Assignment On Business Plan on Paper Bag
MBA – II Section - A Subject: New Business Development Prepared By: No. 1 2 3
Name Dave Bhavesh G. Kalathiya Ajay K. Maniya Dilip B. Submitted To: Mr. Jaydeep Chaudhry
Roll No. 22 39 50
INDEX SR No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
PARTICULAR Executive summery Business plan at a glance Management setup Vision Mission Justification of location Raw materials Machines Product details Market potential Manufacturing process Organization structure SW OT analysis Production capacity schedule Staff and labour Total fixed assets Cost of production W orking capital Sources of finance Interest of capital Depreciation Fixed and variable cost Cost of capital Break even analysis Profitability analysis Conclusion
PAGE NO.
1. EXECUTIVE SUMMARY
A business plan is an essential tool for anyone trying to obtain fundingfor an innovative project, regardless of the type of funding, be it a grantapplication, approaching a bank for a loan, getting in contact with a ventur ecapitalist. The business plan should be well developed as this will be your wayof presenting the current state of our company and detailed strategy of howyou plan to carry out your project. The business plan will need to conveythe strength of your idea and how it can be implemented successfully. In this business plan to use totally eco-friendly papers. To make theproduct popular in every place of Gujarat and gradually cover all nearbystates. To make the firm a medium scale industry and then a large scale. Ifpossible I would expor t my product, as they are highly in demand in foreigncountries. Let’s hope for the best and work hard to make all future planscome true. W ith the expectation of high profitability it is assumed that it would bethe perfect product to be manufactured in today’s environment. AFTER ALLIT’S AN ENVIRONMENTAL FRIENDLY PRODUCT! !! Its Save-“E” paperbags. Today market of paper bags is expanding; demand for the product isincreasing day by day. The return on this business is also satisfactory.
2. . BUSINESS PLAN AT A GLANCE
Name of the Unit Registered Office
Paper Bags Plot No. 228, GIDC,Lodhika, Kalawad Road, Metoda,
Location of the Unit
Rajkot-360 005 Plot No. 228, GIDC, Lodhika, Kalawad Road, Metoda, Rajkot-360 005.
Form of Organization Name of Owner
Partnership firm Dave Bhavesh Kalathiya Ajay
Name of Product Size of the Unit SSI Registration Number Subsidy Registration No Cost of Project Means of Finance
Maniya Dilip Paper Bags Small Scale Applied for Applied for Rs. 40,00,000 SIDBI, HDFC Rs. 10, 00, 000 by each Partner
3. . MANAGEMENT SETUP
Partner’s Backgorund 1.
Name Age Address Academic Qualification Role in the Unit Financial Contribution
2.
Name Age Address Academic Qualification Role in the Unit Financial Contribution
3.
Name Age Address Academic Qualification Role in the Unit Financial Contribution
Dave Bhavesh G. 22 Years At Varachha Area, Surat. MBA (Finance) Finance Rs. 10, 00, 000.00 Ajay Kalathiya 23 Years At Katargam Area, Surat. MBA (Marketing) Marketing Rs. 10, 00, 000.00 Dilip Maniya 22 Years At, Varachha Area, Surat. MBA (Production) Production Rs. 10, 00, 000.00
ORGANIZATION STRUCTURE The organization is establishing of effective authority relationship among selected works, persons and work places in order for the group to work together efficiently. Organization is a basic activity of any business firm.
owner Production Manager Workers
Personnel Manager
Marketing Salesman
Finance Accountant
4. VISION OF THE COMPNAY
Vision is a picture of what a firm want to be in broad terms what it come to altimetry achieve it is what ultimately the firm or person would like to become. Therefore vision statement articulate the ideal description of origination give shape to it interrelated future “Vision is a description of something (an organization, corporate culture, a business, a technology) in the future “Following vision of paper bags To become a proactive, integral and responsible member of our environment and community, making us a strong global supply base for world class products. To use totally eco friendly papers, which are made not from tree. To make the product popular in every place of Gujarat and gradually cover all nearby states. To offer continuous value added product to our customer. To make the firm a medium scale industry and then a large scale. If possible, I would export my product, as they are highly in demand in foreign countries.
5. MISSION Mission is what an organization is and why it exists. Organization relates their existence to satisfying particular need of the society. They do this in term of their mission. Thus, Organization finds a role for its self to pay in the society in by playing this role organization meet the requirement of so city. The role organization play whether it is producing a product or services that role describe by strategic mission. “Mission is a statement which defines the role that an organization plays in a society “ The Eco friendly paper bags manufacturing industry is poised for a higher growth with a bright future. To constantly grow the customers by designing superior and cost effective product through contribution of ideas. Now a day’s paper bags have become the way of the modern world. It is eco-friendly and attractive as well. Paper bags are proffered more today because it makes a style statement and adds to your appearance. Due to the increasing awareness of the hazards of plastic bags to the environment among the public and the ban imposed on plastic bags throughout India and abroad by the government, there is a great demand for eco-friendly paper bags. We prepared plan of own eco- friendly paper bags manufacturing unit at nominal investment, and to provide employment opportunity to decrease unemployment in the country, to earn profit and save the environment in our own respective way.
GENERAL INFORMATION 6. JUSTIFICATION OF LOCATION Location plays an important role in starting industry. Before starting any industry entrepreneurs have to take a decision about the location of industry. They have to select that location where all the facilities must be available. They have to take right decision about the selection of location because once a location selected it cannot be changed in the near future. The following should be taken into consideration. 1. 2. 3. 4.
Availability of market Availability of Labour Availability of transport Availability of Power & water.
Thus, all the above factors justify the selection of the location. So, the selection would definitely contribute to the profitability. Metoda METODA Highway G.I.D.C Mani Dwip Temple“SAV – EPaper bags”AtulMarblesPvt Ltd.
Map
PRODUCT DETAILS PRODUCT The people regularly use paper bag now a days. If we go to the shopping center & purchase some goods the shopkeeper gives the good in the paper bag. The option is also to use a polythine or plastic bag but they are harmful to use because we can produce the plastic bag but we can not destroyed it. PRODUCT’S FEATURS There are many features of paper bag are as follows. . 1. It is very economical. :- Paper bags are very economic in nature. It is cheaply available in the market. 2. It is eco-friendly in nature. : - It is very easy to produce a paper bags and we can also easily destroyed it. So, it is less harmful to nature as compare to plastic bags. PRODUCT’S USES Paper bags are common packing material being used by bakers and confectioners, grocers, textile and cloth merchant, dry cleaner, sweet shopkeeper etc. Due to lower price, paper bags be used even by hawkers and vendors on the footpath for packing fruits and vegetables etc. BRAND NAME Brand also plays an important role in marketing. Good brand has to face less competition in the increasing market. MARKET POTENTIAL Just consider the sheer size of the existing market for plastic carry bags. It amounts to 600 billion bags. Many governments today are increasingly becoming environment-sensitive and at least project themselves to be so. Big business too wants to be seen as eco-friendly. Several local government bodies such as city municipal corporations and town-planning bodies have banned usage of plastic bags. In fact in all hill stations in India, the use of plastic bags has been banned. Also Before some time people are using plastic bags. But now a day’s people are realize that plastic bags are harmful to the nature. Because we can produce plastic bags but we cannot destroy it. So, now a day people are moving toward to use a paper bags rather than plastic bags. So it is highly demanded and profitable product. The introduction of shopping complexes & consumer stores in the semi-urban & rural areas are creating additional demand for paper bags, paper bags manufacturer, therefore, may be taken up as a profitable manufacturing activity in selected areas.
Paper bags can be used for
Carrying household articles Garments, toys Stationary items Foods & vegetables Medicines Cosmetic items etc.
The introduction of shopping complexes & consumer stores in the semi-urban & rural areas are creating additional demand for paper bags, paper bags manufacturer, therefore, may be taken up as a profitable manufacturing activity in selected areas. Before some time people are using plastic bags. But now a day’s people are realize that plastic bags are harmful to the nature. Because we can produce plastic bags but we cannot destroy it. So, now a day people are moving toward to use a paper bags rather than plastic bags. So it is highly demanded and profitable product.
RAW MATERIALS The raw material is the base for the production. The required raw material is paper in roll, gum, printing ink, string and misc. chemicals. The raw material of this unit is easily obtained from the market and from the paper mills. The raw materials required in this unit are:
Paper in roll Gum Printing ink Misc. chemical String
MACHINES
Automatic paper bag machine - 3 Nos. Stereo Press - 2 Nos. Stereo Grinder - 2 Nos. Roll Slitter motorized with 2 HP packing machine - 2 Nos. Testing equipment - 1 no. Punching Machine - 1 No.
MANUFACTURING PROCESS Raw Material (Paper Roll) Cutting through Automatic Machine Stereo pressing with the help of gum & chemical Grinding Printing through ink Punching Packing Testing
MANUFACTURING PROCESS IN DETAIL The required raw material is in the form of roll, the cutting of roll is done through the automatic paper bag machine according to the size, and then pressing of required size is done through stereo pressing machine with the help of gum & chemical. Then side grinding of paper bag is done. Then the process of printing is done and after that punching is done and after this string is tied in these holes and at last they are tested for bursting pressure and packing is done.
PRODUCTION CAPACITY SCHEDULE Production Capacity No. of Working Days in a month No. of Working Days in a Year No. of Shifts per day No. of Working hours per shift Production Capacity per month
1,06,20,000 Units 25 300 1 8 8,85,000 Units
STAFF & LABOUR No. 1
2 3 4 5 6 7
Staff & Labour Factory Staff Skilled Unskilled Technical Supervisor Clerk cum typist Accountant Peon cum Watchman Salesman Manager
No. 4 6 1 1 1 1 2 1
SWOT ANALYSIS Every existing firm has their own strength, weakness, opportunities and threat. There four aspects have their importance in each and every existing business. It is possible that strength of one unit may be weakness for another and opportunity for one becomes threat for another. As every company, PAPER BAGS also have their own strength, weakness, opportunity and threats. STRENGTHS
It is eco-friendly in nature. Lower price Fewer competitors Quality of product. Use of modern technology. Current fashion trend
WEAKNESSES
Plant capacity It is not useful in Monsoon season Less advertising effort
OPPORTUNITIES Increasing awareness of hazards of plastic Ban imposed on plastic bags in many states It is opportunity to in a normal market purchase comes with a packaging and a bag Form a stall on the road to superstore in big malls, everywhere bags are provided. This is something which will never end packaging and visibility provides companies the added advantage. THREATS
Government policies Introduce new product Similar to plastic bags. Increase raw material price.
COST OF PRODUCTION Raw Material Particulars Paper in roll Total (Rs.) Gum Total (Rs.) Printing Ink Total (Rs.) Misc. Chemical Total (Rs.) String Total (Rs.) Net Total
Rate/kg. 10
Req/day 2,950 29,500 35 280 20 1,300 40 160 50 350
Req.per month 73,750 7,37,500 875 7,000 500 32,500 1,000 4,000 1,250 8,750 7,89,750
Req.per year 8,85,000 88,50,000 10,500 84,000 6,000 3,90,000 12,000 48,000 15,000 1,05,000 94,77,000
No.
Rate
P.M.
P. A.
4 6 1
2,000 1,800 5,000
8,000 10,800 5,000
96,000 1,29,600 60,000
2 1 1 1 1
3,000 7,000 2,500 3,500 2,000
6,000 7,000 2,500 3,500 2,000
72,000 84,000 30,000 42,000 24,000
44,800
5,37,600
8 65 4 7
Staff & Labour Particulars Factory Staff Skilled Unskilled Technical Supervisor Salesman Manager Clerk cum typist Accountant Peon cum W atchman Total
OTHER EXPENSES & UTILITIES Sr. 1. 2. 3. 4. 5. 6. 7.
Particulars Electricity Water Charges Postage & Telegram Stationery Repairs Telephone Expense Transport Inward outward Packing Miscellaneous Exp Audit Fees Professional Tax Legal Fees Insurance Selling Exp
8. 9. 10. 11. 12. 13. 14.
Total
Sr. 1. 2. 3. Total
Particulars Raw Material Staff & Labour Other Expenses
P.M. 17,000 1,500 2,000 1,200 2,000 1,800
P. A. 2,04,000 18,000 24,000 14,400 24,000 21,600
2,000 2,000 3,000 2,000
24,000 24,000 36,000 24,000 21,500 1,000 15,000 1,02,000 2,01,000 7,55,000
16,750 51,250
P.M. 7,89,750 44,800 51,250 8,85,800
P. A. 94,77,000 5,37,600 7,55,000 1,07,69,600
TOTAL WORKING CAPITAL REQUIREMENT
Working capital is very important for every business unit; either it might be small scale or large scale. Working capital is capital which is invested for daily use of the firm. Mainly working capital is used for salary purpose, rent, and repair work & for paying off allowances. Sr. 1. 2. 3. Total
Particulars Raw Material Staff & Labour Other Expenses
Particulars Fixed Cost W orking Capital (2 months)
Amount 43,65,000 16,75,550 60,40,550
SOURCES OF FINANCE Sr. 1. 2.
P. A. 94,77,000 5,37,600 7,55,000 1,07,69,600
TOTAL PROJECT FUND Sr. 1. 2. Total
P.M. 7,89,750 44,800 51,250 8,85,800
Particulars Own Capital(40%) Borrowed Capital (60%) HDFC SIDBI Total
Rate
Amount 30,00,050
12% 10%
22,50,000 22,50,000 75,00,000
Rate 8%
Amount 2,40,000
12% 10%
2,70,000 2,25,000 7,35,000
INTEREST ON CAPITAL Sr. 1. 2.
Particulars Own Capital(40%) Borrowed Capital (60%) HDFC SIDBI Total
DEPRECI Sr. 1. 2. 3. 4.
Value 4,50,000 30,80,000 3,10,000 40,000
Particulars Raw Material Recurring Expenses Depreciation Interest on Investment
Amount 94,77,000 12,92,600 8,82,000 7,35,000 1,23,86,600
SALES FORECAST (NEXT 5 YEAR) Year 1 2 3 4 5
Particulars Building (10%) Plant & Machinery (25%) Other Fixed Assets (15%) Computer (40%) Total
ANNUAL COST OF PRODUCTION Sr. 1. 2. 3. 4. Total
ATION
Units per Annum 1,04,50,000 1,18,40,000 1,39,50,000 1,42,00,000 1,45,50,000
Rate per Unit 1.25 1.25 1.25 1.50 1.50
Amount (Rs.) 1,30,62,500 1,48,00,000 1,74,37,500 2,13,00,000 2,18,25,000
SCHEDULE OF FIXED & V ARI ABLE COST Particulars Depreciation Int. on capital Salary Other expenses Raw Materials TOTAL
Variable cost Amount --3,22,560 4,53,000 94,77,000 1,02,52,560
Fixed cost Amount 8,82,000 7,35,000 2,15,000 3,02,000 -21,34,000
Amount 49,500 7,70,000 46,500 16,000 8,82,000
Fixed cost/unit = Total Fixed Cost/Total no. of units = 21, 34,040/1, 06, 20,000 = 0.20 ps. /unit
Variable cost/unit = Total Variable Cost/ Total no. of units = 1,02,52,560/1,06,20,000 = 0.96ps. /unit Contribution/unit = S.P./unit -V.C./unit = 1.25 -0.96 = 0.29 ps. /unit
BREAK EVEN ANALYSIS Break-even point is that point of achieving, where total revenue and total expenses are equal. It is the point of zero profit. If the sales exceed BEP the business will earn profit and if it decreases from BEP the business will incur loss. Thus, BEP may take, as the minimum level of production and sales and company must attain in order to be economically viable. B.E.P. (%) = {Fixed Cost / (Fixed Cost + Profit)} * 75 = 21, 34,040/ (21, 34,040 + 12, 09,900) * 75 = 47.86% B.E.P. (units) = Fixed Cost/ (Contribution/unit) = 21, 34,040/0.29 = 73, 58,759 Bags B.E.P. (Rs.) = B.E.P. * S.P./unit = 73, 58,759 * 1.25 = Rs.91, 98,449
P. V. Ratio= Contribution per unit / Sales *100 = 0.29 / 1.25 * 100 = 23.2% Gross Profit Ratio= Profit (EBIT) / Sales * 100 = 31,10,100/ 1,28,61,500 * 100 = 4.18% Net Profit Ratio = Profit after Tax / Sales * 100 = 4, 44,770 /1,28,61,500 * 100 = 3.46 %
Fixed Assets Ratio = Fixed Assets/ Sales * 100 = 43, 65,000/1, 28, 61,500 * 100 = 33.94% 26
PROFITABILITY ANALYSIS Particulars Sales
Amount 1,28,61,500
Less: Cost of Production E.B.I.T.
1,61,51,600 12,09,900
Less: Interest on Capital E.B.T.
7,35,000 4,74,900
Less: Tax Net Profit after tax
88,970 3,85,930
CONCLUSION
In the product project report on paper bags I have discussed all financial data and other relevant information. The market of paper bags is expanding; demand for the product is increasing day by day. The return on this business is also satisfactory. With the expectation of high profitability it is assumed that it would bethe perfect product to be manufactured in today’s environment. AFTER ALL, IT’S AN ENVIRONMENTAL FRIENDLY PRODUCT! !! Its Save-“E” paper bags. At last it can be said that future of this product is very bright.
LOAN REPAYMENT SCHEDULE IDFC bank
Year
Openingbalance
Installment
Closingbalance Interest
1 2 3 4 5 6 7 8 9 10
22,50,000 20,25,000 18,00,000 15,75,000 13,50,000 11,25,000 9,00,000 6,75,000 4,50,000 2,25,000
2,25,000 2,25,000 2,25,000 2,25,000 2,25,000 2,25,000 2,25,000 2,25,000 2,25,000 2,25,000
20,25,000 18,00,000 15,75,000 13,50,000 11,25,000 9,00,000 6,75,000 4,50,000 2,25,000 0
2,70,000 2,43,000 2,16,000 1,89,000 1,62,000 1,35,000 1,08,000 81,000 54,000 27,000
SHRINATHJI INVESTMENTS
Year
Opening balance
Installment
Closing balance
Interest
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
22,50,000 21,00,000 19,50,000 18,00,000 16,50,000 15,00,000 13,50,000 12,00,000 10,50,000 9,00,000 7,50,000 6,00,000 4,50,000 3,00,000 1,50,000
1,50,000 1,50,000 1,50,000 1,50,000 1,50,000 1,50,000 1,50,000 1,50,000 1,50,000 1,50,000 1,50,000 1,50,000 1,50,000 1,50,000 1,50,000
21,00,000 19,50,000 18,00,000 16,50,000 15,00,000 13,50,000 12,00,000 10,50,000 9,00,000 7,50,000 6,00,000 4,50,000 3,00,000 1,50,000 0
2,25,000 2,10,000 1,,000 1,80,000 1,65,000 1,50,000 1,35,000 1,20,000 1,05,000 90,000 75,000 60,000 45,000 30,000 15,000
