feasibility analysis of exercise books & cut

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FEASIBILITY ANALYSIS OF EXERCISE BOOKS

& CUT PAPER STATIONARY

Part II

For DEPARTMENT OF INDUSTRIES MINISTRY OF ECONOMIC AFFAIRS ROYAL GOVERNMENT OF BHUTAN

By IDRG CONSULTANCY SERVICES

In Association with Sherpa Consultancy February, 2009

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CONTENTS CHAPTER 1 – PROJECT AT A GLANCE ……………………………………………3 CHAPTER 2 – JUSTIFICATION OF THE PROJECT…………………………………5 CHAPTER 3 – MARKET ANALYSIS……………………………………………………7 CHAPTER 4 – RESOURCES…………………………………………………………..21 CHAPTER 5 – THE PLANT…………………………………………………………….25 CHAPTER 6 – PLANT LOCATION AND INFRASTRUCTURE…………………….35 CHAPTER 7 – ENVIRONMENTAL ASPECT…………………………………………37 CHAPTER 8 – PROJECT IMPLEMENTATION………………………………………39 CHAPTER 9 – COST PRESENTATION………………………………………………40 CHAPTER 10 – FINANCIAL ANALYSIS………………………………………………44 CHAPTER 11 – ECONOMIC ANALYSIS……………………………………………...59 ANNEXURES……………………………………………………………………………..61 Annexure 1 – List of machine suppliers Annexure 2 – List of raw material suppliers Annexure 3 - List of lab testing equipment suppliers



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CHAPTER 1 - PROJECT AT A GLANCE

1. Project concept – Detailed feasibility analysis of exercise books and cut paper stationery. The project envisages the manufacture of various types of exercise books, writing pads, registers and cut paper stationery for a variety of applications.

2. Location - Thimphu, Paro, Trashigang, Chukka, Samatse and Samdrup

happen to be the main education centres in terms of enrollment till higher secondary. Keeping in view, various other parameters, these sites have been short listed in the order of preference.

Location Overall rating Thimphu 43 Paro 40 Trashigang 36

Chhukka 35 Samatse 35 Samdrup 35 3. Markets - Based on the detailed study of the school supplies in Bhutan, it is

observed that from market point of view, it would be feasible to setup a unit for the manufacture of exercise books and cut paper stationery. The current demand level for various types of exercise books for school students only is estimated to be around 2 million per year. In addition to this, there is a demand from offices, commercial establishment and households. Besides, the proposed unit in Bhutan could market their products in north-eastern part of India and also in other adjoining markets. Presently, there are no manufacturing units for exercise books in Bhutan and the entire demand is being met through imports. There exist possibilities of marketing exercise books, both to the government and private trade. There being no local competition, the proposed unit stands a good chance of capturing substantial domestic markets.

4. Annual production capacity recommended - Exercise books and registers (assorted size) – 3 million nos Cut paper stationery – 30,000 reams 5. Land and building requirement Plot area 1000 sq. mts

Built up area 250 sq mts Industrial shed 500 sq. mts

6. Power 37.5 KWH



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requirement 7. Main machinery Automatic ruling machine Paper cutting machine Note book folding machine Binding machine Wire stitching machine Spiral binding machine 8. Man power Managerial and office staff – 5 requirement Skilled and unskilled workers – 23 9. Total project cost Rs. 160.38 lacs 10. Project implementation period 10-11 months 11. Means of Debt - Rs. 112.26 lacs (70%) finance Equity - Rs. 48.11 lacs (30%) 12. Break up of Machinery - Rs. 69.53 lacs cost of project Construction cost - Rs. 32.50 lacs Misc. fixed assets - Rs. 3.00 lacs Pre-operative exp. - Rs. 5.00 lacs Training expenses - Rs. 0.70 lacs Interest - Rs. 13.29 lacs Working capital - Rs. 36.36 lacs Total - Rs. 160.38 lacs 13. Annual sales Rs. 530 lacs turnover 14. Financial IRR – 65% on equity analysis IRR – 36% on investment NPV – Rs. 254.95 lacs (discount rate of 12%) Pay back period – 2 years 6 months Project Break-Even – 39%

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CHAPTER 2 – JUSTIFICATION OF THE PROJECT 2.1 Project Concept The project is for carrying out detailed feasibility analysis for setting up a manufacturing unit in Bhutan for exercise books and cut paper stationery mainly to cater the domestic demand in school supplies sector. 2.2 Project Justification With the fast pace of economic growth and increase in Urban population there has been a perceptible change in education sector scenario in Bhutan. In addition to new schools and higher education institutions being set up by the Government, a number of private sector schools have been established to meet the growing demand of modern educational facilities. Further to provide options for parents who can afford, the private sector is being encouraged to set up new schools.

As discussed in part 1 of the report, in order to efficiently run the schools system a large of number of inputs viz. Text book, exercise books & other stationary items, school bags, uniform, item of games and sports, scientific equipment etc. are required. Textbook, exercise books, school uniform & bags have been identified as the major requirements as these are required by each and every student. It has been overserved that there is sufficient capacity for printing of textbooks in Bhutan, while the requirement of exercise books, bags and uniforms is being met through imports from India and other countries. The exercise books are purchased both by the Government and in the open market by children and their parents. The Government procures exercise books mainly to supply the stationary in rural area school while the children in urban areas have to buy the exercise books from the market. In view of the changes in education sector, the demand of school supplies including exercise books have under gone a change both in terms of quality and quantity. A large number of different types of exercise books are required by the students. Besides there is a sizable requirement of different types of notebooks, writing pages, registers etc. in the open market. In addition to exercise books and registers, there exists a demand for cut paper stationary viz. letter heads, coping paper, and printing paper for computer.

The demand of exercise books is being met through imports from India and other countries. The purchases of exercise books are made, both by the government as well as by the private trade. The government purchases exercise books for supplying them to students in rural schools. The proposed unit shall facilitate import substitution and self-reliance in terms of indigenous production. Besides, this would also provide gainful employment to a number of persons directly. There would also be indirect employment in terms of transport of raw materials and finished goods, services and marketing of the





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indigenous production. The setting up of the unit shall lead to expansion of economic activities in Bhutan.

The project envisages the manufacture of various types of exercise books, writing pad, registers and cut paper stationary for a variety of applications. At present there are no such manufacturing facilities in Bhutan and there exist a good scope for setting up of such units to begin with the vicinity of main cities which happen to be main education centres also. The details of the product range, manufacturing technologies machines and equipment and the financial parameters have been described in the subsequent chapters.





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CHAPTER 3 – MARKET ANALYSIS 3.1 Demand and supply scenario The current demand level for various types of exercise books in Bhutan has been earlier estimated as 20 lac numbers of exercise books per annum. The exercise books are purchased both by government for distribution to schools in the rural areas as well by children and parents from open market in urban areas. In addition to the demand of exercise books by the students, the exercise books and registers are also required by household, institutions, shops, commercial establishments & factories. Various types of writing pads are also required for meetings & conferences and day-to-day use in offices. In addition to bound type of stationary items, cut paper stationary for use as typing paper, writing paper, computer printing paper, paper for fax machine etc is extensively used in offices and commercial establishments. In Bhutan also, there is a sizeable demand of cut paper stationary for various types of applications. The requisite quality of paper is cut in specified size and cut sheets are packed in 100-500 sheets per pack. Such stationary is also needed by school students for project work and other assignments and usually sold at stationary shops. There are no manufacturing units in Bhutan engaged in the production of exercise books. The demand is being met through imports from India and other countries. The exercise books available in the market in Bhutan are of wide variety, including those with the spiral binding with plastic covers. As per market requirement, these exercise books are sold with different number of pages both with lining and without lining. The price range also varies according to quality of paper, size and cover page type and the type of binding viz conventional or spiral binding. It has been observed during the market survey that the prices of exercise books in Bhutan are on an average are 25-30% higher than the prices in India. Further, as the different types of exercise books are purchased in smaller quantities by the trade, they are not able to get the benefit of bulk purchases. The transport cost further adds to the purchase value and is finally reflected in the sales prices. The trade is also required to maintain substantial inventory as the purchases are made from across the border which is a time consuming process and this further add to the sales price. Besides, the trade also has to keep stock of the different type of exercise books to meet the varying consumer demand adding to their inventory costs. 3.2 Competitive Advantages Production of exercise books is essentially a paper conversion industry and the cost of paper happens to be the major input cost (60-70%) in the final cost of production of exercise books. In India, the exercises are being manufactured both by the paper mills as well as other private companies, which procure paper from paper mills. Invariably, the paper mills also get their products made from the private trade and market them under their name and brand. Through purchase of paper in bulk at competitive prices, the exercise books manufacturing units substantially reduce their





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cost of production. This benefit could also be availed by the proposed units in Bhutan through procuring paper in bulk at competitive prices. The transport cost of paper would be relatively lower than the transport cost for exercise books. The unit can transfer these cost benefits to the trade and thus become competitive in the domestic market. As stated earlier, the production of exercise books is essentially a paper conversion industry and scale of operation and use of technology happen to be the major factors affecting the cost of production. Presently, in India, the trend is to setup units with relatively higher production capacities, so as to achieve the benefits of economy of scale of production. In the suggested unit, these factors have been taken into consideration and the unit envisages the production of 3 million exercise books and registers with a view to achieve economy of production and be competitive in the market. Further, the production facilities in the unit are mostly based on automatic, semi-automatic operations with a view to ensure the quality of production. Such operations have been recommended with a view to reduce the dependence on a large number of skilled workers, which are required to be brought from outside Bhutan in the initial phase. The cost calculations in the project have been made on the basis of “A” grade paper with 60 GSM. As the exercise books and registers are used for different purposes including rough work also, the different quality of paper could be used to bring down the cost of production for such type of products. The detailed specifications of the different type of exercise books are given in the project; however, the unit could produce exercise books as per customers / trade specifications. This would facilitate the unit to produce tailor made products viz examinations answer books within the price band of the customers. The main competitive advantage factors of the indigenously produced exercise books over the other competitors viz imported goods could be summarized as under: - Better inventory control management resulting in low overhead costs. Production

can be planned as per demand. Direct purchase of raw materials resulting in lower cost inputs and better quality

control. Lower cost inputs in terms of power, transport and labour. Flexibility in production both in terms of type and volume of the product. Different type of exercise books can be tailor made suiting to local requirements

in terms of design, convenience and usage. Possibility of introducing new products and new designs as per local demand. Quality control from raw material stage to finished product and possibility of

acquiring ISO 9000 leading to higher acceptability in the market. Possibility of adoption of logo and design of schools and institutions on the cover

page of the exercise books. Value addition leading to saving of foreign exchange.

All these factors would enable the proposed unit to market the exercise books of

acceptable design and quality at a lower cost as compared to the imported products being presently marketed in Bhutan.





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3.3 Marketing Strategy As there exists possibilities of marketing the exercise books, both to the government as well to private trade, and there is no local competition, the proposed unit stands a good chance of capturing the substantial market share. In the present scenario, the following marketing strategies could be adopted by the unit. Marketing through trade channels viz by appointing whole-sellers in major cities

or through direct sales to stationery shops. Sales to government departments viz Ministry of Education for distribution to

schools in rural areas. Dedicated production with logo and monogram etc of the schools and institutions

and sales through these schools and institutions. Marketing of cut paper stationery, registers and writing pads to various

government departments, offices and commercial establishments.

Besides, the possibilities of exports to adjoining areas of India viz. north-eastern region could also be explored. The possibilities of exporting the product to other neighboring markets could also be explored. 3.4 Product range and target markets

The project has been designed for the manufacture two distinct types of stationary products the first being cut paper stationary in packs viz. writing / typing paper, copying paper, computer printing paper etc. and the second being bound paper stationary items viz. exercise books, registers, writing pads etc Education sector being the main thrust market area the emphasis would be on the production of items for supplies to school children, however the remaining capacity of paper cutting machines proposed to be utilized for the production of cut paper stationary which is required both by student as well as business establishment. 3.5 Quality Standards and characteristics 3.5.1 Cut Paper Stationary

A large variety of cut paper size are used for various application viz typing paper, letter heads, photocopying paper, loose sheet stationary both rules and un ruled, computer printing paper. In loose stationary paper is cut in required standard size and then 1000 sheets are packed in paper pack. International Standard Organization (ISO) has adopted ‘A’ Series of cut & trimmed sizes based on the principle of obtaining smaller size from a bigger sheet maintaining the same length and breadth ratio without only wastage. The various sizes listed in A- series are as given in Table below:





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Principal Size – A series (ISO)

S. No. Designation Size (in mm)

i. 4 A0 1682 x 2378 ii. 2 A0 1189 x 1682 iii. A0 841 x 1189 iv. A1 594 x 841 v. A2 420 x 594 vi. A3 297 x 420 vii. A4 210 x 297 viii. A5 148 x 210 ix. A6 105 x 148 x. A7 74 x 105 xi. A8 52 x 74 xii. A9 37 x 52 xiii. A10 26 x 37 xiv. A11 18 x 26 xv. A12 13 x 18

Some additional sizes of paper which may be used only in exceptional circumstances or when sizes are needed intermediate between any two adjacent of the ‘A’ series have also been specified by ISO in ‘B’ & ‘C’ series. The details of ‘B’ & ‘C’ series are as given in Table below:

Supplementary Size from B- and C- Series (ISO)

S. No. Designation Size (in mm)

i. B0 1000 x 1414 ii. B1 707 x 1000 iii. B2 500 x 707 iv. B3 353 x 500 v. B4 250 x 353 vi. B5 176 x 250 vii. B6 125 x 176 viii. B7 88 x 125 ix. B8 62 x 88 x. B9 44 x 62 xi. B10 31 x 44 xii. C0 917 x 37 xiii. C1 648 x 917 xiv. C2 458 x 648 xv. C3 324 x 458 xvi. C4 229 x 324 xvii. C5 162 x 229





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Simultaneously with a view to rationalize the size of various paper products and ensure international coordination ISO has also recommended the size of ‘A’ series of various commercial formats of paper product. The details are given in the table below;

Recommended Size of A-Series suitable for various commercial formats

S. No.

Designation Size (in mm)

1. Tear Off Calendar Block A4,A5, A6,A7,A8 2. Tear Off Calendar Base A2,A3, A4,A5,A6, A7 3. Directories (General) A4,A5 4. Official Gazette A4 5. Share Scrips A3,A4, A5 6. Advertisement Posters A0, A1, A2, A3 7. Certificates A4,A5,A6 8. Order Forms A4,A5,A6 9. Printing proof A3, A4,A5,A6, A7 10. Letters (General) A4 11. Half Letter Size (General) A5 12. Books A4,A5,A6, A7, 13. Carbon Papers A4, A5 14. Railway time Table A0, A1, A2, A3, A4,A5,A6 15. Telephone Directory A4, A5 16. Scribbling Pads or Note Papers A4,A5,A6, A7, 17. Trade Books A2, A3, A4,A5 18. Commercial Letters Paper A3, A4,A5,A6, A7 19. Card Index A4,A5,A6, A7 20. Catalogues A4,A5,A6, A7 21. Advertising Pamphlet A0,A1,A2,A3, A4,A5,A6, A7, A8, A9 22. Hand Bills A6, A7, A8, A9 23. Periodicals, Magazines A3, A4,A5 24. Costing and Posting sheets A4,A5 25. Maps A0,A1,A2,A3, A4,A5,A6 26. Patent and Standard Drawing papers A3, A4 27. Posters (Big) A0,A1,A2,A3 28. Drawing A0,A1,A2,A3, A4,A5,A6 29. Post cards A6 30. Newspaper A2,A3, A4 31. Price Lists A4,A5,A6,A7 32. Receipts A5,A6 33. Instrument Record Sheets (Round) A4,A5 34. Sign Boards A0,A1,A2,A3, A4,A5,A6, A7, A8 35. Pocket Note Books A5,A6, A7 36. Sand paper A4,A5,A6 37. Instruction and Rule sheets A3, A4,A5,A6





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International Standard Organization (ISO) has also specified the sizes of untrimmed paper, which shall normally be manufactured and stocked by the paper mills and paper dealer in the untrimmed sizes. These sizes are as given below in the table:

Untrimmed (Raw Stock) Paper Sizes S. No. Trimmed Size Untrimmed Size Standard Size Special Size Designation Size Designation Size

1 A0 RA0 860 x 1 220 SRA0 900 x 1 280 2 A1 RA1 610 x 860 SRA1 640 x 900 3 B1 RB1 750 x 1 050 -- -- 4 C1 RC1 670 x 940 SRC1 680 x 960

The system of specifying size in ISO standard has been adopted by a large number of countries including India. This adoption results in bringing about uniformity in the size of paper to be used for correspondence, exercise books, production of books, pamphlets and a variety of other paper products. These standard also facilitate the manufacture of paper products to order the specific size of untrimmed paper from mills & paper stickiest so that the wastage in cutting the required size are absolutely minimum. 3.5.2 Bound Paper Stationary

Bound paper stationary mainly comprises of various types of exercise books, register and writing pads. Registers are also known as long note books and usually have comparatively largers size of paper sheets with or without lines and some times with columns and heading as per requirement of the customer. Note Books and registers are used by the people of all walks of life, the school students and offices being the biggest consumers. Students use them for noting down their class lessons, notes and other important information related to their subject of studies. These written works in notebooks can be used in future at appropriate times whenever needed. Registers and exercise books of specified dimensions and size are used for recording science practicals, geographical subject and also as answer sheet in examinations. Though mainly used by students whether school going or college going, the exercise books are not less important for a house wife who keeps her daily expenses record in the note books. Registers are used to keep the record of day-to-day activities of the office, maintaining of accounts, attendance in schools and offices, stocks of raw materials finished goods. Registers are also widely used by school and college students. Writing pads also fall in the category of bound paper stationary and find wide applications in the offices, conferences and seminars, business establishment and even in houses for noting down information and details and when required. The exercise books however remain the most important products under this category. The type & classification of exercise books and registers are given in the forthcoming paras.





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3.5.3 Exercise Books & Registers Exercise books and registers some times referred to as long note books are available in the market in various sizes, shapes with varying number of pages both ruled and plain and having various types of covers viz. paper bound, board & white card and plastic sheet covers with spiral binding. The exercise books and register are made in different sizes suiting to their intended application. Their sizes vary according to the requirement. Bureau of Indian Standards (BIS) has prescribed the following types of exercise books and registers mainly for use in schools:

Exercise books (wire stitched) Exercise books (bound) Drawing exercise books (wire stitched) Map exercise books (wire stitched) Science practical notebooks (bound) Examination answer books (wire stitched) Register (wire stitched) and Register (bound)





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In addition to the above following type of exercise book and register are now a

days used commonly:

Exercise books with spiral binding and plastic. Registers with spiral binding and plastic covers.

Though exercise books and registers are available in various shapes and size, Bureau of Indian Standard has prescribed the standards for various aspects of the





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quality and size of exercise books. The norms and standard for various types of exercise books are as under: 3.5.4 Exercise books (wire stitched)

Size- The size of this type of exercise book shall be 162 x 229 mm (C5). This may economically be obtained from 67 x 94 cm (RCI Standard) getting 32 pages or from 47 x 67 cm (RC2 Standard) getting 16 pages per sheet respectively. Denominations – These books shall be composed of 32, 48, 64, 80, 96, 112 and 128 pages excluding the covers. Binding – Exercise books of 32 pages shall have one stitch and 48 and 128 pages shall have two stitches on the spine of each exercise book. The size of stitch (staple) shall be 13 to 16 mm in length. Ruling – The ruling, if required, shall be done as agreed to between the purchaser and the supplier. If required, the copy rule shall be done in blue colour and the top and side margin shall be in red colour. For copy rule, the distance between horizontal lines shall be 9 mm and for margin, whether it is on the top or on the side, the distance from the end shall be 25 + 1 mm. There shall be 21 blue lines on each page.

Quality of Paper- Cream laid, cream wove or white printing hard-sized paper of minimum 52 g/m2 substance shall be used. The quality of paper shall be such that the matter can be written on both sides using a latem pattern nib and ink conforming to IS : 222-1962 *, without any loss of legibility.

Cover- Coloured cover paper of minimum 66 g/m 2 substance shall be used.

3.5.5 EXERCISE BOOKS (BOUND) Size- The size of this type of book shall be 162 x 229 mm (C5). This size may economically be obtained from 67 x 94 cm (RC1 Standard) getting 32 pages or from 47 x 67 cm (RC2 Standard) getting 16 pages per sheet respectively. Denominations – These books shall be composed of 96,128, 144,160,192, 256, 288, 320, 384,480 and 576 pages. Binding – The sections shall be thread stitched and bound with binding cloth on the spine and strawboard on the top and the bottom of the book. Millboard may also be used for exercise books of 96 and 128 pages. Ruling – The ruling, if required, shall be done as agreed to between the purchaser and the supplier. If required, the copy rule shall be done in blue colour and the top and side margin shall be in red colour. For copy rule, the distance between horizontal lines shall





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be 9 mm and for margin, whether it is on the top or on the side, the distance from the end shall be approximately 25 mm. There shall be 21 blue lines on each page. Quality of Paper- Cream laid, cream wove or white printing hard sized paper of minimum 52 g/m2 substance shall be used. The quality of paper shall be such that the matter can be written on both sides using a latem pattern nib and ink conforming to IS : 222-1962 *, without any loss of legibility. Cover- Strawboard suitably covered with papers both from inside and outside shall be used as cover and the minimum substance for different denominations of bound books shall be as follows:

Denomination (No. of pages)

Substance g/m2

96,128,160 490 192, 256, 675 288, 320, 384 900 480 and 576 1100

3.5.6 DRAWING EXERCISE BOOKS (WIRE STITCHED). Size – These books shall be of the following three sizes:

177 x 250 mm (B5). This size may economically be obtained from 75 x 105 cm (RB1 Standard) getting 32 pages or 52.5 x 75 cm (RB2 Standard) getting 16 pages per sheet.

210 x 297 mm (A4). This size may economically be obtained from 61 x 86 cm

(RB1 Standard) getting 16 pages or 43 x 61 cm (RB2 Standard) getting 8 pages per sheet respectively.

229 x 324 mm (C4). This size may economically be obtained from 67 x 94 cm


Denominations – These books shall be composed of 16 and 24 pages excluding covers. Binding – The binding shall be done on the spine of the book by two wire stitches of 16 to 16 mm in length. Quality of Paper- White cartridge (see 1848-1991) or drawing paper (see IS: 3064-1964) of minimum 80 g/m2 substance shall be used. Cover- Coloured cover of minimum 100 g/m 2 substances shall be used.





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3.5.7 MAP EXERCISE BOOKS (WIRE STITCHED). The size and specification of map exercise books shall be as specified for drawing exercise books of 210 x 297 mm (A4) and 229 x 324 mm (C4), manufactured horizontal or vertical. 3.5.8 SCIENCE PRACTICAL NOTEBOOKS (BOUND). Size- The size of this type of book shall be 210 x 297 mm (A4). This size may economically obtained from 61 x 86 cm (RC1 Standard) getting 16 pages or from 43 x 61 cm (RC2 Standard) getting 8 pages per sheet respectively. Denominations – These books shall be composed of 96, 128, 144, 160 and 192 pages besides the printed data.

Binding- The sections shall be thread stitched and bound with binding cloth on the spine and strawboard pasted on the top and the bottom of the book. Ruling – The ruling shall be done as agreed to between the purchaser and the supplier but for copy rule blue colour and for margin red colour shall be used. Quality of Paper- Azure laid of minimum 70 g/m2 substance shall be used. The quality of paper shall be such that the matter can be written on both sides using a latem pattern nib and ink conforming to without any loss of legibility. Cover- Strawboard suitably covered with papers both from inside and outside shall be used as cover and the minimum substance for different denominations of science practical notebook shall be as follows:


Substance g/m2

96, 128 and 144 675 160 and 192 900

3.5.9 EXAMINATION ANSWER BOOKS (WIRE STITCHED) Size- These books shall be of two sizes:

162 x 229 mm (C5). This size may economically be obtained from 67 x 94 cm (RB1 Standard) getting 32 pages or 47 x 67 cm (RB2 Standard) getting 16 pages per sheet respectively.

210 x 297 mm (A4). This size may economically be obtained from 61 x 86 cm






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Denominations- Both the above size shall be composed of 16, 24,32 and 48 pages inclusive of covers. Binding- Size C5 shall have single wire stitch binding on the spine when composed of 16 pages. For other denominations of size C5 and all denominations of size A4, two wire stitches on the spine shall be provided. Size of stitch (staple) be 13 to 16 mm long. Size A4 shall have a hole on left hand top corner of minimum 3 mm diameter on each answer book. Ruling- The ruling, if required, shall be done as agreed to between the purchaser and the supplier. If required, the horizontal lines shall be done in blue ink and the margin shall be red. Margin, if required, shall be given at a distance of 30 mm from the spine for C5 size and 45 mm for the A4 size; the top margins in the two cases shall be 25 mm and 30 mm respectively.

Quality of Paper- Cream laid, cream wove or white printing hard-sized paper of minimum 60 g/m2 substance shall be used. The quality of paper shall be such that the matter can be written on both sides using a latem pattern nib and ink conforming to IS: 222- 1962 without any loss of legibility.

Cover- There shall be no extra cover and the paper used for the top shall be same as used for inside.

3.5.10 REGISTER (WIRE STITCHED) Size- The register (wire stitched) shall be of the following two sizes:

210 x 297 mm (A4). This size may economically be obtained from 61 x 86 cm (RB1 Standard) getting 16 pages or 43 x 61 cm (RB2 Standard) getting 8 pages per sheet respectively.

229 x 324 mm (C4). This size may economically be obtained from 67 x 94 cm


Denominations – These registers shall be composed of 96 and 144 pages exclusive of covers. Binding- The binding shall be done on the spine of the register by two wire stitches of 13 to 16 mm in length. Ruling – The ruling shall be done as agreed to between the purchaser and the supplier. Quality of Paper – Cream laid, cream wove or white printing hard-size paper of minimum 60 g/m2 substance shall be used. The quality of paper shall be such that the





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matter can be written on both sides using a latem pattern nib and ink conforming to IS without any loss of legibility. Cover- coloured cover paper of minimum 100 g/m 2 substance shall be used. 3.5.11 REGISTER (BOUND) Size- The register (bound) shall be of the following two sizes:

210 x 297 mm (A4). This size may economically be obtained from 61 x 86 cm (RB1 Standard) getting 16 pages or 43 x 61 cm (RB2 Standard) getting 8 pages per sheet respectively.

229 x 324 mm (C4). This size may economically be obtained from 67 x 94 cm (RB1 Standard) getting 16 pages or 47 x 67 cm (RB2 Standard) getting 8 pages per sheet respectively.

Denominations – these registers shall be composed of 100, 200, 300, 400, 500 and 600 pages. Binding- The sections shall be thread-stitched cloth back, paper inside and cut flash. It shall be protected by pasting a piece of jaconet cloth throughout length of the register at the inside joint of the text under the sheet pasted over the cover and bound with a binding cloth on the spine and straw board on the top and the bottom of the book. Any other binding may be used if agreed to between the purchaser and supplier. Ruling – The ruling shall be done as agreed to between the purchaser and the supplier. Quality of Paper- Cream laid, cream wove or white printing hard-sized or azure laid paper of minimum 60 g/m2 substance shall be used. The quality of paper shall be such that the matter can be written on both sides using a latem pattern nib and ink conforming to IS without any loss of legibility. Cover- Strawboard covered suitably with paper both from inside and outside shall be used as cover and for different denominations shall be minimum of the following substance:


Substance g/m2

Up to 192 675 256 and above 1100

3.6 Packaging and Marking

In accordance with Bureau of Indian Standards (BIS) specifications each exercise notebooks on cover pages shall be clearly and durably marked with the following particulars:





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- Name and address of the manufacturers or his trade mark. - Weight of the paper in GSM. - Length and width of paper in cm and - Number of pages.

While packaging exercise books or register in package the following procedure and norms would be adhered to: Packaging- The notebooks shall be supplied in packages, containing copybooks of the same type, size and having the same number of pages. Each package shall be wrapped in paper to protect the notebooks from damage during transportation. The notebooks may be first tied in bundles before being packaged. If the notebooks are tied in bundles, each bundle shall be firmly bound with paper tape. Marking- Each package of notebooks shall be marked or labeled with the following particulars:

- Name and address of the manufacturer or his trade –mark. - Description of the notebooks in the package, and - Number of notebooks in the package.

Each notebook shall be clearly and durably marked with the following particulars:

- Name and address of the manufacturer or his trade mark. - Weight of the paper (in g/m 2) - Length and width (in cm), and - Number of pages.





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CHAPTER 4 - RESOURCES 4.1 Main resources The main resources required for the project include the following.

- Land and building - Plant and machinery - Paper, the main raw material - Consumables - Power - Skilled and non-skilled workers

It has been envisaged in the project the land for the project would be available on lease basis from Government of Bhutan and the building as per requirement has to be constructed. The plant and machinery has to be imported as per details given in the project. There is a requirement of operators and skilled workers for the project. In the initial phase, the machine suppliers would be deputing their experts for erection and commissioning of the plant and they would also train the local workers in various operations. If needed, the training of Bhutanese workers could also be arranged by the machine manufacturer in their premises. 4.2 Raw material and consumables The major raw material required for the manufacture of cut paper stationary and exercise books is writing paper. Various grades and qualities of paper as specified in previous chapter are used for the production of exercise books and registers. The common grade of paper used is between 56 to 62 GSM (grams per square meter), which is measure of the thickness of paper. The texture and colour is the main criteria taken in to consideration for assessing the quality of paper. The generally used textures and colours used for the production of exercise books and registers writing pads include the following:

- Cream laid - Cream Wove - White Printing hard-sized - White cartridge - Azure laid - Super Cream Wove - Super Cream Deluxe - White Wove

The quality of paper shall also conform to Standards of writing on both side of paper without loosing legibility as specified earlier.





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The texture, colour and gram mage of paper required for different type of

exercise books and registers have been earlier specified in the previous chapter while describing the standards for exercise books & registers.

Another important raw material required for exercise books is the duplex board

and hard board. In case of exercise books the cover and made of paper on duplex board or straw board of proper GSM covered on both side by paper. In case of registers the straw board of higher GSM would be used. In case of exercise books with spiral binding the cover shall be of polyethylene or PVC substrate with our without printing.

The main raw material viz paper is supplied by the mills either in the form of

continuous rolls of appropriate with or in the form of untrimmed cut sizes commonly known as reams. The width of a standard roll should correspond to one dimension of specified standard size of paper or an integral multiple thereof. In case of cut sizes the width & length shall conform to one of the standard size of untrimmed raw stock paper sizes.

Besides paper the other raw material required are as under:

- Ink for ruling machine - Stitching wire - Thread - Cloth - Duplex board, straw board - Glue or adhesive - Spiral plastic - Packing paper

4.3 Quality Standards for Paper As stated earlier various types of paper are used for the manufacture of exercise books, registers, cut paper stationary broadly these papers are classified as writing and printing papers. The standards for trimmed and untrimmed commercial size of paper have already been specified. The various types of writing and printing paper shall cornply with quality requirements as given in table below:





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Quality Parameters for Writing and Printing Papers

Type of paper Tensile index Nm/ g

Min

Brightness

Min

Opacity Percent

Min

One Minute Cobb Test Max

Average

Double fold

Min

Gloss Percent

Min

Wax Pick

Smoothness

(Bendtsen)

Ml/mm Max

Tear Index

MN.m2/g

Min

CD MD CD MD CD MD Account Book 17 25 75 80 22 5 10 -- No

Pick on 8A

250 4.0 3.5

Air mail / manifold

20 30 72 70 25 -- -- -- -- 4.0 3.5

Antique wove and antique laid

17 25 72 80 25 -- -- -- -- 4.0 3.5

Azure laid 17 25 -- 85 25 5 10 -- -- 4.0 3.5 Bond 25 35 80 80 20 10 15 -- -- 5.0 4.0 Cartridge, drawing

20 30 72 -- 25 20 25 -- -- 4.0 3.5

Cartridge, white

17 25 72 80 25 -- -- -- -- 4.0 3.5

Cream laid and cream wove

17 25 72 80 25 -- -- -- -- 4.0 3.5

Duplicating absorbent

17 25 72 85 -- -- -- -- -- 4.0 3.5

Duplicating semi-absorbent

17 25 72 85 35 (Min 25)

-- -- -- -- 4.0 3.5

Poster, Machine glazed

17 25 72 -- 25 -- -- 18 (glazed side only)

-- 4.0 3.5

Printing, coloured

17 25 -- 80 25 -- - -- 4.0 3.5

Printing, maplitho

20 30 77 80 25 10 15 -- No Pick on 10A

280 4.0 3.5

Printing, offset 20 30 72 80 25 -- -- -- No Pick on 8A

280 4.0 3.5

Printing, semi bleached

17 25 45 80 25 -- -- -- -- -- 4.0 3.5

Printing unbleached

17 25 -- 80 25 -- -- -- - -- 4.0 3.5

Printing, white 17 25 72 80 25 -- -- -- -- -- 4.0 3.5 Printing white super calendared

17 25 72 75 25 -- - 15 - - 4.0 3.5

Typewriting 17 25 72 -- 25 -- -- -- - -- 4.0 3.5 1) Only for white papers. + Strip test water rise in 1 min -10 mm Tensile index= Breaking length, m x 0.0098; Tear Index = Tear Factor x 0.098 CD = Cross direction MD = Machine direction





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4.4 Comparative analysis of sources and prices of critical inputs & consumables As mentioned earlier, various raw materials required for manufacture of exercise books include the following: -

- Paper - Ink for ruling machine - Stitching wire - Thread - Cloth - Duplex board, straw board - Glue or adhesive - Spiral plastic - Packing paper

The main raw material is paper which can be sourced either directly from paper mills or from the dealers / wholesalers in paper raw materials. As the paper required for the proposed project would be in the form of reels, it would be more profitable to purchase the paper directly from paper mills or through their dealers in eastern region of India. The small quantity of paper and board as and when required could be procured from the local paper dealers. 4.5 Recommended sources A list of raw material supplier has been given in the Annexure II. As mentioned above, it would be more economical to purchase the paper directly from paper mills. 4.6 Annual requirement of raw materials The annual requirement of various raw materials along with their prices have been given in the chapter 9 relating to cost presentation.





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CHAPTER 5 – THE PLANT 5.1 Choice of technology Manufacture of exercise books is essentially a paper conversion industry. The main manufacturing operations include ruling of paper, cutting of paper followed by stitching and binding. Depending on the type and size of the market, these operations are carried out either manually or with the use of semi-automatic machines or by using completely automatic machines. Sometimes, partly manual and partly semi-automatic machines operations are also employed. 5.1.1 Process Technologies used For the production of exercise books, normally following type of process technology are used Manual process wherein the ruling of paper is outsourced and cutting and

binding operations are carried out manually. Semi-automatic process using disc paper ruling machine and semi-automatic

cutting and binding operations. Automatic reel to sheet ruling and cutting machine with semi-automatic binding

operations. Fully automatic sheet ruling, cutting and binding operations.

5.1.2 Factors influencing the choice of technology A number of factors need to be taken into considerations while deciding the choice in favour of a process technology. These factors mainly include Factor inputs. Market findings viz size of market and recurrence of repeat demand. Purchasing power of consumers and prevailing price spectrum. Future projections of market demand. Availability of skilled manpower and support facilities. Availability of infrastructure and transport facilities. Environmental considerations.

5.1.3 Technology recommended Manufacture of exercise books & cut paper stationery is essentially a paper conversion industry wherein the cost input of paper contributes a major share viz 65-75 percent in the total cost of production of finished goods. In the open market economy, in such products wherein value addition on raw materials is relatively low, the quantum of production or turnover has to be necessarily kept at a substantially higher level to achieve economics of production and to be able to compete in the market. In India also,





26

now a days exercise books units operate at a higher level of production capacity to achieve the economics of production. During last few years, it has been observed in India that the units producing lower volumes of exercise books have either upgraded their technology and production capacities or diversified in to other areas. Normally, two processes are used for ruling of the paper for exercise books. In the conventional process, paper reel is first cut to sheets by use of reel to sheet cutting machine and then sheets are ruled on disc paper ruling machine. In the modern process, the automatic reel to sheet ruling machine is used for ruling of the paper. Keeping in view the current trends in the industry for upgradation of the technology, the project has been based on automatic high speed REEL to SHEET ruling machine. 5.2 Production capacity The production capacity has been calculated on the basis of 80% utilization of the installed capacity of the machines. Keeping in view the above, the installed capacity of the proposed project on single shift basis, and 300 working days in a year has been envisaged as under: - Exercise books of assorted sizes viz - 28 lacs per annum 32, 48, 64, 80, 96 & 112, 128 pages Practical note books & register - 2 lac per annum with 96, 128, 144 & 160 pages Cut paper stationary packed in reams - 30,000 reams 5.3 Details & Specification of Machinery & Equipment I. Automatic high-speed reel to sheet ruling machine:

Copy & margin both side consisting of following: One Flexo and two Ruling Disc Total 3 Colour on each side, one set of margin cylinder = 2 Pcs Cylinder with following accessories and attachments.

WEB STATION: The lifting of paper reels is done by advanced mechanism suitable to lift maximum reel web of 90 cms & reel diameter of 120 cms of core diameter of 70 mm & reel weight maximum 700 Kgs. Can be lifted from floor by a single person easily.

RULING & MARGIN TOWER: 3 colour inking system is installed on each side. The ink used for ruling is water-soluble which is economical for production of sheets.





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CROSS CUTTER UNIT: Most advanced technology is installed for cross cutting, which is done by rotary system with a progressive increase of 1 cms varying from size 35 cms upto 88 cms.

DELIVERY STATION: Jogging arrangement is done one a wooden pallet kept on delivery platform with facility of automatic downward movement.

OUTPUT: Web line speed of 200 meters/ minute maximum depending on quality & GSM of paper. A set of other items includes-----

Web-guiding system tension controller (Hydraulic), Static unit, Rotary knives, disc, spaces, Hydraulic pallet truck, margin cylinder, cylinder stand, disc rod, disc rod stand, cylinder disc rod with collar, reel shaft, took kit, etc.

Micro perforate unit II. REEL TO SHEET CUTTING MACHINE* III. Disc Paper Ruling Machine* double sided double colour with

stop with cutting and perforate attachment with suitable electrical motor and standard accessories (main drum 11”)

36”

IV. MICROCUT Paper cutting machine with all Standard Accessories as listed below:

Hydraulic Clutching device for less maintenance & slippage free operation with instant stop fully adjustable clamping pressure. Standard Accessories S.S.COATING ON front side of table & side Tables also. Auto Guage, Photo Cell, cutting side indicator, main switch for instant stop,

side guage plate left & right hand knife changing kit, 2 knives and 4 cutting sticks, oil can, grease gun and all operational tools, operational manual of machine, 2 Nos. electric motor -440 volt 3 phase, one cutting line bulb, one overload stud etc.

Technical specification: Cutting width 1070 MM Clamp opening 130 MM Working depth of table (rear) 1070 MM Table height 900 MM Clamp pressure minimum 400 kg Clamp pressure maximum 3500 Kg Residual cut 27 MM Main motor 3HP Blower motor 1HP Weight 3000 Kgs





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V. E.M.C. Fully Automatic High Speed paper Cutting machine

with Electromagnetic Clutch Brake, Photo Cell hand Safety Device for instant stopping, also double switch for safe actuation, motorized back gauge with manual micro adjustment, illuminating magnified measuring tape at Eye Level for quick setting back gauge, complete with lubrication pump, two electric motors, two special steel knives, Panel switch control Board.

42”

VI. Semi Automatic Type Paper cutting Machine with Electrical, a

set of knives and a set of tools. 43”

VII. AUTOMATIC NOTE BOOK FOLDING MACHINE (for Exercise Note Books)

With counting arrangement, with standard accessories.

Technical specification:

Feeder: Automatic Flat Pile feeder Fold: Double / Single Parallel fold Paper Size handled: Maximum – 90 cm (W) x 90 cm (L) Maximum – 30 cm (W) x 43 cm (L) Counting: From 2 to 14 sheets Speed: 7200 to 9000 sheets per hour Electrical; 440 V 3 phase, 50 Hz Power: 2 HP VIII. Paper Folding Machine, with two speed mechanical speed device

(2 cross) (Max. sheet size 60 cm (W) x 91 cm (L), Mini: 30 cm (W) x 45 cm (L)

Technical Specification: Maxi. Paper sizes 60 CM (W) x 91 cm (L) Mini. Paper size 30 CM (W) x 45 cm (L) Parallel Fold Two Cross Fold Two Feeder Mode Manual Knives Vertical mechanical Maxi. Knife stroke 6,500 P/hr. approx Counter Infrared Oil distribution Manual (oil pump optional) Delivery Stacker





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Speed variation Available Power 1.5 HP 1440 RPM Floor space 250 (L) x 244 (W) x 130(H) cm IX. “PERFECT” BINDING MACHINE consists of single clamp hand milling station with

4 HP motor and cutters build in waste exhaust system with bags, motorized not melt gluing station with build in heater and thermostatic control, manual cover feeding station with Nipping arrangement and delivery tray, drive motor and build in Electrical Panel Board with Side Glue System

Technical Details: Max. length (along spine) 430 mm Min. Length (along spine) 50 mm Max. Height (page width) 300 mm Min. Height (page width) 50 mm Bindable thickness 1 to 45 mm Production speed 700 Power requirement 440 V Motor 3.7 KWA Heater 2 KW Machine size 2240 x 620 mm Machine weight 825 kgs. X. Power Driven Automatic Wire Stitching Machine complete with motor, pulley

etc. size: 5/8” XI. ROBERTSON make Thread Book Sewing Machine size 18” x 9 ¾”) 460 x

250mm) power operated, fitted with Magnetic Brake, speed of Machine 70 sections per minute, supplied with all standard accessories and fittings inclusive of 0.5 HP motor and starter

Technical specifications: Maxi size of Book 460 x 250 mm 18” x 9 ¾” Min. size of Book 100 x 80 mm 4” x 3 ¼” Net weight (approx) 700 kgs Gross weight (approx) 900 kgs Speed 70 sections P.M Motor 0.5 HP 1440 RMP Space required 5’ x 5’ Provided with Magnetic Brake

XII. TWIN BOOK PRESS Packing charges XIII. BOOK PRESS manual Pillar Type – Size : 18 x 24”





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Technical Details: Pile (stock) height 70 mm Punching stroke 90mm Size of working table 390 x 60 mm Distance between dies (Min-max) 100-310mm System Punching pressure 2500 kgs No of Strokes (Min) 15 Electrical load 1.5 /2kva /hp Electrical supply 400/440 V AC 50Hz 3Ph. Hydraulic Oil capacity 45 Ltrs Overall dimension (wxDxH) 60 x 60 x 160 cms Net weight 300 kgs. XIV. SPIRAL BINDING MACHINE- for production of exercise books spiral binding with plastic covers. (*) REEL TO SHEET CUTTING MACHINE and DISC PAPER RULING MACHINE would be required for a lower capacity unit, in place of automatic high speed REEL TO SHEET RULING MACHINE

5.4 Process of Manufacture As mentioned in previous chapter the exercise books and registers are manufactured in a variety of dimensions and varying number of pages. Normally the exercise books are of small dimension and registers are of relative larger dimensions. The process of manufacture for exercise books & registers involve the following operations.

- Cutting of paper - Ruling – Line Printing - Creasing / folding - Stapling, wire stitching or punching, thread sewing - Printing of cover - Binding - Finishing

Cutting of paper- Paper is available from the mills or dealers in the form of continuous rolls with specific width. Paper is also available in the form of untrimmed cut size of larger dimension. The rolls are also required to be cut in large cut sizes with the help of cutting machine. The cut sizes of paper are then stocked in form of reams.





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Ruling – Line Printing- The paper after cutting to proper dimension is taken to the ruling or line-printing machine. The ruling is done either on one side of paper (in case of science practical note book) or on both sides of required for the final product. Spacing between the horizontal lines and the spacing on top of the page & side of the page shall be as per requirement of the product. These dimensions of spacing have been given for various types of the exercise books & registers in the previous chapters. Selection of proper ink is also important for clear appearance of the lines. Creasing & Folding- After lining the paper sheets are folded in the required sizes and the register number of folded sheets are placed together depending on the number of page required in the final products.

Stapling, Wire stitching, thread Sewing, Punching- the folded set of paper after lining and folding are then bonded together either stapling, wire stitching or thread sewing. These operations are carried out with the help of wire stitching machine or thread book sewing machine. In case of thick notebooks or registers with more pages, two or more stapled set of papers are combined to obtain the desired number of pages. In case of spiral binding the requisite perforation are made on the margin side of the paper sets. Printing of Covers- Covers are provided to the note books and registers in order to prevent the note book from reorientation & damage dulling handling while in use. Covers are usually made of duplex board, straw board or plastic in each of spiral binding. Covers are printed suitably giving the name of manufacture, brand name, trademark, number of pages, size of paper and gram mage (GSM) OF PAPER. Maximum retail price (MRP) may also be printed or stamped on the cover page. Normally printed of cover page is outsourced from printing presses.

Binding- In case of exercise books and registers, which are required to be bound by ordinary paper or hard paper cover, the printed covers are directly stitched or stapled with the pages. In case of thick covers or hard board covers, the stapled sets of pages are placed between the properly sized with a strip of cloth with the help of suitable adhesives. The outside of board is pasted with the pointed paper cover and inside is pasted with the top page of the inside cut paper sets. In case of spiral binding the spiral are placed into cut perforations with the help of spiral binding machine.

Finishing- After binding the exercise books or registers are finally trimmed and finished. The finished products are then packed for dispatch to market destinations.





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5.5 Process Flow Chart Process flow chart for the production of bound paper stationary and cut paper stationary is as under:

Paper Rolls

Ruling & Cutting of Paper Cut Paper Stationary

Creasing and folding

Stapling /wire stitching/thread sewing /perforating

Binding

Printing of Cover

Side Trimming and finishing Packaging of Finish Products

Cutting of paper





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5.6 Technical know-how The manufacturing process for exercise books and cut paper stationery is relatively simple and the technical know-how is available from machine suppliers. The machine suppliers also provide training at their premises or at the factory side to the workers in operation of various machines. 5.7 Requirement of Power, Fuel and utilities It is estimated that 50 HP power connections would be required for the production unit including the power requirement for production machines and general-purpose lighting. The cost of the power has been calculated on the basis of Re. 1.45 per unit. 5.8 Manpower requirement The production capacity and the financial projections are based on single shift operation. For operation of the unit, 5 managerial and office staff, 2 marketing executive, 8 skilled workers and operators and 15 unskilled workers would be required. In case the unit is required to be operated in more than one shift, additional staff would be required. In addition to this, there would be a requirement of contract workers during construction phase of the factory and installation of machinery and equipment. The organization chart for single shift operation would be as under: 5.9 Organization Chart

Manager

(Overall head of the factory operations)

Production Section

Machine Operators – 6

Packing Supervisor – 1

Electrician – 1

Unskilled workers – 15 nos

Administration and accounts

Accounts and administration staff – 2 nos

Marketing Department

Marketing Executive – 2 nos





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The project has a good employment potential for skilled and unskilled workers, which would be employed in the production unit. Beside the project would generate employment potential in marketing & sales of its produce, transport of raw materials and finished products. The project would thus create opportunity both for direct & indirect employment. 5.10 Plant Layout





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CHAPTER 6 –PLANT LOCATION & INFRASTRUCTURE 6.1 Potential locations It is desirable that the exercise books be manufactured at a location near to main education centres. As mentioned earlier, the size of enrollment till higher secondary was maximum in Thimphu followed by Chhuka, Trashigang, Samdrup, Paro and Samatse. Evidently, Thimphu followed by Chhuka, Trashigang, Samdrup, Paro and Samatse constitute the major centres for market sales of school supplies including exercise books as they account for maximum numbers of students. It would, therefore be quite logical to locate the unit at one of these main educational centres.

= Education Centres





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6.2 Selection of suitable locations In order to select the suitable location for the manufacturing plant, various parameters viz availability of land, environmental conditions, investments considerations, operational logistics, future development possibilities, socio-economic factors including availability of services like transport and communication facilities etc. have been taken into consideration for ranking the locations. The table below shows the ranking of locations: Ranking of possible locations based on various parameters

Weightage of location related parameters

S. No.

Locations Land Access condition

Environmental Conditions

Socio economic factors

Investment Consideration

Operational Logistics

Future development possibilities

Total

1 Thimphu 7 7 7 8 7 7 43 2 Paro 7 7 7 7 6 6 40 3 Trashigang 7 7 6 5 6 5 36 4 Samdrup 7 7 6 5 5 5 35 5 Samatse 7 7 6 5 5 5 35 6 Chukka 7 7 6 5 5 5 35

It is therefore proposed that the unit be located either at Bjemina Industrial Estate near Thimphu or Paro. The requisite infrastructure viz land, power, road transport and communication facilities required for the proposed unit are available in and around Thimphu specially in Bjemina Industrial Estate. The project has been conceptualized in totality and all the manufacturing operations are proposed to be carried out in the unit itself. The project has an inbuilt provision for spare parts, components and tools and the cost for the same has been incorporated. There may be some requirement of minor mechanical or electric repairs which could be taken care of by the skilled workers of the unit. Alternatively, the assistance could be taken of from the existing mechanical and electrical repair workshops. Keeping in view the fact, that on the considerations of price competitiveness, one relatively large production turnover unit is being recommended and Thimphu with its developed trading network and concentration of printing units would the most suitable location for exercise books unit. Further, a large part of exercise books is procured by the government for distribution to schools in rural areas and therefore, it would be better if the unit is setup near Thimphu.





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CHAPTER 7 – ENVIRONMENTAL IMPACT

7.1 Environmental aspect of manufacturing process The manufacturing process for production of exercise books is basically a paper conversion process, and the main operation is cutting of paper and binding. No chemical process is involved in the manufacturing of exercise books. For ruling on paper, water-soluble inks are proposed to be used and there are no liquid or gaseous emissions. For binding also organic type glues or adhesive are used which do not cause any pollution. As stated above, in the manufacture of exercise books, there are no liquid or gaseous effluents and the manufacturing process in totally environment friendly. The waste paper scrap generated during side cutting trimming operations also does not have any pollution angle. The waste paper is recycled either for making paper in the mill or for making hand made paper. 7.2 Waste generated and mitigation measures As stated above, the manufacturing process for exercise books is environment friendly and no toxic & hazardous waste would be generated. However, some waste in the form of paper trimming and cutting would be generated during manufacturing process. Besides, there would be some waste of metal scrap, wooden scrap, broken bricks, stone aggregates, etc during construction phase of the project. The waste generated during construction phase is mainly used for earth filling & flooring. The details of the waste generated during construction phase and project operation phase along with mitigation measures are given below in subsequent paras. 7.2.1 Waste generated during construction phase The details of the waste generated during construction phase and the mitigation measures are as under: - S. No. Type of waste / scrap Quantity Mitigation measures Impact on

Environment 1. Metal scrap Around 2-3 %

of the steel used in construction

Sold to trade channels for reprocessing.

No adverse impact

2. Wooden scrap Around 5-7% of the wood used in construction.

Used as fuel. No adverse impact

3. Clay stones, mounds Depending upon on the topography of the construction site.

Used for earth filling. No adverse impact.

4. Brick stone cement aggregate

5% of the quantity used

Used for flooring and earth filling.

No adverse impact





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7.2.2 Waste generated during project operation phase

The details of the waste generated and the mitigation measures are as under:

S. No. Type of waste Quantity Mitigation

measures Impact on environment

1. Liquid effluents Nil Not applicable No adverse impact

2. Gaseous effluents Nil Not applicable No adverse impact

3. Solid effluents / waste Paper cuttings and trimmings, 3-5% of the consumption of paper.

Recycling for the production of hand made paper

No adverse impact

The waste paper scrap could be easily used for making hand made paper, which has a good market potential. There is already one hand made paper unit in Bjemina Industrial Estate. The waste paper scrap obtained during manufacturer of exercise books and cut paper stationary could be sold to existing hand made paper unit. As such, there is practically no adverse impact of the project on the environment.





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CHAPTER 8 – IMPLEMENTATION SCHEDULE

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44Arrangement of Funds through Bank/ Own

Procurement of Land

Procurement of Tech. know how/ transfer of technology

Finalization of Building Contracts

Placement of Orders for Building Material

Placement of Orders for Machinery

Construction of Manufacturing premises

Delivery of Machinery

Erection, Commissioning of Plant & Machinery & Utilities

Procurement of Raw Material and Trial Runs

Training for workers

Commercial Production

Manufacture of Exercise Books Week

Activity

Implementation Schedule





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CHAPTER 9 - COST PRESENTATION 9.1 Capital costs 9.1.1 Cost of land and building A). Plot and built up area: - Total land requirement - 1000 sq. mt. - Constructed area for godowns and offices - 250 sq. mt. - Industrial shed for installations of machines - 500 sq. mt.

B). Cost of construction: - Office and godown (250 X 6000) - Rs. 15 lacs - Industrial sheds (500 X 3500) - Rs. 17.5 lacs C). Land on lease @ Rs. 10/- per sq. mt / annum

Cost of Land and Building

Office and godownIndustrial sheds

9.1.2 Cost of Machinery & Equipments Automatic High Speed Reel to Sheet Ruling Machine (M1)

1 Nos. Rs. 13,65,000/-

Micro Perforating Machine (M2) 1 Nos. Rs. 77,000/- Microcut Paper cutting machine (M3) 1 Nos. Rs. 8,25,000/- E.M.C. Fully Automatic High Speed paper Cutting machine (M4)

1 Nos. Rs. 3,55,000/-

Semi Automatic Type Paper cutting Machine (M5)

1 Nos. Rs. 1,75,000/-

Automatic Note Book Folding Machine 1 Nos. Rs. 6,55,000/-





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(M6) Paper Folding Machine (M7) 1 Nos. Rs. 5,12,000/- “Perfect” Binding Machine (M8) 1 Nos. Rs. 6,22,000/- Power Driven Automatic Wire Stitching Machine (M9)

1 Nos. Rs. 59,500/-

ROBERTSON Make Thread Book Sewing Machine (M10)

1 Nos. Rs. 2,77,500/-

Twin Book Press (M11) 1 Nos. Rs. 2,96,000/- Book Press (M12) 1 Nos. Rs. 13,750/- Spiral Binding Machine (M13) 1 Nos. Rs. 75,000/- Total Rs. 53,07,750/- 9.1.3 Miscellaneous Fixed Assets - Rs. 3 lacs 9.1.4 Pre-operative expenses - Rs. 5 lacs

9.2 OPERATING COSTS: 9.2.1 Cost of Raw Materials A). For exercise books (4 lac nos each)

Exercise books with 32 pages - 28 mt. tonnes Exercise books with 48 pages - 42 mt. tonnes Exercise books with 64 pages - 56 mt. tonnes Exercise books with 80 pages - 70 mt. tonnes Exercise books with 96 pages - 84 mt. tonnes Exercise books with 112 pages - 98 mt. tonnes Exercise books with 128 pages - 112 mt. tonnes B). For practical exercise books & registers (50,000 each)

With 96 pages - 21 mt. tonnes With 128 pages - 28 mt. tonnes With 144 pages - 31.5 mt. tonnes With 160 pages - 35 mt. tonnes

C). Cut paper reams (30,000 reams)

30,000 reams of 500 sheets each - 65.4 mt. tonnes Paper @ Rs. 60,000 per mt. tonne D). Card board sheets, - 10% of cost of paper White card sheets for covers And cover printing E). Ink and packaging material - 0.5% of cost of paper Total cost of raw materials - Rs. 3,67,23,875/-





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9.2.2 Salary and wages Manager - 1 no - Rs. 25,000/- Office Staff & Marketing Executive - 4 nos - Rs. 48,000/- Skilled workers & operators - 8 nos - Rs. 80,000/- Unskilled workers - 15 nos - Rs. 1,05,000/- Sub-total - Rs. 2,58,000/- Total annual salary & wages - Rs. 30,96,000/-

Salary and Wages

Manager

Office staff & MarketingexecutiveSkilled workers & operators

Unskilled workers

9.2.3 Cost of Power and Fuel Power requirement for production machines - 39 KWH Power requirement for general purpose with lighting Of stores, offices and production unit - 7 KWH Total - 46 KWH Cost of Power per annum - Rs. 1,30,500/-

Cost of Power and Fuel

Power for production machines

Power for office and generallighting





43

9.2.4 Annual Turnover A). Exercise books Exercise books with 32 pages - 4 lac nos - Rs. 23,05,030/- Exercise books with 48 pages - 4 lac nos - Rs. 34,34,340/- Exercise books with 64 pages - 4 lac nos - Rs. 45,48,180/- Exercise books with 80 pages - 4 lac nos - Rs. 56,46,550/- Exercise books with 96 pages - 4 lac nos - Rs. 67,29,450/- Exercise books with 112 pages - 4 lac nos - Rs. 78,51,025/- Exercise books with 128 pages - 4 lac nos - Rs. 89,10,720/- Sub-total - 28 lac nos - Rs. 3,94,25,295/- B). Practical exercise books & registers With 96 pages - 0.5 lac nos - Rs. 16,59,158/- With 128 pages - 0.5 lac nos - Rs. 21,96,740/- With 144 pages - 0.5 lac nos - Rs. 24,53,929/- With 160 pages - 0.5 lac nos - Rs. 27,07,250/- Sub-total - 2 lac nos - Rs. 90,17,076/- C). Cut paper reams Reams of 500 sheets each - 30,000 nos - Rs. 45,78,000/- Total sales turnover - Rs. 5,30,20,371/-





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CHAPTER 10 – FINANCIAL ANALYSIS 10.1 Project Assumptions

Assumptions at a Glance S. No Particulars Rate/Amount

1 Total Project Cost 160.38 2 Debt 70% 3 Equity 30% 4 Rate of Interest 12% 5 Depreciation (Building) SLM 10 yrs 6 Depreciation (Machinery) SLM 20 yrs 7 Tax 30% 8 Construction Cost (Building) per sq. m. 6000 9 Construction Cost (Shed) per sq. m. 3500

10 Repayment period of Debt 8 yrs 11 Moratorium period 1 yr. 12 Installed Capacity (kg) 628.53 13 Capacity Utilization 75% 14 Working Capital Cycle 1 month

10.2 Total Project Cost Total Project cost

1 Machinery 69.53 2 Construction Cost 32.50 3 Miscellaneous Fixed Assets 3.00 4 Pre operating Expenses 5.00 5 Training Expense 0.70 6 Interest 13.29 7 Working Capital 36.36 Total 160.38





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Break up (Cost of Project)

MachineryConstruction CostMisc. Fixed AssetsPre-operative ExpTraining ExpensesInterestWorking Capital

10.3 Means of Finance

Means of Finance Debt 112.26 70% Equity 48.11 30% Total 160.38 100%

Means of Finance

DebtEquity





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10.4 Investment on Machinery and Equipments MACHINERY M1 1365000 M2 77000 M3 825000 M4 355000 M5 175000 M6 655000 M7 512000 M8 622000 M9 59500 M10 277500 M11 296000 M12 13750 M13 75000 Total 5307750

Add Packaging, Forwarding, Transport and Insurance @ 11% 583852.5

Add Installation, Erection and Commissioning @ 5% 265387.5 Add Duty and Taxes @ 10% 530775 Add Spare Parts @ 5% 265387.5 TOTAL 6953152.5

Investment on Machinery & Equipments

Cost of machinesPackaging to InsuranceInstallation & CommissioningDuty and TaxesSpare parts





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10.5 Cost of Construction

Constructed Area (250 Sq. mtr @ 6000per Sq. mtr.) 1500000 Shed (500 Sq. mtr. @ 3500 per Sq mtr.) 1750000 Total 3250000

Cost of Construction

Constructed AreaShed





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10.6 Cost of Raw Materials

Product Category Paper used

Board @ 10% of Paper

Consumables @ 0.5% of paper

Total Material Used

Cost per gram

Total Cost per unit

No. of copies Total cost

Weight (in t)

Exercise Book (EB)

a) 32 pages EB 70 7 0.35 77.35 0.05 3.87 400000 1547000 28b) 48 pages EB 105 10.5 0.53 116.03 0.05 5.80 400000 2320500 42c) 64 pages EB 140 14 0.70 154.70 0.05 7.74 400000 3094000 56d) 80 pages EB 175 17.5 0.88 193.38 0.05 9.67 400000 3867500 70e) 96 pages EB 210 21 1.05 232.05 0.05 11.60 400000 4641000 84f) 112 pages EB 245 24.5 1.23 270.73 0.05 13.54 400000 5414500 98g) 128 pages EB 280 28 1.40 309.40 0.05 15.47 400000 6188000 112

Total 2800000 27072500 490

Practical Note book & Register (PNB)

a) 96 pages PNB 420.00 42.00 2.10 464.10 0.05 23.21 50000.00 1160250.00 21b) 128 pages PNB 560.00 56.00 2.80 618.80 0.05 30.94 50000.00 1547000.00 28c) 144 pages PNB 630.00 63.00 3.15 696.15 0.05 34.81 50000.00 1740375.00 31.5d) 160 pages PNB 700.00 70.00 3.50 773.50 0.05 38.68 50000.00 1933750.00 35

Total 200000.00 6381375.00

Rim 2180 0.05 109 30000 3270000 65.4

TOTAL RAW MATERIAL COST 3030000.00 36723875.00 555.40

Raw Material Cost (Per Unit)





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10.7 Expenses incurred Expenses (in Rs.)

Salary and Wages

Type of Employees No. of Employees

Per month

Per Annum Total

Manager 1 25000 300000 300000 Office Staff 4 12000 144000 576000 Skilled Workers 8 10000 120000 960000 Unskilled Workers 15 7000 84000 1260000 3096000 Total 3560400 Training & Development Cost ( 1% of Machinery) 69531.525 Power ([email protected]/hour, 8hrs/day, 25days/mth) Rate=1.45/unit 130500 Water and Diesel RS. 5000 pm 60000 Selling Expenses (Publicity & Marketing Expense) 5% of Sales 2651018.6 Total 6471450.1

Expenses incurred

ManagerOffice staffSkilled workersUnskilled workersTraining & Dev. CostPowerWater and DieselSelling Expenses





mailto:[email protected]

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10.8 Break up of cost of Production Particulars

Rs. In Lacs

Raw Material & Consumables 320.83 Utilities & Fuel 1.91 Wages & Salaries 35.60 Indirect Expenses 49.97

Break up of Cost of Production

Raw Material & ConsumablesUtilities & FuelesWages & SalariesIndirect Expenses





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10.9 Annual Turnover Exercise Book (EB)

Revenue Per Unit Selling Price (Rs.)

a) 32 pages EB 2305030 5.76 b) 48 pages EB 3434340 8.59 c) 64 pages EB 4548180 11.37 d) 80 pages EB 5646550 14.12 e) 96 pages EB 6729450 16.82 f) 112 pages EB 7851025 19.63 g) 128 pages EB 8910720 22.28 Sub-total 39425295 Practical Note book & Register (PNB) a) 96 pages PNB 1659158 33.18 b) 128 pages PNB 2196740 43.93 c) 144 pages PNB 2453929 49.08 d) 160 pages PNB 2707250 54.15 Sub-total 9017076 Rim 4578000 152.6 TOTAL 53020371

Annual Turnover

Exercise BooksNote books & registerRIM





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10.10 Income Statement

Operating years 1 2 3 4 5 6 7 8 9 10

CapacityInstalled Capacity (tonnes) 894.53 894.53 894.53 894.53 894.53 894.53 894.53 894.53 894.53 894.53Capacity Utilisation 75% 75% 75% 75% 75% 75% 75% 75% 75% 75%

PRODUCTION 670.9 670.9 670.9 670.9 670.9 670.9 670.9 670.9 670.9 670.9

Sales Revenue 530.20 530.20 530.20 530.20 530.20 530.20 530.20 530.20 530.20 530.20

Raw Material & Consumables 367.24 367.24 367.24 367.24 367.24 367.24 367.24 367.24 367.24 367.24Utilities & FuelesPower 1.31 1.31 1.31 1.31 1.31 1.31 1.31 1.31 1.31 1.31Water, Diesel, etc 0.60 0.60 0.60 0.60 0.60 0.60 0.60 0.60 0.60 0.60Sub Total 1.91 1.91 1.91 1.91 1.91 1.91 1.91 1.91 1.91 1.91Wages & Salaries 35.60 35.60 35.60 35.60 35.60 35.60 35.60 35.60 35.60 35.60

Factory Overheads 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00General Overheads 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00LeaseLand 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10 0.10Estimated Cost of Production 409.85 409.85 409.85 409.85 409.85 409.85 409.85 409.85 409.85 409.85Selling Expenses 26.51 26.51 26.51 26.51 26.51 26.51 26.51 26.51 26.51 26.51Cost of Sales 436.36 436.36 436.36 436.36 436.36 436.36 436.36 436.36 436.36 436.36

EBITDA 93.85 93.85 93.85 93.85 93.85 93.85 93.85 93.85 93.85 93.85Interest 13.47 11.79 10.10 8.42 6.74 5.05 3.37 1.68 0.00 0.00Depreciation 8.58 8.58 8.58 8.58 8.58 8.58 8.58 8.58 8.58 8.58PBT 71.80 73.48 75.16 76.85 78.53 80.22 81.90 83.58 85.27 85.27Taxation 21.54 22.04 22.55 23.05 23.56 24.06 24.57 25.08 25.58 25.58PAT 50.26 51.44 52.61 53.79 54.97 56.15 57.33 58.51 59.69 59.69

Income Statement

It would be seen from table above that the PBT in the 1st year of operation in Rs. 71.80 lacs which works out to be 14% of the total sales. In the 10th year, the %age of PBT would be 16%. Similarly PAT in the 1st year is Rs. 50.26 lacs accounting for 9% of total turnover. PAT in 10th would rise to 11%. These figures could vary depending upon change in tax structure.





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10.11 Repayment and Interest Schedule for Loans

Repayment and Interest Schedule for Loans Operating Years 1 2 3 4 5 6 7 8 9 10 Rate of Interest 12% Loan (Outstanding) 112.26 98.23 84.20 70.17 56.13 42.10 28.07 14.03 0.00 0.00 Interest 13.47169 11.78773 10.10377 8.419804 6.735843 5.051883 3.367922 1.683961 0.00 0.00 Moratorium Repayment 14.03301 14.03301 14.03301 14.03301 14.03301 14.03301 14.03301 14.03301 0.00 0.00 Closing Balance 98.23 84.20 70.17 56.13 42.10 28.07 14.03 0.00 0.00 0.00

10.12 Depreciation Depreciation Operating Years 1 2 3 4 5 6 7 8 9 10 Machinery @ 10% 6.95 6.95 6.95 6.95 6.95 6.95 6.95 6.95 6.95 6.95 Construction Cost @ 5% 1.63 1.63 1.63 1.63 1.63 1.63 1.63 1.63 1.63 1.63 Total 8.58 8.58 8.58 8.58 8.58 8.58 8.58 8.58 8.58 8.58





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10.13 Projected Funds Flow Statement

Construction Period1 1 2 3 4 5 6 7 8 9 10

SOURCES OF FUNDSEquity 46.87Debt 109.36PBDIT 76.69 76.69 76.69 76.69 76.69 76.69 76.69 76.69 76.69 76.69

Total Sources A 156.23 76.69 76.69 76.69 76.69 76.69 76.69 76.69 76.69 76.69 76.69

APPLICATION OF FUNDSFixed Assets Purchase 121.01Miscellaneous Fixed Assets 3.00Increase in Current Assets 32.22Repayment of Loan Payment 13.67 13.67 13.67 13.67 13.67 13.67 13.67 13.67 0.00 0.00 Payment of Interest on Term Loan 13.12 11.48 9.84 8.20 6.56 4.92 3.28 1.64 0.00 0.00Taxation 16.50 16.99 17.48 17.97 18.47 18.96 19.45 19.94 20.43 20.43

Total Application B 156.23 43.29 42.14 40.99 39.85 38.70 37.55 36.40 35.25 20.43 20.43

SURPLUS/(DEFICIT) A-B 0.00 33.40 34.55 35.70 36.85 38.00 39.14 40.29 41.44 56.26 56.26OPENING CASH & BANK BALANCES 0.00 33.40 67.95 103.65 140.50 178.49 217.64 257.93 299.37 355.63CLOSING CASH & BANK BALANCES 0.00 33.40 67.95 103.65 140.50 178.49 217.64 257.93 299.37 355.63 411.89

Years

Projected Funds Flow Statement

Operation period





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10.14 Projected Balance Sheet

Sn DescriptionConstruction Period Operati0on Period

1 1 2 3 4 5 6 7 8 9 10

1.1 Equity 48.11 48.11 48.11 48.11 48.11 48.11 48.11 48.11 48.11 48.11 48.111.2 General Reserves 50.26 101.69 154.31 208.10 263.07 319.22 376.55 435.06 494.75 554.441.3 Debt 112.26 98.23 84.20 70.17 56.13 42.10 28.07 14.03 0.00 0.00 0.00

Total Liabilities 160.38 196.60 234.00 272.59 312.35 353.29 395.40 438.70 483.18 542.86 602.552 Assets

2.1 Gross Fixed Assets 124.01 124.01 124.01 124.01 124.01 124.01 124.01 124.01 124.01 124.01 124.012.2 Accumulated Depreciation 8.58 17.16 25.73 34.31 42.89 51.47 60.05 68.63 77.20 85.782.3 Net Fixed Assets 124.01 115.44 106.86 98.28 89.70 81.12 72.55 63.97 55.39 46.81 38.232.4 Working Capital Assets 36.36 36.36 36.36 36.36 36.36 36.36 36.36 36.36 36.36 36.36 36.362.5 Cash & Bank Balances 0 44.80 90.78 137.94 186.28 235.80 286.50 338.37 391.42 459.69 527.96

Total Assets 160.38 196.60 234.00 272.59 312.35 353.29 395.40 438.70 483.18 542.86 602.55

Projected Balance Sheet





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10.15 Discounted Cash Flow Statement Discounted Cash flow statement (Total Investment)

Construction PeriodYears t=0 t=1 1 2 3 4 5 6 7 8 9 10InflowsNet Cash Accruals After Interest & Tax 58.84 60.01 61.19 62.37 63.55 64.73 65.91 67.09 68.27 68.27Less: Change in Working Capital 0 0 0 0 0 0 0 0 0 0Add back financial Expenses 13.47 11.79 10.10 8.42 6.74 5.05 3.37 1.68 0.00 0.00Terminal value 300Total inflow 72.31 71.80 71.30 70.79 70.29 69.78 69.28 68.77 68.27 368.27OutflowsInvestment 124.01 36.36Bridge Loan 0 0Total outflow 124.01 36.36Net Cashflow -124.01 -36.36 72.31 71.80 71.30 70.79 70.29 69.78 69.28 68.77 68.27 368.27IRR on Investment (%) 36%NPV (12% Discount Rate) Rs. 254.95Pay Back Period 2 Years 6 month

Discounted Cashflow Statement (Equity)

Years t=o t=1 1 2 3 4 5 6 7 8 9 10InflowsNet Cash Accruals After Interest & Tax 58.84 60.01 61.19 62.37 63.55 64.73 65.91 67.09 68.27 68.27Less: Change in Working Capital 0 0 0 0 0 0 0 0 0 0Less: Loan Repayment 14.03 14.03 14.03 14.03 14.03 14.03 14.03 14.03 0.00 0.00Terminal Value 210Total Inflow 44.80 45.98 47.16 48.34 49.52 50.70 51.87 53.05 68.27 278.27OutflowsEquity 37.20 10.91Total Outflow 37.20 10.91Net Cash Flow -37.20 -10.91 44.80 45.98 47.16 48.34 49.52 50.70 51.87 53.05 68.27 278.27IRR on Equity 65%

Operation Period

The IRR on investment is 36% which is quite a positive indication about the financial health of the project because the cost of borrowing is 12%. Similarly IRR on Equity is 65% which again is a positive indicator. The NPV @ of 12% on investment is Rs. 254.95 lacs which is quite good for any investment.





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10.16 Break Even and Sensitivity Analysis

Break Even Point And Senstivity Analysis

Normal Case1 Case2 Case3 Case4Variable Cost (Rs. Lacs)Raw material & Consumable Stores 367.24 403.96 367.24 367.24 403.96Utilities 1.91 2.10 1.91 1.91 2.10Total Variable Cost 369.14 406.06 369.14 369.14 406.06Average Variable Cost (Rs. per kg uses of paper) 66.46 73.11 66.46 66.46 73.11Fixed Cost (Rs. Lacs)Wages & Salaries 35.60 35.60 39.16 35.60 37.38Repairs & Maintenance 3.00 3.00 3.30 3.00 3.15General Overheads 2.00 2.00 2.20 2.00 2.10Lease charges 0.10 0.10 0.11 0.10 0.11Financial Expenses 13.47 13.47 14.82 14.82 15.56Depreciation 8.58 8.58 9.44 9.44 9.91Total Fixed Cost (Rs. Lacs) 62.75 62.75 69.03 64.96 68.21Average Fixed Cost (Rs. per kg uses of paper) 11.30 11.30 12.43 11.70 12.28Average Selling Price 95.46 95.46 95.46 95.46 90.69Project Break Even Point (t) 216.40 280.75 238.04 224.00 387.99Project Break Even 39% 51% 43% 40% 70%Cash Break Even Point 186.82 242.37 205.50 191.47 331.63Cash Break Even 34% 44% 37% 34% 60%

Case 1 - 10% Increase in Variable CostCase 2 - 10% Increase in fixed CostCase 3 - 10% Increase in Project CostCase 4 - 10% Increase in Variable Cost and Fixed Cost 5% Increase in Fixed Cost 5% Dcrease in Selling Price The project break even in normal case is 34% i.e. after achieving 34% of the Projected Turn Over the unit would be in be in the profit zone.





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10.17 Ratio Analysis

Ratio Analysis

1 Return on Assets 25%

2 Return on Equity 82%

3 Debt-Equity Ratio 43%

4 Interest coverage Ratio 6

10.18 Foreign exchange implications The foreign exchange requirement for the project would be only for the import of machines, equipments and accessories for a value of Rs. 60 lacs, during the setting up of the project. Approximately, Rs. 5 lacs worth of foreign exchange would be required for incidental expenses such as training, travel, etc. Additionally, there would be a requirement of Rs. 367 lacs per annum for the import of raw materials. Thus, the foreign exchange expenditures during first five years would be Rs. 1900 lacs. The foreign exchange saving in terms of import substitution would be around Rs. 2650 lacs during the first five years of operation of the project.





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CHAPTER 11 – ECONOMIC ANALYSIS 11.1 Economic Rate of Return (ERR) Economic Rate of Return is the interest rate at which the cost and benefits of a project, discounted over its life, and equal. ERR differs from Financial Rate of Return in that it takes into account the effects of factors such as Price Controls, Subsidies and Tax breaks from local government, to compute the actual cost of the project to the economy. The economic rate of return also includes indirect benefits to the economy that are likely to be ploughed back to the investors, people, government and other government or non-government agencies, over a longer period of time. 11.2 Relevance of ERR to the project This concept of ERR is more relevant for big projects involving large capital deployment. For small projects, like the project under consideration, there may not be significant difference between Financial Rate of Return and Economic Rate of Return, as, while formulating the project, factors like Price Controls, Subsidies and Tax breaks from local government and also socio-economic benefits have not been taken into account. 11.3 Socio-economic impact of the project As state above, the concept of ERR is not quite relevant for this project and the impact of the proposed unit would not be quite significant on the overall economic scenario of Bhutan. However, over a long time horizon and setting up of a number of similar units would result into following socio-economic benefits for the country.

Indigenous production of exercise books and cut paper stationery would lead to self-reliance for these items in the field of school supplies. This would also insulate the school supplies from vagaries of external economies.

Local production of exercise books and cut paper stationery would lead to import substitution which would result in saving of foreign exchange. Setting up of more units to meet the requirement of school supplies would have a multiplier effect on foreign exchange saving.

There are possibilities of export of the exercise books and stationery to eastern and north-eastern parts of India and other neighboring markets. This would lead to earning to foreign exchange for the country.

There are not many medium and small-scale units manufacturing units in Bhutan. Setting up of this unit would have a catalytic effect on growth of entrepreneurship in medium and small-scale sector.

The setting up of the project would lead to generation of direct and indirect employment, both for skilled and unskilled workers which would





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result into economic upliftment of local population. This would also lead to upgradation of skills.

There are employment opportunities in the project for persons with managerial, technical, financial and marketing capabilities. The employment of such people in the local industry would provide them an option to have an employment in private sector in Bhutan and also reduce the migration of qualified manpower.

There would be revenue generation for the local government by way of excise, sales tax/VAT and income tax from the unit as well as from its promoters.

Finally, the project would lead to enhancement of economic activities in the field of construction, transport of raw materials and finished goods, marketing and trade, repairs and maintenance, etc.

It is important here to mention that above benefits can only be listed but these cannot be quantified based on a single unit with small investment. However, as mentioned above, if a number of such units in school supplies sector or any other sector of economy are setup, these would have a significant impact on overall economy of Bhutan.





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Annexure





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Annexure I List of Machinery Suppliers 1. M/s Acme Machinery Company Unit No 1, Vaibhav Ind. Est., Near Telecom Factory, Sion-Trombay Road, Deonar, Mumbai – 400088 Tel: 91-22-25518978

2. M/s Friends Engineering Works 8-9/A, Industrial Estate Pratap Nagar, Udaipur 313001(India). Phone: +91-294-2492200, Fax: +91-294-2492201 3. M/s Senior Machinery Company 116, Focal Point, Mehta Road, Amritsar-143001 (India) Tel. : +91-20-24491889 4. M/s Akar Ltd.

223, Laxmi Plaza, New Link Road, Andheri (west), Mumbai -400053 Maharashtra India Tel: 91-022-26374053





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Annexure II

List of Raw Materials Suppliers 1. Shree Gajanan Papers & Boards Pvt. Ltd., Plot No. 781/1, 40 Shed Area, GIDC, Vapi, Valsad - 396195, India, Gujarat Tel: 91-260-2400571 2. M/s Hi-tech Papers Opp. jayant K G Main Road Rajkot, Gujarat Telephone Nos. 91-281-2449061 3. M/s Rama Pulp and Papers Limited

1, Chateau Windsor, 86 Veer Nariman Road, Mumbai - 400 020 Maharashtra - 400020

4. M/s Vandana International 6 - Mangalmurti Apartments, Opp. NKGSB Bank Ltd., Navghar Road, Bhayandar (E), Thane,

Phone(s): 91-22-28168793 5. M/s Paper Roll Supplying Co. 204, Malwa, Patanwala Compound, LBS Marg, Ghatkopar (W), Mumbai, Maharashtra Phone(s): 91-022-25003500 6. M/s Joyti (spj) Overseas L-382-c, Mahipalpur, New Delhi, Delhi 7. M/s Anjani International P Ltd. 3, Jaora Compound, M-1 Urvashi Complex, Indore 8. M/s Pravin & Co. Shop no. 29-30-31, alibhai haiderbhai cmpd, Bail bazaar, behind SBI, Kurla (w), Mumbai, Maharashtra 9. M/S Nirmal Printers &Stationers

Oswal Complex, M.G. Road, Fancy Bazar, Guwahati, Assam





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Annexure III List of lab testing equipment suppliers

1. M/s Imperial Lab Equipment Address: 109, Vardhman Plaza Tower, H-3, Netaji Subhash Place District Center, PitamPura, New Delhi, Delhi Phone(s): 91-11-65154406 / 42470203 Fax(s): 91-11-27352924

2. M/s Scientific Engineering Corp Address: 3280, Arya Pura Old Subzi Mandi, Delhi – 110007 Phone(s): 91-011-23829918 / 23823794 Mobile: 9811569035 Fax(s): 91-011-23829918 / 23823794

3. M/s Toshniwal Brother Pvt. Ltd. 388 Udyog Vihar Phase 3 Gurgaon – 122006 Haryana Ph +91-124-4003629 / 4003985 Fax no +91-124-4003986





feasibility analysis of exercise books & cut

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