Rajnish Chaubey
[ ye a r-
2 008 -2 010 ]
Business Plan QUASAR PLASTICS IBMR Bangalore
Quality at the BEST
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“This is business plan is submitted to the IBMR Bangalore as a part of curriculum.”
Submitted by: Rajnish kumar Chaubey PGDM (2008-2010)
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TABLE OF CONTENT EXECUTIVE SUMMARY……………………………………………………………………………………… ………………….4 COMPANY OVERVIEW……………………………………………………………………………………… …………………..5 MISSION…………………. ……………………………………………………………………………………………………… ………….5 MARKET AND PRODUCT………………………………………………………………………………………… …………………..6 OBJECTIVE……………………………………………………………………………………… …………………………………………..6 KEY TO SUCCESS.. ……………………………………………………………………………………………………… ………………..6
PRODUCT AND SERVICE DESCRIPTION…………………………………………………………………………………. .7 MARKET COMPARISON…………………………. ……………………………………………………………………………………7 POSSIBLE OBSTACLES…….…………………………………. ………………………………………………………………………..7
INDUSTRY AND MARKET PLACE ANALYSIS…………. ………………………………………………………………….9 INDUSTRY ANALYSIS…………………………………………………….. …………………………………………………………….6 MARKETPLACE ANALYSIS……………………………………………………………………. ……………………………………..6
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CUSTOMER ANALYSIS………………………………………………………………………………………… ………………….…11 COMPETITOR ANALYSIS………………………………………………………………………………………… …………………12
MARKETING STRATEGY…………. ……………………………………………………………………………………………12 PRODUCT SERVICE STRATEGY.. STRATEGY.. …………………………………………………………………………….………………….13 PRICING STRATEGY………………………………………….. ………………………………………………………………….…13 DISTRIBUTION STRATEGY………………………………………………………………………………………… ………………13 ADVERTISEMENT ADVERTISEMENT AND PROMOTION STRATEGY……………………………………………………………………….13 SALES STRATEGY………………………………………………………………………………………… ……………………………13 SALES FORECAST……………………………………………………………………………………… ………………………………13
DEVELOPMENT ……………………………………………………………………………………………………… ………….14 DEVELOPMENT STRATEGY…. …………………………………………………………………………………………………….1 4
MANAGEMENT……. ……………………………………………………………………………………………………… …….15
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OPERATIONS…. ……………………………………………………………………………………………………… …………..16 SCOPE OF OPERATIONS…………………………………………………………………………………… ………………..…….20 SUPPLY CHAIN……………….. ……………………………………………………………………………………………………… …21 PROCESS FLOWCHART…………………………. ………………………………………………………………………………….22 GANTT CHART…………………………………………………………………………………………… …………………………….23 FACILITY LAYOUT…………………………………………………………………………………………… ………………………..24
FINANCIAL STATEMENT…………………………………. …………………………………………………………………..25 STARTUP EXPENCES………………………………………………………………………………………… ………………………25 INCOME STATEMENT……………………………………………………………………………………… ……………………….26 BALANCE SHEET………………………. …………………………………………………………………………………………….…27 BREAK EVEN POINT……………………………………………………………………………………………… ………………….28
APPENDIX……………………………………………………………………………………… ………………………………….29
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Bibliography ……………………………………………………………………………………………………… ………………33
Executive summary Plastic is the basic need of our day to day life. During recent years the plastic industry has grown with a substantial growth rate. This growth is driven by three sectors sectors viz packagin packaging, g, infrast infrastruct ructure ure and agricult agriculture. ure. There There are the various various verities of plastics out of which PVC (Polyvinyl chloride) and PET (Polyethylene terephth terephthylen ylene) e) plastic plastics s have their their consider considerable able contribu contribution tion.. PET plastics plastics are generally used in the manufacturing of beverage bottles for the packaging and PVC plastic is used in the production of household plastic materials. The growing utilization of plastics in industrial and consumer applications and surrounding solid waste recycling, has led to an increased demand for recycled plastic resins and products. We the Quasar plastics provide a wide range of plastic solutions for household and raw material for packaging of various companies. As a part of our ongoing efforts efforts to exploit exploit this opportu opportunity nity we will recycle recycle the plastics plastics and then produc produce e kitchen kitchen ware items items and other related plastic plastic materia material. l. We will also also sell the recycl recycled ed plasti plastics cs to the the comp compan anies ies in the the plasti plastic c busin busines ess. s. We will will have have a 7 | Q ua sa r P la st ic s
recycling plant along with the production unit. The raw material will be procured from the waste collectors. The raw material will be post consumed beverage bottles and other soft plastic materials Our main focus is our industrial customer whom we will sell PET bottles and PET flakes. It will contribute more than 60% of our sales. We will also focus on the household plastic business which is the part of our portfolio. The initial set up cost will be Rs 34, 40,000. Quasar plastics will be a solution proprietorship business run by the promoter Rajnish Kumar Chaubey who is a MBA graduate with finance and marketing as specialization. Since plastic material does not carry any brand name so it will give us an addition benefit in long term to establish our brand name. To exploit the market we will use penet penetrat ration ion prici pricing ng as our mark marketi eting ng strate strategy gy and and utiliz utilize e our string stringent ent distribution network and strong industrial relationship. As a future plan in coming years we will increase the variety of plastics like LDPE (Low density polyethylene) and HDPE (High density polyethylene). By doing this we will be able to produce plastic carry bags and raw material for production for plastic chairs and tables and other fiber based products.
COMPANY OVERVIEW Quasar Plastics provide a wide range of plastic solutions for households and raw material for packaging to the various companies. Allahabad Allahabad is the place where the facility will be established and other operation will commence. We will collect the plastic garbage like consumer beverage bottles, plastic bags from from variou various s garb garbag age e store stores s and and then then our recyc recycle le unit unit will will proc process ess it which which eventually be used for the production of finished goods. The plastic garbage we are getting as raw material has two components one is PVC (Polyvinyl chloride) and other is PET (Polyethylene terephthylene ). Firstly the whole garbage is melted and then PVC and PET are separated from each other by froth flotation technique.
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We will create a plant (actual facilities to be shared with the recycling unit) to manufacture extruded plastic flakes (purified plastic). The extruded plastic is then molded in the various products. We will produce two types of replay plastics •
PVC( Polyvinyl chloride)
•
PET( Polyethylene terephthylene )
Mission Statement Quasar Plastics •
• •
Strive Strive to provide provide the excellen excellentt plastic plastic solution solution to the custome customers rs at competitive prices. Continually expands our range of products. Is poised to service both large and small customers .
Markets and Products The plastic plastic produ products cts usually usually do not carry carry a brand brand name name so intru intrudin ding g in the the business like plastic will not be too hard with low price strategy. The population of Allahabad and the cities around it like Varanasi, Gorakhpur, Johnpur is around 3Cr. and this area is basically comprises of low to middle income group families so they focus on plastic products rather than fiber since it is a cheaper. Hence it is huge market to exploit. From Allahabad city 500 tons of solid waste is produced from that 15tons of plastic bags and around 7 tons of plastic bottles is generated per day. So the supply of raw material will be continuous. Apart Apart from from this this we will will sell sell raw materia materiall for packag packaging ing to the various various small small companie companies s in this area. Around 30 small small and medium scale companies companies are working in this region. So a large amount of industrial customer is also available. There are two folds of products that we are providing one is industrial and other is household. 9 | Q ua sa r P la st ic s
Objectives •
• • •
Develop a business that survives on its own cash. Create a company which exceeds customer satisfaction level. Expand the service to whole UP in first five years and then to Delhi. Extending the services to electronic component manufacturing companies for production of capacitors printed circuit boards etc.
Key to success: The main keys to the success of the Company are: •
Secure Secure SupplySupply- Contrac Contractt for supply supply of post-con post-consum sumer er bottles bottles and postpostindustrial manufacturing waste for PET raw material feed stock.
•
Satisfy our customer so that we can retain them
•
Maintain low overhead and operating costs
•
Provide better prices than all our competitors
Product and services
We will provide a wide range of plastic products for households and raw material for packaging. The recycled plastic is processed to Polyethylene Terephthalate Terephthalate (PET). PET is a thermoplastic polymer viscous of polyester family. The biggest property of this compound is it transparent. This is the reason why it is used for packaging. Apart from this PET have good strength, strength, ductilit ductility, y, stiffnes stiffness s and hardnes hardness. s. After After the recycling process completed completed an extruded plastic is generated. Plastics extrusion is a high volume manufacturing process in which raw plastic material is melted and formed into a continuous profile . The products we are producing are Cleaned and recycled plastic flakes of PET and bottles, recovered from post-consumer post-consumer beverage beverage bottles. (this PET will work as raw material for packaging to various firms, not for the end user) Household finished plastic goods. We are manufacturing plastic tubes of various diameter, plastic kitchen ware. ( for the end user) •
•
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PET flake will be sold to thermo formers (those who mold plastic sheets into usable products) primarily to be used to produce high-visibility high-visibility packaging. And also to the beverage companies for packaging. Recycled plastic is widely used in mainstream construction products such as damp proof membrane, drainage pipes, ducting and flooring. Bins, street signs and planters are frequently made from plastic. They are cost competitive and resistan resistantt to damage. damage. Local authorit authorities ies and schools schools are able to demons demonstrat trate e recycling in action by specifying recycled products High strength PET is used in the clothing, furnishings, tyre cord and technical textiles Apart from PET the household plastic will be directly sold to the end customers. In day day to day day life life plast plastic ic items items like like water water bottles bottles,, shop shop case case scrub scrubber ber etc is frequently used. So there is a big demand of these in local market.
Market comparison While quality and delivery are important factors to our potential clients, price is most often the determining factor in a buying decision. Good-quality packaging produ product cts s manu manufac factur tured ed from from recyc recycled led (less (less expen expensi sive) ve) resin resins, s, as close close as practical to the end customer's operations, will be most competitive and achieve a significant market share. These factors have helped to determine determine the business parameters of Replay Plastics.
Possible obstacle The The prod produc uctt is comp comple lete ted d and and read ready y for for the the mark market et laun launch ch.. The The poss possib ible le obstacles are Unavailable or scarce raw material stock for production •
Replay is confident that it has secured good availability of low cost postconsumer consumer PET bottles (feed stock) derived from post-consumer post-consumer beverage beverage bottles. It may be possible that we would not get desired raw material.
Company may not meet environmental standards This environmentally-f environmentally-favorable avorable venture provides for the development development of techn technica ically lly feasi feasibl ble e and and econo economic micall ally y viab viable le solut solution ions s to PET PET plasti plastic c beverage bottle recycling, as well as environmentally aware in-house reuse practices which filter and return nearly all of the process water to the production lines
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Industry and marketplace analysis Industry analysis Plastic recycling is an industry in itself in India. According to the Crisil research 7360 companies are working in this industry with a turnover of Rs 9200 Crore prov provid ides es empl employ oyme ment nt to 3.5 3.5 milli illion on peop people le.. In Ind India per capi capita ta plast lastic ic consumption in lowest in the world. The per capita consumption is just one fifth of world average which is 5kg. the domestic demand of plastic has grown by 9% and reached to 4.5MMT in year 2005.The GDP has grown during this period at 6.3% and plastic plastic industry industry 1.3 times of GDP. Accordin According g to the Crisil Crisil report the demand of plastic by 2012 will be around 12MMT. The plastic consumption in India is booming. Demand for commodity plastics is growing at the rate of 15% per year. .India holds immense potential for the use of plastic in the infrastructure and agriculture. In case of packaging industry we are using more plastic than the developed countries. The growth is driven in three major sectors – infrastructure which is 13%% of the total, packaging is 15% of the total and 10% for plastic consumer durables. It is projected that the plastic waste generation will reach the will reach the level of 1.6 million tons annually. India produces 5600 tons of plastic waste per day. Region wise and polymer wise turnover of recycling industry in Rs.Crore Region
PVC
PET
West
156
383
East
75
86
North
338
158
South
111
139
Total
680
766
Each region is specialized in one type of plastic viz south: PET; north: PVC; The The curr curren entt plas plasti tic c recy recycl clin ing g rate rate is esti estima mate ted d as 60% 60% by Plas Plasti tic c Indi India a Foundation. One estimate is that about 20,000 microenterprises are engaged in reprocessing and recovery of plastic waste in addition to 180,000 of various sortin sorting g and washi washing ng units units,, 60% 60% of which which are are unregi unregist stere ered d .Delhi .Delhi alone alone has has estimated 53,400 units and Delhi and Bombay together process over 50% of India's waste plastics. 12 | Q u a s a r P l a s t i c s
STRUCTURE OF THE PLASTICS INDUSTRY The following pattern is likely to be general but there will be some variation from country to country.
Raw Material Producers These These are chemical chemical and petrole petroleum um companie companies s who produce produce "virgin" "virgin" plastic plastic (sometimes called resin or polymer) in huge quantities. The main influence they have on the recycler recycler is to fix prices prices and availability availability of virgin virgin materia materials. ls. Virgin Virgin material is delivered in powder or pellet form, in plastic or paper sacks of around 20 kilos weight, in large cardboard drums that hold many times that quantity or even by road tanker. Compounders These specialist companies, usually small, stock various polymers and provide the manufacturers of plastic goods with technical advice and the most suitable materials or mixtures for each individual need. The compounder compounder is often the best market for the recycler because he possesses possesses superior technical knowledge and has a large volume throughput of virgin material, in which small percentages of reclaim will reduce cost without seriously affecting the quality required by the molder. Stockists These These warehou warehouses ses stock stock polymers polymers and compoun compounds ds but neither neither manufac manufacture ture thems themselv elves, es, nor nor provid provide e a compou compound nding ing servic service. e. They They may may be agen agents ts or subsidiaries of the producer companies or departments of companies concerned with the supply of other materials such as chemical, rubber or paper. They may be willing to stock reclaim alongside virgin materials, especially if these are in short supply. Specialist Manufacturers or Molders Thes These e buy buy thei theirr raw raw mate materi rial als s from from comp compou ound nder ers. s. If they they do thei theirr own own compo compoun undin ding, g, or if the the mater material ial is used used as produ produce ced d and and does does not need need compo compoun undin ding, g, they they may may buy buy direct direct from from stocki stockist sts s or produ produce cers. rs. They They are are specialists in plastics and do not perform other types of manufacturing. They may be an attractive attractive market to the recycler because they operate at high volume, but rarely have as much flexibility to vary product quality as molders who know, accurately, the final market for the product. Other Manufacturers Many companies are not plastics specialists but employ molding operations in the manufacture of some other product. For example shoe and boot makers use plastics extensively extensively and may carry out the various plastics molding operations in the same production sequence as the work in leather, canvas, rubber etc. Many 13 | Q u a s a r P l a s t i c s
manufact manufacturer urers s use plastic plastic packagin packaging g machine machinery ry at the end of a producti production on operation.
Fabricators These firms cut and join sheet, rod or extrusion to manufacture a variety of products. They have no opportunity to use reclaim. Machinery and Tool Makers One other sector of the plastics industry justifies mention although not customers for reclaim. The makers and suppliers of plastics manufacturing machinery, tools, moulds and dies are well informed about who does what, who makes what and who uses what within the local plastics industry. They may advise who is likely to buy material. Marketplace analysis Various overseas players wish to explore the Indian market and invest in opportunities thrown open by the country, projected to be world number 3 in plastics consumption by 2010 .As shown above the north region of India India is specialized in recycling of PVC. So there is a great scope of PET recycling. Apart from this the other •
A huge market with full of opportunity.
•
Absence of standard product and service
•
Well connected with other rural areas
•
Having good transportation facility
Customer analysis Since we are new player in the market so we need to make some stringent strategies to penetrate market and grab customers. The customers of the plastic industry are scattered due to lack well known brand names. So our first priority will be to accumulate the defused customers. The direct direct custom customers ers are the cust custom omers ers whom whom we are are selli selling ng our produc productt regul regularl arly. y. So for for us house househo holds lds whom whom we are are selli selling ng plast plastic ic goods goods and and companie companies s who are getting getting raw material materials s for packag packaging ing are direct direct custome customers rs (PET (PET bottl bottles) es).. So only only in Allaha Allahaba bad d arou around nd 20,00 20,000 0 famil familie ies s are our direct direct prospective customers and in terms of business to business market around 20 small and medium scale companies are our direct customers Apart from them there are few small companies which are giving compounding services. They use to collect various types of plastics flakes along with the virgin plastic and suggest customer (companies) in choosing appropriate plastic. An Asha enterprise is one compounder whom we will sell our plastics. 14 | Q u a s a r P l a s t i c s
Competitor analysis In plastic manufacturing market there is no specific brand name is existing so the market is flooded by small companies which are in this business. So they are our biggest direct competitors. As we are also not alone as a supplier of PET to the companies as raw materials there are many companies in this region which are supplying PET. Indira Plastics is one of them who is currently selling all types of plastics items. So in case of business to business market they are our direct competitors. Kanpur is plastic recycling city of UP. The direct threat we will also have is with the companies operatin operating g in Kanpur. Kanpur. But as the distance distance between between Kanpur and Allahaba Allahabad d is 600km as well as the road is not in good condition, so it will not affect much.
Marketing strategy The Comp Company any has chos chosen en to focus focus on the the produc productio tion n of plasti plastic c packa packagin ging g materials from recycled post-consumer beverage bottles. we have identified a significant available market in the eastern part of UP. All of our initial marketing strate strategy gy will will be to secure secure contr contract acts s in that that segm segment ent,, and and after after reach reaching ing full full planned capacity, capacity, look to grow in concert with that segment and related markets. We see little need at present for further market research and development, and will focus on continually updating our production technology in an effort to remain in the forefront of our chosen marketplace. Product/ service strategy The packagi packaging ng compan companies ies require require high quality and highly highly transpa transparen rentt PET bottles. The companies which are producing mineral water will reject PET bottles with even a small impurity/ opaqueness. opaqueness. So we the Quasar Plastics provide high end PET flakes for the perfect packaging. Quasar Quasar Plastics Plastics will will apply apply recyclin recycling g and extrusi extrusion on technolo technology gy managed managed by decades of industry specific expertise to create a competitive advantage for its clients. These processes will produce clean, cost-efficient, cost-efficient, recycled raw material for manufacturers of thermoform, thermoform, laminate and other high value-added value-added products, and high strength packaging strapping for shippers of large products and pallets, ther thereb eby y redu reduci cing ng costs osts and and crea creati ting ng a clea clearr prici ricing ng edge edge amon among g thei their r competitors . Plastic bags and plastic sheets are now in high demand. And this demand is driven by continuously increasing promotional activities. Pricing strategy As plastic products do not carry any brand name so only pricing and distribution strategi strategies es will works to achieve achieve competiti competitive ve edge. edge. The pricing strategy strategy we will use is penetration pricing. The price of all household plastic goods we will sell will 15 | Q u a s a r P l a s t i c s
be lower than the market price. Also for the PET flakes and bottles the price will be lower than the competitors. A lower price enables me to get contracts of PET bottles and sheets from various companies. In case of kitchenware and other household products we will provide combo offers and discounts which a common customer expects.
Distribution strategy As I described before that firstly we will target Allahabad city and villages close to it. We will have have a distribu distribution tion center center in the Allahabad Allahabad city which continuou continuously sly maintains the supply of goods. So the household plastics will be sold through small local grocery shops from which the customers can get them easily. Apart from this we will hire street hawkers who will roam around the city and sell the goods door to door. PET bottles will be stored in warehouse which is close to the facility itself. The sales people will directly contact to the companies which require these bottles for packaging and look for the contracts. In city as stated above that we will have a distribution center, from that center we will distribute to whole sellers.
Advertising & promotion strategy As I described we are in both B2C and B2B so for this we will use two different promotional strategies. For B2C business we will use flyers which will have full detail of our product range, price, combo offers and discounts. These flyers will circulate through the newspapers across whole city. For B2B business we will promo promote te throu through gh online online social social media media and and we will will also also develo develop p our webs website ite through which enable us to widely spread our contact among various companies. the site will have full details of product which are available available for companies as well as end user.
Sales strategy The strategy of sales effort will be to convert potential and first time customers into long term customers. Our sales strategy is totally based upon the distribution channel and the pricing strategies. We will have a distribution centre in the city that that will will take take care care of sale sales s of hous househ ehol old d and and also also supp supply ly prod produc ucts ts to the the wholesalers. We will also give the industrial customers a facility to order the products through our website which will help them in reducing the delivery time. To market the products, the Company will use a number of sales agents/brokers. They They have have a cust custom omer er base base of thei theirr own, own, havi having ng deve develo lope ped d succ succes essf sful ul relationships with their client over the years. Their customer base is currently demanding demanding product so they can expand upon their current base. Of course, they will expand that to new customers when product is available. If the Company grows faster than its prime customer base, additional capacity may be developed. developed. We will identify additional prospective prospective customers who can be attracted for our products .
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Marketing & sales forecast The first month prior to the opening will be used to get the new office in order, set up appointment and begin marketing activities. In the first month we will focus on the generat generating ing public public visibili visibility. ty. The sales sales forecas forecastt is based based on the assumpt assumption ion that we will sell all of the highest volume PET bottles that we can produce. This flake will be sold to other manufacturing companies. Recycling industry is growing with 15-20% each year. So we can assume that we will grow with at leas leastt 20%. 20%. Ther There e is a cont contin inui uing ng stro strong ng dema demand nd for for flak flake e and and extr extrud uded ed products made from recycled PET.
Sales forecast year 1
year 2
year 3
year 4
Annual sales Monthly sales PET Sales Household items
1620000
2106000
2737800
3559140
135000
175500
228150
296595
94500
122850
159705
207617
40500
52650
68445
88978.5
Development The development of Quasar plastics required to accomplish a series of action and formaliti formalities. es. Since we are new in the market market we kept our productio production n is low initially, as demand will increase the production will be enhanced respectively. Now we are recycling and producing only two types of plastics i.e. PVC and PET, as we grow we will produce a wide the range of plastics and its finished product. . The development process involves following steps: • • •
Legal formalities Office/business setup Future offerings and expansion plan
Development strategy In future we are looking for the production of a variety of plastic. These plastics will be •
LDPE ( Low density polyethylene)
•
HDPE ( High density polyethylene)
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LDPE plastic is used in the production carry bags and other plastic sheets as well as cling wrap, car covers, squeeze bottles, liners for tanks and ponds, moisture barriers barriers in constru constructio ction. n. And HDPE plastics plastics are used used in product production ion of freezer freezer bags, water pipes, wire and cable insulation, extrusion coating. Our development strategy will base on timely completion of the establishment of the business centre with low execution cost. Our strategy will focus not only the current uninterrupted production of PVC and PET and acquisition of customer as fast as we can, but we will also look for the future expansion plan and execution strategy. Our future development strategy will focus on to chart out a careful plan for the future expansion and growth of our business. The development strategy will address following issue: • • •
How will we expand our services? Which are the new areas we will include to provide our services? What will be the format of the business
Our development strategy will address all those above mentioned point. As we will grow and our earning will increase, we will produce more of PVC and PET as well as expand in new area. We have a development strategy to expand our facility size in order to meet the production size.
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Management
The company will be managed by promoter and six supporting staff. Rajnish Kumar Chaubey, Chaubey, a MBA graduate with specialization specialization in Marketing and Fina Financ nce e is the the owne ownerr and and prom promot oter er of Quas Quasar ar Plas Plasti tics cs.. He has has inte intens nsiv ive e knowle knowledg dge e and and vast vast under understa standi nding ng in financ financial ial areas areas like like Risk Risk and and Retur Return n management, Investment portfolio and Capital Budgeting, which undoubtedly will be of intense help in the business. Apart from this he also has a good knowledge of chemicals and their properties Marketing skills like convincing power, negotiating ability, creating promotional strategies and sales skills will all be extremely helpful in taking the business a long way and will prove intensely valuable to take Quasar Plastics to flaring heights. Thus with such potential skills, and other qualities like efficient interpersonal skills, leadership skills and decision making quality, aptly makes him the best promoter and eligible founder and owner of Quasar Plastics Along with promoter five more employees will work for the accomplishment of companie companies’ s’ objecti objective. ve. One supervi supervisor sor will work on the facility facility along with two supporting supporting staff. Supervisor who will work upon the facility does not need to be a chemical chemical engineer engineer a simple simple technici technician an has experie experience nce on working working upon the facility can be able to do this. Job description Process
No of employees
Sorting 19 | Q u a s a r P l a s t i c s
2
Proficiency unskilled
Belt Conveyer
1
semiskilled
PET Separator
1
semiskilled
Packaging
4
unskilled
Operations The operations is defined as the process used to deliver your products and servic service e to the custo custome merr mark market et place place and and also also inclu include de manu manufac factur turing ing transportation logistics travel and after sales services. The facility is located at outside the city. Facility is divided in two parts •
Recycling and Production unit
•
Warehouse
The facility is located in an area of 3000 sqft..Apart from these two units there will be an office which will look for the perpetual supply of required raw material and also take care about about the outbound outbound logisti logistics. cs. The production production capacity capacity is 80kg/hr. The operations will be based upon JIT i.e. just in time. We will have contracted with the suppliers who can supply the raw material as quickly as we want. The raw raw mate materi rial al cont contai ains ns post post cons consum umer er beve bevera rage ge bott bottles les and and othe otherr plas plasti tic c material materials. s. The bottles bottles and other plastic plastic material material that can be recycled recycled have a specific sign from which it can be identified that it can be recycled or not. The plastic is then transferred to respective unit to be recycled because PET and PVC cannot be recycled simultaneously simultaneously due to their different properties. There will be two units running parallel to each other. On unit will recycle and produce PVC plastic and other will perform the same for the PET plastic. The recycled recycled PVC is then then moved moved for the plastic plastic injectio injection n molding molding unit in the various shapes. Since there are a variety of product is being produced so the preference will be given to that product whose demand is high. All the products will not be produced each and every day. There will be different products which will be produced on different day according to the demand in market. After the recycling process is completed one part of PET flake is moved to the warehouse according to the demand of raw material which different companies need and other part will move for the molding in bottles. 20 | Q u a s a r P l a s t i c s
The recycled PET flake is then heated and made the viscous solution of it. The PET resin is then feeded to the molder and molder will give it various shape bottle bottles. s. And And then then it left left for dryin drying. g. Thos Those e produc products ts which which furthe furtherr need need for for processing like buckets, the handle will be inserted after the bucket is dried.
Stages of Recycling and Production The process of recycling of waste plastics into products of varying usefulness involves the following essential steps: •
Sizing / Chipping
•
Cleaning
•
Segregation.
•
Agglomerating / Colouring
•
Extrusion / Palletisation
•
Fabrication into end Product.
Chipping: The plastics waste is then required to be properly sized so that those may be fed into the extruders for processing and palletizing. The sizing operation depends on the type and shape of the waste plastics. During this process, attention is required to separate any powdery material from the sized / chipped plastics. Segregation: Certain polymeric polymeric materials are compatible compatible with each other at all proportions. For example LDPE and Lldpe are generally compatible to each other at all proportions. The advanced technology of separating / segregating segregating different types of waste plastics plastics involves involves ‘Floatat ‘Floatation ion Process’ Process’.. In this process process the property property of the varying densities of different plastics is made use of for segregating different types of plastics. However in the Indian Context, this separation or segregation process, in many cases, are done by manual process utilizing the availability of cheap and expert labor force. force. In case case the waste is contami contaminate nated d with embedded embedded metal metals, s, prope properr meth method od of sepa separat ratin ing g the the meta metals ls / other other contam contamin inant ants s is required.
Cleaning: The scale of cleaning cleaning depends depends on the type of waste. waste. Whenever Whenever a cleanin cleaning g operation is involved, it is to be ensured that the water or any other cleaning 21 | Q u a s a r P l a s t i c s
material used, should be discharged after ascertaining that the discharge does not contain any objectionable substance. A proper Treatment Device may have to be deployed – like a water treatment plant / effluent treatment plant. For drying, a suitably designed drier is used. Many industries situated outside the metropolises, use open space for natural drying of the cleaned waste. Agglomerating / Colouring In the next operation the sized plastics waste is mixed with colour master batch batch in high-s high-spe peed ed mixers mixers / agglo agglome merat rators ors and and the outpu outputt is ready ready for extrusion into pellets. Extrusion / Palletisation This is the most important part of the process wherein the sized / chipped plastics are plasticized and granulated to make the plastics material material ready for fabrication next. The type and size of the Extruder depend on the type and volume of the plastics waste. Fabrication into end Product Finall Finally y the repr reproce ocess ssed ed plast plastics ics granu granules les are are used used as raw mate materia riall for for producin producing g end products products using using similar similar fabricat fabrication ion machine machines s like Injecti Injection on Molding / Extrusion etc., depending upon specific requirement . Scope of operations Now presently our production capacity is 200kg/day from which in initial stages we are utilizi utilizing ng aroun around d 50% 50% of it. As the the busin business ess expand expands s we will will reach reach to optimum capacity utilization. We are expecting that we will start producing more advance plastics in the fourth year of our operations and accordingly the sales will increase and the facility will have to be expanded. Supply chain In the city there are various small post consumer plastic bottle collectors. To make a continuo continuous us supply of raw material material we will have four suppliers suppliers with us. There will be one permanent supplier which will continuously supply the raw mate materi rial al.. In case case of exce excess ss deman emand d othe otherr supp suppli lier ers s will will be take taken n into into consider consideratio ation. n. The transporta transportation tion cost will be covered covered by supplier supplier only. The finished product will be stored in the warehouse and according to the demand it will be send to city distribution centre. The distribution center will directly sell the finished household plastics as well as to the small shops. Our average average daily demand demand of raw material material is 300kg 300kg and the lead time we will keep lead time of 6hrs. We keep a safety stock of 50 kg. So the reorder point is given by Reorder point= average daily uses x lead time + safety stock 22 | Q u a s a r P l a s t i c s
Reorder point = 300 X .25day + 50 = 125 kg. So at each and every day we will have minimum of 125kg (safety stock+ reorder point) of raw material in our inventory.
This means means that when the raw materia materiall level level reaches reaches to 125kg 125kg we will place the next order. The difference time in which we will place the order and receive the order is the lead time which is 6hrs.
23 | Q u a s a r P l a s t i c s
Process flow chart Gantt chart
24 | Q u a s a r P l a s t i c s
As it is an assembly line the output of one stage is feeded to the input of next stage. The whole whole process process will run in series format. format. That is the reason reason why no parallel parallel process process is mentioned in the gantt chart.
Facility Layout
25 | Q u a s a r P l a s t i c s
Financials 26 | Q u a s a r P l a s t i c s
The startup cost of our business is as follows :
Start-up Requirements Start-up Expenses Legal Stationery Business Cards Initial Mailing Process Funding Office Equipment Total Start-up Expenses
Amount 6,000 500 500 100 400 2,500 10,000
Start-up Assets Cash Required Other Current Assets Long-term Assets Total Assets
1,00,000 0 33,30,000 34,30,000
Total Requirements
34,40,000
Income statement The projected income is as shown below it shows that first year we will end up with loss but from second year we will start making profits .
Particulars
YEAR 1
27 | Q u a s a r P l a s t i c s
YEAR 2 YEAR 3
Year 4
net sales cost of good sales gross margin operating expenses: admin exp. Advertisement Salaries Transportation Maintenance Electricity Telephone Legal exp. Insurance Rent other exp
EBITDA less depreciation EBIT Less interest paid
EBT tax @ 30% 28 | Q u a s a r P l a s t i c s
16200 00 89100 0 72900 0
210600 0 115830 0 947700
273780 0 150579 0 123201 0
3000 3150 3308 6000 7200 8640 19200 0 211200 232320 96000 105600 116160 15000 15750 16538 4800 5040 5292 10000 11000 12100 10000 1000 1000 20000 20000 20000 24000 26400 29040 6000 6600 7260 38680 0 412940 451657 34220 0 534760 780353 30300 0 272700 245430 39200 262060 534923 17555 0 165061 153243 13635 0 96999 381680 0 29100 114504
3285 853 360 1806 069 948 1478 784 412
3473 10368 255552 127776 17364 5557 13310 1000 20000 31944 7986 494330 984082 220887 763195 139926
623269 186981
13635 0
PAT
67899
267176
436288
Balance sheet The projected balance sheet of four years is as follows: Sources of Funds
Year-1
Year-2
Year-3
Year-4
Capital Owner's capital
1930000
1930000
1930000
1930000
Surplus
-136350
-68451
130274
765287
Net worth
1793650
1861549
2060274
2695287
1417302
1324116
1219111
1100789
70500
56722
68066
81680
3281452
3242387
3347451
3877756
3030000
2727000
2454300
2208870
303000
272700
245430
220887
2727000
2454300
2208870
1987983
300000
300000
300000
300000
3027000
2754300
2508870
2287983
Inventory
97200
315900
410670
821340
Bank
10000
40000
100000
100000
147252
132187
117911
232703
0
0
210000
335730
Long Term loan Loan Current Liabilities Creditors Total liabilities Application of fund Plant & M/C Less depreciation Land Actual Fixed Asset Current Assets:
Debtors Advance to suppliers’ Investment Total Assets
100000 3281452
29 | Q u a s a r P l a s t i c s
3242387
3347451
3877756
Break Even Point
VC
Amount in Rs
other exp transportati on telephone wages carriage inward
6000 96000 10000 119250
raw material
total contributio n
BEP units BEP SALES
Admin Interest advertisem ent Insurance Salary
238500 Rent maintenan 119250 ce depreciatio 414000 n Legal 1003000 Total
power
pv ratio
FC
Amount in Rs 3000 175550 6000 20000 192000 24000 15000 303000 10000 748550
617000 0.3808642 1965398.70 3 15 in months
1.21 In years 30 | Q u a s a r P l a s t i c s
135000
As the BEP is 15months it means that at 15 th month we will be in a trade off total expenses and revenue.
Appendix Annuity table: total loan pmt[1-1/(1amt.= i)^n]/i n is number of years i is interest rate
loan amount interest rate annually
pmt =
150000 0 0.12
21521
month 1 2 3 4 5 6 7 8 9 10 11
EMI Interest 2152 1 15000 2152 1 14935 2152 1 14869 2152 1 14802 2152 1 14735 2152 1 14667 2152 1 14599 2152 1 14530 2152 1 14460 2152 1 14389 2152 1 14318
31 | Q u a s a r P l a s t i c s
### ### ### ### 21520. 64
princi ple 6521 6586 6652 6718 6785 6853 6922 6991 7061 7132 7203
balanc Annual e O/S interest 149347 9 148689 4 148024 2 147352 4 146673 8 145988 5 145296 3 144597 2 143891 1 143178 0 142457 7
12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35
2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1
14246
7275
14173
7348
14100
7421
14025
7495
13950
7570
13875
7646
13798
7722
13721
7800
13643
7878
13564
7956
13485
8036
13404
8116
13323
8198
13241
8279
13158
8362
13075
8446
12990
8530
12905
8616
12819
8702
12732
8789
12644
8877
12555
8965
12465
9055
12375
9146
32 | Q u a s a r P l a s t i c s
141730 2 140995 4 140253 3 139503 8 138746 8 137982 2 137209 9 136430 0 135642 2 134846 6 134043 0 133231 3 132411 6 131583 6 130747 4 129902 8 129049 8 128188 2 127318 0 126439 1 125551 5 124654 9 123749 4 122834 8
175550
165061
36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59
2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1
12283
9237
12191
9330
12098
9423
12004
9517
11908
9612
11812
9708
11715
9805
11617
9903
11518
10003
11418
10103
11317
10204
11215
10306
11112
10409
11008
10513
10903
10618
10797
10724
10689
10831
10581
10940
10472
11049
10361
11159
10250
11271
10137
11384
121911 1 120978 2 120035 9 119084 2 118122 9 117152 1 116171 6 115181 2 114181 0 113170 7 112150 4 111119 8 110078 9 109027 7 107965 9 106893 5 105810 3 104716 4 103611 5 102495 5 101368 4 100230 0
10023
11498
990803
9908
11613
9 97 79190
33 | Q u a s a r P l a s t i c s
153243
139926
60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83
2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1
9792
11 1 1729
96 967461
9675
11846
9 95 55615
9556
11964
9 94 43651
9437
12084
9 93 31567
9316
12205
9 91 19362
9194
12327
9 90 07035
9070
12450
8 89 94584
8946
12575
8 88 82010
8820
12701
8 86 69309
8693
12828
8 85 56481
8565
12956
8 84 43526
8435
13085
8 83 30440
8304
13 1 3216
81 817224
8172
13348
8 80 03876
8039
13482
7 79 90394
7904
13617
7 77 76777
7768
13753
7 76 63024
7630
13890
7 74 49134
7491
14029
7 73 35104
7351
14170
7 72 20935
7209
14311
7 70 06624
7066
14454
6 69 92169
6922
14599
6 67 77570
6776
14745
6 66 62825
34 | Q u a s a r P l a s t i c s
124920
108010
84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102 103 104 105 106 107
2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1
6628
14892
647933
6479
15041
6 63 32892
6329
15192
6 61 17700
6177
15344
6 60 02356
6024
15497
5 58 86859
5869
15652
5 57 71207
5712
15809
5 55 55398
5554
15967
5 53 39432
5394
16126
5 52 23305
5233
16288
5 50 07018
5070
16450
4 49 90567
4906
16615
4 47 73952
4740
16781
457171
4572
16949
4 44 40222
4402
17118
4 42 23104
4231
17290
4 40 05814
4058
17462
3 38 88352
3884
17637
3 37 70715
3707
17813
3 35 52901
3529
17992
3 33 34910
3349
18172
3 31 16738
3167
18353
2 29 98385
2984
18537
2 27 79848
2798
18722
2 26 61126
35 | Q u a s a r P l a s t i c s
88957
67486
108 109 110 111 112 113 114 115 116 117 118 119 120
2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1
2611
18909
242216
2422
19098
2 22 23118
2231
19289
2 20 03829
2038
19482
1 18 84346
1843
19677
1 16 64669
1647
19874
1 14 44795
1448
20073
1 12 24722
1247
20273
1 10 04449
1044
20 20476
83973
84 0
20681
63292
63 3
20888
42404
42 4
21097
21308
21 3
21308
0
Bibliography •
Crisil report on plastic industry
36 | Q u a s a r P l a s t i c s
43293
16031
•
•
Plas Plasti ticc wast wastee opti option on for for smal smalll scal scalee reco recour urse se recov recover ery y by Inge Inge Lardinois Small scale recycling of plastic by- Jon Vogler
37 | Q u a s a r P l a s t i c s
