1 Techno-economic Feasibility Report for NE Region of India | ANUGRAHA LOOM

TECHNO ECONOMIC FEASIBILITY REPORT

ANUGRAHA – A METALLIC HAND LOOM FOR WEAVING COIR
GEO- TEXTILES
SUMMARY
In the North East Region, landslides due to soil erosion in hilly states like Meghalaya,
Mizoram, Manipur, Sikkim, Arunachal Pradesh, Nagaland and river side soil erosion in
the state of Assam are common & perennial problem. One of the most effective and
yet natural soil erosion prevention techniques is the use of Coir Geotextiles fabrics
(Woven Geotextiles). It is strong, durable, water proof and is one of the few natural
fibers that is salt water resistant. Therefore, in North East India there is a high
demand and potentiality of coir geotextile production industry.
The Anugraha Loom under North East Indian conditions is very much technically
feasible and economically viable as has been worked out in the feasibility report.
However, it is also found that big industries with higher capacity of production with
multiple Anugraha Loom will not be feasible because of limitation of raw materials as
compared to South Indian States. The Anugraha loom will be economically feasible in
the major coconut producing districts in Assam, which are – Barpeta, Nagaon,
Sonitpur, Golaghat, Kamrup & Nalbari. In Tripura 2 numbers of Anugraha Loom will
be feasible at the state headquarter at Agartala. & Udaipur.
Plant Capacity :
The production basis for a single ANUGRAHA LOOM would be as follows :
Working hour per day : 8 hours
Production capacity : 80 sp.m. per day
Working Days in a year : 300 days
Capacity utilization : 75%, 80%, 85% during first, second & third year
& 90% from fourth year onwards.
Annual Production : 24000 sq.m.

The major highlight of the feasibility report :

1. The Capital requirement : Rs.3.41 lakh
2. Promoter contribution : Rs.0.682 lakh
3. Annual Sales (Turnover) : Rs.11.52 lakh
4. Annual Operating expenses (fixed + variable) : Rs.8.29 lakh
5. Annual Gross profit (pre-tax) : Rs.3.23 lakh
6. Annual Gross profit Ratio : 28.00%
7. Break Even Point : 26.45%
8. Rate of return on investment : 27.55%
9. Number of person employed : 3 persons per day

2 Techno-economic Feasibility Report for NE Region of India | ANUGRAHA LOOM

 TECHNO ECONOMIC FEASIBILITY REPORT
ANUGRAHA – A METALLIC HAND LOOM FOR WEAVING COIR
GEO- TEXTILES

CONTENT
1. INTRODUCTION
1.1 General
1.2 Brief of the technologies
1.3 About the North Eastern Region
1.4 Aim of the feasibility study

2. DEMAND, PRODUCTION AND SUPPLY

2.1 Demand of the product
2.2 Production & Supply

3. PLANT LOCATION AND INFRASTRUCTURAL FACILITIES

3.1 Plant Location
3.2 Infrastructural Facilities
3.3 Plant Layout

4. MANUFACTURING PROCESS
4.1 General
4.2 Manufacturing Process
4.3 Quality Control Analysis
4.4 Pollution and abatement
5. ORGANIZATION AND MANAGEMENT
5.1 Functional areas envisaged

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 5.2 Functional responsibilities

6. PROJECT PHASING AND ACTIVITY SCHEDULE

6.1 Project phasing
6.2 Activity Schedule

7. CAPITAL REQUIREMENT AND COSTS

7.1 Fixed capital
7.2 Working capital
7.3 Scheme of finance

8. OPERATING REQUIREMENT AND COSTS

8.1 Variable costs
8.2 Fixed costs

9. FINANCIAL ANALYSIS
9.1 Fixation of product price
9.2 Profitability analysis
9.3 Cash flow analysis
9.4 Balance Sheet
9.5 Appraisal

10.CONCLUSION AND RECOMMENDATION

4 Techno-economic Feasibility Report for NE Region of India | ANUGRAHA LOOM

 TECHNO ECONOMIC FEASIBILITY REPORT

ANUGRAHA – A METALLIC HAND LOOM FOR WEAVING COIR

GEO-TEXTILES
11. INTRODUCTION
11.1 General
The coconut palm indeed is a traditional plantation crop grown in India over the past
3000 years with longest mythological and historical record. In spite of the great
antiquity attached to coconut crop in the country, organized efforts to develop the
crop were made only about a century back and actual systematic efforts for
development of coconut palm as a commercial crop begun in 1940s.

Coir is a unique natural fibre with diverse applications of great economic importance
extracted from husks of Coconut. India is the largest coir producer in the world
accounting for more than 80 per cent of the total world production of coir fibre. The
coir sector in India is very diverse and involves households, co-operatives, NGOs,
manufacturers and exporters.

The husk yields fibres, which is converted into coir and coir products viz., coil carpets,
coir geo-textile, coir composite, coir safety belts, coir boards, coir asbestos and coir
pith. Coir pith a secondary by product obtained during defibering process is used as
soil conditioner and mending all types of soils. The spongy nature of pith helps in
disintegration of clay soil and allows free drainage. Its sponginess helps to retain
water and oxygen and also prevents loss of vital nutrients from soil.

Coir fibres measure up to 35 cm in length with a diameter of 12-25 microns. A

coconut harvest occurs once in 45 days. From 1000 coconuts it would be possible to
extract 10 kgs of coir. Among vegetable fibres, coir has one of the highest
concentrations of lignin, making it stronger but less flexible than cotton and
unsuitable for dyeing. The tensile strength of coir is low compared to abaca, but it has
good resistance to microbial action and salt water damage and needs no chemical
treatment.

There are two types of coir - the more commonly used brown fibre, which is obtained
from mature coconuts, and finer white fibre, which is extracted from immature green
coconuts after soaking for up to 10 months. Mature coir fibres contain more lignin, a
complex woody chemical, and less cellulose than fibres such as flax or cotton.

Indian coir industry is an important cottage industry contributing significantly to the

economy of the major coconut growing States and Union Territories, i.e., Kerala,
Tamil Nadu, Andhra Pradesh, Karnataka, Maharashtra, Goa, Orissa, Assam, Andaman
& Nicobar, Lakshadweep, Pondicherry, etc. Coconut husk is the basic raw material for

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coir products. Around 50 per cent of the available coir husk is used to produce coir
products. Hence, there is scope for growth of coir industry.

There is a huge potential for using coconut husk to set up coir units to produce coir
fibre, yarn and other value-added products including coir mattresses. Production of
coir bhoovastra and coir pith in the North Eastern region could also help in the speedy
development of the rural sector. It will be a great achievement for these States if they
succeeded in capturing at least 5 per cent each of the Rs. 1,300-crore domestic
market for rubberised coir mattresses.

The coir industry employs more than 6.4 lakh persons of whom majorities are from
rural areas belonging to the economically weaker sections of society. Nearly 80% of
the coir workers in the fibre extraction and spinning sectors are women
approximately of which 3.60 lakhs people belong to Kerala alone. About 80% of them
are women. The women are mostly engaged in fibre extraction and spinning. The
industry concentrated in Kerala but spread over in other States like Tamilnadu,
Karnataka, Orissa, Andhra Pradesh etc. The development of industry is mainly
concentrated in the area of coconut cultivation and availability of coconut husk.

11.2 Brief of the technologies

Central Coir Research Institute, Kalavoor the research center of Coir Board has
successfully developed a metallic handloom namely “ANUGRAHA” for weaving all
kinds of geo textiles. It is a specially designed light weight loom for weaving Coir Geo
Textiles, very easy to operate and offers comfortable weaving of geo textiles
especially for ladies. It is made up of steel material. Weaving method is similar to
normal handloom, but the warp release and take up of woven matting are
automatically done in this loom. The operation of wooden coir handlooms requires
exertion of a large force and therefore can be operated mainly by males having sound
physique. Anugraha loom has been so designed that it can weave a coir fabric with a
close to 6 mm to a fabric having mesh size of 25 mm. A layman can operate and
produce standard quality products without any drudgery. As there is no power
required to operate this loom, it can be installed in the remote village where women
can easily operate it as it has a simple pedal for treadling. The treadling and beating is
very is in Anugraha loom. The treadling is operated by a 3 mm wire rope (motor cycle
cable) and beating simplified providing a bush bearing. The loom can be converted in
to wider width or a multi shaft loom to make it more versatile to produce intricate
designs on coir.

Anugraha is light weight, easy to shift from one place to another as it needs no
foundation. It needs less maintenance and occupies less space. It is easy to operate
compared to wooden handloom. Anugraha loom is a big success in the coir industry
and there is a tremendous scope for generation of woman employment. It is a boon
to the industry and hence named “Anugraha” by CCRI which means blessing
especially to the rural poor woman folk. Anugraha loom is the best machine for

6 Techno-economic Feasibility Report for NE Region of India | ANUGRAHA LOOM

producing coir geotextiles. Fabrication of wooden handloom requires one cubic
meter of valuable wood. A tree of height 15 m and diameter 0.5 m can produce 2.25
cubic meters of planks. Therefore, two wooden handlooms necessitate cutting of a
tree. The metallic Anugraha handloom could save trees, which are very essential for
maintenance of ecology.

The treadle lever in Anugraha loom is raised by a cable system. The Anugraha loom is
designed with a cover to protect the women during weaving. Women get expertise to
operate Anugraha Loom in four hours training. Panama matting, Ribbed matting, rod
mat, rod inland mat and carpet mat can also be manufactured using Anugraha loom
with minor arrangements.

The technology has been already transferred to 23 parties for manufacturing the
Anugraha loom. The Anugraha loom for purchase will be available with the following :
1) Ashok Steel Industries, Cherthala
2) Clamp Tools, Kalamasserry
3) Coirwell Engineering Works, Pollachi
4) Cones India Engineering Works, Pollachi
5) Dollar Industrial Machines, Thanjavur
6) G.S. Industries, Thiruvananthapuram
7) Kurichi Engineering, Thanjavur
8) Mas Engineering Works, Thiruvananthapuram
9) Plants (India) Agro Machinery Pvt. Ltd, Kalamasserry
10) Sagar Nylon products (India) Pvt. Ltd., Thiruvananthapuram
11) St. Joseph Engineering Works, Cherthala
12) Sakthi Engineering Works, Pollachi
13) Sakthivel & Co., Muhamma
14) Shajan Engineering Enterprises, Alappuzha
15) Steelex Chemicals, Thiruvananthapuram
16) Steel Track Engineering products, Cherthala
17) Monarck Engineers, Kochi
18) Metal Forms, Palakkad
19) Sri Saranya industries, Coibatore
20) Charankattu Coir Manufacturing Co.(P) Ltd., Cherthala
21) Brothers Coir Mills, Alappuzha
22) Peekay Tree Crops Foundation, Kochi
23) Centre for Development of Coir Technology, Thiruvananthapuram

11.3 About the North Eastern Region

North Eastern region of India comprising the eight states of Assam, Arunachal
Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim and Tripura is endowed
with vast natural resources and has enormous potential of development. The
economic structure of north-east India is similar to the general economic structure of
India as a whole. But because of its topography as well as social and political
conditions it has a relatively backward economy.

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The climatic condition in the region varies from temperate to sub-tropical and
tropical. The agro-climatic conditions of the region, varied soil types and abundant
rainfall are favourable for cultivation of horticultural crops especially plantation crops.
Coconut is one of the most popular crop grown for a long time especially in Assam
state and in recent times in others N.E. states. The area and production which were
11,000 hectares and 60 million nuts, respectively, during 1985–86, have now
increased to 40,000 hectares and about 178 million nuts, in the North Eastern Region.
The cultivation which was confined to Assam, Tripura and to some extent in Manipur,
has now spread to states like Nagaland, Mizoram, Arunachal Pradesh and Meghalaya
due to efforts made by Coconut Development Board.
The state of Assam is having 20710 ha area under Coconut & with a total production
of 1756.13 lakhs of nuts every year. In the State, farmers of Nagaon, Nalbari, Kamrup
(R), Morigaon districts and the Bajali sub-division in Barpeta district are the major
producers of coconut. Farmers in some areas of Lakhimpur and Dhemaji districts also
produce the crop. Lion’s share of the coconut produced in the State is consumed by
its own people, while a portion is exported to the neighbouring states of Manipur,
Mizoram, Meghalaya and West Bengal. Some portions are also exported to Bihar and
Jharkhand.

Taking advantage of the sufficient number of coconut production, there is great scope
to set up Coir based industries in the states of Assam & Tripura in this North East
Region of India. The prospect of the coir industry is very high as Assam produces a
total of 176 million coconuts every year. The state produces 8 thousand 480 nuts per
hectare per year against the national average of 8 thousand 303. According to
experts, 80 tonnes of fiber could be extracted from 1 million coconuts. Hence, Assam
can produce 17 thousand 561 metric tonnes of fiber per year. Traditional items like
durable ropes and twines, brooms, door mats along with technology based products
including Geo-textile for erosion control and ornaments are being produced, using
coir.

In the North East Region, landslides due to soil erosion in hilly states like Meghalaya,
Mizoram, Manipur, Sikkim, Arunachal Pradesh, Nagaland and river side soil erosion in
the state of Assam are common & perennial problem. One of the most effective and
yet natural soil erosion prevention techniques is the use of Coir Geotextiles fabrics
(Woven Geotextiles). Used extensively to prevent environmental degradation
geotextiles have no synthetic material but is instead made out of an organic fiber,
coir, which is extracted from the husk of a coconut. It is strong, durable, water proof
and is one of the few natural fibers that is salt water resistant. The coir fiber is spun or
woven into mesh generating products such as coir netting, coir matting, geotextiles,
geo blankets, coir beds, coir pots, coir discs and so on with an “ANUGRAHA LOOM”.
These products in NE States could be used widely for many purposes such as stream
and river bank protection, slope stabilization in railways cuttings and embankments,
Sediment control, reinforcement of rural unpaved roads, railways and storage areas,
filtration in road drains, waste protections and greening forestry re-vegetation, UV
protection for under earth crops, roof top greening and landscaping, protection from
8 Techno-economic Feasibility Report for NE Region of India | ANUGRAHA LOOM
 wind erosion, Soil erosion control and wetland environment, concrete column curing
and as a sound barrier and mine site reclamation. Therefore in North East India there
is a high demand and potentiality of coir geotextile industry.

11.4 Aim of the feasibility study

The development of coir industry has all along been in areas where there is a
concentration of coconut trees and availability of coconut husk. Historically, the coir
industry started and flourished in Kerala which has a long coast line, lakes, lagoons
and backwaters providing natural conditions required for retting. However, with the
expansion of coconut cultivation, coir industry has picked up in the States of Tamil
Nadu, Karnataka, Andhra Pradesh, Orissa, West Bengal, Assam, Tripura, Pondicherry
and the Union Territories of Lakshadweep and Andaman & Nicobar Islands through
the efforts of Coir Board. The coir fibre industry is particularly located in Southern
states of India, mainly the coastal region of Kerala State, produces 60% of the total
world supply of white coir fibre. There is scope for development of coir industry in the
coconut growing North Eastern States of India. Hence, the present study was
undertaken to find out the feasibility of establishing Coir Industries in North Eastern
States of India with respect to availability of raw materials (coconut husks),
operational cost etc.

The main aims of the techno-economic feasibility study for a developed technology
are –
 Technical evaluation of the know-how/technology developed by an R&D
institution.
 To broadly specify the plant and machinery and other facilities required.
 Assessment of demand of the product to be produced.
 The likely investment required.
 Financial analysis of the proposed technology/venture to broadly determine
whether the project is economically viable.
 Commercial analysis of the project to evolve sound marketing plan and
organizational structure for the proposed venture.
 To make projected financial analysis for submission to the financial institutions
and bank seeking long term and short term borrowings respectively.

12. DEMAND, PRODUCTION AND SUPPLY

12.1 Demand of the product
North Eastern Hill (NEH) region of India comprises of 08 states namely Assam,
Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Tripura and Sikkim. The
area is dominated by three land forms associated viz., (1) The Greater Himalayas (2)
strong dissected high lands (3) low lying riverine plains. The Annual rainfall of the
region varies from 2,000 to 10,000 mm. The topography and climate of the region is
conducive to accelerate soil erosion, which has been recognized as a serious threat to
environment. The hill of Arunachal Pradesh, which occupies a major portion in the
Himalayan Mountains is relatively a younger formation and geologically, a very

9 Techno-economic Feasibility Report for NE Region of India | ANUGRAHA LOOM

 complex range. There is a usual phenomenon of erosion and land degradation by the
action of water in this region.

Use of geo-textiles in NE region at present is negligible. However, there is a huge

scope of using coir geotextile for preventing soil erosion, landslides, construction of
hilly roads etc. There is lack of proper awareness about the use of coir geotextile in
this part of India & if efforts made to aware the general people, concerned govt.
departments in this part of the country, the demand of coir geotextiles will increase
tremendously.

12.2 Production & Supply

Assam produces 1756.13 lakh of coconut per year. It is estimated that 80 tones of
fiber could be extracted from 1 million coconuts. Hence, Assam can produce 14
thousand 80 metric tones of coir fiber per year.
However, at present there is no Anugraha loom or no commercial coir geotextile
producing unit in the North Eastern states. Hence, considering the enormous scope of
using coir geotextile in various ways in this part of the country, a few industries with
Anugraha loom for producing coir geotextile should be established.

13. PLANT LOCATION AND INFRASTRUCTURAL FACILITIES

13.1 Plant Location
For the selection of a suitable location for setting up of Anugraha Loom for
production of Coir Geotextiles, following prerequisites are to be considered.
(i) Availability of infrastructural facilities viz. raw materials and transport.
(ii) Locally available raw materials (Coir fibre/coir yarn) utilization.
(iii) Communication and transport facilities.
(iv) Availability of necessary technical personnel, skilled & unskilled
manpower.

The source of coir fibre is the Coconut plant. It is observed from the survey, collection
of data from various sources that Coconut is mostly grown in Assam (20710 ha) and
Tripura (5900 ha) amongst the North Eastern States of India. Therefore, any
entrepreneur wish to set up Coir Industry should be in Assam or in Tripura.

Assam & Tripura together produces 1890.55 lakhs of nuts per year. The Major
coconut producing districts in Assam are – Barpeta, Nagaon, Sonitpur, Golaghat,
Kamrup & Nalbari. The Anugraha loom plant for producing coir geotextile to be
established in these district of Assam along with the fibre extraction machine. In
Tripura the recommended area for Anugraha loom plant is Agartala, where coir fibres
& yarns from all four districts can be collected for making coir geotextiles.

Keeping in mind the above factors it is recommended that in Assam at least 10 unit
of Anugraha Loom and in Tripura at least 2 Anugraha Loom unit could be
established.
10 Techno-economic Feasibility Report for NE Region of India | ANUGRAHA LOOM
 13.2 Infrastructural Facilities
Infrastructural facilities required for installation of Anugraha Loom are a building of
6m × 4m and one Anugraha Loom. The land requirement for construction of
building/loom house is suggested to have his/her own and attached with residential
house. As the Anugraha loom occupies less space, the 6m × 4m house will be
sufficient enough for the installation of loom and storing raw materials & coir yarn &
finished product.

13.3 Plant Layout

There will not be any specific plant for setting up of Anugraha Loom. It is to be
purchased from Coir Board authorized dealer. The loom is to be installed in the
proposed loom house (6m × 4m) attached to residential house of the entrepreneur.

14. MANUFACTURING PROCESS

4.1. General :
The technology of Anugraha Loom is very simple and very easy to operate with higher
output of superior quality, lesser cost, suitable for women can be manufactured by
basic level fabrication units, even take up by mechanical means and warping
mechanism for single machine. The finished product i.e. geo-textiles have a looser
weave and are used outside for erosion control (pre-vegetative protection).

4.2. Manufacturing Process :

The main process steps are :
(a) Purchase/Fabrication and setting up of Anugraha Loom
(b) Collection and storage of coir yarn
(c) Weaving of coir geotextiles in Anugraha Loom
(d) Marketing of finished product

Anugraha Loom Technology has already been transferred to 23 parties and they are
the authorized manufacturer of the Anugraha Loom. Therefore, no manufacturing
processes have been involved & interested entrepreneurs have to purchase the Loom
& get trained for operation.

4.3. Quality Control Analysis :

The coir geotextile is an excellent medium for bio-engineering applications in amny
parts of the world in the form of meshes, netting, needle felt and pads, erosion
control blankets, geo rolls, vegetation fascines, geo cushions, geo beds and anti-weed
blankets. The quality of production depends on the application of the product.

4.4. Pollution and abatement :

The proposed plant for production of Coir Geotextile does not produce harmful
effluents. Therefore, no environmental pollution will arise from the proposed
industry.

11 Techno-economic Feasibility Report for NE Region of India | ANUGRAHA LOOM

15. ORGANIZATION AND MANAGEMENT
15.1 Functional areas envisaged
The operation and management of Anugraha Loom is very easy and a simple
organizational structure is recommended the following functional areas :
(i) Production (Weaving)
(ii) Administration, sales/purchase and accounts &
(iii) Quality Control.

5.2 Functional responsibilities

The recommended that only three persons are needed to execute the above
functional areas with following responsibilities :
(i) Production : A person may be directly involved in the activities related to
the operation (weaver) using Anugraha Loom. A labour will also be
required to collect & continuous supply of raw materials (coir yarn),
cleaning of loom, packing of finished product etc.

(ii) Administration, Sales/Purchase and accounts : Another third person (may

be the owner also) will responsible for purchase of coir yarn, marketing of
coir geotextiles, calculating operational cost, fixing of prices for sales &
purchase and maintaining accounts. Formulation of a workable &
profitable program for purchase of raw materials & sales of coir geotextiles
will look after by the proposed Supervisor.

(iii) Quality Control : Both the weaver & supervisor have to be well trained
before starting the operation and should know about the operational
functions of the loom with varied quality of raw materials for maintaining
the quality of geotextiles.

16. PROJECT PHASING AND ACTIVITY SCHEDULE

16.1 Project phasing
A poorly designed traditional planning and control methods fail to cope up with
the changing realities of modern business. Now the management have started
using more effective planning and control techniques when a complex set of
activities are involved. However, as the operation & function of Anugraha Loom is
very simple no such critical planning is required.
A time span of 15 weeks time is envisaged to complete the project
implementation i.e. training, purchase of Anugraha Loom, market survey &
collection of raw materials.

16.2 Activity Schedule

The detail scheduling of each activity and effective project control systems are
essential to completion of the project according to the project implementation
schedule. The activity schedule for producing geotextiles through Anugraha looms
involves the following primary activities:
(i) Purchase & Installation of Anugraha Loom

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 (ii) Engagement of Manpower like Supervisor, weaver & labour
(iii) Training
(iv) Purchase/collection of raw materials
(v) Weaving/production of Coir geotextiles
(vi) Storing & marketing of product

17. CAPITAL REQUIREMENT AND COSTS

17.1 Fixed capital
For the purpose of techno-economic study fixed costs are taken as those which
are required before the commencement of commercial production. This includes
fixed assets towards land and buildings, plant & machinery, miscellaneous fixed
assets, know-how and engineering/training fees, capitalized and pre-operative
expenses etc. The fixed investment for purchase & operation of Anugraha Loom is
estimated as Rs.3.41 lakh. To cover the expenditure during project
implementation period of 15 weeks, the establishment salaries, travelling
expenses, postage and telephones, printing & stationeries expenses are
considered under the pre-operative head. In this case, the Pre-operative cost is
calculated as Rs.0.10 lakh & Margin Money for Working Capital is estimated at
0.58 lakh (Table-IV). The detail cost break of individual components is presented
in Table I & Figure I.

17.2 Working capital

Working Capital provided for the inventory of new materials & utilities, salaries
and wages, stock of finished goods, bills receivable & other items. Considerable
care is exercised in estimating the working capital since it is a non-depreciable
capital on which a return must be earned. The details of working capital (Cost of
production) have been calculated as Rs.8.30 lakh and shown in Table-II, Table- III
& Figure-II.

17.3 Scheme of finance

The proposed project i.e. Anugraha is to be managed by private entrepreneurs,
requirement of funds are proposed to be drawn through a bankable project,
capital subsidy from Coir Board, Govt. of India under suitable scheme. Table-V
presents the Bank Loan along with loan repayment schedule for five years.

18. OPERATING REQUIREMENT AND COSTS

This is deals with the operating costs viz. fixed and variable costs after
commencement of production. The breakdown of the production cost is given in
Table II.

18.1 Variable costs

The variable costs which are directly related to the quantum of production,
include raw materials, utilities, packing costs, maintenance cost etc. The total
variable cost is presented in Table-II.
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 18.2 Fixed costs
The salary and wages of all the personnel to be employed is calculated as Rs.2.25
lakh per year and shown in Table-III.

19. FINANCIAL ANALYSIS

The primary objective of the financial analysis is to determine the suggested program
and policies that form the very basis of the proposed venture would yield a
reasonable return on investment. The assessment is presented in the following
format.
(i) Fixation of price of Coir Geotextiles
(ii) Profitability Analysis
(iii) Cash Flow Analysis
(iv) Balance sheet presentation
(v) Appraisal of the proposed venture
19.1 Fixation of product price
Demand of coir geotextile is well established in the country. From the available
information the current price of coir geotextile in NE states is varies from Rs.48-
55/- per square meter. However, for the purpose of feasibility study and financial
analysis of the proposed project the minimum price of Rs.48/- per square meter
has been considered.
19.2 Profitability analysis
From the recommended selling price and generated cost data the profitability has
been worked out. While estimating profitability, sales and administrative
expenses, financial expenses i.e. interest payable to financial institutions and
banks have been duly considered. Considering the geographical locations & Socio-
economic conditions in NE states, it is calculated that only 75% of the capacity of
Anugraha loom is utilized in first year, 80% in second year, 85% in third year and
90% from fourth year onwards. The details of profitability analysis are presented
in Table-VI. In short it can be seen that the proposed Anugraha Loom of an
entrepreneur can generate the Gross Operating Profit and Net Profits for ten
production years as per the following table:
Years Gross Operating Profit (Rs. Net Profit (Rs. in lakh)
in lakh)

I Year 2.129 2.119

II Year 2.129 2.119
III Year 2.129 2.119
IV Year 2.129 2.119
V Year 2.129 2.119
VI Year 2.129 2.119
VII Year 2.129 2.119
VIII Year 2.129 2.119
IX Year 2.129 2.119
X Year 2.129 2.119

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 19.3 Cash flow analysis
The data presented in Table VII is very critical for the purpose of financial analysis.
The data highlight the quantum of cash flow from the proposed Anugraha Loom
for the ten productive years. This would in turn bring the debt paying power of
the proposed entrepreneur. For the purpose of financial analysis, the repayment
of loan (Rs.2.728 lakh), commences from the first year of production. It is
expected to be cleared by the end of fifth year in 5 equal installments with
interest. Table-V shows repayment schedule of loans and the interest payable to
the financial institution at the rate of 12%. It is observed from the Cash Flow
Analysis that an amount of Rs.25.413 lakh cash also has been accumulated for any
expansion or diversification of business utilizing coir fibre during a period of ten
years after clearing all the loans by fifth year.

19.4 Balance Sheet

The projected balance sheet for the ten productive years showing the assets and
liabilities of the proposed venture (Anugraha Loom) has been shown in Table-VIII.

19.5 Appraisal
Setting up of industries in NE states owing to its varied socio-cultural differences,
geographical unevenness & other socio-economic condition is sometimes become
complex. To overcome such risks it is very much essential to judge a project by
various means after working out a detail techno-economic feasibility report. Most
of the projects are financed from multiple sources, internal funds, loans, grants
etc. The loan and associated interest and other charges will be repaid principally
from the operating cash flow which the capital project is expected subsequently
to generate. Thus the risk are shared by both the parties i.e. lender & financial
institution. There are some reliable means of judging a project and they are duly
considered here.

19.6 Break Even Point :

The Break Even Point analysis is primarily intended to indicate the proposed plant
operating level at which accounting sales covers the accounting costs and the unit
run at no loss basis. Any increase in production from break event level will
definitely yield profit whereas it will run at loss if the production level is below the
break even. The secondary objective is to examine the relationship between profit
and quantum of production. Table-IX represented the detail Break Even Point
Analysis and Figure-III represented the BEP graphically. In this particular Anugraha
loom in NE States, the break even point occurs at 26.45% production level.

20. CONCLUSION AND RECOMMENDATION

India accounts for more than two-thirds of the world production of coir and coir
products. It is an important cottage industry contributing significantly to the economy
of the major coconut growing States and Union Territories, i.e., Kerala, Tamilnadu,

15 Techno-economic Feasibility Report for NE Region of India | ANUGRAHA LOOM

 Andhra Pradesh, Karnataka, Maharashtra, Goa, Orissa, Assam, Andaman & Nicobar,
Lakshadweep, Pondicherry, etc.
However, despite the huge potential to grow up this industry in NE region, especially
in Assam, due to lack of awareness, scattered nature of coconut plantations, the
growth of the coir industry is negligible or very poor. The state of Assam is having
20710 ha area under Coconut & with a total production of 1756.13 lakhs of nuts every
year. Assam can produce 17 thousand 561 metric tonnes of fiber per year. Due to lack
of infrastructure facility, lack of awareness & poor economic condition the full
utilization of the coconut husk has not been achieved.

The Anugraha Loom under North East Indian conditions is very much technically
feasible and economically viable as has been worked out in the feasibility report.
However, it is also found that big industries with higher capacity of production with
multiple Anugraha Loom will not be feasible because of limitation of raw materials as
compared to South Indian States. The Anugraha loom will be economically feasible in
the major coconut producing districts in Assam, which are – Barpeta, Nagaon,
Sonitpur, Golaghat, Kamrup & Nalbari. In Tripura 2 numbers of Anugraha Loom will
be feasible at the state headquarter at Agartala & Udaipur.

Therefore, it is recommended that interested entrepreneurs may come forward to

take up the technology (Anugraha loom) for self employment and socio-economic
development of this region. Cooperation is also required from different sectors to
provide necessary facilities i.e. financial, technical etc. to help the interested
entrepreneurs for speedy & successful implementation of the project.

16 Techno-economic Feasibility Report for NE Region of India | ANUGRAHA LOOM

 TECHNO ECONOMIC FEASIBILITY STUDY

Title of the Project : ANUGRAHA LOOM-A METALLIC HAND LOOM

FOR WEAVING COIR GEO-TEXTILES
Basis of calculation :
Number of Working Days = 300 days
Debt Equity Ratio =4:1

Plant Capacity
Raw Material (Coir Yarn) processing = 45 Kg per day
Product (Geo-textile) = 80 Sq.M per day

TABLE- I
PROJECT CAPITAL COST

Sl. PARTICULARS CAPACITY UNIT QTY COST(Rs)

NO.
A BUILDING (6M x 4M) 24 Sq.M 1 228000.00
B MACHINERY 45000.00
1 Machinery 1 metre Anugraha loom 600 Kg 1
2 Transportation Cost of the Machine
C PRE-OPERATIVE EXPENSES 10000.00
D MARGIN MONEY FOR WORKING CAPITAL 58000.00
GRAND TOTAL 341000.00

17.01%

2.93%
BUILDING (6M x 4M)

MACHINERY

PRE-OPERATIVE EXPENSES
13.20%
MARGIN MONEY FOR
66.86%
WORKING CAPITAL

Figure-I : Diagrammatic Representation of Project Capital Cost

17 Techno-economic Feasibility Report for NE Region of India | ANUGRAHA LOOM

 TABLE - II
COST OF PRODUCTION
Sl. Item Requirement per Price Amount per
No. Day (Rs) Annum
1 Raw Material Cost
Coir Yarn 45.0 Kg 40.00 per Kg Rs. 540000.00
Raw Material Cost Rs. 540000.00
2 Maintenance & Repair 5% of Machinery Rs. 2250.00
3 Manpower Cost Rs. 225000.00
4 Depreciation 10% of Machinery Rs. 4500.00
of
5% Building Rs. 11400.00
Depreciation Cost Rs. 15900.00
5 Interest on Bank Loan 12% of Bank Loan Rs. 32700.00
6 Miscellaneous
Expenditure 4% of Machinery Rs. 13640.00
TOTAL COST OF PRODUCTION Rs. 829490.00

SALES REALIZATION
Sl. Item Quantity Selling Price Amount per
No. (Rs) Annum
per
1 Coir Geo-textile 80 sq.M 48.00 sq.M Rs. 1152000.00
TOTAL SALES REALIZATION Rs. 1152000.00

Raw Material Cost

1.92% 3.94% 1.64%

27.13% Maintenance & Repair

Manpower Cost

Depreciation Cost

Interest on Bank Loan

0.27% 65.10%
Miscellaneous
Expenditure

Figure-II : Diagrammatic Representation of Working Capital

18 Techno-economic Feasibility Report for NE Region of India | ANUGRAHA LOOM

 TABLE - III
COST OF MANPOWER
Sl. Type Quantity Wage/ No. of Days Amount in
No. Monthly or month Rupees
Salary in Rs.
1 Supervisor 1 5000.00 12 Months 60000.00
2 Weaver 1 300.00 300 Days 90000.00
3 Labour 1 250.00 300 Days 75000.00
TOTAL YEARLY COST 225000.00

TABLE - IV
MARGIN MONEY FOR WORKING CAPITAL
Sl. Particulars No. of Months Amount in
No. Rupees
1 Raw Materials 1 Month 45000.00
2 Maintenance & Repair 1 Month 187.50
3 Manpower 1 Month 5000.00
4 Depreciation 1 Month 1325.00
5 Interest on fixed capital 2 Month 5450.00
6 Miscellaneous 1 Month 1136.67
TOTAL 58099.00
SAY 58000.00

19 Techno-economic Feasibility Report for NE Region of India | ANUGRAHA LOOM

 TABLE - V
BANK LOAN

Year Loan Amount Loan Outstanding Interest

at the Repayment Balance at (12%)
Beginning of at the End the end of
the Year of the Year the Year
1st 272800.00 54560.00 218240.00 32700.00
2nd 218240.00 54560.00 163680.00 26200.00
3rd 163680.00 54560.00 109120.00 19600.00
4th 109120.00 54560.00 54560.00 13100.00
5th 54560.00 54560.00 0.00 6500.00

20 Techno-economic Feasibility Report for NE Region of India | ANUGRAHA LOOM

 TABLE - VI
PROFITABITY ANALYSIS
(Rs. Lakhs)
1st 2nd 3rd 4th 5th 6th 7th 8th 9th 10th
Description year year year year year year year year year year
CAPACITY UTILIZATION 75% 80% 85% 90% 90% 90% 90% 90% 90% 90%
Total Turnover 8.640 9.216 9.792 10.368 10.368 10.368 10.368 10.368 10.368 10.368
Less: cost of production 6.511 6.868 7.225 7.581 7.581 7.581 7.581 7.581 7.581 7.581
Gross Operating Profit 2.129 2.348 2.567 2.787 2.787 2.787 2.787 2.787 2.787 2.787
Less: pre-operative
0.010 0.010 0.010 0.010 0.010 0.010 0.010 0.010 0.010 0.010
expenses written off
Net Profit 2.119 2.338 2.557 2.777 2.777 2.777 2.777 2.777 2.777 2.777
Add back :-
- depreciation 0.159 0.159 0.159 0.159 0.159 0.159 0.159 0.159 0.159 0.159
- expenses written off 0.010 0.010 0.010 0.010 0.010 0.010 0.010 0.010 0.010 0.010
TOTAL CASH ACCRUALS 2.288 2.507 2.726 2.946 2.946 2.946 2.946 2.946 2.946 2.946

21 Techno-economic Feasibility Report for NE Region of India | ANUGRAHA LOOM

 TABLE - VII
CASH FLOW STATEMENT
(Rs. Lakhs)
Procurement 1st 2nd 3rd 4th 5th 6th 7th 8th 9th 10th
Description Stage year year year year year year year year year year
CAPACITY UTILIZATION 75% 80% 85% 90% 90% 90% 90% 90% 90% 90%
A. Source of Fund
Owner's Equity 0.682
Gross Operating Profit 2.129 2.348 2.567 2.787 2.787 2.787 2.787 2.787 2.787 2.787
Bank Interest 0.327 0.262 0.196 0.131 0.065
Profit after Depreciation but
2.456 2.610 2.763 2.918 2.852 2.787 2.787 2.787 2.787 2.787
before Interest
Depreciation 0.159 0.159 0.159 0.159 0.159 0.159 0.159 0.159 0.159 0.159
Bank Loan 2.728
Total of A 3.410 2.615 2.769 2.922 3.077 3.011 2.946 2.946 2.946 2.946 2.946
B. Application of Fund
Project Expenditure 3.410
Repayment of Bank Loan 0.546 0.546 0.546 0.546 0.546
Interest on Bank Loan 0.327 0.262 0.196 0.131 0.065
Total of B 3.410 0.546 0.873 0.808 0.742 0.677 0.065
Opening Balance of Cash 2.069 3.966 6.081 8.416 10.750 13.630 16.576 19.521 22.467
Surplus/Deficit during the
2.069 1.897 2.115 2.335 2.334 2.881 2.946 2.946 2.946 2.946
year
Cumulative surplus 2.069 3.966 6.081 8.416 10.750 13.630 16.576 19.521 22.467 25.413

22 Techno-economic Feasibility Report for NE Region of India | ANUGRAHA LOOM

 TABLE - VIII
PROJECTED BALANCE SHEET
(Rs. Lakhs)
Pre-operative 1st 2nd 3rd 4th 5th 6th 7th 8th 9th 10th
Description Stage year year year year year year year year year year
LIABILITIES
0.682 0.682 0.682 0.682 0.682 0.682 0.682 0.682 0.682 0.682 0.682
Equity Capital
2.129 4.477 7.044 9.831 12.618 15.404 18.191 20.977 23.764 26.551
Reserve or Surplus
2.728 2.182 1.637 1.091 0.546
Bank Loan
0.327 0.262 0.196 0.131 0.065
Interest Payable
3.410 5.320 7.058 9.014 11.190 13.365 16.086 18.873 21.659 24.446 27.233
Total
ASSETS
2.730 2.571 2.412 2.253 2.094 1.935 1.776 1.617 1.458 1.299 1.140
Fixed Assets
0.680 0.680 0.680 0.680 0.680 0.680 0.680 0.680 0.680 0.680 0.680
Current Assets
2.069 3.966 6.081 8.416 10.750 13.630 16.576 19.521 22.467 25.413
Cash or Bank Balance
3.410 5.320 7.058 9.014 11.190 13.365 16.086 18.873 21.659 24.446 27.233
Total

23 Techno-economic Feasibility Report for NE Region of India | ANUGRAHA LOOM

 TABLE - IX
BREAK-EVEN ANALYSIS
Sl. Particulars Amount in
No. Rupees
A FIXED COST
1 Manpower Cost 60000.00
2 Interest on Bank Loan 32700.00
3 Depreciation 15900.00
4 Maintenance & Repair 562.50
5 Miscellaneous Expenditure 6820.00
TOTAL OF (A) 115982.50
B VARIABLE COST
1 Raw Material Cost 540000.00
2 Manpower Cost 165000.00
3 Maintenance & Repair 1687.50
4 Miscellaneous Expenditure 6820.00
TOTAL OF (B) 713507.50
C TOTAL COST (A + B) 829490.00
D SALES REALIZATION (TURNOVER) 1152000.00
E GROSS PROFIT 322510.00
F BREAK - EVEN POINT 26.45%

24 Techno-economic Feasibility Report for NE Region of India| ANUGRAHA LOOM

 Figure-III : Graphical representation of Break Even Point Analysis

25 Techno-economic Feasibility Report for NE Region of India| ANUGRAHA LOOM