PROJECT REPORT ON SOLAR

CHARKHA SPINNING, WEAVING,

PROCESSING AND GARMENTS

PRIME MINISTER’S
EMPLOYMENT
GENERATION
PROGRAMME

Khadi & Village Industries Commission

Ministry of MSME, Govt. of India,
Mumbai
 KHADI & VILLAGE INDUSTRIES COMMISSION
PROJECT AT A GLANCE - TOP SHEET

1 Name of the Entrepreneur

2 Constitution (legal Status) Individual

3 Father's/Spouse’s Name

4 Unit Address :
Taluka/Block:
District :
Pin: State:
Phone
:
E-Mail
:

SOLAR CHARKHA SPINNING,

5 Product and By Product WEAVING, PROCESSING & GARMENTS
MANUFACTURING UNIT

6 Cost of Project : Rs. 24,87,694

7 Means of Finance
Term Loan Rs. 22,38,925.00
KVIC Margin Money Rs. 6,21,924.00
Own Capital Rs. 248769.00

8 Debt Service Coverage Ratio : 2.39

9 Pay Back Period : 5Years

10 Project Implementation Period : 12Months

11 Break Even Point : 47.66%

12 Employment : 47

13 Power Requirement : 1 KW

14 Major Raw materials : Sliver/Roving

15 Estimated Annual Sales Turnover : Rs.8000000.00

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 DETAILED PROJECT REPORT

1 INTRODUCTION :
The overall objective of the Khadi and Village Industries Commission (KVIC) is to
provide employment opportunities to spinners /weavers/artisans/individuals/
entrepreneurs with remunerative wages through Khadi & V.I. activities.

KVIC is implementing Khadi programme through the certified Khadi Institutions of

KVIC. At present there are over 2300 Khadi institutions registered under Societies
Registration Act, Trust Act, Co-operative Societies Act etc. are implementing Khadi
programme throughout the country. In order to extend requisite fillip and to help
the sector to emerge as most potent employment provider, KVIC has decided to
introduce solar power charkha for production of solar spun yarn through the willing
khadi institutions and also entrepreneurs. The yarn produced in this solar powered
charkha will be used to convert into cloth using handlooms available with the
weavers and wherever possible by introducing new looms to weavers.

Looking to the low cost technology, production of yarn through solar charkha
activities can easily be undertaken in the rural areas by the Khadi institutions and
entrepreneurs. Training for a week on solar charkha will assist the hand spinners to
operate the solar charkha at their dwelling place itself.

Production Process

The project captioned "Production of Solar Charkha cloth" envisages deployment of

25 solar power operated charkhas and 10 looms (5 new and 5 old) to one
composite unit. The Khadi institutions already possesses infrastructure for
production of Khadi using hand spinning and hand weaving process and
arrangement for processing the grey cloth.

The raw material supply for the solar charkhas will be ensured through KVIC’s
departmental Sliver / Roving plants situated at 6 locations in the country. Beside
KVIC’s departmental units the few Khadi institutions also possess the sliver / roving
production facilities. They will also cater the need of raw material to the solar
power operated charkhas. However, entrepreneurs will have option to procure
sliver/roving from textile manufacturing units.

The yarn produced out of solar charkhas will be converted into cloth using the
weaving implements available with the weavers and subsequent processing for
dyeing, finishing etc. The units will utilize the garmenting capacity available in the
vicinity to convert the cloth into readymade particularly shirts etc.

Market Potential

The change of climate has caused major concern about conservation of ecology
and nature. Therefore, Government of India is encouraging to use non-
conventional energy such as solar energy wherever possible. The products such as
towels, bed sheets, pillow covers, duster cloth etc. produced using solar yarn will
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 be sold to Government departments, Railways etc. with the support of KVIC.

Production planning

The instant project envisages for introduction of minimum of 25 Nos. solar power
operated charkha each having 8 to 10 spindles (per charkha) in each unit with 10
weaving implements and Garment Unit containing 5 single needle locked stitch
machine, one overlocking machine and automatic fabric cutting machine with allied
accessories.

The cost of charkha and minimum cycle of working capital will be provided to the
Khadi institutions/entrepreneurs through PMEGP Scheme by Banks. The yarn
produced through these solar charkhas will be taken-up for further production of
garment especially men shirts by the Khadi institutions. It is estimated that around
60 shirts will be produced each day. Therefore, the annual production of the unit
will be around 18000 for 300 days operation and the average price of each shirt
comes around Rs.445/-.

The unit will also have the option to produce finished products such as bed sheets,
towels, pillow covers, duster cloth, uniforms, dungri cloth etc. KVIC through its
Marketing Directorate will assist the Khadi institutions for extending support to
market their shirts through KVIC Departmental Sales Outlets and also facilitate
supply of solar charkha cloth to Government departments, Railways etc.

Financial Assistance
Financing of Solar charkha units to be set by Khadi Institutions under PMEGP will
receive financial assistance as per the provision of PMEGP with Margin money
assistance as provided under PMEGP scheme.

2 ABOUT THE PROMOTER : Khadi institutions / Entrepreneurs

3 COST OF PROJECT :
A. Fixed Capital Investment
Land and Workshed Rental Workshed Own
The requirement of area will be around 2500 sq.ft. (covered-2000, uncovered-500)
with rent of Rs.5/- per sq.ft. per month.

B. Machinery Qty. Rate Amount (in Rs.)

8 Spindle Charkha 25 13500.00 337500.00
Solar Panel, Battery, Motor, Etc. 25 18000.00 450000.00
Improved Looms 5 40000.00 200000.00
(5 new and 5 owned by weaver)
Garments Machine & Equipment Set 1 375000.00 375000.00
Total 1362500.00

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 d. Preliminary & Pre-operative Cost : Rs.50000.00

e. Furniture & Fixtures : Rs.100000.00

Total Capital Expenditure: Rs.1512500.00

Working Capital Rs.975194.00

Total Cost Project Rs.2487694.00

3.1 Means of Financing :

Own Contribution 10% Rs.248769.00

Bank Finance : 90%

Term Loan Rs.1361250.00
Working Capital Rs.877675.00
Total Rs.2238925.00

Margin Money (Govt. Subsidy) From KVIC 25% Rs.621924.00

Margin Money Subsidy received From KVIC will be kept in term deposit as
per norms of PMEGP in the name of Beneficiary for three years in the
financing branch

3.2 STATEMENT SHOWING THE REPAYMENT OF TERM LOAN & WORKING CAPITAL :

TERM LOAN

Year Opening Installment Closing Interest @

Balance Balance 13.00%
1st 1361250 272250 1089000 176963
2nd 1089000 272250 816750 141570
3rd 816750 272250 544500 106178
4th 544500 272250 272250 70785
5th 272250 272250 0 35393

WORKING CAPITAL

Year Opening Installment Closing Balance Interest @

Balance 13.00%
1st 877675 175535 702140 114098
2nd 702140 175535 526605 91278
3rd 526605 175535 351070 68459
4th 351070 175535 175535 45639
5th 175535 175535 0 22820

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3.3 STATEMENT SHOWING THE DEPRECIATION ON FIXED ASSETS:

MACHINERY @10.00%
Opening Balance 1362500 1226250 1103625 993263 893936
Depreciation 136250 122625 110363 99326 89394
Closing Balance 1226250 1103625 993263 893936 804543

TOTAL DEPRECIATION
Machinery 136250 122625 110363 99326 89394
Total 136250 122625 110363 99326 89394

4 Schedule of Sales Realization :

4.1 Details of Sales

Particulars of Product Rate/unit No.of unit Amount (in Rs.)

Garments 445 18000 8000000.00
Total 8000000.00

4.2 Capacity Utilization of Sales

Particulars 1st Year 2nd Year 3rd Year 4th Year 5th Year
Capacity Utilization 70% 80% 90% 90% 90%
Sales / Receipts 5600000 6400000 7200000 7200000 7200000

5 Raw materials:
Particulars Unit Rate/unit Reqd.Unit Amount (in Rs.)
Sliver/Roving Kgs. 225.00 6260 1408500.00
Total 1408500.00

5.1 Wages :
Particulars No. of Wages Amount in Rs.
Worker Per Month (Per Annum)
Spinner 25 5490.00 1647000.00
Weaver 10 9033.33 1084000.00
Master Cutter-1, Tailor-5, 7 6250.00 525000.00
Overlock Operator-1
Total 42 3256000.00

5.2 Repairs and Maintenance: Rs.12000.00

5.3 Power and Fuel Rs.24000.00

5.4 Other Overhead Expenses Rs.9000.00

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6 Administrative Expenses :

6.1 Salary No. Per month (in Rs.) Annual amount (in Rs.)
Manager/Entrepreneurs 1 15000.00 180000.00
Accountant/Office 1 8000.00 96000.00
Assistance
Production Staff 2 6000.00 144000.00
Sales staff 1 4000.00 48000.00
Total 5 468000.00

6.2 Stationery & Postage 6000.00

6.3 Workshed Rent 150000.00

6.4 Other Miscellaneous Expenses 61600.00

Total 685600.00

7 Capacity Utilization of Manufacturing & Administrative Expenses :

Particulars 1st Year 2nd Year 3rd Year 4th Year 5th Year
Capacity Utilization 70% 80% 90% 90% 90%
Manufacturing Expenses
Raw materials 985950 1126800 1267650 1267650 1267650
Wages 2279200 2604800 2930400 2930400 2930400
Repairs & Maintenance 8400 9600 10800 10800 10800
Power & Fuel 16800 19200 21600 21600 21600
Other Overhead Expenses 6300 7200 8100 8100 8100
Administrative Expenses
Salary 468000 468000 468000 468000 468000
Stationery & Postage 4200 4800 5400 5400 5400
Workshed Rent 150000 150000 150000 150000 150000
Other Miscellaneous 43120 49280 55440 55440 55440
Expenses
Total: 3961970 4439680 4917390 4917390 4917390

8 Assessment of Working Capital :

Particulars Amount (in Rs.)
Sale 8000000.00
Manufacturing Expenses
Raw Material 1408500.00
Wages 3256000.00
Repair & Maintenance 12000.00
Power & Fuel 24000.00
Other Overhead Expenses 9000.00
Production Cost 4709500.00
Administrative Cost 685600.00
Manufacturing Cost 5395100.00

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 Working Capital Estimate :

Element of Working Capital No of Days Basis Amount (in Rs.)

Raw materials 12 Material Cost 56340.00
Stock in process 15 Production Cost 235475.00
Finished goods 18 Manufacturing Cost 323706.00
Receivable by 20 Manufacturing Cost 359673.00
Total Working Capital Requirement Per Cycle 975194.00

9 Financial Analysis

9.1 Projected Profit & Loss Account :

Particulars 1st Year 2nd Year 3rd Year 4th Year

Sales 5600000 6400000 7200000 7200000
Receipts 5600000 6400000 7200000 7200000
Manufacturing Expenses
Raw materials 985950 1126800 1267650 1267650
Wages 2279200 2604800 2930400 2930400
Repairs & Maintenance 8400 9600 10800 10800
Power & Fuel 16800 19200 21600 21600
Other Overhead Expenses 6300 7200 8100 8100
Depreciation 136250 122625 110363 99326
Production Cost 3432900 3890225 4348913 4337876
Administrative Expenses
Salary 468000 491400 515970 541769
Stationery & Postage 4200 4800 5400 5400
Workshed Rent 150000 150000 150000 150000
Other Miscellaneous Expenses 43120 49280 55440 55440
Administrative Cost 665320 695480 726810 752609
Interest on Bank credit @ 13%
Term Loan 176963 141570 106178 70785
Working Capital Loan 114098 91278 68459 45639
Cost of Sale 4389280 4818553 5250359 5206909
Net Profit Before Tax 1210720 1581447 1949641 1993091
Net Profit 1210720 1581447 1949641 1993091

9.2 CALCULATION OF DEBT SERVICE CREDIT RATIO (D.S.C.R) :

Particulars 1st Year 2nd Year 3rd Year 4th Year
Net Profit 1210720 1581447 1949641 1993091
Add :Depreciation 136250 122625 110363 99326
TOTAL - A 1346970 1704072 2060004 2092417
Payments :
On Term Loan :
Interest 176963 141570 106178 70785
Installment 272250 272250 272250 272250
On Working Capital
Interest 114098 91278 68459 45639
TOTAL - B 563310 505098 446886 388674
D.S.C.R = A/B 2.39 3.37 4.61 5.38
Average D.S.C.R
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9.3 PROJECTED BALANCE SHEET :

Particulars 0 Year 1st Year 2nd Year 3rd Year 4th Year
LIABILITIES :
Promoters Capital 248769 248769 248769 248769
Profit 1210720 1581447 1949641 1993091
Term Loan 1361250 1089000 816750 544500
Working Capital Loan 877675 702140 526605 351070
Current Liabilities 0 0 0 0
Sundry Creditors 0 0 0 0
Total 3698414 3621356 3541765 3137430
ASSETS :
Gross Fixed Assets : 1462500 1326250 1203625 1093263
Less : Depreciation 136250 122625 110363 99326
Net Fixed Assets 1326250 1203625 1093263 993936
Preliminary & Pre-Op. Expenses 50000 37500 28125 21094
Current Assets 877675 702140 526605 351070
Cash in Bank/Hand 1494489 1715591 1921898 1792423
Total 3698414 3621356 3541765 3137430

9.4 CASH FLOW STATEMENT :

Particulars 0 Year 1st Year 2nd Year 3rd Year 4th Year
Net Profit 1210720 1581447 1949641 1993091
Add : Depreciation 136250 122625 110363 99326
Term Loan 1361250 1089000 816750 544500
Working Capital Loan 877675 702140 526605 351070
Promoters Capital 248769 0 0 0
Total 3834664 3495212 3403359 2987987

Total Fixed Capital Invested 1512500

Repayment of Term Loan 272250 272250 272250 272250

Repayment of WC Loan 175535 175535 175535 175535
Current Assets 877675 702140 526605 351070
Total 1325460 1149925 974390 798855

Opening Balance 0 2509204 4854491 7283459

Surplus 2509204 2345287 2428969 2189132
Closing Balance 2509204 4854491 7283459 9472591

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9.5 BREAK EVEN POINT AND RATIO ANALYSIS :

Particulars 0 Year 1st Year 2nd Year 3rd Year 4th Year
Fixed Cost 978533 959675 943350 922720
Variable Cost 3546998 3981503 4417371 4383515
Total Cost 4525530 4941178 5360721 5306236
Sales 5600000 6400000 7200000 7200000
Contribution (Sales-VC) 2053002 2418497 2782629 2816485
B.E.P in % 47.66% 39.68% 33.90% 32.76%
Break Even Sales in Rs. 2669155 2539561 2440900 2358822
Break Even Units 2669155 2539561 2440900 2358822
Current Ratio 1.19 1.03 0.85 0.62
Net Profit Ratio 21.62% 24.71% 27.08% 27.68%

This Project Report has been prepared based on the data furnished by the entrepreneur
whose details are given in the application.

Place :
Date:

Prepared by :
Director, Khadi & Village Industries Commission,
State/Divisional Office, ……………………………….
Signature with round real

Signature of the Beneficiary

Full Name: …………………………………………...
Address: ……………………………………………
…………………………………………………………
Phone:………………………………………………..
Fax: …………………………………………………..
Email: ……………………………………………….

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