PROJECT REPORT

Of

WOOD CRAFTING UNIT

PURPOSE OF THE DOCUMENT

This particular pre-feasibility is regarding Wood Crafting 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 FRAMES

6 Name of the project / business activity proposed : WOOD CRAFTING UNIT

7 Cost of Project : Rs.10.64 Lakhs

8 Means of Finance
Term Loan Rs.7.29 Lakhs
Own Capital Rs.1.06 Lakhs
Working Capital Rs.2.28 Lakhs

9 Debt Service Coverage Ratio : 2.74

10 Pay Back Period : 5 Years

11 Project Implementation Period : 5-6 Months

12 Break Even Point : 34%

13 Employment : 10 Persons

14 Power Requirement : 6.00 HP

Hardwood, Softwood, Glue and Nails

15 Major Raw materials
:

16 Estimated Annual Sales Turnover (Max Capacity) : 57.44 Lakhs

17 Detailed Cost of Project & Means of Finance

COST OF PROJECT (Rs. In Lakhs)

Particulars Amount
Land Own/Rented
Civil Work 5.00
Plant & Machinery 2.60
Furniture & Fixtures 0.50
Working Capital 2.54
Total 10.64

MEANS OF FINANCE
Particulars Amount
Own Contribution 1.06
Working Capital(Finance) 2.28
Term Loan 7.29
Total 10.64
 WOOD CRAFTING 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.

Uses & Market Potential:

It may be noted that the woodworking industry is one of the fastest growing sectors of
the Indian economy. According to a study by the World Bank, India's organized furniture
industry is expected to grow 20% per annum over the next few years and is projected to
cross USD 32 billion by 2019, while the luxury furniture market is expected to garner
$27.01 billion by 2020, registering a CAGR of 4.1% during the forecast period 2015-
2020. Market Reports on India Provides the Trending Market Research Report on “India
Cutting Boards Market” under Consumer Goods category. The wood panel industry
includes plywood sheets, engineered wood panels (MDF [Medium Density Fibre board’s]
furniture board and particle board) and decorative surface products such as laminates.
The Indian wood panel industry is estimated to be around INR 28,000 crore and is
growing at the rate of 10-12% annually. This is driven by a healthy demand for wood
panels, mainly for new housing construction (90% of the total demand) and the remaining
(10%) from renovation activity. Engineered wood furniture goods are also gaining
popularity in Indian cities. The leading cause of this is a rise in demand for ready to
assemble furniture in towns. Moreover, the ease of buying from the E-commerce platform
is also encouraging the growth of modular and multifunctional furniture in the market for
home decoration and convenience purposes.

Product:
WOODEN FRAMES

Raw Material:
1. Hardwood and Softwood
2. Glue
3. Nails

Manufacturing Process:
 Fig. 1 – Process Flowchart

Area:
The industrial setup requires space for manufacturing unit. Also some of the area of
building is required for office staff facilities, documentation, office furniture, etc. Thus,
the approximate total area required for complete small-scale factory setup is 1500-
2000Sq. ft. approximately.

Cost of Machines:
S No. Machine Price (INR)
1. Circular Saws 4,500/-
2. Bandsaw 38,000/-
3. Frame Saw 1,000/-
4. Hand Saw 800/-
5. Planes 700/-
6. Router 15,000/-
7. Lathe Machine 2,00,000/-
Total 2,60,000/-

Power Requirement- The estimated Power requirement is taken at 6

HP.

Manpower Requirement– Following manpower is required:

• Skilled/unskilled worker-3
• Helper- 4
• Machine Operator- 1
• Sales Personal and Accountant- 2

FINANCIALS
PROJECTED BALANCE SHEET

PARTICULARS I II III IV V

SOURCES OF FUND
Capital Account
Opening Balance - 1.70 2.70 3.90 5.57
Add: Additions 1.06 - - - -
Add: Net Profit 2.34 3.00 3.80 5.07 6.03
Less: Drawings 1.70 2.00 2.60 3.40 4.20
Closing Balance 1.70 2.70 3.90 5.57 7.40
CC Limit 2.28 2.28 2.28 2.28 2.28
Term Loan 6.48 4.86 3.24 1.62 -
Sundry Creditors 0.74 0.85 0.96 1.07 1.19

TOTAL : 11.21 10.69 10.39 10.55 10.87

APPLICATION OF FUND

Fixed Assets ( Gross) 8.10 8.10 8.10 8.10 8.10

Gross Dep. 0.94 1.77 2.49 3.13 3.70
Net Fixed Assets 7.16 6.33 5.61 4.97 4.40

Current Assets
Sundry Debtors 1.65 1.96 2.24 2.55 2.87
Stock in Hand 1.63 1.88 2.14 2.42 2.71
Cash and Bank 0.77 0.52 0.40 0.61 0.89

TOTAL : 11.21 10.69 10.39 10.55 10.87

- - - - -
PROJECTED PROFITABILITY STATEMENT

PARTICULARS I II III IV V

A) SALES
Gross Sale 32.94 39.27 44.85 51.00 57.44

Total (A) 32.94 39.27 44.85 51.00 57.44

B) COST OF SALES

Raw Material Consumed 14.88 17.01 19.20 21.45 23.76

Elecricity Expenses 0.54 0.60 0.67 0.74 0.81
Repair & Maintenance 0.49 0.59 0.67 0.76 0.86
Labour & Wages 8.69 10.00 11.50 13.11 15.07
Depreciation 0.94 0.83 0.73 0.64 0.56
Cost of Production 25.55 29.03 32.77 36.70 41.07

Add: Opening Stock /WIP - 1.14 1.31 1.50 1.71

Less: Closing Stock /WIP 1.14 1.31 1.50 1.71 1.92

Cost of Sales (B) 24.41 28.85 32.58 36.50 40.85

C) GROSS PROFIT (A-B) 8.53 10.42 12.27 14.50 16.59

25.91% 26.54% 27.35% 28.43% 28.88%
D) Bank Interest i) (Term Loan ) 0.79 0.65 0.47 0.29 0.11
ii) Interest On Working Capital 0.25 0.25 0.25 0.25 0.25
E) Salary to Staff 4.03 4.96 5.95 6.67 7.47
F) Selling & Adm Expenses Exp. 1.12 1.57 1.79 2.04 2.30

G) TOTAL (D+E+F) 6.19 7.43 8.46 9.25 10.13

H) NET PROFIT 2.34 3.00 3.80 5.25 6.46

7.1% 7.6% 8.5% 10.3% 11.3%
I) Taxation - - - 0.18 0.43

J) PROFIT (After Tax) 2.34 3.00 3.80 5.07 6.03

PROJECTED CASH FLOW STATEMENT

PARTICULARS I II III IV V

SOURCES OF FUND

Own Contribution 1.06 -

Reserve & Surplus 2.34 3.00 3.80 5.25 6.46
Depriciation & Exp. W/off 0.94 0.83 0.73 0.64 0.56
Increase In Cash Credit 2.28
Increase In Term Loan 7.29 - - - -
Increase in Creditors 0.74 0.11 0.11 0.11 0.12

TOTAL : 14.66 3.93 4.64 6.01 7.14

APPLICATION OF FUND

Increase in Fixed Assets 8.10 - - - -

Increase in Stock 1.63 0.25 0.26 0.28 0.29
Increase in Debtors 1.65 0.32 0.28 0.31 0.32
Repayment of Term Loan 0.81 1.62 1.62 1.62 1.62
Taxation - - - 0.18 0.43
Drawings 1.70 2.00 2.60 3.40 4.20
TOTAL : 13.89 4.19 4.76 5.79 6.87

Opening Cash & Bank Balance - 0.77 0.52 0.40 0.61

Add : Surplus 0.77 - 0.26 - 0.12 0.22 0.28

Closing Cash & Bank Balance 0.77 0.52 0.40 0.61 0.89
COMPUTATION OF CLOSING STOCK & WORKING CAPITAL

PARTICULARS I II III IV V

Finished Goods
(10 Days requirement) 1.14 1.31 1.50 1.71 1.92
Raw Material
(10 Days requirement) 0.50 0.57 0.64 0.72 0.79

Closing Stock 1.63 1.88 2.14 2.42 2.71

COMPUTATION OF WORKING CAPITAL REQUIREMENT

Particulars Amount Margin(10%) Net

Amount
Stock in Hand 1.63
Less:
Sundry Creditors 0.74
Paid Stock 0.89 0.09 0.80

Sundry Debtors 1.65 0.16 1.48

Working Capital Requirement 2.28

Margin 0.25

MPBF 2.28
Working Capital Demand 2.28
REPAYMENT SCHEDULE OF TERM LOAN 11.0%

Year Particulars Amount Addition Total Interest Repayment Cl Balance

I Opening Balance
Ist Quarter - 7.29 7.29 0.20 - 7.29
Iind Quarter 7.29 - 7.29 0.20 - 7.29
IIIrd Quarter 7.29 - 7.29 0.20 0.41 6.89
Ivth Quarter 6.89 - 6.89 0.19 0.41 6.48
0.79 0.81
II Opening Balance
Ist Quarter 6.48 - 6.48 0.18 0.41 6.08
Iind Quarter 6.08 - 6.08 0.17 0.41 5.67
IIIrd Quarter 5.67 - 5.67 0.16 0.41 5.27
Ivth Quarter 5.27 5.27 0.14 0.41 4.86
0.65 1.62
III Opening Balance
Ist Quarter 4.86 - 4.86 0.13 0.41 4.46
Iind Quarter 4.46 - 4.46 0.12 0.41 4.05
IIIrd Quarter 4.05 - 4.05 0.11 0.41 3.65
Ivth Quarter 3.65 3.65 0.10 0.41 3.24
0.47 1.62
IV Opening Balance
Ist Quarter 3.24 - 3.24 0.09 0.41 2.84
Iind Quarter 2.84 - 2.84 0.08 0.41 2.43
IIIrd Quarter 2.43 - 2.43 0.07 0.41 2.03
Ivth Quarter 2.03 2.03 0.06 0.41 1.62
0.29 1.62
V Opening Balance
Ist Quarter 1.62 - 1.62 0.04 0.41 1.22
Iind Quarter 1.22 - 1.22 0.03 0.41 0.81
IIIrd Quarter 0.81 - 0.81 0.02 0.41 0.40
Ivth Quarter 0.40 0.40 0.01 0.41 - 0.00
0.11 1.62

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 3.28 3.82 4.53 5.71 6.59

Interest on Term Loan 0.79 0.65 0.47 0.29 0.11

Total 4.07 4.47 5.00 6.00 6.71

REPAYMENT
Repayment of Term Loan 0.81 1.62 1.62 1.62 1.62
Interest on Term Loan 0.79 0.65 0.47 0.29 0.11

Total 1.60 2.27 2.09 1.91 1.73

DEBT SERVICE COVERAGE R 2.54 1.97 2.39 3.14 3.87

AVERAGE D.S.C.R. 2.74

Assumptions:

1. Production Capacity of Wooden Frames is 200 pcs per day. First year, Capacity
has been taken @ 40%.
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 6 HP.

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

The views expressed in this Project Report are advisory in nature. SAMADHAN assum e
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.