Increase Margins using Keskan Finance

We have a unique scenario in the manufacturing of Ready Made Garments’ supply chain. Our Gross Margins is linked to the ability of strong finance along the whole chain! How? We will show you.

THE MATH -

Factory X received an Order from H&M for 100,000 at $5 per piece FOB India.
Total Order Value is $500,000

Traditional Costing of the T shirt is as below;

Fabric Input = $8/ Kg (with 90 days credit from fabric supplier) 
hence a T Shirt fabric costs = 8×0.35 = $2.8

Print on T-Shirt = $0.2 per piece (with 30 days credit from printing facility)

Cost of Making = $0.55 per piece (SAM calculated on a basic round neck T-shirt)
(with no factory worker incentive for better productivity)

Cost of Trims + Packaging + Testing per piece = $0.85
(with 30 days credit from from all the various entities involved)

Total Gross cost of T shirt (with taking credit from all stakeholders involved) =
$4.4 giving you a Gross Margin of 12%

Total Net cost of T shirt (2% wastage + 2% Collateral bank Finance) =
$4.58 per piece which results in Net Margin of 8.4%

Now We Look at the Math using Keskan Finance;

Fabric Input = $7.5/ Kg (upfront payment to fabric supplier) 
hence a T Shirt fabric costs = 7.5×0.35 = $2.63

Print on T-Shirt = $0.15 per piece (upfront payment to printing facility)

Cost of Making = $0.45 per piece (SAM calculated on a basic round neck T-shirt)
(with incentive for factory workers for better productivity)

Cost of Trims + Packaging + Testing per piece = $0.75
(upfront payment to all the various entities involved)

Total Gross cost of T shirt (with taking credit from all stakeholders involved) =
$3.98 giving you a Gross Margin of 20%

Total Net cost of T shirt (2% wastage + 3% Keskan Finance Cost) =
$4.18 per piece which results in Net Margin of 16.4%

Summary:

Keskan Finance enhances profitability by lowering production costs through better supplier terms, resulting in higher gross and net margins—demonstrating the power of strong financing along the supply chain.