BANKABLE PROJECT PROPOSAL

ON
COIR BASED INDUSTRY

FOR
APICOL (Agricultural Promotion and Investment
Corporation of Odisha Ltd.)

Prepared by:

• Dr. Minakshee Mohanty, Research Officer, DPME, OUAT

• Dr. Sarba Narayan Mishra (Team leader and Principal Investigator) ACSSC, OUAT
• Prof. Bibudha Parasar (Director, ACSSC, OUAT)

Submitted by
Agriculture Consultancy Support Service Cell
Orissa University of Agriculture and Technology
Bhubaneswar

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 CONTENT

1 INTRODUCTION

2 REVIEW OF THE COIR INDUSTRY

3 DEMAND OF THE PRODUCT

4 PLANT LOCATION

5 MANUFACTURING PROCESS

6 ACTIVITY SCHEDULE

7 STANDARD COST OF COIR MAT FINISHING &

PROCESSING UNIT

8 FINANCIAL DETAILS

9 PROJECT ARITHMETIC

10 CONCLUSION

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 BANKABLE PROJECT REPORT
ON
COIR MAT FINISHING UNIT

Introduction

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 fiber 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 fiber. The coir sector in India is very
diverse and involves households, co-operatives, NGOs, manufacturers and exporters. The husk
yields fibers, 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 de-fibering 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 fibers measure up to 35 cm in length and 12-25 microns in diameter. A coconut harvest
occurs once in 45 days. From 1000 coconuts it would be possible to extract 10 kgs of coir.
Among vegetable fibers, coir has one of the highest concentrations of lignin, making it stronger
but less flexible than cotton and unsuitable for dyeing. There are two types of coir - the more
commonly used brown fiber, which is obtained from mature coconuts, and finer white fiber,
which is extracted from immature green coconuts after soaking for up to 10 months. Mature coir
fibers 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, Odisha, Assam, Andaman & Nicobar,
Lakshadweep, Pondicherry, etc.
Odisha has about 54,000 hectares under coconut cultivation producing 290 million
coconuts annually. As per the present status of coir industry in Odisha, Coir Board has more
than 600 registered units in the State producing 6521 MTs of coir fiber a year, which are used
for making various value-added coir products. The percentage of husk utilization for value
addition is roughly about 30%.

Review of the Coir Industry

Coir industry is an agro based traditional industry providing means of livelihood for
more than 7 lakhs of workers predominantly women. The industry is still using age old

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equipments and technologies for the spinning of coir yarn and manufacture of coir products.
Realizing the need for modernization of the industry, several agencies through their research and
development programmes have developed different modern machineries and technologies for
production and processing of coir and coir products. The Coir Board of the state has also
evolved schemes for providing financial assistance to the entrepreneurs for setting up of coir
units with modern machinery items. In spite of these, the entrepreneurs are not keen to acquire
new technologies and install modern machinery without getting convinced on the viability of
these machineries and technologies. In modern open economies, entrepreneurship is argued to
be far more important than it ever was. There is a general consensus that almost all new jobs in
the last couple of decades have been created by startups spearheaded by energetic entrepreneurs.
The large companies, if anything, have been steadily losing jobs. The economic growth led by
entrepreneurship is believed to be more comprehensive. The coir sector has also take advantage
of the emerging scenario. India is a young country with about 63% population currently being in
the age group of 15-59 years. Every year India adds more than 5 million people eligible for
securing jobs. India’s young demographic profile has placed the country favourably in terms of
manpower availability. People can be turned to economic assets if they can be gainfully
employed. This demographic dividend requires engaging our youth in creative pursuits through
developing appropriate skills, including entrepreneurial skills in coir industry also. Added to this
are the burning issues of unemployment and poverty that continue to pose serious challenges to
polity and economy of the nation. The need of the hour, therefore, is to create ‘job providers’ in
large numbers rather than ‘job seekers’. Coir sector provides scope for creating ‘job providers’
in the modern coir projects. The myth that the entrepreneurs are born, no more holds good,
rather it is well recognized now that entrepreneurs can be created and nurtured through
appropriate interventions in the form of entrepreneurship development programmes.

The objective of promoting entrepreneurship development in the country can be

achieved by providing handholding support to first generation entrepreneurs by helping them to
set up their own micro and small enterprises. In addition, in order to inculcate entrepreneurial
skills to the youth, skill development needs to be encouraged through which the youth can
become employable and/ or create their own enterprise. There are several trades which can be
covered to cater to the skill demands. Coir sector is one such trade which could be developed in
the coconut producing states. With the concerted efforts of the Coir Board and the respective
state governments, the coir industry has now proliferated to more than 14 States and Union
Territories of the country. Various Ministries / Departments of Government of India are
operating a number of schemes to support first generation entrepreneurs. However, most of
these schemes/ departments are working in silos. There is a need for establishing a network,
building a database of these efforts in order that these are easily accessible to the entrepreneurs
to select and convert them into commercial ventures. This would also provide a platform for
sharing best practices, technological advancements and could ultimately bring up the ground
realities before the policy makers for making policy changes.

Development of the rural economy has been one of the prime concerns for Government
of India. Accordingly, efforts have been made on a continuous basis for improving the economic
and social well-being of people in rural areas on a sustainable basis. Despite the sincere efforts,

ACSSC,OUAT,Bhubaneswar Page 4
the problems of poverty, unemployment, drudgery and migration still exist in rural economy.
There is a need to address these problems by creating employment opportunities in the rural
areas and this could be done by setting up of small enterprises in the Coir- based industry sector
more so as nearly 80 % of the workforce are women. There is ample scope for innovation, value
addition and entrepreneurship development in this sector. This is possible only by skill up-
gradation, handholding, mentoring, incubation and credit support aimed especially at rural youth
and women providing them employment opportunities at their doorstep.

Demand of the product

The world-wide demand of coir products have increased tremendously. The major
portion of demand is primarily met by India & Srilanka. Although Srilanka is gaining on the
global coir product export share, India, who has witnessed rapid growth in coir product export
since the early 1990s, still holds 80% of the global coir product market. India produces many
different coir products (mats, matting, geotextiles, rugs, carpet, rubberized coir), and export
them to more than 43 countries around the world. The global coir product market seems to be
promising, with exports of variety of different products to many different countries. Besides, the
export market, India itself is a huge consumer of coir products. Therefore, the utilization of coir
husks (fiber) of North East India is the need of time for socio-economic development of this
region. The Board has proposed various programmes during the 12th Five Year Plan for the
development of coir industry in Odisha, and has prepared an action plan to increase the husk
utilization percentage to 50%, he added. The Coir Board has launched various programmes for
development of coir industry in the State The Board also takes part in exhibitions organized in
various states to demonstrate lab to trade transfer of technology, which has been developed in
Central Coir Research Institute (CCRI), Alleppy, Kerala and Central Institute of Coir
Technology (CICT), Bangaluru.

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

Manufacturing Process
The coconut fibre extracted from the husk of the coconut is twisted into yarn. The yarn is
then woven into matting using automatic and semi-automatic power looms.
The main process steps are:
(i) Purchase/Fabrication and setting up of Anupam Loom
(ii) Collection and storage of coir yarn
(iii)Dyeing of coir yarn as and when required
(iv) Weaving of different types of mats & matting
(v) Marketing of finished product

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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 coirmats involves the following primary activities:
(i) Purchase & Installation of machinery
(ii) Engagement of Manpower like Supervisor, weaver & labour
(iii) Training
(iv) Purchase/collection of raw materials
(v) Weaving/production of Coir mats/matting
(vi) Storing & marketing of product

Standard Cost of Coir Mat Finishing & Processing Unit

Sl. No. Item Cost (Rs.)

1. Machinery (Shearing Machine) 1,20,000
2. Stenciling tables, shooting guns, stirrer & 1,65,000
Accessories
3. Compressor 75,000
4. Work shed 1,40,000
Total Rs. 5,00,000

Financial Details
Coir Mat Finishing & Processing Unit Outlay Details:

Individual Investment: Rs. 25,000.00

Term Loan: Rs. 2,75,000.00
Government Grant: Rs. 2,00,000.00
Total Outlay: Rs. 5,00,000.00
Periodicity of the Term Loan: 5 Years
Release of subsidy by Banks: Back ended subsidy
Term Loan: 8.5% to 9.5%

The term loan shall be covered under the Credit Guarantee Fund Trust for Small Industries
under the Office/of the Development Commissioner, Ministry of Micro Small Medium
Enterprises. The beneficiary of the loan has to pay one time guarantee fee, upfront of Rs. 2750/-
to the Trust. The premium annual fee payable at the commencement of the loan shall be Rs.
1375/-. This shall decrease with the diminishing returns of the loan amount. This has to be borne
by the beneficiary. The bank shall debit the beneficiary and remit the amount to the Trust, as the
Bank as the lending institution needs to execute an agreement with the Trust. The subsidy
retained by the Bank shall command no interest.

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 INTEREST PAYABLE ON DIMINISHING BALANCE

Total Loan: Rs. Installment Repayable CGFSI Service Fees Interest Payable on
2.75 lakhs payable by diminishing Balance
beneficiary (Interest @ 8.5%)
I Year Rs. 55,000.00 Rs. 1375-00 Rs. 23,375.00
II Year Rs. 55,000.00 Rs. 1100-00 Rs. 18,700.00
III Year Rs. 55,000.00 Rs. 825-00 Rs. 14,025.00
IV Year Rs. 55,000.00 Rs. 550-00 Rs. 9,350.00
V Year Rs. 55,000.00 Rs. 275-00 Rs. 4,675.00
Total: Rs. 2,75,000.00 Rs. 4175-00 Rs. 70,125.00
(*) One time Guarantee fee (upfront) of Rs. 2750/- to be paid

Units/ any entrepreneur/SHG/NGO/group of workers engaged in the production of

traditional Coir products like Coir Mats, Mattings, Carpets, rope, rubber backed Coir products,
Coir pith processing industries etc registered with Coir Board under R&L rules, 1958/Coir Co-
operatives and new entrepreneurs are eligible for assistance. The unit members should prove
that they have worked for a minimum of 3 years in any Coir manufacturing unit. They shall also
satisfy to the Board that they have sufficient lands where they can put up a pucca shed. They
have to obtain Invoices from reputed registered manufacturers, and these machineries shall be
approved by the Technical experts in the Board and approved.

The Applicants will be selected by a Committee of the Coir Board which has expertise,
along with additional members like SLBC representative, Industries Dept representative, etc.
The selection will be on first-cum-first served basis.
The following documents will be produced by the beneficiary before the Bank Branch
for availing the loan:
a. A copy of the title deed of the property on which the unit is proposed to be located/
already located
b. The prescribed application form for Scheme assistance
c. Proof of Coir Industry experience
d. Any training facility availed from Coir Board
e. Machineries proposed for purchase along with Invoice (must be endorsed by the
technical experts of Coir Board)
f. MSME acknowledgement issued by DIC
g. Industrial Establishment Certificate issued by Coir Board
h. Chartered Engineer’s drawing with estimate for construction of shed
i. Any other document to support the application like SC/ST/OBC certificate
j. Any other supporting document
k. Project profile

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PROJECT ARITHMETIC(Cost of the Project)

WORKSHED 140000.00
PLANT & MACHINERY
7 HP SHEARING MACHINE 120000.00
7 HP COMPRESSOR 75000.00
STENCILING TABLES, SHOOTING GUN,
STIRRER & ACCESSORIES 165000.00
WORKING CAPITAL REQUIREMENT 25000.00
TOTAL 525000.00
MEANS OF FINANCE
PROMOTER'S CONTRIBUTION 30000.00
TERM LOAN FROM BANK 275000.00
GRANT FROM COIR BOARD 200000.00
WORKING CAPITAL ASSISTANCE FROM
BANK 20000.00
TOTAL 525000.00
Note: Promotor’s contribution includes Rs. 25000.00towards term loan and Rs. 5000.00
for working capital assistance.

PROJECTED BALANCE SHEET

YEAR 1 2 3 4 5
LIABILITIES
PROMOTER'S CAPITAL 94993.75 170442.50 254791.25 347068.55 441632.84
TERM LOAN FROM
BANK 220000.00 165000.00 110000.00 55000.00 NIL
WORKING CAPITAL LOAN
FROM BANK 20000.00 20000.00 20000.00 20000.00 20000.00
TOTAL 334993.75 355442.50 384791.25 422068.55 461632.84
ASSETS
FIXED ASSETS 259200.00 224100.00 193887.00 167865.75 145441.51
CURRENT ASSETS
SUNDRY DEBTORS 166250.00 310000.00 330000.00 393750.00 555000.00
CASH IN HAND & AT
BANK 1543.75 14542.50 5804.25 12597.80 16794.93
TOTAL (A) 167793.75 324542.50 335804.25 406347.80 571794.93
CURRENT LIABILITIES
SUNDRY CREDITORS 92000.00 193200.00 144900.00 152145.00 255603.60
TOTAL (B) 92000.00 193200.00 144900.00 152145.00 255603.60
NET WORKING CAPITAL
(A) - (B) 75793.75 131342.50 190904.25 254202.80 316191.33
TOTAL 334993.75 355442.50 384791.25 422068.55 461632.84

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 Note:
1. Contribution includes promoters. Contribution for term loan and working capital loan
and profit for each year.
2. Sundry debtors are taken to be 25 days sales for year. Thereafter the credit period is
increased gradually.
3. Sundry creditors are taken to be 20 days purchase on an average.
4. Number of working days is taken to be 300.

PROJECTED PROFIT & LOSS ACCOUNT

YEAR 1 2 3 4 5
INCOME 1995000.00 2325000.00 2475000.00 2625000.00 2775000.00
TOTAL (A) 1995000.00 2325000.00 2475000.00 2625000.00 2775000.00
EXPENDITURE
RAW MATERIALS 1380000.00 1656000.00 1738800.00 1825740.00 1917027.00
WAGES 426000.00 474000.00 537000.00 594000.00 651000.00
TRANSPORTATION 15000.00 16500.00 18150.00 19965.00 21961.50
GREASE, OIL &
LUBRICANTS 4200.00 4620.00 5082.00 5590.20 6149.22
LOADING & UNLOADING 10000.00 11000.00 12100.00 13310.00 14641.00
POWER CHARGES 30000.00 33000.00 34650.00 38115.00 41926.50
BANK INTEREST
ON TERM LOAN 22206.25 17531.25 12856.25 8181.25 3506.25
ON WORKING CAPITAL
LOAN 1800.00 1800.00 1800.00 1800.00 1800.00
DEPRECIATION 40800.00 35100.00 30213.00 26021.25 22424.24
TOTAL (B) 1930006.25 2249551.25 2390651.25 2532722.70 2680435.71
NET PROFIT FOR THE
YEAR 64993.75 75448.75 84348.75 92277.30 94564.29
PROJECTED FUND FLOW STATEMENT

YEAR 1 2 3 4 5
INFLOW OF FUND
PROMOTERS CONTRIBUTION 30000.00 0.00 0.00 0.00 0.00
FUND FROM OPERATION 105793.75 110548.75 114561.75 118298.55 116988.53
TERM LOAN FROM BANK 275000.00 0.00 0.00 0.00 0.00
GRANT FROM COIR BOARD 200000.00 0.00 0.00 0.00 0.00
WORKING CAPITAL LOAN
FROM BANK 20000.00 0.00 0.00 0.00 0.00
TOTAL 630793.75 110548.75 114561.75 118298.55 116988.53
APPLICATION OF FUND
CONSTRUCTION OF WORK
SHED 140000.00 0.00 0.00 0.00 0.00
7 HP SHEARING MACHINE 120000.00 0.00 0.00 0.00 0.00

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7 HP COMPRESSOR 75000.00 0.00 0.00 0.00 0.00
STENCILING TABLES,
SHOOTING GUN, STIRRER & 165000.00 0.00 0.00 0.00 0.00
ACCESSORIES
REPAYMENT OF TERM LOAN 55000.00 55000.00 55000.00 55000.00 55000.00
INCREASE OF WORKING
CAPITAL 75793.75 55548.75 59561.75 63298.55 61988.53
TOTAL 630793.75 110548.75 114561.75 118298.55 116988.53

PROJECTED DEBT SERVICE COVERAGE RATION

YEAR 1 2 3 4 5
NET PROFIT 64993.75 75448.75 84348.75 92277.3 94564.29
DEPRECIATION ON FIXED
ASSETS 40800 35100 30213 26021.25 22424.24
INTEREST ON TERM LOANS 22206.25 17531.25 12856.25 8181.25 3506.25
INTEREST ON WORKING CAPITAL
LOAN 1800 1800 1800 1800 1800
TOTAL (A) 129800 129880 129218 128280 122295
REPAYMENT OF TERM LOAN 55000 55000 55000 55000 55000
INTEREST ON TERM LOANS 22206.25 17531.25 12856.25 8181.25 3506.25
INTEREST ON WORKING CAPITAL
LOAN 1800 1800 1800 1800 1800
TOTAL (B) 79006.3 74331.25 69656.3 64981.3 60306.3
DSCR A/B 1.64 1.75 1.86 1.97 2.03
AVERAGE DSCR 1.85

SALES 1995000.00
TOTAL (A) 1995000.00
VARIABLE COST
RAW MATERIALS 1380000.00
WAGES 426000.00
TRANSPORTATION 15000.00
GREASE, OIL &
LUBRICANTS 4200.00
LOADING & UNLOADING 10000.00
POWER CHARGES 30000.00
TOTAL (B) 1865200.00
CONTRIBUTION (A) - (B) 129800.00
FIXED COST BANK INTEREST 24006.25
DEPRECIATION 40800.00
TOTAL FIXED COST 64806.25
BREAK EVEN SALES 996059.08

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 Conclusion
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, Andhra
Pradesh, Karnataka, Maharashtra, Goa, Odisha, Assam, Andaman & Nicobar, Lakshadweep,
Pondicherry, etc. However, despite the huge potential to grow up this industry in Odisha,
due to lack of awareness, scattered nature of coconut plantations, the growth of the coir
industry is negligible or very poor. With appropriate planning and financial support the
industry can prove to be a boon for rural youth and women in particular.

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