ECONOMICS AND MANAGEMENT FOR ENGINEERS

ASSIGNMENT I

BY
S.P.KARTHICK PRABU
14CSR057
CSE A (III YEAR)
KONGU ENGINEERING COLLEGE
 WEAVERS BUSINESS

BUSINESS PLAN:
EXECUTIVE SUMMARY:
Mission Statement - This business is about producing power loom-woven clothing to
be sent to textiles and mills for manufacture of all mens and womens clothing.

Company Information - This company is a very small, localized and one of the
teeming other loomers present in the industrial area of Coimbatore and Tirupur.

Product/Services - The products are woven plain clothing produced from yarns.

Financial Information Since this is a small company with very few employees and
no particular brand name, the finances are met by the owner or owners, usually with
the help of loans.

Future Plans Depending on the market growth, expanding the warehouse and
increasing the number of machineries would be the suitable proposition.

FORM OF BUSINESS:

Power looms are often entrepreneurships or partnerships with less than 5 partners.

They do not involve huge start-up cost or investments to fall under the category of
corporations or franchises.
COMPANY DESCRIPTION:
Our company is referred to as a Textile in the cloth-manufacturing industry. There
are numerous textiles present near-by.

Our work is to get the yarns which are the raw materials from the supplier, weave it to
plain clothing or sometimes, dyed clothes and return it to the same supplier for
further processing.

Each power loom owner does business with only one supplier of yarns only. So there
is no direct competition among weavers.

The type of goods produced in this company are capital goods which are used further
the manufacture shirts, pants, etc.
MARKET ANALYSIS:
Apparel sales are driven by economic conditions, demographic trends, and pricing.
Fashion, while important for an individual company, plays a limited role in overall
market demand.

Sales of apparel at the retail level rose approximately 4.7% in 1998, according to NPD
Group, Inc., a market research firm located in Port Washington, New York.

In case of Indian weaving industry, the demand for our goods is seasonal though the
demand type is derived.

The Indian textiles industry, currently estimated at around US$ 108 billion, is
expected to reach US$ 223 billion by 2021.

The industry is the second largest employer after agriculture, providing employment
to over 45 million people directly and 60 million people indirectly. The Indian Textile
Industry contributes approximately 5 per cent to Indias Gross Domestic Product
(GDP), and 14 per cent to overall Index of Industrial Production (IIP).

The above image shows the production of raw bales of cotton over the past years
which is one of raw materials for power looms.
PRODUCT LIFE-CYCLE:
INTRODUCTION
During the entry into the market, the quality of the product will be examined by the
retailers and corrections will be made.

The required quantity of the goods the product order will be low and ever-changing
before reputation stabilizes the market.
GROWTH
After this there will be continuous growth and the product demand will be rising also
based on how large or how capable our machineries are.

Once we are working in our full capability and also under the best supplier we can
work for the product will move to maturity stage.
MATURITY
Rapid sales growth cannot last for a long time. Sales slow down as the product sales
reach peak as it has been accepted by most buyers.

If the festive seasons end, then the need for new clothes reduce and the prices fall and
the market moves to decline stage.

DECLINE
Sales and profits start to decline, the company may try to change their pricing strategy
to simulate growth, and however the product will either have to be re-modified or
replaced within the market.

Or rather the company has to strive till it reaches the next festive season.

GOVERNING AGENCIES:
POWER LOOM WEAVERS ASSOCIATION
Every new weaver must register in this association. This association sets the prices
and handles all negotiations for the weavers with the suppliers and retailers.

If the prices set arent enough, the organisations may negotiate or even boycott work.
These decisions must be followed by every power loom owner to ensure unity.

In some cases the suppliers themselves will have power looms in which case, they
need not come under any governing bodies.
POWERLOOM DEVELOPMENT AND EXPORT PROMOTION COUNCIL
The Powerloom Development and Export Promotion Council (PDEXCIL) is the nodal
agency for the development and promotion of exports of powerloom products.

The Council undertakes direct promotional activities such as participation in

international trade shows, sending and hosting trade delegations, and sustained image-
building exercises through advertisements abroad, publications and audiovisuals.

IDENTIFYING THE CORRECT MARKET:

In case of this industry, there is only one market, which is classified into slightly different
categories only based on the type of loom we choose:
Air Jet Loom:
Weft insertion by means of air jet has made a major breakthrough in the early 70s and
its importance is increasing further because of its ability to weave a wide range of
fabrics at a very high speed weft insertion rate of about 2000 mpm. The first attempt
to use a compressed air steam instead of shuttle is made by Brooks in 1914.

Water Jet Loom:

The first loom to make use of a water jet for insertion of weft was developed by
Satyr.The loom was first shown at the Brussels textile Machinery Exhibition in 1995.

Shuttle Loom with Features:

The shuttle loom is the oldest type of weaving loom which uses a shuttle which
contains a bobbin of filling yarn that appears through a hole situated in the side. The
shuttle is batted across the loom and during this process, it leaves a trail of the filling
at the rate of about 110 to 225 picks per minute (ppm). Although very effective and
versatile, the shuttle looms are slow and noisy.

Multiphase Loom:
The phase number of a loom is defined as the average number of shuttles or weft
carriers inserting weft simultaneously. It is shown that existing multi-phase looms
must have high phase numbers to compensate for their low shuttle velocity.
Among all these categories the entire market mostly depends on Shuttle looms, available in
huge numbers throughout India. So it is often chosen as the best market for a beginner.
CHOOSING A BUSINESS LOCATION:
There is very limited choice in the locations for a power loom business.

It must be located around Coimbatore, Tirupur or Erode preferably in the rural areas
of the mentioned districts.

Coimbatore and Tirupur are at the forefront of Textiles and Apparel Industry even in a
global scenario.

Hence it is only ideal that we may find a great market in these areas.

FINANCIAL PROJECTIONS:
LOANS AND INTEREST RATES AVAILABLE

SBI Business Loan Interest Rates

Self Employed

Interest Rate 11.20% - 16.30%

Lowest EMI Rs. 2,594 per lakh

Tenure From 12 months to 48 months

Loan Amount Min Rs. 500,000 and Max Rs.

1,000,000,000

Processing Fee 2-3% of Loan Amount

Part Prepayment, Charges Allowed after 6 EMI's, Nil Prepayment

Charges

Early Foreclosure, Charges Allowed after 6 EMI's, Nil Prepayment

Charges

Eligibility
You are eligible if you are a Salaried individual, self-employed engineer, doctor, architect,
chartered accountant, or a MBA with minimum 2 years experience.
Loan Amount
Your personal loan limit would be determined by your income and repayment capacity.
Minimum:
Rs.24,000/- is offered in metros and urban centres.
Rs.10,000/- in rural/semi-urban centres
Maximum: 12 times Net Monthly Income for salaried individuals and pensioners subject to a
ceiling of Rs.10 lacs in all centres
Documents Required:
Important documents to be furnished while opening a Personal Loan Account:
For existing bank customers(only) Passport size photograph
VARIOUS SUBSIDIES FOR POWER LOOMS
GOVERNMENT SCHEMES LIST
Handlooms, Handicrafts, Textiles and Khadi Department:
Development Schemes - Free Power Supply to Handloom and Powerloom Weavers
Development Schemes - Free Supply of Dhothies and Sarees Scheme
Development Schemes - Rebate Subsidy Scheme
Development Schemes - Scheme of Free Supply of Uniforms to School Children
Handlooms and Textiles Department - Prize Award Scheme for the Best Exporters
Handlooms and Textiles Department - Scheme for integrated textile parks(SITP)
Handlooms and Textiles Department - Scheme for integrated textile parks(SITP) Under the
Scheme for setting up of Integrated Textile Parks
Handlooms and Textiles Department - Technology Upgradation Fund Scheme (TUFS)
Health Insurance Scheme for Weavers
Electrical Subsidies:
The chief operational cost for power looms is the electrical cost. So electrical subsidies play
an important role while establishing a power loom business.
Objective: For encouraging the Power Loom Operators in the state and increasing their
incomes.
Scheme Name: Electricity Subsidy for Power Loom Operators: Energy Department
Benefits: The following benefits are provided to the small scale and large scale power loom
operators by the Energy Department of Madhya Pradesh on the basis of consumption of
electricity by the power loom operators:
For Consumption of 30 units per month subsidy of 90 paisa per unit will be availed.
For Power Loom machines of the capacity up to 25 HP, Subsidy of 1.25 per unit will be
availed. The operator will be charged of the actual amount of units consumed.
Subsidies to be provided:
1. Fixed Consumption With Meter Without Meter
a. Consumption First of 300 Units (Per Unit Price) 1.75 Rs 1.75 Rs
b. Consumption of 301 to 500 Units 2.05 Rs 2.05 Rs
c. Consumption above 501 Units 1.90 Rs 1.90 Rs
2. Schedule Caste and Schedule Tribe Consumer with Land Up to 1 hectare with
capacity up to 5HP
a. Consumption First of 300 Units (Per Unit Price) 3 Rs 3 Rs
b. Consumption of 301 to 500 Units 3.50 Rs 3.50 Rs
c. Consumption above 501 Units 3.50 Rs 3.50 Rs
3. Varied Consumptions 1.75 Rs
4. Consumption Via DTR Meter 1.50 Rs
5. SC/STs Lying Below Poverty Line with consumption up to 25 units per month
2.90 Rs
Eligibility Criteria: All Small Scale and Large Scale Power Loom operators can apply for this
financial Assistance.