PROJECT REPORT

Of

WOODEN FURNITURE MANUFACTURING UNIT

PURPOSE OF THE DOCUMENT

This particular pre-feasibility is regarding Wooden Furniture Manufacturing unit.

The objective of the pre-feasibility report is primarily to facilitate potential entrepreneurs in project
identification for investment and in order to serve his objective; the document covers various aspects
of the project concept development, start-up, marketing, finance and management.

[We can modify the project capacity and project cost as per your requirement. We can also prepare
project report on any subject as per your requirement.]

Lucknow Office: Sidhivinayak Building ,

27/1/B, Gokhlley Marg, Lucknow-226001

Delhi Office : Multi Disciplinary Training

Centre, Gandhi Darshan Rajghat,
New Delhi 110002

Email : info@udyami.org.in
Contact : +91 7526000333, 444, 555
 PROJECT AT A GLANCE

1 Name of the Entreprenuer xxxxxxxxxx

2 Constitution (legal Status) : xxxxxxxxxx

3 Father / Spouse Name xxxxxxxxxxxx

4 Unit Address : xxxxxxxxxxxxxxxxxxxxxxx

District : xxxxxxx
Pin: xxxxxxx State: xxxxx
Mobile xxxxxxx

5 Product and By Product : WOODEN FURNITURE

6 Name of the project / business activity proposed : WOODEN FURNITURE UNIT

7 Cost of Project : Rs.13.66 Lakhs

8 Means of Finance
Term Loan Rs.7.09 Lakhs
Own Capital Rs.1.37 Lakhs
Working Capital Rs.5.2 Lakhs

9 Debt Service Coverage Ratio : 3.38

10 Pay Back Period : 5 Years

11 Project Implementation Period : 5-6 Months

12 Break Even Point : 29%

13 Employment : 12 Persons

14 Power Requirement : 15.00 HP

Wood, Adhesives,nails and finishing

15 Major Raw materials
: material(stains,basecoats,glazers and enamels)

16 Estimated Annual Sales Turnover (Max Capacity) : 151.44 Lakhs

17 Detailed Cost of Project & Means of Finance

COST OF PROJECT (Rs. In Lakhs)

Particulars Amount
Land Own/Rented
Plant & Machinery 6.38
Furniture & Fixtures 1.50
Working Capital 5.78
Total 13.66

MEANS OF FINANCE
Particulars Amount
Own Contribution 1.37
Working Capital(Finance) 5.20
Term Loan 7.09
Total 13.66
 WOODEN FURNITURE UNIT

Introduction:
The wood carving artistry is about 400 years old. The products showcase the skill of the
craftsmen of the region and intricate designs and carvings chiseled on wood, mostly
sheesham wood being the raw material of choice. The most common varieties used to
make Indian handicrafts are teak, sheesham, sal, oak, mango, ebony and mahogany.
Sandalwood, rosewood and walnut are the exotic varieties and are expensive and are used
in producing fine pieces of furniture and decorative items. These materials may have
revolutionized the furniture industry, but wood is undeniably a staple material in furniture
manufacturing. Wood is, of course, a long-lasting and robust material and is the perfect
choice for anyone looking for longevity from their furniture. Wooden furniture can also
go a long way to creating a sense of the natural world indoors. The export of these wood
carving furniture and handicraft products is carried out by exporting units in the district.
The wood items manufactured here include household items such as doors, charms, beds
and wooden figures like toys and other artworks. India is a land of wonderful and
marvelous artistic work of wood. The rich handicraft and beautiful traditional attributes
of art and design have established a reputation of Indian Furniture Industry in the nation
and worldwide. Furniture refers to the movable objects that support various human
activities such as seating, eating and sleeping. They are also used to hold objects at a
convenient height for work or to store things. Furniture is a product of design and it is
also considered as a form of decorative art. Over 11.5 per cent of the total land of the
district is covered by forest which offer very good potential for forest based industries.
Mahrajganj is a quaint district endowed with serene and tranquil environment and
picturesque terrains dotted by meandering streams is a real treat.
Uses & Market Potential:

Wooden furniture is used for articles of daily use in dwelling house, place of business,
public buildings and includes items such as chairs, tables, beds, safes, sofa sets, Almirahs
cabinets, etc. are made of wood. The popularity of traditional furniture has strengthened
the demand for wood in the manufacturing of furniture in India. Over the past few years,
the utilization of wooden goods in home has increased as people have started using wood
for furnishing cupboards, decorating and for other purposes. Apart from this, the demand
for engineered wood furniture is rising in metro cities such as Delhi, Mumbai, Bangalore
and other major cities. The country’s furniture market is projected to cross USD32 billion
by 2019. The country’s furniture market is expected to grow at a rapid pace due to rising
disposable income, expanding middle class and growing number of urban households.
Wooden furniture accounts for US$ 5,358 million. (US$ 852 million) of this (wooden
furniture) is imported and imports are growing at 50 to 60 per cent every year. India was
the largest furniture importer in the world, with a 19 per cent share in the furniture imports
worldwide. A total of 10, 476 importers shipped furniture to India during this period,
mainly from Italy, Germany, Spain, China, Korea, Malaysia, Indonesia, Philippines and
Japan.

Product:
WOODEN FURNITURE

Raw Material:
1. Wood
2. Adhesives
3. Nails
4. Finishing Material (stains, basecoat, glazers,enamles)
Manufacturing Process:

Fig. 1 – Process Flowchart

Area:
The required land for wood furniture making is estimated to be around 2000sqft.

Cost of Machines:
S No. Machine Unit Price (INR)
1. Band Saw 1 2,85,500/-
2. Drill Machine 1 44,000/-
3. Planing Tools 1 29,500/-
4. Wood Seasoning Plant 1 1,00,000/-
5. Planer Machine 1 80,000/-
6. Belt Sander 1 9,500/-
7. Buffer Machine 1 20,000/-
8. Round Cutter 1 5,500/-
9. Wood Lathe Machine 1 45,000/-
10. Chip Carving Knife 10 1,000/-
11. Carpenter Chisels 10 2,000/-
12. U- gouges 10 1,500/-
13. V- gouges 10 1,500/-
14. Spoon gouges 10 2,500/-
15. Palm Tools 10 1,000/-
16. Carpentary Saw 1 9,500/-
Total 6,38,000/-

Power Requirement- - The estimated Power requirement is taken at 15

HP.

Manpower Requirement– Following manpower is required:

• Skilled/unskilled worker-4
• Helper- 6
• Sales Personal and Accountant- 2

FINANCIALS
PROJECTED BALANCE SHEET

PARTICULARS I II III IV V

SOURCES OF FUND
Capital Account
Opening Balance - 2.81 3.76 5.52 7.72
Add: Additions 1.37 - - - -
Add: Net Profit 2.44 3.76 4.96 6.20 7.76
Less: Drawings 1.00 2.80 3.20 4.00 5.00
Closing Balance 2.81 3.76 5.52 7.72 10.48
CC Limit 5.20 5.20 5.20 5.20 5.20
Term Loan 6.30 4.73 3.15 1.58 -
Sundry Creditors 2.52 3.00 3.50 4.01 4.55

TOTAL : 16.83 16.69 17.36 18.50 20.22

APPLICATION OF FUND

Fixed Assets ( Gross) 7.88 7.88 7.88 7.88 7.88

Gross Dep. 1.11 2.06 2.87 3.57 4.16
Net Fixed Assets 6.77 5.82 5.01 4.31 3.72

Current Assets
Sundry Debtors 3.92 4.84 5.70 6.61 7.57
Stock in Hand 4.38 5.24 6.15 7.10 8.10
Cash and Bank 1.76 0.78 0.50 0.48 0.84

TOTAL : 16.83 16.69 17.36 18.50 20.22

- - - - -
PROJECTED PROFITABILITY STATEMENT

PARTICULARS I II III IV V

A) SALES
Gross Sale 78.30 96.87 114.10 132.27 151.44

Total (A) 78.30 96.87 114.10 132.27 151.44

B) COST OF SALES

Raw Material Consumed 50.40 59.98 69.91 80.22 90.90

Elecricity Expenses 1.01 1.17 1.34 1.51 1.68
Repair & Maintenance 1.57 1.94 2.28 2.65 3.03
Labour & Wages 15.12 18.14 21.77 25.69 29.80
Depreciation 1.11 0.95 0.81 0.70 0.60

Cost of Production 69.20 82.18 96.12 110.76 126.01

Add: Opening Stock /WIP - 2.70 3.24 3.82 4.43

Less: Closing Stock /WIP 2.70 3.24 3.82 4.43 5.07

Cost of Sales (B) 66.50 81.64 95.55 110.16 125.37

C) GROSS PROFIT (A-B) 11.80 15.24 18.55 22.11 26.08

15.07% 15.73% 16.26% 16.72% 17.22%
D) Bank Interest i) (Term Loan ) 0.77 0.63 0.46 0.28 0.11
ii) Interest On Working Capital 0.57 0.57 0.57 0.57 0.57
E) Salary to Staff 5.67 7.37 8.99 10.61 12.20
F) Selling & Adm Expenses Exp. 2.35 2.91 3.42 3.97 4.54

G) TOTAL (D+E+F) 9.36 11.48 13.44 15.43 17.43

H) NET PROFIT 2.44 3.76 5.11 6.68 8.65

3.1% 3.9% 4.5% 5.0% 5.7%
I) Taxation - - 0.15 0.48 0.89

J) PROFIT (After Tax) 2.44 3.76 4.96 6.20 7.76

PROJECTED CASH FLOW STATEMENT

PARTICULARS I II III IV V

SOURCES OF FUND

Own Contribution 1.37 -

Reserve & Surplus 2.44 3.76 5.11 6.68 8.65
Depriciation & Exp. W/off 1.11 0.95 0.81 0.70 0.60
Increase In Cash Credit 5.20
Increase In Term Loan 7.09 - - - -
Increase in Creditors 2.52 0.48 0.50 0.52 0.53

TOTAL : 19.72 5.19 6.42 7.89 9.78

APPLICATION OF FUND

Increase in Fixed Assets 7.88 - - - -

Increase in Stock 4.38 0.86 0.91 0.95 1.00
Increase in Debtors 3.92 0.93 0.86 0.91 0.96
Repayment of Term Loan 0.79 1.58 1.58 1.58 1.58
Taxation - - 0.15 0.48 0.89
Drawings 1.00 2.80 3.20 4.00 5.00
TOTAL : 17.96 6.17 6.70 7.91 9.42

Opening Cash & Bank Balance - 1.76 0.78 0.50 0.48

Add : Surplus 1.76 - 0.98 - 0.28 - 0.02 0.36

Closing Cash & Bank Balance 1.76 0.78 0.50 0.48 0.84
COMPUTATION OF CLOSING STOCK & WORKING CAPITAL

PARTICULARS I II III IV V

Finished Goods
(10 Days requirement) 2.70 3.24 3.82 4.43 5.07
Raw Material
(10 Days requirement) 1.68 2.00 2.33 2.67 3.03

Closing Stock 4.38 5.24 6.15 7.10 8.10

COMPUTATION OF WORKING CAPITAL REQUIREMENT

Particulars Amount Margin(10%) Net

Amount
Stock in Hand 4.38
Less:
Sundry Creditors 2.52
Paid Stock 1.86 0.19 1.67

Sundry Debtors 3.92 0.39 3.52

Working Capital Requirement 5.20

Margin 0.58

MPBF 5.20
Working Capital Demand 5.20
REPAYMENT SCHEDULE OF TERM LOAN 11.0%

Year Particulars Amount Addition Total Interest Repayment Cl Balance

I Opening Balance
Ist Quarter - 7.09 7.09 0.20 - 7.09
Iind Quarter 7.09 - 7.09 0.20 - 7.09
IIIrd Quarter 7.09 - 7.09 0.20 0.39 6.70
Ivth Quarter 6.70 - 6.70 0.18 0.39 6.30
0.77 0.79
II Opening Balance
Ist Quarter 6.30 - 6.30 0.17 0.39 5.91
Iind Quarter 5.91 - 5.91 0.16 0.39 5.52
IIIrd Quarter 5.52 - 5.52 0.15 0.39 5.12
Ivth Quarter 5.12 5.12 0.14 0.39 4.73
0.63 1.58
III Opening Balance
Ist Quarter 4.73 - 4.73 0.13 0.39 4.33

Iind Quarter 4.33 - 4.33 0.12 0.39 3.94

IIIrd Quarter 3.94 - 3.94 0.11 0.39 3.55
Ivth Quarter 3.55 3.55 0.10 0.39 3.15
0.46 1.58
IV Opening Balance
Ist Quarter 3.15 - 3.15 0.09 0.39 2.76
Iind Quarter 2.76 - 2.76 0.08 0.39 2.36
IIIrd Quarter 2.36 - 2.36 0.07 0.39 1.97
Ivth Quarter 1.97 1.97 0.05 0.39 1.58
0.28 1.58
V Opening Balance
Ist Quarter 1.58 - 1.58 0.04 0.39 1.18
Iind Quarter 1.18 - 1.18 0.03 0.39 0.79
IIIrd Quarter 0.79 - 0.79 0.02 0.39 0.39
Ivth Quarter 0.39 0.39 0.01 0.39 - 0.00
0.11 1.58

Door to Door Period 60 Months

Moratorium Period 6 Months
Repayment Period 54 Months
CALCULATION OF D.S.C.R
PARTICULARS I II III IV V

CASH ACCRUALS 3.55 4.71 5.77 6.90 8.36

Interest on Term Loan 0.77 0.63 0.46 0.28 0.11

Total 4.32 5.33 6.22 7.18 8.47

REPAYMENT
Repayment of Term Loan 0.79 1.58 1.58 1.58 1.58
Interest on Term Loan 0.77 0.63 0.46 0.28 0.11

Total 1.56 2.20 2.03 1.86 1.68

DEBT SERVICE COVERAGE R 2.77 2.42 3.06 3.86 5.03

AVERAGE D.S.C.R. 3.38

Assumptions:

1. Production Capacity of Wooden Furniture is 20 sets per day. First year, Capacity
has been taken @ 30%.

2. Working shift of 10 hours per day has been considered.

3. Raw Material stock and Finished goods closing stock has been taken for 10 days.

4. Credit period to Sundry Debtors has been given for 15 days.

5. Credit period by the Sundry Creditors has been provided for 15 days.

6. Depreciation and Income tax has been taken as per the Income tax Act,

1961.

7. Interest on working Capital Loan and Term loan has been taken at 11%.

8. Salary and wages rates are taken as per the Current Market Scenario.

9. Power Consumption has been taken at 15 HP.

10. Selling Prices & Raw material costing has been increased by 3% & 2%
respectively in the subsequent years
 DISCLAIMER

The views expressed in this Project Report are advisory in nature. SAMADHAN assume
no financial liability to anyone using the content for any purpose. All the materials and
content contained in Project report is for educational purpose and reflect the views of the
industry which are drawn from various research material sources from internet, experts,
suppliers and various other sources. The actual cost of the project or industry will
have to be taken on case to case basis considering specific requirement of the project,
capacity and type of plant and other specific factors/cost directly related to the
implementation of project. It is intended for general guidance only and must not be
considered a substitute for a competent legal advice provided by a licensed industry
professional. SAMADHAN hereby disclaims any and all liability to any party for any direct,
indirect, implied, punitive, special, incidental or other consequential damages arising
directly or indirectly from any use of the Project Report Content, which is provided as is,
and without warranties.