PROJECT INVESTMENT a NEW FINISHING WORKSHOP

To meet production and business tasks initially, in the existing conditions, the Board of management decided for investment "a new Finishing workshop" at 12/14c Man Thien Road, Tang Nhon

PROJECT INVESTMENT "A NEW FINISHING WORKSHOP"

CONTENT

1 Introduction:

Minh Phuong Furniture Ltd was formally established on 11.19.2002, (abbreviated as MPF), it's located at S12 - 13, Bau Cat, P13 , Tan Binh District, HCMC With the

function of producing furniture export business This is a small company, there are four family members; at the time of its establishment, has charter capital of 1 billion VNĐ

To meet production and business tasks initially, in the existing conditions, the Board of management decided for investment "a new Finishing workshop" at 12/14c Man Thien Road, Tang Nhon Phu Ward, District 9, HCMC

MPF is an independent economic unit operating under current corporate law, the

management of all aspects of the project owner is also the director of the enterprise Type of investment is fully equipped in a new workshop on the power plant hire

This project is an investment in small-scale production that I was directly made The data presented in this exercise is the real data, keep the price from building project time

(2003) Partial implementation schedule be adjusted according to the present time.

The project presented here is also limited to the economic criteria, the layout could be adjusted to suit all requirements However, the core part of the project remains the same

2 Description of Project:

To meet the immediate demands of production, this project outlines a feasible plan to invest in building a workshop, aimed at finishing stages of wooden furnitures The project refers to the key issues such as acquisition, construction, original equipment, investment and efficiency issues related to a newly established unit; with the accurate calculation based on the study prices in order to limit costs incurred in the

implementation process Also, this project is the basis for Board of management

consideration and approval authorities for consideration

2.1 The need for investment:

Besides the renovation policy of the State, the influence of trend in the world enabling manufacturers not only expanded the scope for domestic consumption but also the direction to search abroad new opportunities for themselves

Recent years due to political situation and social security in Indonesia; price of labor in Malaysia, Taiwan, Thailand making furniture ineffective, traders became interested

in exposed to the manufacturers in Vietnam to search for new sources

MPF fortunate to have access to the foreign importers can buy in large quantity and long term stability It is the necessary premise to decide "for investment Finishing equipped workshop" with the appropriate technology to meet the demand for quantity and quality The investment in new production facilities to not only expand but also the commitment confirmed, improving customer faith and society Specifically:

- To ensure better production environment,

- Create more jobs for the society,

- There are conditions associated with other production units in order to promote the synergy of small units, improve competitiveness

2.2 Feasibility Study:

2.2.1 Production:

The major product of the company is bedroom furniture The wood raw material is imported from New Zealand and MDF imported from Malaysia Because of the variety

of items in production, so we choose bedside to bench-product capacity Accordingly all the products being produced are provided on the basis of FOB bedside Production

expected 10 x 40 'containers / month (1x40' container contains 480 bedsides).

MPF is not advocate production from A till Z, just focused on design, modeling to develop market and complete the finishing stages For raw products, MPF associated with the production unit to carry out, or supply the imported lumber, inspection, return the products on the basis of economic contracts

2.2.2 Sale of products:

MPF products are 100% exported to Australia, Europe We already have orders to the end of year and is promoting the development of products, the market for later years The company signed a contract directly with customers, organizing subcontract

satellites, purchasing products, directly to finishing, packaging and shipment Revenue

is expected in table 1

Table 1: Expected revenue

Description Unit 1st Year 2nd Year 3rd Year 4th Year Goods of sales USD 300,000 1,000,000 1,500,000 2,000,000

2.3 Estimation:

2.3.1 Construction:

Using an area of 1000 m2 was employed, with the existing utility infrastructure, it's not invest for construction

2.3.2 Machinery and equipment needed:

Based and designed capacity of the coating line manufacturer and experienced of the units in the field, we calculated the machinery needs to meet minimum production requirements of the finishing stage in table 2

Table 2: Demand for equipment

4

Equip for environmental treatment:

- Filter & air supply

- Drying the coating

system

FTA –100 PCH – 80

2 2

Malaysia

2.3.3 Production diagram: as outlined below:

Material Pre-cutting Re-fining Sanding Assembling Sanding

Shipping Inspected Packaging Spraying Sanding Inspected

In this production scheme, MPF focused the last steps, from inspection to shipment

2.4 Estimates investment costs: (VNĐ)

2.4.1 Cost workshop:

- Air compressed system 70,000,000

Total: 330,000,000 2.4.2 Equipment:

- 2 coating lines

- Production tools 50,000,000

- Transportation 300,000,000

- Environmental treatment equips 110,000,000

Total: 900,000,000

Total investment costs 1,730,000,000 (one billion seven hundred & thirty million VNĐ)

2.4.3 The items are not included in the estimates:

- This is a small scale project, the project manager is the owner, direct write, review prices, select contractors and project management So the costs

associated with setting up and managing projects are not included in the estimate

- The cost finishing lines design, transportation to and installation of the units are included in the products costs should also not alone in the estimates

2.4.4 Capital sources: Investment include two sources:

- Shareholders' equity 1,000,000,000

- Loans 730,000,000

Total: 900 million

2.5 ROI analysis:

Effective investment of the project are summarized in tables 3, 4, 5, 6, 7, 8 and 9 below: Currencies in the tables are in $US

Table 3: Depreciation plan

No Description

Origin price

(USD)

Time of depreciation

Depreciation /month

Depreciation value

1st Year 2nd Year 3rd Year+

treatment equips

4 Production tools and

Table 4: Costs plan

Description 1st Year 2nd Year 3rd Year 4th Year

Packaging & auxiliaries 12,385 41,284 61,927 82,569

Table 5: Lost & profit plan

Description 1st Year 2nd Year 3rd Year 4th Year

Materials, auxiliary materials,

Production costs:

- Parts & repairing equipment 300 600 750 900

- Costs of electricity & water 3,240 6,480 8,100 9,720

- Other costs of production 1,000 2,000 2,500 3,000

Total production costs 226,773 765,954 1,098,408 1,457,937

Company management costs

- Indirect wages 12,000 36,000 50,000 60,000

- Bonnus, Holidays, Tết 2,000 4,800 6,667 8,000

- Petrol & car maintenance 0 4,500 6,750 9,000

- Telephone, fax, press 1,200 2,400 3,600 4,800

- Social insurance, healthcare,

- Other management costs 1,000 2,000 2,500 3,000

Costs of circulation

- Goods delivery costs 3,800 12,800 19,200 25,400

- Sales expenses 30,000 100,000 150,000 200,000

Revenue - Expenses (profit / lost) 6,271 29,586 104,459 161,259

2.5.1 The financial rates:

Table 6: Value added ratio (%)

Table 7: Profit ratio (%)

Profit on turnover rate Profit Turnover Rates  

- 2nd Year 29,586 1,000,000 2.96

Profit on investment rate

Table 8: Breakeven point ($US)

  1st Year 2nd Year 3rd Year 4th Year          Variable costs 213,965 743,822 1,069,872 1,426,481

         Breakeven point 278,133 884,510 1,135,718 1,437,650

Table 9: Payback period

Description 1st Year 2nd Year 3rd Year 4th Year Initial capital investment 111,613

Accumulated net income 13,495 57,947 180,861 360,575

Of which: Depreciation 7,224 14,866 18,455 18,455 Net profit 6,271 29,586 104,459 161,259

Payback period = 2 years 4 months

2.6 Risk assessment and alternatives:

MPF has target market for investment and development purposes This project is small,

execution time is short (6 months), the partners all know each other & the price is

committed un-change, so that there will be no risks

A minor risk can occur is the exchange rate at time of payment may change adversely, but not great Alternative is to use the profits to offset

3 Schedule:

Please see attached PDF file

4 Review Project:

After examining the feasibility factors as discussed above, the BOM has agreed to conduct the project On 18/06/2003, HCMC People's Committee has decided to enjoy investment incentives

4.1 Key personnel and related parties:

4.1.1 Key staff:

To ensure the implementation of this project, the BOM has assigned:

- The director is the commander, relations with foreign partners

- Engineer in charge of the company direct technical supervision of construction and acceptance

- Chief Accountant to capital, ensure of international payments and investment performance measurement

- Workshop Manager responsible for measuring productivity and quality before and after investment

4.1.2 Stakeholders:

- Minh Phuong Furniture Ltd., owner of investment, is responsible for import procedures, acceptance and payment on time

- Avent Company Pte Singapore, supply and installation the environmental treatment equipments

- Goldin Yaja Bhd Malaysia, supply and installation two finishing lines

4.2 Allocation of resources:

- The financial sources of investment expected in Section 2.4 was Agriculture and Rural Development Banks, branch 9 guaranteed

- Human resources assigned in Section 4.1.1 is part-time and really busy at the installation time It's not necessary a person in charge

4.3 Process control:

- The coating lines and environmental treatment systems is inspected by the manufacturer & send a certificate of quality accompanied by export

documents

- Install within 10 working days, testing and commissioning of payment

15 days before the last payment

4.4 Implementation:

- During assembly time, the engineer in charge of coordinating with supplyer technicians hand over the assembly, providing the necessary facilities and technical monitoring progress

- Workshop Manager to coordinate hospital and spend additional labor when required

5 Reporting and evaluation project:

5.1 Reporting:

- During the time of implementation, any department with any problems, report promptly to the director for resolution

- Seven days (7) after completion of the project, the personnel involved must report the results to the Director

5.2 Project evaluation:

After 30 days of trial operation, Manager must report the results of measurement and evaluation of productivity and quality before and after investment Chief Accountant based on this report to analyze efficiency

5.3 Conclusion:

The project was established based on needs, the BOM agreed Capital investment is defined and guaranteed from the beginning All cost factors are determined on the basis

of quotation, and negotiate to ensure that does not arise in the implementation process

5.3.1 Economic Benefits:

- Value added from year 2 onwards stabilized at 31.2%, contributing to increased production of the national economy, by increasing the net value of about US$ 867.280 / year in operation stability

- Quick payback period, only 2 years 4 months

- Products produced by the company exports 100%, net foreign exchange gain of about 43% of sales Taxes paid by the company will also increase

5.3.2 Social benefits:

When the project operation 60 local labors will attract, creating jobs for local, not to mention the satellites supply goods to the company

The technology that is relatively compact modern fitted furniture industry at the time of investment, contribute to increasing the level of management, technology and labor productivity of society

Confidence to customers on order fulfillment capabilities.

*****

It is important that after 6 months of implementation, the project was completed and put into operation as expected Very successful project, entitled to investment incentives

Ending in English 4/8/2012

Huynh Van Hanh