Object:

Full-cycle production, Recycling, Reformatting, Automation and expansion of the garment production process based on a contemporary concept – Textile Cluster!

1. GENERAL INFORMATION ON THE ATC PROJECT

1.1 Brief presentation of the Cluster and activity:
The ATC Cluster is a new business concept for the sector, grouped as a Cluster of industrial garment manufacturers, with long experience working in the garment manufacturing sector.

The Cluster will be owned by one or more partners, all industrial clothing manufacturers. The object of this Cluster’s activity is the production of confections, with a full cycle, with customer material, as well as its brand.

This investment presented below, based on the studies carried out and the technical projects made, as well as the market study, results in economic benefits for several reasons:

First: The effectiveness of the investment is high, since only the initial investment costs are large, while the production or operating costs are relatively low.

Second: the payback period of the investment is relatively low, approximately 7 years.

Third: the sale of the product is guaranteed, since the activity is based on contracts with the customer material.

Fourth: the current market for the production of confections with custom material is constantly growing, especially in the last year, taking into account the world economic situation in general and that of the textile industry and clothing production in particular.

1.2 Curriculum of investors of the Cluster:
The Cluster was created by one or several partners with real experience and activity in the production of clothing and investments in similar business activities. All of these partners have a rich curriculum associated with it.

1.3 Project description:
The aim of the project calculated on this synthetic material is full-cycle production, from fabric production to the finished product, as well as the expansion and renovation of the production lines of clothing, investing in machines that perform automated production processes.

We have studied the world progress on this fact, but even in these 30 years that the commercial activity of the market economy has continued, there has been an immediate need to switch to the production of raw materials, as well as to production technology with automated or semi-automated equipment. automated.

There are three main reasons:

First: production costs are significantly reduced by having a centralized workflow and automated processes. The main costs that are reduced are labor costs and electricity costs.

Second: the labor force has started to be in short supply in the textile production sector, due to emigration, but also to the increase in the level of education of citizens, and fewer employees want to work in this sector, so in this way our company begins adapting the new offer of the employee market.

Third: clustered and automated production is carried out in a shorter time, so our groups become more competitive.

1.4 Legal form of ATC:
This business that we will develop, will be carried out following the activity of the ATC Cluster, which as an object of its activity has the production of raw material, fabric, as well as confection with customer material.

1.5 Location of ATC:
This business development that we have planned to realize, we have thought of placing it in an area of about 150,000-200,000 m2, where we can build work silos as well as all other service areas.

1.6 Number of employees and work organization of ATC:
Our Cluster for this type of grouped production will employ about 2,000 – 3,000 permanent employees. One of the main directions of its policy is the best possible treatment of employees and all company personnel, in order to specialize and train at the appropriate level.

In this Cluster of the textile industry, technical personnel, new employees, as well as workers from the current employees of our production lines, who are experienced in the field of clothing production, and have seniority in the current company, will be employed with long-term contracts.

The Layout Chart of ATC presented like as follow:

2. MARKET ANALYSIS

2.1 Analysis of request, sector and equipment purchase market:

The textile cluster that we are presenting to build, will be used mainly for the production needs of garment manufacturers with customer material, based on the contracts we currently have but also new contracts, seeing the great demand to conclude contracts with us, as producer.

The market for the purchase of machinery and the main production equipment as well as other equipment is guaranteed, as the main shareholder as well as the C.E.O. of the cluster is also specialized in the field of trading of machines for the production of confections, from which we have provided different offers, from which we will choose according to the estimate presented in the investment value. The design and prevention of all civil and assembly works has also been done.

2.2 Analysis of competition:

The business of making garments with custom material has a relatively high competition, but this competition depends a lot on the quality of the fabric production, on the quality of the confection, on the short production time and on its low costs. In these four main points we will make this investment, seeking to be as competitive as possible in the market.

The fluctuations of the workforce make us more competitive compared to other companies, which are not grouped in a cluster like ours.

2.3 Demand trends:

As we pointed out above, the demand for the production of fabric and for the manufacture of clothing has increased significantly in the last two years, due to the world economic structure, where the costs in the countries of the region (Romania, Bulgaria, North Macedonia, etc.) but even in the countries of the Far East (China, Bangladesh, Pakistan, etc.) they have grown too much for the European market. We add here the still relatively low costs of Albania, the proximity to the European market, the European mentality of production, the experience of almost 30 years of cooperation with European companies, make it more sought after by European customers (mainly Italians and Germans, target group of EU customers – Market).

2.4 Marketing plan:

The marketing plan for the new business we are thinking of building is simple. We have thought of concluding long-term contracts with different firms, according to the best offer from those, where we will have guaranteed production quantity and price, on an annual average.

By analyzing the costs of society, the expected profit becomes more guaranteed.

3. DATA ON PROJECT INVESTMENTS AND THEIR FINANCING SOURCES

3.1. Total project cost:

The investment will be in machinery and equipment, standardization, certification and training, based on EU standards and norms, as well as in basic operating tools.

3.2. Funding sources:

– This investment is proposed to be financed by financial and investment institutions.

– The request for financing sources will include the value of the investment without the calculated VAT, since the company in question has the investment in equipment exempt from VAT, and the target market will be for export, again exempt from VAT.

3.3. Terms and investment repayment schedule:

– The investment that will be financed will be repaid according to the forecasts that will be made in the financing agreement. We have calculated the financing expenses among the different expenses of the financial activity, in the forecast table.

4. FINANCIAL ASSESSMENT OF THE ACTIVITY

4.1 Income assessment for the new venture:

The income of the new Cluster during the first year is predicted, so that the Cluster enters normal production capacity within four months, since the current workforce and the experience of the company, enables a quick start of work.

The Cluster has calculated the average income according to the daily production volume and the average market price of the production of confections. We have calculated the minimum monthly production volume. Increased production leads to a higher rate of profit, as many of the costs are fixed.

4.2 Estimate of expenses for the new investment:

Expenses are calculated in indirect operating expenses and direct production expenses. An estimated reserve of 10% of total expenses has been left for interest expenses and other unforeseen expenses.

4.3 Assessment of income and expenses:

The statement of income and expenses for the first three years for this business is given according to the attached statement:

V.O. All costs and sales prices of the finished product are calculated without VAT, based on the current average market prices and the increasing trend of some costs. The profit and loss calculation is regardless of these influences or market fluctuations.

5. PROFITABILITY OF THE PROJECT

• According to the above indicators, the NPV of the project for a capital cost of 10% is equal to the initial investment for a period of 7 years from the beginning of the activity, assuming that the investment is paid off at the end of the 7th year.

V.O. The calculation of NPV is made according to the attached statement.

• The IRR indicator for the 7-year period 1-7 is 11.33%, which shows the rate of return for 7 years with a fully paid-off investment. The IRR until the end of the 10th year is 16.08%.

V.O. The IRR calculation is made according to the attached statement.

• According to NPV and IRR indicators, this investment pays for itself completely within 7 years.

• The works for the construction of the chain of production lines, until they are in full use, are planned for a period of 6-9 months.

• Re-investment: In the 11-^th year of putting this line into operation, the company plans to re-invest the amount of 70% of the value of the machines and equipment, in order to improve the quality and production yield.

6. SENSITIVITY ANALYSIS

• The estimated income from the fashion production of confections is based on the estimated minimum volume of the Cluster, as well as on the average prices offered by our customers.

• The number of customers is relatively high, enabling the forecast of income and the guarantee of production to be more secure. Also by improving the production and the time of its realization, we will be more competitive for larger markets, which are being demanded insistently by our potential customers (production in larger quantities and in a shorter time).

• Also, the Cluster has the possibility of using the local market, both for the production and marketing of its products. The production trend of the fashion industry is to be oriented towards hybrid production: both for foreign suppliers and for its own brand.

7. SUPPLEMENTARY ANNEXES

7.1 Strengths and weaknesses of the business.

7.1.1 The strengths of this business are:

– This type of clothing production business format is low-risk and safe, since humanity will continue to dress as before, today and until it exists.

– The ownership of the Cluster, as it is the property of one or several partners, who are today among the most successful operators of this market in Albania.

– Experience gained in business management based on experiences gained from other activities.

– Guaranteed sales and production market based on customized service contracts with pre-fixed prices.

– Garment Production business is a medium investment and pays for itself in 5-7 years.

– The smaller number of workforces concentrated in a single location, compared to enterprises with non-automated production and the fact that they are specialized in the field of clothing production.

– Additional production of the product produced and marketed by the company itself would bring additional profits since many costs are fixed.

7.1.2 The weak points of this business are:

• The initial investment for our conditions requires a lot of free funds, which we will solve by getting financing from financial institutions.

• The production of own products and their marketing requires a lot of commitment and investment. The growth of their trading is gradual in time (compared to the façon production, which has a defined volume and comparable to the normal capacity).