* If you want to know more about detail project, contact WILLFORCE.

WOVEN SACKS

1. Introduction

Synthetic Woven Sacks made from HDPE or PP are one of the bulk packaging materials. These sacks are presently
being used for packaging of bulk commodities like cement, fertilizers and some other applications like sugar, salt,
chemicals, wheat flour, starch, poultry products, bulk drugs etc. Some of the newer applications of woven sacks are
Geo-synthetic, postal/mail bags, tea packaging etc.

High density polyethylene or HDPE woven sacks have become a versatile commodity in the packaging industry
Introduced for the first time in India during the year 1969 it has over the years replaced the conventional jute bags
to a large extent. HDPE sacks have an edge over the conventional jute sacks in the sense that the former are light in
weight, strong and attractive. These sacks are immune to the effect of corrosion, decay, moisture, atmosphere, rats,

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rodents, moths and insects. Being superior in quality and economic as compared to the traditional jute material,
these modern sacks have gradually captured a large market for packing fertilizers, chemicals, food stuffs, animal

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foods, oil cakes etc. Sacks made of HDPE are laminated with LDPE inside it. This gives protection against
moisture, air and the material packed cannot penetrate out of the sack.

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2. Market Potential

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Woven Sacks industry constitutes PP & HDPE polymers and is primarily used for packaging of industrial goods
such as cement, fertilizer, flour, chemicals, sugar as well as agricultural produce. The total estimated installed
capacity of woven sacks segment in North-Eastern Region is in the range of 900 MTPM dominated by PP. The

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woven sacks industry is the single largest PP consuming sector in the NER. At present here are no units
manufacturing laminated HDPE woven sacks in Assam or in any part of the N.E. Region. As a result the full
requirement of laminated HDPE woven sacks is supplied by manufactures from outside the state and region.

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The current demand of woven sacks in North Eastern Region is estimated to be in the range of 600 - 650 MTPM of
which only 60 - 70% of the requirement is fulfilled by local industries, Cement, Fertilizer and Flour Mills are major
woven sacks consuming sectors in North-Eastern Region. The omly fertilizer complex (urea based) of NER is
located in Assam with installed capacity of 0.5 MMTPA, and has reported a production growth of 12% in the past
five years. Apart from urea complex, there are 9 bio-fertilizer units in the region with a total installed capacity of
1115 MTPA. The consumption of HDPE for a standard packaging size of 50 Kg fertilizer ranges between 110-120
gm. Based on this, the annual HDPE consumption for the fertilizer industry is estimated to be about 800 TPA
(nearly 70 TPM). Almost entire quantity of the HDPE sacks requirement is met by suppliers outside the NER.
3. Plant Capacity

The production basis for a typical unit would be as under:

Working hours/day: 8 (1 shifts)

Working days in a year: 300
Annual Production capacity: 600 TPA laminated HDPE woven sacks and 400 TPA PP woven sacks.

The unit has been assumed to operate at 75%, 80%, and 90% of its installed capacity in the first, second and third
year and at 100% capacity from fourth year onwards of its operation.

4. Process, Plant & Machinery (Details & List of Machinery Suppliers)

The process manufacturing of laminated HDPE woven sacks involves four major operations which maintain
continuity from the raw material or HDPE granules stage to the finished product stage.These operations are as
follows:

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1. Production of mono-axially oriented tapes in the extruder and auxiliary equipment.
2. Processing of the tapes thus produced in textile equipment and machienery to obtain the woven material or
fabric.
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3. Extrusion coating/laminating the out coming woven material with low density polyethylene in the extrusion
coating/laminating plant.

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4. Cutting and stitching the laminated woven material into the required sizes and finally printing the name,
trade mark etc. of the agency whose product is to be packed on the sack to obtain the final or finished
product.

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Major Machinery required for manufacturing woven sacks is as under:

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Extrusion Tape Lines for Raffia Tape Manufacture
Circular Weaving Machines




Laminating Machines
Cutting Machine
Stiching Machines
Printing Machines
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Under this project, the plant would be producing the output till the laminating stage. Cutting, stitching and printing
can be outsourced (on job work basis) since the production capacity is not that high and hence it is advisable to go
in till the laminating stage in the initial phase. For future expansion, machines for cutting, stitching and printing can
be added.
Plant and Machinery Suppliers

The following table gives the names and addresses of suppliers along with the machinery type suitable for the
process and product.

Sl. No. Name Communication Address

1 Lohia Starlinger Ltd.
2 DGP Windsor India Ltd
3 J. P. Industries
4 Brimco Plastic Machinery (p) Ltd
D - 3/A, Panki Industrial Estate
Kanpur - 208022, INDIA
5403, Phase IV, G. I. D. C. Industrial Estate
Ahmedabad 38044, Gujarat
1701, G. I. D. C. Industrial Estate
Ankleshwar - 393002,
Dist. - Bharuch, Gujarat, India.
Brimco House, 55 Govt. Industrial Estate, Charkop,
Kandivli (West), Mumbai - 400067, Maharashtra, India

5. Raw Material & Utilities Requirement

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The major raw material required for the project is as follows:

Raffia grade high density polyethylene (HDPE)
Raffia grade polypropylene (PP)
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Lamination grade low density Polyethylene (LDPE)

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The production capacity of HDPE & PP has been taken at 60:40. The raw material required would be around 630

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MT of HDPE and 420 MT of PP at 100% capacity utilization.

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6. Land & Built-
Built-up Area Requirement
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The total land required is 8000 sq.m. and the built-up area is 3200 sq.m.

7. Manpower Requirement & Project Implementation Schedule

A margin of 25% has been considered for other benefits for the staff.

Staff Nos
Production Manager 1
Accountant 2
Supervisors 4
Skilled Workers 10
Unskilled Workers 15
Security 3
Total Manpower Required 35
8. Project Cost/Fixed Capital Requirement & Means of Finance:

Land has not been considered as a part of the project cost because it has been considered to be taken on lease (as
applicable in Assam). One time Land Development Charges have been taken as part of the project Cost. Also,
Special Maintenance Charges and an Annual Service Charge have been considered as part of operating cost. The
Total Project Cost is Rs. 675.44 Lakhs as per the table below:

Sl. No. Cost Head Cost (in Rs. Lakhs)

1 Building 256.00
2 Machinery 279.13
3 Miscellaneous Fixed Assets 20.13
4 Preliminary and Pre-Operative Expenses 2.00
5 Margin Money for Working Capital 70.78
6 Contingency Expenses 31.40
7 Land Development 16.00
Total Cost 675.44

The means of finance considering Debt-Equity ratio of 2:1 will be:

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Equity
Means of Finance
C Rs. in Lakhs
225.12
Debt
Total R 450.31
675.44

9. Working Capital Requirement (in Rs. Lakhs)

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The Total Working Capital Requirement is as under:

Particulars I Year of Operation

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Year-1 Year-2 Year-3 Year-4 Year-5
Net WC 283.14 302.01 339.77 377.52 377.52
Available Bank Finance 212.35 226.51 254.82 283.14 283.14
Margin Money 70.78 75.50 84.94 94.38 94.38

10. Operating Expenses

The Annual Operating expenses for the first year (75% capacity utilization) are given below:

Particulars Expense (Rs in lakhs)

Utilities 1.06
Wages & Salaries 15.84
Interest on term loan 67.55
Interest on Bank Finance for Working Capital 31.85
Raw Material 570.50
Depreciation 30.80
Maintenance Charges 1.84
Job Work Charges 15.00
Total 734.44
11. Profitability Estimates

Year
Sl. No. PARTICULARS
Year-1 Year-2 Year-3 Year-4 Year-5
Production/Sales
Installed Capacity(HDPE) 600 600 600 600 600
Installed Capacity (PP) 400 400 400 400 400
Capacity Utilization 75% 80% 90% 100% 100%
Estimated Production 450 480 540 600 600
Estimated Production (PP) 300 320 360 400 400
Gross Sales Revenue 1140 1216 1368 1520 1520
Expenses
Raw Material Consumption 571 609 685 761 761
Utilities 1 1 1 1 1
Administrative Overheads 30 30 30 30 30
Salaries 20 20 20 20 20
Sales Expenses 29 30
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Loan Repayment 90 90 90 90 90
Maintenance Charges 2 2 2 2 2
Job Work Charges
TOTAL
15
757
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798
18
880
20
962
20
962

Financial Expenses
GROSS PROFIT

Interest On Term Loan

383

68
F O 418

56
488

42
558

28
558

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Interest On Working Capital
Sub Total
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99
34
90
38
80
42
70
42
56
Depreciation
Profit Before Tax I 30.8
253
30.8
297
30.8
377
30.8
457
30.8
471
Provision For Tax
Profit After Tax
W 83
169
98
199
124
253
151
306
155
316

12. Financial Indicators

The Average Break Even Point for the project is 40%.

(Rs. in Lakhs)
Year-1 Year-2 Year-3 Year-4 Year-5
Sales Realization 1140 1216 1368 1520 1520
Fixed Costs
Salaries 20 20 20 20 20
Fixed Selling Expenses 29 30 34 38 38
Depreciation (SLM) 1 1 1 1 1
Utilities (Fixed) 30 30 30 30 30
Admin. Overheads 30 30 30 30 30
Loan Repayment 90 90 90 90 90
Interest On L.T. Loan 68 56 42 28 14
Total Fixed Costs 268 258 248 238 224
Variable Costs
Raw Materials 571 609 685 761 761
Interest On Working Capital Loan 31.85 33.98 38.22 42.47 42.47
Total Variable Costs 602 643 723 803 803
Contribution 538 573 645 717 717
Breakeven In % 50% 45% 38% 33% 31%
Average BEP 40%

The IRR for the project is 18.9%, Average ROI is 66% and the Average DSCR is 2.54.

(Rs. In Lakhs)
Year of Operation
Particulars
Year-1 Year-2 Year-3 Year-4 Year-5
Revenue 1140 1216 1368 1520 1520
Profit Before Tax 252.64 297.29 377.14 456.98 470.94
Profit After Tax 169.27 199.18 252.68 306.18 315.53
LT Interest 67.55 55.84 41.88 27.92 13.96
Depreciation 30.80 30.80 30.80 30.80 30.80
LT Loan Repayment 90.06 90.06 90.06 90.06 90.06
Return on Investment (%) 52% 57% 67%
E 76% 76%

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Average ROI 66%
Debt-Service Coverage Ratio
-Debt Service
-Coverage
157.61
267.61
145.90
285.82
R 131.94
325.36
117.98
364.90
104.02
360.29
DSCR
Average DSCR
1.70
2.54

F O 1.96 2.47 3.09 3.46

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