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PROJECT PROPOSAL FOR

PANIPAT CLUSTER
Department of Industries
Government of Haryana
Prepared by: Access Consultancy Services
www.accessconsulting.in

CLUSTER PROFILE
Primary stakeholder of cluster comprise of
manufacturers and exporters of home furnishing
products. The cluster has
3000 manufacturing units
300 registered export units
Turnover of Rs. 11,000 crores per annum
Export oriented units with annual
turnover of Rs. 3000 crores
Units catering to domestic market have
an annual turnover of Rs. 8000 crores
Employment: 50,000 persons


Cluster caters to both domestic and international markets

Products: Carpets, durries, rugs, blankets (acrylic, shoddy and woolen),
upholstery, curtains, bed sheets etc.
1
INTRODUCTION
2
KEY CHALLENGES
3
CLUSTER DEVELOPMENT APPROACH/PROCESS
4
GLOBAL SCENARIO (HOME FURNISHINGS/CARPETS)
5
CLUSTER SCENARIO/PROFILE
6
SWOT ANALYSIS/NEED ASSESSMENT
7
PROJECT PROFILE
8
PROPOSED FACILITIES
9
PROJECT COST & MEANS OF FINANCE
10
ENVISIONED IMPACT ASSESSMENT
STRUCTURE OF THE PRESENTATION
INTRODUCTION- PANIPAT CARPET CLUSTER
INDIAS GLOBAL SHARE IN TUFTED CARPETS IS 8.5%

WE ARE RANKED 5TH IN GLOBAL EXPORTS

ANNUAL GROWTH HAS BEEN NEGATIVE (-2%) OVER 2005 TO
2009-10



KEY CHALLENGES
LONG PRODUCT DEVELOPMENT TIME
LONG LEAD TIME
10% YARN WASTAGE
NO PROFESSIONAL DESIGN CENTER
LIMITED CARPET WIDTH < 10 FT
AUTO SECONDARY BACKING NOT AVAILABLE
AUTOMATIC PRINTING FACILITY NOT AVAILABLE
CLUSTER IS INTO PRICE BASED COMPETITION NOT DIFFERENTIATION BASED (DESIGNS
AND BRANDING)
SHORTAGE OF SKILLED MANPOWER
GLOBAL SCENARIO-HOME FURNISHING
S.NO. EXPORTERS
VALUE EXPORTED IN 2009,
IN USD THOUSAND
ANNUAL GROWTH IN
VALUE
2005-2009 (%)
SHARE IN WORLD
EXPORTS
(%)
1 CHINA 1331471 5 36.1
2 INDIA 1022263 -3 27.8
3 TURKEY 158823 1 4.3
4 VIETNAM 122257 29 3.3
5 GERMANY 99654 21 2.7
INDUSTRY

WORLD LEADER MARKET
SHARE (CHINA)
INDIAS MARKET SHARE

HOME FURNISHING 36% 27%
GLOBAL SCENARIO-CARPETS (TUFTED)
INDUSTRY

WORLD LEADER
MARKET SHARE
(BELGIUM)
INDIAS MARKET
SHARE
CARPETS (TUFTED) 18% 8.5%
S.NO. EXPORTERS
VALUE EXPORTED
IN 2009 (USD
THOUSAND)
ANNUAL GROWTH
IN VALUE, 2005-
2009 (%)
SHARE IN WORLD
EXPORTS (%)
1 BELGIUM 2056714 -2 18
2 CHINA 1491264 15 13
3 TURKEY 1075733 15 9.4
4 NETHERLANDS 1000220 1 8.7
5 INDIA 978190 -2 8.5
CLUSTER SCENARIO CURRENT PRODUCTION:








30% OF CLUSTERS ANNUAL
PRODUCTION IS EXPORTED.



CARPETS ACCOUNT FOR MORE
THAN 25% OF EXPORTS.


BLANKETS 50%.


BED SHEETS 16%



STRENGTHS
TRADITIONAL BRAND STRENGTHS.
LOCATED NEAR DELHI .
PRESENCE OF SUPPORT INSTITUTIONS.
CLUSTER CURRENTLY CATERING TO THE
EXPORT MARKET.
MARKETING INFRASTRUCTURE IN PLACE.




WEAKNESSES
LIMITED RANGE OF PRODUCTS.
LOW FACTOR PRODUCTIVITY.
NO DIFFERENTIATED PRODUCT. REPETITIVE DESIGNS
SMALLER WIDTH CARPETS BEING PRODUCED
MANUAL, SPRAY LATEXING, SUB STANDARD QUALITY
TRADITIONAL PRINTING NOT VERY ACCURATE AND
APPEALING.






OPPORTUNITY
A NATURAL CLUSTER OF 1000 + MSME.
DIVERSIFICATION OF PRODUCTS.
MOVING UP THE VALUE CHAIN.
CONSOLIDATION OF PRODUCT PROFILE.
UN-EXPLORED MARKETS ( AFRICA & LATIN
AMERICAS








THREATS
STIFF COMPETITION FROM CHINA.
FAST EVOLVING PRODUCTION TECHNOLOGIES.
VAST VARIETIES OF DESIGNS.
FASTER DELIVERY SCHEDULES.
QUALITY BACKING AND PRINTING TECHNOLOGY.





SWOT ANALYSIS
NEED ASSESSMENT- GAP ANALYSIS
PRODUCT REASONS FOR LIMITED SUCCESS INTERNATIONALLY PREVALENT TECHNOLOGY
BATH
MATS &
RUGS
Absence of raw material bank (possibility
of cost cutting by7-10%)
Low accuracy of designs
Long product development cycle on
account of manual processes
Delayed shipments and limited sampling
techniques resulting in cost overrun

Use of CAD / CAM for product development for
more accurate designs and allows design
variations
CARPETS
Non availability of wide carpets on account
of lack of wide width looms
Low productivity
Non availability of faster printing faclities
and techniques.
Inability to develop designs that cater to
changing global taste
High wastage involved in experimenting
with designs while replicating products
which have a growing demand in
international market
Wide width tufting machine that ensures higher
productivity during mass production
Presence of modern weaving carpet units with
wide width looms which facilitate execution of
bulk orders.
Use of technology that involves shorter product
production cycle

CAD/ CAM allows experimenting with designs on
computer before actually replicating it on the
carpets.
Usage of automatic small tools in tufting,
latexing and finishing resulting in standardization
and in higher production levels

PROPOSED FACILITY-
CLUSTER STANDARD VS GLOBAL STANDARD
PROPOSED
FACILITY
CLUSTER STANDARD GLOBAL STANDARD
CARPETS 10 FT. X 12 FT. WIDTH UPTO 16 FT. AND MORE
10% YARN WASTAGE NEGLIGIBLE YARN WASTAGE WITH ADVANCED
PRODUCTION MACHINES
TUFTING 1 METRE PER DAY PER
ARTISAN
3-4 METRES PER HOUR
BACKING MANUAL SPRAY LATEXING. FULLY AUTOMATED SECONDARY BACKING
PLANTS. SUPERIOR & LONG LASTING FINISH
TIME OVER RUNS AND
DELAY IN DELIVERY
SHORTER PRODUCTION CYCLE RESULTING IN
REDUCTION IN COST OVER RUN AND ON TIME
DELIVERY

PRINTING TRADITIONAL MANUAL
DYEING
CHROMOJET / PRINTING MACHINE WITH
VERSATILITY OF COLOR AND SPEED.
Introduction- Panipat Carpet Cluster
EXISTING TECHNOLOGY -
TUFTING
EXISTING PRODUCTS CARPETS / RUGS GLOBAL RANGE OF PRODUCTS CARPETS / RUGS
SKILLS DEVELOPMENT AND TRAINING

To address the need of the cluster for skilled man
power shortage and to enable them to work on
the proposed facilities. The SPV would undertake
imparting trainings on diverse skills required by
the cluster units


PROJECT PROFILE

Project
implementation on
a 1 acre plot in
sector 28 Panipat.
Land Allotted by
HUDA, with a
comfortable 3 year
payment plan
LAND





PROPOSED FACILITIES CFC

1. PRODUCT DEVELOPMENT
CAD & CAM CENTER WITH WIDE WIDTH TUFTED
SAMPLING MACHINE.

2. COMMON FACILITY CENTRE
AUTOMATED BACKING PLANT.
CHROMOJET PRINTING.

3. SKILL DEVELOPMENT & TRAINING











CARPETS- PRODUCT DEVELOPMENT
Cluster gets designs from buyers and tracemakers convert these
designs form paper to cloth
Mostly trial and error for product development
CAD / CAM is not used

PRODUCT DEVELOPMENT
CAD & CAM Center
Relevant soft wares
and related hard ware
on which
demonstrative tufting
of different pile height
and loops can be done.
This machine shall tuft
the latest designs for
cluster members to
take approvals from
their buyers



Wide Width Tufting
Sampling Machine.
AUTOMATED PRINTING LINE
No Screens- no Limitation
in pattern repeats

Design change on the fly

Full penetration

Pile weight 250 up to
1500 g/m2

For polyamide, wool,
acrylic and (up to certain
extent) polyester yarns

Complete print line from
one supplier

PROJECT COST
&
MEANS OF FINANCE
TOTAL PROJECT COST
S No Component Cost (Rs Crores)
1 LAND AND DEVELOPMENT COST 2.46
2 BUILDING 1.72
3 PLANT AND MACHINERY 13.86
4 MISC FIXED ASSETS 2.04
5 PRELIM AND PRE-OP EXPENSES 0.02
6 CONTINGENCIES 0.13
7 MARGIN FOR WORKING CAPITAL 0.27
TOTAL PROJECT COST 20.50
Source Amount (Rs Lacs) %
Equity from cluster members 5.23 25.51%
Grant under CDP 13.50 65.85%
Grant from State Govt 1.769 8.63%
Total 20.50 100.0%
SL ACTIVITY/MONTH
JUNE JULY AUG SEPT OCT NOV DEC JAN FEB MAR APR MAY
1 POSSESSION IN FAVOUR OF SPV.
2 FOLLOW-UP FINAL SANCTION OF
GRANT.
3 TYING UP OF CONTRIBUTION OF
SPV /STAKEHOLDERS.
4 COLLATE INFORMATION ON
DEFICIENCIES
5 FOLLOW-UP FOR RELEASE OF
GRANT.
6 PREPARATION OF DETAILED
DRAWINGS.
7 FORMATION OF PURCHASE
COMMITTEE.
8 FINALIZE BOQ OF EQUIPMENTS
9 SEEKING QUOTATIONS FROM
MANUFACTURERS & CALLING
TENDERS
10 CONSTRUCTION OF FACILITIES.
11 OBTAINING STATUTORY
CLEARANCES/ APPROVALS.
12 PURCHASING OF MACHINERY
AND EQUIPMENT.
13 INSTALLATION AND TRIAL RUN
OF MACHINERY AND
EQUIPMENT.
14 PROGRESS REPORTS OF
PROJECT MONITORING BY THE
COMMITTEE.
15 COMMENCEMENT OF
OPERATIONS OF THE FACILITY
IMPLEMENTATION SCHEDULE
Working Assumptions
Year Capacity Utilization
1 50%
2 55%
3 60.50%
EXPENDITURE ASSUMPTIONS
RAW MATERIAL COST % OF SALES REVENUE
72%
MANUFACTURING OVERHEADS % OF SALES REVENUE
5%
ADMINISTRATION OVERHEADS AS A % OF PROJECT COST
0.64%
SALARY & WAGES AS A % OF TOTAL REVENUE
3.72%
LEASE RENTALS RS. 15,000 PER MONTH FOR USING THE LAND AREA
Revenue Assumptions
Year
SALES REVENUE
1
1500 LACS
2
1650 LACS
3
1815 LACS
Key Financial Indicators
S No. Financial Indicators
1 Debt Service Coverage Ratio 4.53
2 Break Even Point 56.02%
Bench mark The Henan province V/S
Panipat
Solution proposed
Raw material Yarn is cheaper, locally
available in cluster
Raw material bank
Marketing Group model Common brand name
Machinery Sophisticated, supports
standardization and
differentiation
Wide width tufting
facilities, backing plant,
Chromojet Printing
Printing Printing is done on
group approach
Chromojet Printing
Financial services Loans at 3-5% interest A financial services
through SPV
Skill development Skilled labor Skill Development
centre to be set up by a
technical partner.
PERCIEVED Impact
1 Enhanced growth of cluster in terms of technological
advancement.
Facilities at CFC will
encourage members to
invest in Automatic Tufting
Machines. 11 Members
already in discussions to
upgrade.
2 Scaling the value chain while being competitive in
national and international market
Repetitive and very basic
designs would not fetch
good price. Its expected to
increase revenues by at least
10%
3 New product development for higher unit value
realization
Current system of designing
shall be taken over by
4 Skill development initiatives for addressing the
manpower shortage in cluster
The quality of products shall
improve as the skill the skill
levels go up.
5 Design Center Expertise The design center shall work
on creating newer varieties
of designs