Requirements & Procedure to Start Embroidery Machine Unit in Pakistan

The demand for commercial embroidery is continually rising due to urbanized population and changing life styles. Although there are a number of local manufacturers producing good quality of embroidered cloths but still a huge demand exists for potential investment in the embroidery business in Pakistan.

The embroidery machine unit in Pakistan is designed as a small scale commercial embroidery unit. This unit will be capable of providing its services to local garments and fabric manufacturers as well as those garment manufacturers who are dealing in exports and require embroidery work on their garments.

This sort of project is quite flexible in a way that there is no processing of raw materials required and each machine is independent in its working. The project can be started even with a single machine. However, keeping in view the potential and industry norms, the project will be more feasible and economical with two or four embroidery machines. Due to the increase in number of commercial embroidery units and competition, there are chances that the market rates may reduce. However, this can be tackled by providing different value added services to customers.

Another major threat to the business is credit factor. This is also related to the competition. The customers may ask for credit facility for a longer period, and this can disturb the cash cycles of the unit. This can be avoided by making a similar policy for all customers, so there will be no complaints from customers and cash cycle will not be disturbed.

The proposed business venture should preferably be located in any of the major urban cities of Pakistan; to reduce initial capital investment, the proposed unit is to be established at rental premises. The proposed machine can stitch 20,833 stitches in 1 hour. This unit will stitch 220 million stitches in 330 working days with 2 embroidery machines on 16 operational hours per day, however, initial operational capacity is assumed at 70%, whereas, maximum operational capacity utilization is at 95%. This production capacity is estimated to be economically viable and justifies the capital as well as operational cost of the project. However, entrepreneur’s knowledge of clothing industry, development of quality cloths, attractive designs, competitive pricing and strong linkage with suppliers and wholesalers network are factors for the success of this project.

The estimated total cost of setting up a commercial embroidery unit in Pakistanis Rs. 20.74 million out of which Rs. 13.76 million is the capital cost and Rs. 6.99 million is for working capital. The project is to be financed through 50% debt and 50% equity. The project NPV is around Rs. 29.11 million, with an IRR of 39% and Payback Period of 3.41 years. The project will provide employment opportunities to 13 individuals including owner / manager. The legal business status of this project is proposed as ‘Sole Proprietorship’.

Factors for Success of Embroidery Machine Plant in Pakistan

Following points should also be ensured to make the business successful:

  • Assurance of high quality with consistency.
  • Surety for on-time delivery of products.
  • Competitive rates.
  • Cost efficiency through better management.
  • Aggressive marketing
  • Attractive designs.
  •  Relationship with export manufacturers.

According to the estimate given by the industry and machine sellers, there are thousands of embroidery machines operational in Pakistan. Most of embroidery factories are located in Karachi, Lahore, Faisalabad and Sialkot. A few factories are also located in Hyderabad, Multan and Rawalpindi. Therefore, any of the above cities would be a suitable location for setting up a commercial embroidery unit. Raw material and labor is also easily accessible in these cities.

Demand of Pakistani embroidery is gaining momentum globally. Orders are being placed from Saudi Arabia, United Arab Emirates, United Kingdom, United States, Belgium and Oman. Pakistan has a great potential to compete in the global market, particularly in the Middle East markets. With little effort it can gain a reasonable share. The markets for embroidery products are as follows:

Local Market of Embroidery 

According to industry estimates, about 70% of the embroidered products are used in local (Pakistani) market. The products include women / men suits, table & sofa cover, bed sheets, badges, logos, T-shirt, caps, etc.

Export / Foreign Market of Embroidery

About 30% of the embroidered products are exported to different countries. These products include T-shirts, caps, badges, logos, women / men suits, etc.

Production Process of Embroidery Factory in Pakistan

The production process flow of commercial embroidery unit starts with the purchasing of fabric from the market, depending whether customer provides the fabric or not. Then comes the designing and tracing phase. The designs are developed either in house by employing a full time designer or can be out sourced. After the completion of designing stage the designs are loaded on the machines and then embroidery work is done by the machines on the fabrics with the help of embroidery threads.

Operational Capacity of Embroidery Machine in Pakistan

The installed and operational capacities of the commercial embroidery unit mainly depends upon the installed machinery. The pre-feasibility study is based on an installed capacity of 666,667 stitches per day on 16 hours basis. While maximum capacity utilization of the unit is assumed at 95%, 633,333 stitches per day and 209,000,000 stitches annually. However, during 1st year operation unit will operate at 70% capacity and will stitch 466,667 stitches per day

Space Requirements for Embroidery Machine Setup

In order to reduce the initial capital expenditure, the proposed Commercial Embroidery Unit will be established in a rental premises. Therefore, space may be acquired in the industrial state or in outskirts of big cities where skilled workers are available. The rent of the building will depend on the area and geographical location of the unit. An estimated area of 10 Marla (2,250 sq. ft.) will be required for the proposed venture. The area requirement has been calculated on the basis of space requirement for production, management and storage. However, the units operating in the industry do not follow any set pattern.

Machinery and Equipment Requirement for Embroidery Machine Unit

Following is a list of plant and machinery required for an average size Commercial Embroidery Unit:

  • Embroidery Machine
  • UPS for Machines
  • Generator (7000 Watts)
  • Air Pressure Machine (Exhaust Fan)

Investment Required to Setup Embroidery Machine Business in Pakistan

A detailed financial model has been developed to analyse the commercial viability of the proposed Commercial Embroidery Unit. Various costs and revenue related assumptions along with results of the analysis are outlined in this section. The projected Income Statement, Cash Flow Statement and Balance Sheet can studied in the pre-feasibility study of embroidery machine unit in Pakistan by SMEDA.

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