEON
20. SWEEPER
01
04
02
02
TOTAL 30
Total: 40 + 410 + 30 = 480 Persons.
SCHEDULE OF IMPLEMENTATION:
The project will start commercial operation within 9 months from the date of opening of
Letter of Credit for machinery.
1. LAND AACQUISITION/ TRANSFE
2. STARTED OF LAND DEVELOPMENT
3. COMPLETION OF LAND DEVELOPMENT
4. START OF CONSTRUCTION OF BUILDING
5. COMPLETION OF HALF CONSTRUCTION
6. ESTABLISHMENT OF LETTER OF CREDIT
7. COMPLETION OF FULL CONSTRUCTION
8. ARRIVAL OF MACHINERY AT PORT
9. ARRIVAL OF MACHINERY AT SITE
10. ERECTION & INSTALLATION
11. ELECTRIFICATION & SANITATION
12. UN FORESEEN DELAY
13. TRIAL RUN
14. COMMERCIAL OPERATION
1st
month
1st
month
1st
month
2nd
month
8th
month
3rd
month
10th
month
10th
month
10th
month
11th
month
11th
month
11th
month
12th
month
12th
month

MARKETING ASPECTS
INTRODUCTION:
Jute is a valued natural fiber with unique characteristics and long standing end-use
applications. It played an even stronger role in the post second world war recovery and
growth with traditional end-uses such as sacking, hessian and carpet backing. Increasing
production was, in fact, unable to meet the needs of rapidly expanding demand, resulting
shortages in and for which manufacturers of synthetic substitutes were able to compete with a
far larger potential capacity, budgets for promotion and lower prices. The demand for jute in
export markets for the traditional products declined in the face of this competition with carpet
backing the first to suffer in the United States, followed by sacking, loss of markets due to the
collapse of the former USSR and most recently a sharp decline in Europe.
The decline in world markets and falling real values led to a substantial reduction in
production in China and Thailand and a gradual reduction in hectarages and volumes in
Bangladesh. These factors were, however, more than compensated by the increase in
consumption of jute sacking in India, where it enjoys a measure of regulatory support and in
production due mainly to higher yield rates, but not in hectarages devoted to jute. Indian
production of jute has not kept pace with increasing demand and India is now a major fiber
importer from Bangladesh. Global production and consumption of jute has therefore become
and is increasingly concentrated in Bangladesh. Diversified or non-traditional jute products
production has been growing in Bangladesh in addition to that of yarn.
A general consensus was expressed in different workshops that jute could once again
compete for export markets provided that action were taken to increase productivity of higher
quality fiber together with a decrease in costs of conversion. This was based on the facts that:
synthetic substitute prices were rising due to higher oil costs and were likely to continue to do
so; that technology allowed production today of higher quality yarn and fabrics; and that the
scope for increased competitiveness was substantial. There have been positive developments
in the form of a growing market for yarn used in woven carpets and end-user preference for
food grade sacks for carrying some commodities. Jute yarn and twine, produced from raw
jute was being used domestically since long. However, Bangladesh started exporting jute
yarn and twine from 1978.due to eco-friendly to the environment, its demand in increasing
day by day.
Source: Jute Market Report -1- June 9th, 2009 Bangladesh

The Environmental Benefits of Jute
Jute is a versatile, natural fiber that has been used for thousands of years to make things such
as rope, twine, hessian bags, rugs, and much more.
While it‘s still being used extensively around the world, it‘s not as popular as it could (or
should) be - especially considering its outstanding environmental benefits. Given the
increasing focus on environmental issues these days, jute might just be in for a crack at the
big-time.
Here are the major environmental benefits of jute:
 Jute cleans the air: Studies indicate that, one hectare of jute plants can consume up
to 15 tons of carbon dioxide and release 11 tons of oxygen during the jute growing
season (about 100 days).
 Less fertilizer, herbicides, & pesticides: Relatively modest amounts of fertilizer,
herbicide, and pesticides are required for jute cultivation - especially in comparison to
cotton.
 Improves soil conditions: During jute cultivation, large portions of leaves and roots
remain with the soil. This results in improved soil fertility.
 Improves other crops: When jute is rotated with other crops, it can improve the
health of those other crops and reduce their risk of attracting pests and disease.
 Jute has high biological efficiency: Jute can be harvested within 4 to 6 months and
can produce 20 to 40 ton of dry stem per hectare. In comparison, the fastest growing
trees take between 10 and 14 years to mature. Also, trees will only produce 8 to 12
ton, per hectare, annually.
 Sound agricultural practices: Studies have found that typical jute agricultural
practices are environmentally sound - they cause minimal impact to the natural
environment.
 Biodegradability: Jute products are 100% biodegradable and recyclable. They can
also be disposed of without causing environmental hazards.
As long as the processing of jute is done in an eco-friendly way, jute has enormous potential
as an eco-friendly alternative to its mainstream rivals such as cotton and trees.
Source: The Environmental Benefits of Jute Natural Environment Blog

PROSPECTS OF JUTE AND JUTE GOODS IN THE GLOBAL MARKET:
According to a report published by the FAO, global demand for jute and jute goods declined
by 16 per cent from 3.4 million tones of fiber equivalent in 1988-90 to 2.9 million tons
during 1998-2000. This happened because of the influence of two interrelated factors, such
as the intensity of competition with, and the displacement by, synthetic fibers and extension
of commodity bulk handling facilities. The decline of jute demand, in the period under
consideration, was much higher in developed countries (40 per cent) compared to that in the
developing countries (10 per cent). Competitiveness of jute and jute goods relative to
polypropylene is determined by both price and non-price factors. Between 1988-90 and
1998-2000, prices for polypropylene fiber decreased on an average by 2 per cent per year in
real terms, while world demand grew at approximately 8-10 per cent each year between
1988 and 2000. During the same period, world consumption of jute fiber and jute products
declined by 1.54 per cent per year to 2.9 million ton in 2000. It is important to examine how
strong the substitutability of jute and polypropylene would be in the coming years. 2
Prospect of increasing the global demand for jute and jute goods largely depend on the
extent of use of jute goods for different purposes, as well as its relative competitiveness vis-
à-vis synthetic products. Polypropylene, which is the end product of petroleum, has become
more expensive in recent years, mainly due to substantial rise of petroleum price. This was
likely to lead to the rise in the consumption of various substitutes of polypropylene,
including jute goods, at the international level. Analysis shows that substitutability of jute
and jute goods vis-à-vis polypropylene has been declining over time, as shown in Table 5.
One could infer from the figures presented that the demand for artificial fibers will be
gradually fulfilled by natural fibers. However, a low substitutability of polypropylene
indicates that global jute market would keep growing approximately at the current level in
the upcoming years.
Table 5: Trend of Production Change under Different Scenarios
Period Polypropylene Jute Goods Total
1980-2003 10.14 0.18 6.98
1985-2003 7.62 0.88 5.95
1990-2003 5.96 -2.82 4.14
1995-2003 5.52 -0.71 4.47
2000-2003 -0.18 -0.33 -0.20

Source: Authors‘ own estimation based on Industrial Commodity Statistical Year Book,
United Nations
According to FAO (2003), although bulk handling is getting popular in the case of food and
other items, due to the substantial amount of capital required for developing such facilities,
bulk handling has not been widespread in developing countries where infrastructure
facilities have often been poor. Utilization of jute as a diversified product has been on the
rise though its share in the total production is still insignificant.
The United Nations (UN) has declared 2009 as the ‗Year of Natural Fiber‘ in order to
popularize the use of natural fibers in manufacturing goods. Consumers of developed
countries have started to show increasing interest in buying more environment-friendly
products. From this perspective, jute is considered as demandable items because of its
biodegradability and environment-friendly nature. Besides, anti-polythene movement is also
getting popular in developed countries. Under such circumstances, jute and jute goods have
considerable prospect and potentialities in the coming years. 4
In the case of Bangladesh, there is ample scope for the development of use of jute and jute
goods at the domestic level. Government regulations as regards ban on polythene, if
appropriately implemented, would enhance the use of jute goods in the country. There is a
huge amount of unutilized capacity in most of the jute mills. If those machines can be
utilized effectively by using a part of the raw jute, which is at present exported without any
substantial value addition, production and income from jute goods could be substantially
increased. In this context, duty free market access in India, accorded to Bangladesh under
the South Asian Free Trade Area (SAFTA), should create prospects for more exports to the
Indian market. Thus, given the discernible market signals, there is considerable room to
enhance both production and export of jute goods.
Government of Bangladesh is trying to rejuvenate the jute sector through various activities
and policy decisions. Introduction of High Yielding Variety (HYV) jute seed, popularizing
the use of modern agricultural practices, encouraging cultivation of good quality fiber,
promotion of jute diversified products (JDPs) etc. are the major areas of intervention of the
Government of Bangladesh. A huge demand for various diversified jute products viz.
carry/shopping bags, shoes, composite materials, geo-textiles, home textiles, handicrafts, gift
items, pulp and paper etc. is continuously increasing in both local and foreign markets. The

future prospect of this eco-friendly natural fiber-jute is expected to increase day by day with
effective support from the national governments of the producing countries through adoption
of appropriate policies like banning of synthetic packaging materials and enactment of
regulations favorable towards its cultivation, diversification and marketing.
The most recent statistics on jute is in current fiscal year of 2010-2011 in eight months the
country earned 7344000 USD which is 51% more than preceding year. During this time raw
jute of 240,000,000 USD, 334,000,000 USD of jute yarn/twine and 128,700,000 USD of jute
bag and other jute product have been exported that lead the sector in second position after
RMG by overtaking frozen fisheries sector in export earnings. Source: Daily ―Prothom-Alo‖
8th
and 10th
March 2011.

OVERVIEW OF JUTE MANUFACTURING INDUSTRY OF BANGLADESH:
Jute manufacturing sector is one of the oldest traditional manufacturing sectors of
Bangladesh, which emerged in erstwhile East Pakistan in the early 1950s. During the 1960s
and 1970s major share of the manufacturing sector in national income and manufacturing
employment was accounted for by this sector. Exports of jute and jute goods were the two
most important sources of foreign exchange of Pakistan during the 1960s. However, both
share and importance of jute and jute goods in manufacturing, export and overall foreign
exchange earnings, and the Gross Domestic Product (GDP) have gradually declined over
time. The sector currently accounts for a more 3.9 per cent of the country‘s total export,
which is of extremely low significance when compared to its contribution in the overall
export observed during the1970s (89.9 per cent in 1973). The ascendancy of the export-
oriented readymade garments (RMG) was a major reason. However, this was also the result
of successive policies pursued by Bangladesh alongside decline in the demand for jute goods
in both domestic and international markets over time.
In July 2007, Government of Bangladesh took a number of decisions as regards public sector
jute mills and their poor performance including closing down mill, downsizing workers
resulting 50% downsize of workforce of BJMC. The government agreed to provide Tk. 2000
million to finance procurement of raw jute of which Tk. 1380 million was to be financed
from banks through issuing of government bonds. Procurement target was set at 5.5 million
ton of raw jute from 58 procurement centers for the 18 jute mills. Government also took the
initiative to sell 120 acres of land (out of BJMC‘s 1,200 acres of land) to generate more funds
for the industry.
Production trend of the jute manufacturing sector can be broadly categorized into four
periods: first phase (1950-1970); second phase (1972-1981); third phase (1982-1990); and
fourth phase (1991-onward) (Figure 1). During these four phases, jute manufacturing sector
had experienced various changes in policies, and also in the pattern of utilization of jute and
jute goods. In the pre-independence period, jute mills were owned by a small number of
private entrepreneurs. During this phase, average hessian production was 155,586 metric ton
(MT) per year, of which 87 per cent was exported; the comparable figures for sacking were
267,614 MT and 78 per cent respectively (Table 1). Production reached its peak in 1969, with

an output of 5.74 lakh MT. Due to political instability and damages caused during the year of
Liberation in 1971, operations of jute mills were interrupted. Consequently, production
declined in 1971 and 1972. Thereafter, production started to increase. In the second phase
(1972-1981), government decided to nationalize the jute manufacturing sector, and took
control of all the private sector jute mills. During the 1970s, average level of production of
hessian was about 165,000 MT, of which 94 per cent was exported, while comparable figures
for sacking were 225,460 MT and 86 per cent respectively. Growth in the production of jute
goods between 1960 and 1980 can be attributed to the growth in production of hessian,
sacking and carpet backing cloth (CBC) products.
Table 1: Periodic Trend of Jute Goods Production, Periodic Average
(in Metric ton)
Period Hessian Sacking CBC Yarn/Twine
Upto 1970
155,586 267,614 23,929 0
(86.9) (78.2) (96.7) (0.0)
1972-80
165,033 225,458 63,578 1,953
(93.7) (86.3) (95.5) (73.3)
1981-91
219,048 270,556 80,415 61,090
(94.8) (83.7) (97.0) (69.1)
1992-05
87,968 196,839 39,777 163,830
(99.5) (71.7) (89.7) (90.8)
Note: Figures in parentheses indicate export as percentage of total production of that period.
Source: Based on BJMC (1979-80 – 2005-06), BJMA (1972-73 – 1978-79), BJMC as cited
in IDRL (1992) (1960-61 – 1971-72), Alim (1978).
Production of yarn/twine accounted for a small share of total production during the 1970s.
During the 1980s (third phase), the then government decided to denationalize a number of
jute mills in line with the initiative of economic liberalization. A mixed trend is observed in
the production of jute goods during this phase, which reached its peak in 1990 with a
production of 5.96 lakh MT. Production of yarn gradually increased in the 1980s. Most
importantly, production of hessian and sacking — two major traditional products gradually
declined, especially since the late 1980s. Production of CBC declined as well. In the fourth
phase (1990-onward), following the suggestions of the World Bank, government started to
denationalize a number of other public sector jute mills which resulted in the shutdown of

many jute mills as well. However, production of jute goods has not picked up even after
adoption of various policy measures. Indeed, production of traditional products such as
hessian, sacking and CBC has continued to decline with the exception of growth in the
production of yarn and twine. Yarn/twine now accounts for the major portion of jute goods
and over time, its production has also been on a steady rise. During 2006, Bangladesh‘s share
in the global production of jute goods was approximately 18 per cent.
Both public and private sector jute mills sell their products in either the domestic market or
the international market (Figure 2). Although overseas export comprised major share of
Bangladesh‘s jute goods production, domestic sale has been posting a rise, which now
accounts for 38 per cent of the total production. Bangladesh is the leading exporter of jute
goods in the world and her share in the global market is gradually increasing—which
accounted for 60 per cent of the global exports in 2006. If export of raw jute is taken into
account, total export would reach more than 75 per cent. According to Bangladesh Jute
Association (BJA), Bangladesh exports about 25 lac bales of jute goods which accounted for
about 56 per cent of the total raw jute grown in the country. It is worth noting here that
Bangladesh and India currently meet more than 90 per cent of the global export demand for
jute and jute goods; to compare, this share was 79 per cent in 1970.
USES OF JUTE YARN & TWINE:
Jute Yarn and twine have got multi various uses. Jute sacks, bags, carpet backing cloth, mats,
carpets, decorative fabrics, rope, upholstery and packing materials, etc. are manufactured
from jute yarn and twine. Generally medium and low quality jute is used for manufacturing
yarn and twine. Because of easy sewing (either by hand or machine), no fragility of jute
packing/binding as well as for environment friendliness, uses of jute yarn/ twine (side by side
jute goods) are increasing in developed countries of Europe, USA, Canada, Australia& Japan.
The dyed and waxed jute yarn and twine i.e. Geo- jute (a very good binder) is used to protect
erosion of soil. They are further used in reinforced plastic of plastic laminated with jute and
the manufacture of propylene yarn. The propylene yarn is manufactured by mixing one ply
each of jute yarn, wool yarn, cotton yarn and synthetic yarn.

JUTE YARN & TWINE IMPORTING AND EXPORTING COUNTRIES:
Bangladesh is the main jute yarn and twine exporting Country. India is the second largest
exporter. Thailand and China also export smaller amount of jute yarn and twine as well as
jute goods. India and china have their vast domestic markets for using jute goods. India also
imports raw jute from Bangladesh. Historically, Bangladesh has advantage for production of
jute. In future, Bangladesh may become the monopolist exporter of jute yarn and twine
because of her edge on price consciousness in the developed countries, jute is gradually
regaining its lost ground. Almost all the European and African countries are the major
importers of jute yarn and twine. Besides, many Asian countries including Japan and USA
import jute yarn and twine. EU and other European countries shares almost 65% of the total
export followed by Africa which share is about 15% and USA which in capturing about 10%.
Demand and Supply Analysis of Jute Yarn & Twine
WORLD DEMAND FOR JUTE YARN:
The demand for jute yarn and twine in the international market particularly in Europe and
Africa is increasing. Following reasons may be mentioned in this regard.
i) In Europe easy availability of alternative jobs has restricted supply of labor to the
jute industry. Moreover, wages have also increased in European Jute mills. Thus
production of jute yarn and twine decreased in the past giving rise to the import of
the same from the jute producing countries.
ii) The demand for jute yarn in mainly due to its use in the carpet manufacturing
industries. It is felt that cost of production of synthetic, Substitute of jute has
increased considerably along with the tremendous price like of petro-chemical
based compounds. Thus the use of Jute yarn/Jute goods is expected to increase in
future, than what it was in the past.
iii) Over and above, intensive and extensive objective tests conducted by jute and
textile Engineering Institutes in Europe & USA revealed the technical superiority
of jute carpet backing over synthetic carpet backing in respect of quality and
durability are congenial to health. In Europe, environmentalists also favor natural
fibers as household items than synthetic fibers.

On the basis of the above and considering price rise of petroleum based products and
worldwide movement for pollution free environment, we may reasonably and conservatively
assume that the world trade demand for conservatively assume that the world trade demand
for jute yarn (as other jute goods) may increase at the rate of 5% per annum in the coming
year.
It has been gathered from the officials of Bangladesh jute Spinners Association (BJSA) that
during the past few years, Bangladesh claimed about 60% to 65% of the total world export of
jute yarn and twine. The approximate world demand of jute yarn and twine in the last 5 years
ranged between 220000 and 250000 MT (2000-2001)
Calculated on the basis of the above, projected world trade demand for jute yarn and twine
(assuming 5% increase) in the coming years will be as under:
Table - III
Projected world Demand for Jute Yarn & Twine
Year World Demand in MT
2002-2003 262,000
2003-2004 275,000
2004-2005 289,000
2005-2006 303,000
2006-2007 318,000
DOMESTIC DEMAND:
Jute Yarn and twine have also local consumptions. It meets domestic demand for making
carpet, carpet backing cloth, bags, ropes, etc. local consumption of jute yarn and twine for the
last 5 years was around 20,000 MT to 25,000 MT. The local demand for jute yarn and twine
may increases substantially due to Govt. ban of polythene goods on health and environment
pollution grounds. Assuming 10% growth of domestic demand of jute yarn and twine in the
changed circumstances, the projected demand is shown in table V.

Table – V
Projected domestic demand of jute yarn
Year Local consumption in MT
2002-2003 27,500
2003-2004 30,250
2004-2005 33,275
2005-2006 36,600
2006-2007 40,260
It may be noted that apart from the mill‘s requirement of jute yarn for producing jute tape,
carpet, etc. there is evidently an increasing need for rope to be used in various developing
sectors including water transport and so on. Jute yarn in an intermediary product used as raw
materials in the jute goods and other manufacturing industries.
TOTAL DEMAND FOR JUTE YARN:
The estimated total demand for jute yarn and twine can be represented as under in table –VI
Table –VI
Estimated total demand for jute yarn and twine
(In metric tons)
Year Export Demand Local Demand Total Demand
2002-2003 262,000 27,500 289,500
2003-2004 275,000 30,250 305,250
2004-2005 289,000 33,275 322,275
2005-2006 303,000 36,600 339,600
2006-2007 318,000 40,260 358,260
GAP BETWEEN DEMAND AND SUPPLY:
Assuming 5% increase of share of Bangladesh in the world market, year wise projected world
supply gap for jute yarn and twine has been estimated and presented in table vii.

Table- VII
Estimated Gap between Demand and Supply
Year Export Demand Bangladesh‘s Supply Supply Gap
2002-2003 262,000 168,000 94,000
2003-2004 275,000 176500 98,500
2004-2005 289,000 185,000 104,000
2005-2006 303,000 194,000 109,000
2006-2007 318,000 204,000 114,000
It may be seen from Table- vii that the estimated supply gap may be increase from 104,000
MT to 114,000MT in 2007.
EXPORT OF JUTE YARN FROM BANGLADESH AND EXISTING CAPACITY:
Data in respect of export of Jute yarn from Bangladesh during the period from 1998-1999 to
2002-2003 are presented in table - I.
Table - I
Export of Jute Yarn
Year Quantity in MT Value in Crore TK.
19998-1999 130,562 358.23
1999-2000 144,400 405.52
2000-2001 160,916 469.89
2001-2002 183,625 557.71
2002-2003 189,679 584.00
Export of Jute yarn has increased from 130,562 MT in 1998-1999 to 189-679 MT in 202-
2003. The annual growth of export during the last five years was 11 percent. The average
export made during the periods was 133.036 MT. In terms of value, the export of Jute Yarn
has risen from Tk. 358.23 crore in 1998-1999 to Tk 584.00 crore in 2002-2003 showing a rise
of 16 percent.
At present, there are 50 export-oriented jute yarn and twine manufacturing mills in the
country. All these units are in the private sectors. Total installed capacity per day and 300
working days in a year stands at about 3.00 lac MT. However, from BJMA it is known that 6
units are closed since long due to various reasons having capacity of about 30.000 MT.

Considering that and assuming optimum capacity Utilization of the remaining mills (an
average rate of 65%), the effective capacity of these units may be considered at about 176000
MT.
PROJECTED EXPORT FROM BANGLADESH:
It appears from Table – I that in terms of quantity, export of jute yarn from Bangladesh has
increased @11% while in term of value, the same has risen 16% which was quite
encouraging and substantial. To be on the conservative, the export of jute yarn from
Bangladesh may be projected @10% per annum as depicted in table-II.
Table II
Projected export of Jute yarn
Year Quantity in MT
2002-2003 189,679
2003-2004 202,735
2004-2005 215,791
2005-2006 228,847
2006-2007 241,903
DISTRIBUTION CHANNEL AND AVIALABILITY OF RAW JUTE:
The proposed unit will be on 100% export oriented one and entire product will be exported to
abroad through the following distribution channel:
FACTORY
COMMISSION AGENT IMPORTERS
END USERSIMPORTERS

The basic raw material is raw jute. The other raw materials are jute batching oil and
emulsifier. Raw jute is abundantly available in Bangladesh for supply to the jute spinning
mills. Other raw materials are also locally available.
The proposed project will procure its raw materials from the local market as per its
requirement at current market prices and will not face any problem in procurement of raw
materials.
The availability of raw jute and internal consumption in the country is given next:
Product of raw jute 42.77 lac bales
Plus carry over 8.00 lac bales
Total 50.77 lac bales
Average internal consumption of raw jute: 32.00 lac bales.
/a BJSA, /b 1 bale = 180 Kg.
PROSPECTIVE IMPORTER OF JUTE YARN AND TWINE:
The product will mainly be sold through the following principles:
01. N. V. Spinning Blanquaert. BELGIUM
02. Bealieu of America Inc. USA
03. Anmaha services Ltd. UK
04. Marubeni Corporation, OSAKA. JAPAN
05. Balta Industries B. V. BELGIUM
06. NJL Group B. V. HOLLAND
07. REB Wilcox. UK
08. Biggrefier
09. Comtrade Ltd.
10. Feltex Carpet. NEW ZEALAND
11. W. G. Clasen. GERMANY
12. Weitex Co. Ltd. CHAINA
13. Sonvigo S. A. SWITZERLAND
14. Codefine S. A. SWITERLAND

OPPORTUNITIES AND THREATS:
Due to worldwide movement for green
product demand for natural fiber instead of
synthetic fibers in households is growing
again, especially in developed countries
Export schedule may be disrupted due to
unfavorable circumstances like political
instability, power problem, inadequate
shipping facility etc, But these are
manageable.
Bangladesh enjoys comparative cost
advantage of producing jute and jute goods
from its comparators, As such; export
potential in future is still prospective.
Price of raw jute is increasing sharply from
year to year which may result in increasing
cost of raw materials.
Mini Jute spinning mills has advantage of
handing smaller number of workers side by
side manageable amount of exportable jute
goods.

CONCLUSION AND RECOMMENDATION:
In view of the world trade and export of Jute Yarn and twine, as depicted in the report, the
following conclusion and recommendation may be drawn.
a) Jute yarn and twine have, no doubt, a growing global demand as because the
developed countries in recent times have reverted to using natural fibers in the
households on environment and health grounds.
b) Mini jute spinning mills having annual capacity of 2,000 MT to 5,500 MT may be
considered for financing. Only the entrepreneurs possessing good business
experiences and capacity to explore international markets should be encouraged. In
fact, experience and marketing competence of the sponsors are the essential pre-
requisite for running an export- oriented jute yarn and twine project successfully.

AKHWAN JUTE SPINNING MILLS LTD.
Financial Aspects
01 Production Capacity & Capacity Utilization
02 Projected Balance Statement
03 Projected Income Statement
04 Projected Retained Earnings Statement
05 Projected Cost of Goods Sold Statement
06 Working Capital Assessment
07 Break Even Analysis
08 Projected Cash Flow Statement
09 Ratio Analysis
10 Calculation of Payback Period
11 Calculation of IRR
12 Loan Repayment schedule
13 Fixed Assets and Depreciation Schedule (For projected 5 years)
14 Operating expenses (For projected 5 years)

Production Capacity and Capacity Utilization
The 100% Capacity Of this Project Total 5440 Unit in (M.T.), based on two shifts of
operation 16 hour each and 300 days in a year and the market price will be Tk 76,325 per
M.T.
This capacity will be increased up to 85%
Particulars YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
Installed Capacity in unit 5,440 5,440 5,440 5,440 5,440
Capacity Utilization in unit 60% 70% 75% 80% 85%
Production in unit: 3,264 3,808 4,080 4,352 4,624

Projected Balance Sheet
Amount in BD
PROPERTY AND ASSETS YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
NON-CURRENT ASSETS
Fixed assets- at cost 337,021,300 337,021,300 337,021,300 337,021,300 337,021,300
Preliminary and Pre-
operating exp. 1,500,000 1,200,000 900,000 600,000 300,000
IDCP 13,200,000 9,900,000 6,600,000 3,300,000 -
CURRENT ASSETS
Bill Receivables 41,520,800 48,440,933 51,901,000 55,361,067 58,821,133
Closing stock 61,949,034 51,250,507 58,129,120 62,004,395 67,338,433
Cash and cash equivalent 14,546,788 14,983,192 15,432,687 15,895,668 16,372,538
TOTAL 469,737,922 462,795,932 469,984,107 474,182,429 479,853,405
CAPITAL AND LIABILITIES
CAPITAL AND RESERVE
Shareholders' equity 2,500,000 2,500,000 2,500,000 2,500,000 2,500,000
Retained Earnings 12,605,930 29,552,783 48,940,508 67,875,249 85,919,338
Share money deposit 178,641,161 171,390,936 175,835,326 188,802,910 213,318,893
NON-CURRENT LIABILITIES
Accumulated depreciation 24,182,796 48,365,592 72,548,388 96,731,184 120,913,980
Term Loan 217,353,218 174,500,083 124,758,112 67,019,896 (0)
CURRENT LIABILITIES
Creditors 16,608,320 10,899,210 12,975,250 13,840,267 15,293,495
Liability for expenses 7,041,414 7,819,929 8,209,186 8,598,444 8,987,701
Provision for income tax 10,805,083 17,767,399 24,217,337 28,814,480 32,919,998
TOTAL 469,737,922 462,795,932 469,984,107 474,182,429 479,853,405

Projected Income Statement
Amount in BDT
Turnover 249,124,800 290,645,600 311,406,000 332,166,400 352,926,800
Less: Cost of goods sold 174,719,526 185,085,887 195,535,287 212,032,885 231,126,917
Gross profit 74,405,274 105,559,713 115,870,713 120,133,515 121,799,883
Less: Operating expenses
28,443,886 28,443,886 28,443,886 28,443,886 28,443,886
Operating profit 45,961,389 77,115,828 87,426,827 91,689,629 93,355,997
Less: Financial expenses 17,147,834 29,736,097 22,847,262 14,851,016 5,569,336
Net profit before tax 28,813,555 47,379,731 64,579,565 76,838,614 87,786,661
Less: Income Tax @ 37.5% 10,805,083 17,767,399 24,217,337 28,814,480 32,919,998
Net profit after tax 18,008,472 29,612,332 40,362,228 48,024,133 54,866,663
Projected Retained Earnings Statement
Amount in BDT
As per last
Account 12,605,930 29,552,783 48,940,508 67,875,249
Add: Net Income /(Loss) during
the year 18,008,472 29,612,332 40,362,228 48,024,133 54,866,663
18,008,472 42,218,262 69,915,011 96,964,641 122,741,912
Less: Dividend paid 30% 5,402,541 12,665,479 20,974,503 29,089,392 36,822,574
TOTAL 12,605,930 29,552,783 48,940,508 67,875,249 85,919,338

Projected Cost of goods sold Statement
Amount in BDT
Opening W/P - 7,971,994 5,231,621 6,228,120 6,643,328
Opening stock of raw material - 33,216,640 21,798,420 25,950,500 27,680,533
Add : Raw material purchase 199,299,840 130,790,520 155,703,000 166,083,200 183,521,936
at Tk 50,000 Per
M. Ton 199,299,840 171,979,154 182,733,041 198,261,820 217,845,797
Less: Closing stock of W/P 7,971,994 5,231,621 6,228,120 6,643,328 7,340,877
Closing stock of raw
material 33,216,640 21,798,420 25,950,500 27,680,533 30,586,989
158,111,206 144,949,113 150,554,421 163,937,959 179,917,931
Add. Manufacturing expenses 37,368,720 43,596,840 46,710,900 49,824,960 52,939,020
Cost of production 195,479,926 188,545,953 197,265,321 213,762,919 232,856,951
Add: Opening stock of finish
goods - 20,760,400 24,220,467 25,950,500 27,680,533
Less: Closing stock of finished
goods 20,760,400 24,220,467 25,950,500 27,680,533 29,410,567
Cost of goods sold 174,719,526 185,085,887 195,535,287 212,032,885 231,126,917

Projected Cash Flow Statement
Amount in BDT
Particulars YEAR 2 YEAR 3 YEAR 4 YEAR 5
Net
Income 29,612,332 40,362,228 48,024,133 54,866,663
Adjustment to reconcile net
income………
Less: Increase in Current assets
Bill
Receivables (6,920,133) (3,460,067) (3,460,067) (3,460,067)
Closing stock (6,878,613) (3,875,275) (5,334,039)
Add: Decrease in Current assets
Closing stock 10,698,527 -
Less: Decrease in current liabilities
Creditors (5,709,110) - - 1,453,228
Add: Increase in Current Liabilities
Creditors 2,076,040 865,017
Liability for expenses 778,515 389,258 389,258 389,258
Provision for income tax 6,962,316 6,449,938 4,597,143 4,105,518
Add: Depreciation exp 24,182,796 24,182,796 24,182,796 24,182,796
59,605,242 63,121,580 70,723,006 76,203,357
Decrease in preliminary exp 300,000 300,000 300,000 300,000
Decrease in IDCP 3,300,000 3,300,000 3,300,000 3,300,000
Dividend (12,665,479) (20,974,503) (29,089,392) (36,822,574)
Increase in Share money deposit - 4,444,390 12,967,584 24,515,983
Decrease in share money deposit (7,250,225) - -
Loan paid (42,853,135) (49,741,970) (57,738,217) (67,019,896)
436,403 449,496 462,981 476,870
14,546,788 14,983,192 15,432,687 15,895,668
Closing Cash and Cash equivalent 14,983,191 15,432,688 15,895,668 16,372,538

Projected Working Capital Assessment
Amount in BDT
Particulars
BLOCK
PERIOD YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
Raw
Materials 2 Month 33,216,640 21,798,420 25,950,500 27,680,533 30,586,989
Wages 1Month 3,114,060 3,633,070 3,892,575 4,152,080 4,411,585
Other
Overhead 1 Month 1,557,030 1,816,535 1,946,288 2,076,040 2,205,793
Work in
Process 12 Days 7,971,994 5,231,621 6,228,120 6,643,328 7,340,877
Finished
Goods 1 Month 20,760,400 24,220,467 25,950,500 27,680,533 29,410,567
Receivables 2 Month 41,520,800 48,440,933 51,901,000 55,361,067 58,821,133
Payables 1 Month (16,608,320) (10,899,210) (12,975,250) (13,840,267) (15,293,495)
Total 91,532,604 94,241,836 102,893,733 109,753,315 117,483,450
Break Even Analysis
PARTICULARS YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
Capacity Utilization 60% 70% 75% 80% 85%
Sales 249,124,800 290,645,600 311,406,000 332,166,400 352,926,800
Total Variable Cost 174,719,526 185,085,887 195,535,287 212,032,885 231,126,917
Contribution Margin 74,405,274 105,559,713 115,870,713 120,133,515 121,799,883
Contribution Margin per unit 22,796 27,721 28,400 27,604 26,341
Fixed Cost 28,443,886 28,443,886 28,443,886 28,443,886 28,443,886
Beak Even (% on Utilization ) 22.94% 18.86% 18.41% 18.94% 19.85%
Break Even Sales In Quantity ( M.ton) 1,248 1,026 1,002 1,030 1,080
Break Even in Sales 95,236,223 78,316,717 76,443,792 78,646,688 82,418,876

Ratio Analysis
Financial Ratio YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5
Growth Ratio:
Net Income Growth
Ratio
N/A 64.44% 36.30% 18.98% 14.25%
11,603,860 10,749,896 7,661,905 6,842,530
64.44% 36.30% 18.98% 14.25%
Total Assets Growth
Ratio
N/A -1% 2% 1% 1%
(6,941,990) 7,188,175 4,198,322 5,670,975
-1% 2% 1% 1%
Networth Ratio 41% 44% 48% 55% 63%
469,737,922 462,795,932 469,984,107 474,182,429 479,853,405
193,747,091 203,443,719 227,275,834 259,178,159 301,738,231
0.41 0.44 0.48 0.55 0.63
Profitability Ratio :
Gross Margin 29.87% 36.32% 37.21% 36.17% 34.51%
Net Margin 7.23% 10.19% 12.96% 14.46% 15.55%
Operating
Margin
18.45% 26.53% 28.07% 27.60% 26.45%
Return on Investment 8.55% 14.06% 19.16% 22.80% 26.05%
Return on Capital
Employed
7.01% 12.54% 18.34% 23.56% 29.09%
28,813,555 47,379,731 64,579,565 76,838,614 87,786,661
411,100,309 377,943,802 352,033,946 326,198,055 301,738,231
0.070 0.125 0.183 0.236 0.291
Activity Ratio:
Receivable in Days 60 60 60 60 60
Payable in
Days
30 30 30 30 30
Liquidity Ratio:
34,454,817 36,486,538 45,401,773 51,253,191 57,201,194
34,454,817 36,486,538 45,401,773 51,253,191 57,201,194
1.63 1.74 1.48 1.39 1.31
Net Working Capital 29.19% 31.82% 36.19% 38.46% 40.13%
118,016,622 114,674,632 125,462,807 133,261,129 142,532,105
34,454,817 36,486,538 45,401,773 51,253,191 57,201,194
0.29 0.32 0.36 0.38 0.40
469,737,922 462,795,932 469,984,107 474,182,429 479,853,405
58.75% 56.04% 51.64% 45.34% 37.12%
Interest Cover (Times) 1.68 1.59 2.83 5.17 15.76

© Moshiur Rahman
Fixed Asset & Depreciation Schedule (For Projected years)
Name of Asset Balance as on Addition During Total as on Rate of Acc. Dep. As on Dep. Charged
Total
Accumulated
W/D/V as
on
the year (Closing Date) Dep. ( Opening Date)
During the
year
as on (Closing
Date)
( Closing
Date)
Land
65,421,300
65,421,300 0% - - -
65,421,300
Building
55,700,000
55,700,000 5% -
2,785,000 2,785,000 52,915,000
Machinery
206,800,000
206,800,000 10% -
20,680,000 20,680,000 186,120,000
Furniture and Fixture
2,500,000
2,500,000 10% -
250,000 250,000 2,250,000
Errection and
Installation 1,500,000
1,500,000 15% -
225,000 225,000 1,275,000
Vehicle
5,100,000
5,100,000 10% -
242,796 242,796 4,857,204
Total 337,021,300 337,021,300 - 24,182,796 24,182,796 312,838,504

© Moshiur Rahman
Calculation of payback period
Year
Profit after
Depreciation Cash Flow
Cumulative
Cash flowdepreciation
YEAR 1
28,813,555 24,182,796
52,996,351
52,996,351
YEAR 2
47,379,731 24,182,796
71,562,527
124,558,877
YEAR 3
64,579,565 24,182,796
88,762,361
213,321,238
YEAR 4
76,838,614 24,182,796
101,021,410
314,342,648
YEAR 5
87,786,661 24,182,796
111,969,457
426,312,105
Payback period = 4 years + 337021300 - 314342648 x 12 months
111,969,457
4 years 2 months
Calculation of IRR
ARR = Average annual accounting profit
Initial investment
61079625
337021300
18%
So two third of ARR is 12%
Time Cash Flow Discounting PV Discounting PV
Factor 7% Factor 10%
0 -337021300 1 -337021300 1 -337021300
1
52,996,351
0.934
49,498,591
0.909
48,173,683
2
71,562,527
0.873
62,474,086
0.826
59,110,647
3
88,762,361
0.816
72,430,087
0.751
66,660,533
4
101,021,410
0.762
76,978,314
0.683
68,997,623
5
111,969,457
0.712
79,722,253
0.62
69,421,063
4,082,031 -24657751
IRR = 7 % + 4082031 x 10% - 7 %
4082031+24657751
The IRR is, in fact exactly 8 %

Loan Repayment Schedule
Particulars Amount
Principal Amount
220,000,000
IDCP
16,500,000
Total payable amount
236,500,000
Rate of Interest 15%
Grace
period
6 Months
Payback period 54 Months
Equal Monthly Installment (EMI)
6,049,103
No of Opening Balance Principal Interest Installment
Closing
Balance
Installment of Principal Payment Payment of Principal
1 236,500,000 3,092,853 2,956,250 6,049,103 233,407,147
2 233,407,147 3,131,513 2,917,589 6,049,103 230,275,634
3 230,275,634 3,170,657 2,878,445 6,049,103 227,104,977
4 227,104,977 3,210,290 2,838,812 6,049,103 223,894,686
5 223,894,686 3,250,419 2,798,684 6,049,103 220,644,267
6 220,644,267 3,291,049 2,758,053 6,049,103 217,353,218
7 217,353,218 3,332,187 2,716,915 6,049,103 214,021,030
8 214,021,030 3,373,840 2,675,263 6,049,103 210,647,190
9 210,647,190 3,416,013 2,633,090 6,049,103 207,231,178
10 207,231,178 3,458,713 2,590,390 6,049,103 203,772,465
11 203,772,465 3,501,947 2,547,156 6,049,103 200,270,518
12 200,270,518 3,545,721 2,503,381 6,049,103 196,724,797
13 196,724,797 3,590,043 2,459,060 6,049,103 193,134,754
14 193,134,754 3,634,918 2,414,184 6,049,103 189,499,836
15 189,499,836 3,680,355 2,368,748 6,049,103 185,819,481
16 185,819,481 3,726,359 2,322,744 6,049,103 182,093,122
17 182,093,122 3,772,939 2,276,164 6,049,103 178,320,183
18 178,320,183 3,820,100 2,229,002 6,049,103 174,500,083
19 174,500,083 3,867,852 2,181,251 6,049,103 170,632,231
20 170,632,231 3,916,200 2,132,903 6,049,103 166,716,031
21 166,716,031 3,965,152 2,083,950 6,049,103 162,750,879
22 162,750,879 4,014,717 2,034,386 6,049,103 158,736,162
23 158,736,162 4,064,901 1,984,202 6,049,103 154,671,261
24 154,671,261 4,115,712 1,933,391 6,049,103 150,555,550
25 150,555,550 4,167,158 1,881,944 6,049,103 146,388,391
26 146,388,391 4,219,248 1,829,855 6,049,103 142,169,143
27 142,169,143 4,271,988 1,777,114 6,049,103 137,897,155
28 137,897,155 4,325,388 1,723,714 6,049,103 133,571,767
29 133,571,767 4,379,456 1,669,647 6,049,103 129,192,311
30 129,192,311 4,434,199 1,614,904 6,049,103 124,758,112

31 124,758,112 4,489,626 1,559,476 6,049,103 120,268,486
32 120,268,486 4,545,747 1,503,356 6,049,103 115,722,739
33 115,722,739 4,602,568 1,446,534 6,049,103 111,120,171
34 111,120,171 4,660,101 1,389,002 6,049,103 106,460,070
35 106,460,070 4,718,352 1,330,751 6,049,103 101,741,719
36 101,741,719 4,777,331 1,271,771 6,049,103 96,964,387
37 96,964,387 4,837,048 1,212,055 6,049,103 92,127,340
38 92,127,340 4,897,511 1,151,592 6,049,103 87,229,829
39 87,229,829 4,958,730 1,090,373 6,049,103 82,271,099
40 82,271,099 5,020,714 1,028,389 6,049,103 77,250,385
41 77,250,385 5,083,473 965,630 6,049,103 72,166,912
42 72,166,912 5,147,016 902,086 6,049,103 67,019,896
43 67,019,896 5,211,354 837,749 6,049,103 61,808,542
44 61,808,542 5,276,496 772,607 6,049,103 56,532,046
45 56,532,046 5,342,452 706,651 6,049,103 51,189,594
46 51,189,594 5,409,233 639,870 6,049,103 45,780,361
47 45,780,361 5,476,848 572,255 6,049,103 40,303,513
48 40,303,513 5,545,309 503,794 6,049,103 34,758,204
49 34,758,204 5,614,625 434,478 6,049,103 29,143,579
50 29,143,579 5,684,808 364,295 6,049,103 23,458,771
51 23,458,771 5,755,868 293,235 6,049,103 17,702,903
52 17,702,903 5,827,816 221,286 6,049,103 11,875,086
53 11,875,086 5,900,664 148,439 6,049,103 5,974,422
54 5,974,422 5,974,422 74,680 6,049,103 (0)

© Moshiur Rahman
Projected Operating Expenses
Operating expenses 28,443,886
Salary and allowance 2,045,000
Directors remuneration 450,000
Festival bonus 450,000
Office rent 360,000
Telephone bill 60,000
Documentation expenses 45,690
Travelling and conveyance 113,800
Advertisement 76,800
Sample expenses 94,010
Carriage outwards 197,500
Sales commission 140,000
Electricity bill 34,700
Miscelleneous expenses 71,300
Fees and renewals 23,700
Donation and subscription 16,000
Entertainment 45,600
Bank charge and commission 36,990
Depreciation expenses 24,182,796

PROJECT PROFILE AKWAN

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