Cold Storage vs Knitwear

Estimate the project’s operating cash flows for each year of the project’s economic life. (Hint: Use Table 2 as a guide)

EEC calculated the amount of time involved the anticipation of its cost ($3 million). The timeline in recovering their cost of investment ($2 million) initially for the foundation of this investment any profit made in the future of this investment will be justified as a profit for the company. If EEC can anticipate a fast return on its investment it is a profitable wise decision in making the investment financial, it is considered to be an easier way of formulating investments financially. On the basis of one year all cash flows is added together equal to the sum of $2 million originally invested, then it is divided by the annual cash flow of $500,000. The calculation of the payback period would equal four years. After this time frame any financial proceeds will be considered profitable for the company. I conclude that the timeframe is adequate in comparison of the investment in this worthwhile investment financial venture for the company.

of tax is 40%, it means that before tax cost of capital is 6.5% and after tax cost of capital is 3.9%.

The Best Manufacturing Company is considering a new investment. Financial projections for the investment are tabulated here. The corporate tax rate is 38 percent. Assume all sales revenue is received in cash, all operating costs and income taxes are paid in cash, and all cash flows occur at the end of the year. All net working capital is recovered at the end of the project.

The analysisassumes that the bank will finance the entirety of each scenario and does not account for high interest rates (they only list interest at 9%) that the bank will likely charge for the additional risk associated with the bigger projects. Another cost that the consultants conveniently left out of their financial analysis is the cost of having consultants spendtime and energy on a project like this. Depending on the amount of time involved, this cost could be somewhere in the $10,000 - $25,000 range.

See Table 1: Expected non-operating cash flow when the project is terminated at year 4 = 165,880$

This trait can be leveraged to build systems on par with the new technologies. An addition of 25% of personnel, expert in modern technologies and equipments would enhance the ability of the firm to start an e-business system that would enable LBS Textiles make a global presence, capture the national and international markets. Increase in the number of clients that LBS Textiles can reach out to will increase the volume of trade. The increase in trade brings in direct returns to the company. The expansion of markets and increase in clients indirectly increases the volume of sales and aid in boosting the returns to LBS Textiles. The company needs to evaluate the demand of the various demographics across the globe and develop newer attractive designs. The Research of newer technologies or designs to attract newer markets and wider demographics will incur expenses but the successful outcomes when channelized through the development teams produce the actual product for direct revenue generation.

Cold storage involves three major inputs – labour, capital and technology at each stage. The cost of these inputs, affects a company’s profitability.

6.The Year 0 net investment outlay for the project is $-475,000. This computed by adding the price of the machinery, installation, shipping, and the change in net working capital. The non-operating cash flow when the project is

Finally, we come up with the value for the operating after-tax operating cash flows for the next three years and the terminal value. We calculate the present value of these cash flows by discounting by the unlevered cost of capital, rU given as 8.7%, which gives us a value of the unlevered firm of ca. $566m.

5. The project is assumed to end in year 4. Do you think that this is realistic? Can you estimate the value of the project’s operating cash flows beyond year 4? State any assumptions you made.

The major decision by current organization head of Managing Director in the year 1990 in introduce the manufacturing of polypropylene Fabrics and marketing of woven fabric as saleable product was the preeminent one in the sub-continent woven sack industrial market, which laid down the foundation for not only the expansion of company’s business but in the emergence of numerous small /medium scale entrepreneurs, and till date the company is good example for other companies to follow the footsteps. expand its business base the company took it second major decision to take over another running unit in Jigani namely M/S Hoysala Blow Moulders at Bangalore and expansion and achieved the status of largest manufacturer in country in HDPE/PP woven fabric

*Q1.* Evaluate the changes Dore-Dore made in its children’s knitwear division. How does the traditional operation & cellular manufacturing system differ?

The Textile Industry occupies a vital place in the Indian economy and contributes substantially to its exports earnings. Textiles exports represent nearly 30 per cent of the country's total exports. It has a high weight age of over 20 per cent in the National production. It provides direct employment to over 15 million persons in the mill, powerloom and handloom sectors. India is the world’s second largest producer of textiles after China. It is the world’s third largest producer of cotton-after China and the USA-and the second largest cotton consumer after China. The textile industry in India is one of the oldest manufacturing sectors in the country and is currently it’s largest1.

According to Technopak Advisors, India is one of the largest textile producers in the world and is still growing. They are second only to their neighbors, China, and India is predicted to have a US$ 223 billion industry by the year 2021. In 2010 the Ministry of Textiles in India openly shared that textiles were responsible for 11.04% of India’s total exports. This year, according to ibef.org, textile exports were estimated to be around US$ 28.53 billion from April 2013 to January 2014. It is clear to see that India is a major player in the world concerning textile exports and manufacturing and according to Dr. A Sakthivel, Chairmen of the Apparel Export Promotion Council (A Brief Report Textile Industry in India, 2012), India will continue to advance and reach roughly US $60 billion over the next three years.