Cotton Ginning Mill Project Report

Mar 26, 2016 |

Project Report to Start a Cotton Ginning Mill

1. Introduction

A Cotton Gin (short for cotton engine) is a machine that quickly and easily separates the cotton fibers from the seedpods and the sometimes, sticky seeds, a job previously done by hand. These seeds either used again to grow more cotton or, if badly damaged, are disposed of for use in cattle feed production.
The cotton ginning sector primarily developed during the 1980s and is one of the most important sectors of the economy. This is a base industry of cotton processing.

2. Market Demand

Ginned cotton is the basic need of spinning mill and other units require raw cotton like quilt & other product manufacturers. Demand of the service is very huge because cotton can not be use without ginning and hand process is very time and labour consuming. Thus the demand of the service is very huge in cotton growing areas. Demand for ginned cotton is significantly affected by its quality, which depends on the characteristics of the raw material.

Production Targets

Basis of estimation: 300 Working Days in a Year
Single Shift basis
8 hours per shift

Ginned Cotton
Quantity (Kg)                75000
Value (Rs)                   3000000

3. Manufacturing Process

The steps followed in the manufacturing process are given below:

* Collection of raw cotton.
* Ginning with the help of carding machine.
* Bell Making & Packaging

4. Quality Control Standards

Quality of the product must be as per customers demand and according to Beauro of Indian standards. Product contain no or minimum quantities of seed in it.

5. Land & Building

1. Covered area                            Sq. Ft.              500
2. Uncovered area                          Sq. Ft.             42500
3. Total area                              Sq. Ft.             43000
4. Whether constructed or Rented                               Rented
5. If constructed, constructed value       Rs                  N.A.
6. If Rented, Rental value (per month)     Rs                  5000

6. Machinery and Equipment

S.N.                      Description                            Qty.    Value (Rs.)
1.         (Cotton Ginning) Heavy Duty Carding Machine            1      125000
2.              10 HP motor with starter and other accessories    1 
3.              Stands for carding machine                        1
4.              Weighing Balance                                  1
5.              Hand Press for Cotton Bell Making                 1
6.              Hand Tools                                        1
7.              Furniture                                         1
8.              Sales Tax, Freight & Insurance etc.                           12500
                Total                                                        137500

7. Raw Material (Per Month)

S.N.            Particulars                Quantity (Kg)             Value (Rs)
1.                   Raw Cotton                  6250                       156250
2.                   Packaging Material                                        750
Total                                                                       157000

8. Staff & Labour (Per Month)

S.N.            Particulars                          Qty         Rate         Value (Rs)
A                Administrative and Supervisory
(i)                 Manager                          1           3000          3000
(ii)                Peon/ Chowkidar                  2           2000          4000
B                Technical (Skilled-Unskilled)
(i)                 Skilled Worker                   1           3000          3000
(ii)                Unskilled Worker                 4           2000          8000
                    Sub-Total                                                 18000
                            Plus perquisites @ 30% of salaries 5400
TOTAL                                                                         23400

9. Other Expenses (Per Month)

1.                        Rent of Land & Building                  5000
2.                        Electricity Charges                      8000
3.                        Fuel Exp.                                   0
4.                        Advertisement & Travelling               2000
5.                        Transport                                5000
6.                        Consumable & stores etc.                 1000
7.                        Postage expenses/ telephones             1000
8.                        Stationery                               1000
9.                        Repairs & Maintenance’s                  2000
Total                                                             25000

10. Working Capital (For One Month)

Sl.No.                      Description                 Amount(RS)
1                         Raw material                   157000
2                         Salaries & Wages               23400
3                         Other Expenses                 25000
Total                                                    205400

11. Total Capital Investment

Building & Other Civil Works                         - 
Machinery & Equipment                                    137500
Working capital for one month                            205400
Total                                                    342900

12. Cost of Production (Per Annum)

Total recurring cost per year                            2664800
Depreciation on machinery & equipment                      14000
Interest on total investment @ 10%                         35000
Total                                                    2713800

13. Sales Proceeds (Per Annum)

S.N.                      Item                Qty (Kg)         Value (Rs.)
1.                     Ginned Cotton           75000            3000000
Total                                                           3000000

14. Profitability (Before Income Tax)

1.                               Annual Gross Profit             286200
2.                               % of Profit on Sales            9.54%
3.                               Break Even Analysis
3.1                              Annual Fixed Cost               580800
3.2                              Annual Sales                   3000000
3.3                              Annual Variable Cost           1884000
3.4 Break Even Point                                            52.04%

Break-Even Analysis
(% of Total Production envisaged)
Annual fixed cost X 100
————– —————- ————- = %
Annual sales – Annual variable costs

15. Manufactures/ Suppliers of Machinery

1 Arora Industries,
Gujrat Jinning Mill Compound,
Ahemdabad.

2 Demand Engineering Works
Near Odiyan Talkies,
New Delhi.

3. Dariyali Engineering Works
27, DLF Industrial Area,
Najafgarh, New Delhi

4. Huma Traders
Near Shajanabad Thana,
Bhopal

16. Suppliers of Raw Materials

From Local cotton mandi or growers of the area.

17. Implementation Period

Proposed Project can commence production with in 6-8 weeks after sanction and first disbursement of term loan.

18. Assumption For Generating Project Profitability

1     Number of Working Days in a year    300 Days
2          Number of Shifts in a day           1 One
3          Hours in a Shift                    8 hours
4          Plant Capacity                      Consider on Average production capacities
                                               of plant.
5          Raw material Estimates              Based upon product Mix

6          Raw Material Availability           Dhar , Barwani, Chhindwara and Seoni
                                               districts of MP
7          Depreciation                       Straight Line Method
8          Manpower                           According to project Requirement
9          Rent estimate                      On the basis of current market prize of
                                              the area.
10         Potential Area of Marketing the
           products                           Spinning Mills situated in and around the
                                              district / state.
11        If project is funded, term loan
          would be                            60-80% of Total investment
12        Moratorium Period                   6- 12 months
13        Repayment Period                    5-7 years
14        Project may be established under    PMEGP (GOI) / Tribal Self Employment
                                              Scheme (NSTFDC) or Rani Durgawati
                                              Scheme of MP

Posted in: Textile Ginning

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