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Weaving Calculations · Lecture 27–28
Feasibility I & II – Costing a Weaving Plant
Variable cost and contribution per metre for local and export sale, then the investment, running cost and return of a 45-loom plant under three scenarios.
Variable costContributionInvestmentReturn %
Feasibility I — contribution per metre
The fabric is 20×16/128×60, 63", 3/1 twill. Warp and weft consumption per metre come from Lecture 14; prices and the selling price differ for the local and export markets. Commission and income tax are percentages of the sale price. What is left after all variable costs is the unit contribution margin (UCM), which, multiplied by the loom’s daily output, is what each loom earns per day towards fixed costs and profit.
| A | B | C | |||
|---|---|---|---|---|---|
| 1 | Local | Export | |||
| 2 | Selling price (Rs / m) | ||||
| 3 | Warp yarn price (Rs / 10 lb) | ||||
| 4 | Weft yarn price (Rs / 10 lb) | ||||
| 5 | Warp consumption (lb / m) | ||||
| 6 | Weft consumption (lb / m) | ||||
| 7 | Sizing cost (Rs / kg of warp) | ||||
| 8 | Packing (Rs / m) | ||||
| 9 | Electricity (Rs / m) | ||||
| 10 | Commission | ||||
| 11 | Income tax on sale | ||||
| 12 | Cost build-up | ||||
| 13 | Warp cost | 28.20 | 34.33 | ||
| 14 | Weft cost | 15.04 | 17.91 | ||
| 15 | Sizing | 2.78 | 2.78 | ||
| 16 | Packing + electricity | 1.70 | 1.70 | ||
| 17 | Commission + tax | 1.06 | 1.41 | ||
| 18 | Total variable cost | 48.78 | 58.13 | ||
| 19 | Unit contribution margin (Rs / m) | 4.22 | 12.19 | ||
| 20 | Per loom and per plant | ||||
| 21 | Production per loom per day (m) | ||||
| 22 | Looms | ||||
| 23 | Contribution per loom per day | 1,815 | 5,242 | ||
| 24 | Contribution per day, whole plant | 81,666 | 235,897 | ||
| 25 | Contribution per month (30 days) | 2,449,971 | 7,076,905 | ||
blue = input (edit me)grey = formula (click to see it)
Local sale leaves Rs 4.35 per metre, export Rs 12. The same loom earns 1,873 or 5,166 rupees a day — a 45-loom shed makes about 2.5 million a month on local business and 7 million on export. Those three numbers are the “conservative / normal / aggressive” scenarios of Feasibility II.
Feasibility II — investment and return
Three scenarios: conservative (local market only), normal (a mix) and aggressive (export). Each has its own view of what the plant costs to build and to run.
| A | B | C | D | ||||
|---|---|---|---|---|---|---|---|
| 1 | Conservative | Normal | Aggressive | ||||
| 2 | Investment | ||||||
| 3 | Looms (45 × 3.0) | ||||||
| 4 | Compressor | ||||||
| 5 | Warping and sizing | ||||||
| 6 | Construction (sq ft × Rs/sq ft) | ||||||
| 7 | Yarn stock (lb × Rs 50) | ||||||
| 8 | Total investment | 223.5 | 215.6 | 210.0 | |||
| 9 | Monthly figures | ||||||
| 10 | Contribution (from Feasibility I) | ||||||
| 11 | Salaries | ||||||
| 12 | Stores and spares | ||||||
| 13 | Overheads | ||||||
| 14 | Administration | ||||||
| 15 | Depreciation life (years) | ||||||
| 16 | Depreciation per month | 1.800 | 1.703 | 1.625 | |||
| 17 | Total conversion cost | 4.160 | 3.953 | 3.765 | |||
| 18 | Monthly saving (profit) | (1.63) | 0.80 | 3.20 | |||
| 19 | Monthly return on investment | (0.73)% | 0.37% | 1.53% | |||
| 20 | Annual return on investment | (8.75)% | 4.43% | 18.31% | |||
| 21 | Annual return ignoring depreciation (cash) | 0.91% | 13.91% | 27.60% | |||
blue = input (edit me)grey = formula (click to see it)
The lecture’s conclusion: a plant that sells only locally loses money (about −9% a year), a mixed plant earns a modest 4%, and an export-oriented plant about 19% — 28% on a cash basis. The decision is not whether to build the plant but what market it must be built for.
Original lecture material
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