Business Plan

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Business Plan

  1. 1. 1
  2. 2. INTRODUCTION India is a nation on move. Its liberalized and open economic policies have shown result. New avenues have opened up for new business activity. There is aroma of all round profession in the air. In this progressive economic scenario, one sector that has emerged as the most happening sector is the small-scale sector. Therefore, the Govt. of India is providing various help for establishment and its growth. It is proving with technical, financial & other guidance also. The main objective of selecting this product is that there is a large demand for the candles in every occasions & festivals as India is called the country of festivals. AIMS & OBJECTIVES 2
  3. 3. Business objective are very imp in an enterprise. It refers to the purpose or goal for which the organization is performing. 1. Consumer Satisfaction: Consumer here refers to the customer to whom this products will be supplied for future processing and making ready for final consumption. The primary objective of OM industries are to satisfy its customers and fulfilling their expectations. 2. Profit earning: The second objective is to earn profit through satisfying the customer as business cannot survive without earning profit. 3. Performing Social Responsibilities: Performing the social responsibilities of business enterprise price is also one of the basic moral responsibilities. Social responsibility will be fulfilled by giving employment opportunities, providing good quality product at reasonable rate. VISSION OF THE COMPANY 3
  4. 4. "To be India's NO 1 Company in Candle deparment Industry Dedicated to Quality and Consistent Performance" MISSION OF THE COMAPANY. Consistently make good Products at the friendliest Prices. Constantly Grow in Volume and Value through New Ideas And by Imbibing the World's Best Technologies, Continuing to remain relevant to our customers in India and the World as a Brand that Stands for our Quality and More Value for Money than any others.. PROJECT AT GLANCE 4
  5. 5. 1. Name of the Company: AV Industries 2. Location of the unit: “AV Industries” Metoda GIDC, Plot No. 1881 Rajkot. 3 Brand Name: ‘INDIGO’ 4 Form of Organization: Partnership firm 5. Name of the Partners: Twinkal Sureja Ankit Sureja 6. Name of the Product: Candles 7. Size of unit: Small – scale 8. Cost of Project: Rs.2778700 /- 9. Sources of Finance: Ownership Capital 10. Investment in Working Capital: Rs.674400/- 11. Investment in Fixed Capital: Rs.2720000/- PROMOTERS BACKGROUND 5
  6. 6. Partner 1 Name: Twinkal Sureja Address: 40, Jankalyan society, “Samudragupt”, Road no.1, Rajkot – 360001 Age: 25yrs. Qualification: M.B.A Experience: nil Contribution: 25% Responsibility: Production & Personnel Department 6
  7. 7. Partner 2 Name: Ankit Sureja Address: 40, Jankalyan society, “Samudragupt”, Road no. 1 Rajkot – 360001 Age: 28 yrs. Qualification: Businessman. Experience: 4yrs Contribution: 75% Responsibility: Marketing & Finance Department. ORGANIZATION STRUCTURE 7
  8. 8. Chairman Production Personnel Marketing Finance Worker Manager Salesman Accountant 8
  9. 9. JUSTIFICATION OF LOCATION Best location is one, which is followed by availabilities of infrastructure facilities with Raw Materials, labour, transportation, Govt. facilities, 9
  10. 10. if available & marketing etc. All these factors easily available at cheaper cost best suits the factory site. These factors must be taken into due consideration before deciding location of the unit so that any difficulties might not rise-up in future. (a) Raw Material – The first & foremost factor that affects the factory location is availability of Raw Materials. Raw Material is of prime importance for the smooth functioning of any production unit. In this unit 60% of the total cost is material cost. The wax & thread rolls are easily available in Metoda so this site has been selected. (b) Supply of Labour – Labour supply must also be cheap & readily available in ample amount so that the work does not break down due to labour inadequacy. Making candles is 99% manual work and therefore the need for semi-skilled & unskilled workers arises. Here the labour is cheaply available. (c) Transport Facilities – A good transportation facility is very well required so that raw materials reach in time to the unit & finished goods to the market – be it to the wholesalers or to the retailers. A good deal of proper & cheap transport facility is needed. Metoda has railways & roadways facility, which help to cater all markets. At present the target market for my product is Gujarat & Maharashtra whereby Roadways & Railways facility is easily available from Metoda. (d) Infrastructure Facility – For smooth functioning of any unit even the infrastructure facilities must be properly available. Telephone, Fax, Banking, Insurance, Postal, Water, 10
  11. 11. Fuel, etc must be available at cheaper & regular interval. These are all available in Metoda. PRODUCT DETAILS 11
  12. 12. The brand name under which “AV” industry is going to manufacture the candles is “INDIGO”. Indigo candles will be available in red light brown & yellow colors. These candles can be used during marriages, festivals, to decorate the hotels and restaurants as the wick, which will be used, is of good quality as the making of candles is related to quality consciousness rather than quantity. Later on, perfumed and aromatherapy candles will also be manufactured. 12
  13. 13. MARKET POTENTIAL Market Potential is the scope of your product occupying space in existing market. Your customers, your market share, your contribution in the market 13
  14. 14. already existing, share in whole industry – all these aspects are covered under the head Market Potential. These days the artificial lighting concept as vanished and now people prefer natural lightening during festivals and occasions, especially religious and marriages. Therefore demand for candles will increase. As all the classes of people can afford the candles the sales will definitely increase, as the new concept is very catchy. DISTRIBUTION CHANNEL 14
  15. 15. In the field of marketing, channels of distribution indicates the routes of pathway through which goods and services flow or move from producers to consumers. The route of channels of distribution includes the manufacturer and the consumer as well as all intermediaries. These components are linked in the channel system by one or more of the marketing flows, such as transfer of title of ownership, physical distribution of merchandise, transfer of title of ownership, physical distribution of merchandise, transmission of marketing information and the flow of money in the form of payment of prices and other dues. 15
  16. 16. The channel of Candle distribution of is as follows: Manufacture Agents Distributors Dealers & Retailers Customers 16
  17. 17. RAW MATERIALS The raw materials are the base for the products without which the final product is not possible. The raw materials used in making candles are:- • Paraffin Wax-Wax is very essential for candle making. This can be purchased at a candle making supply store and comes in the form of granulated wax. Ensure that you buy it from quality suppliers, as it can have a bearing on the final product. • Color Dyes and Stearic acid - Use stearic acid to harden the candle. It also helps the candles release from their molds by causing the wax to shrink as it cools. Apply your creative ideas and use different or blended colors to your candles. You can get color dyes from the candle making supply stores and the use of these dyes depends on the size of your candle. You can find these dyes in block, chips and liquid form. Color dyes are highly concentrated and must be used sparingly. • Moulds- Shop around to find out different designs of candle making moulds. Moulds come in all shapes and sizes and you can put them to best use by your creative efforts. You are limited only by your imagination. 17
  18. 18. • Ladle and Spoons - Use handy metal spoons or ladle to stir the wax and pour it out. • Wick - There is a wide range of wick types and sizes available in the market. Choose a wick that is suitable for the size and shape of candle you are making. The most common candle-making wick is braided cotton that has been treated chemically to improve the quality of burning. If the wick is too small, the candle will not burn well whereas a large wick will cause a smoky flame 18
  19. 19. MANUFACTURING PROCESS Candle Making Paraffin wax melts at 130 degrees. While the wax melts, measure the size of wick required for your mold. Tie the wick to the center of the pencil or dowel. Suspend the wick in the center of the mold with the help of small weight on the other end. Add stearic acid and color in another pot and allow them to dissolve. Once the temperature reaches 190 degrees, combine the mixture into the pot with the paraffin wax. Stir and blend them together completely while maintaining the temperature at 190 degrees. Finally pour the contents into the mold and let the mixture cool. As the wax cools, it will contract and a small well will form around the wick. Touch the candle; if it is cold it is time to remove it from the mold. Safety is critical in candle making especially when it comes to wax melting. Wax melting is one of the dangerous aspects of candle making. Keep attending to your pans once you heat wax. The characteristics of a good candle are absence of bubbles or lines and long and even burning of the flame. The color must be well distributed and the fragrance it emits must be pleasant without being overpowering. 19
  20. 20. Production Capacity Schedule Sr. no. Particulars Installed Capacity Utilized Capacity a. Capacity in % 100% 60% b. Daily Production 1000 Units 600 Units c. No. of working days in a month 25 days 25 days d. Monthly Production (b * c) 25000 units 15000 units e. No. of working days in a year 300 days 300 days f. Yearly Production (b * e) 300000 units 180000 units 20
  21. 21. Staff & Labour details Factory Staff: Semi-Skilled workers 3 Unskilled workers 2 Managers: 1 Salesman: 1 Delivery boy: 2 Watchman: 1 Peon: 1 10 21
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  23. 23. FINANCIAL PLANNING Finance is an important function of business. The application of planning to the function is financial planning. It involves the policies, determination of objectives and procedure relating to the finance function. Financial planning is an important function of a financial manager whether a business is big or small this function has to be performed. It is necessary to do financial planning for an existing as well as new business. A financial plan is a statement estimating the amount of capital and determining its compensation and another important aspect of financial plan is to determine the pattern of financing. 0 Before raising finance it is essential to make estimates for long term as well as short tern financial needs. 0 Long term financing is generally needed for fixed capital requirement i.e. purchase of fixed assets. Short term finance is generally needed for working capital requirement i.e. marketable securities, debtors, etc. In Candle, the financial planning is done for long tern or short term financial requirements. Financial planning is necessary to reduce the cost of finance and all the long term and short term finances is raised through 23
  24. 24. family funds and overdrafts. The requirement of all the long term is also fulfilled through bank as and when needed Sales Forecast Year Capacity (%) Production(Units)/ annum Sales(Units)/ annum Rate (S.P) Amount (Rs.) 1 60 180000 150000 9.5 1425000 2 70 210000 210000 10 2100000 3 80 240000 260000 10 2600000 4 90 270000 265000 10.5 2782500 5 100 300000 295000 11 3245000 Total Fixed Assets Particulars Area Rate (Rs.) Amount Land (sq. mt.) 1000 810 810000 810000 Building (sq. ft.) 5000 300 1500000 1500000 Equipments Quantity Aluminum mould 8 1500 12000 Designer block 4 100 400 Stove 3 500 1500 Enamel vessels 8 50 400 14300 Other Assets Furniture 50000 50000 Delivery Van 1 250000 250000 Computer 1 35000 35000 335000 Other equipments 700 Preliminary Expenses 60000 60000 60000 Total 2720000 24
  25. 25. Interest on Own Capital Details Amount Rate (%) Interest Rs. (p.a.) Twinkal Sureja Ankit Sureja 694675 2084025 8 8 55578 166722 Total Interest On Capital: 222300 Depreciation @ SLM Particulars Rate (%) Amount Building 10 150000 Equipments 15 2250 Computer 40 14000 Furniture 15 7500 Delivery Van 15 37500 Total Depreciation 211250 25
  26. 26. Staff & Labour Salary Particulars No. of Persons Rate Amount/ month Amount Manager 1 5500 5500 66000 Salesman 1 1000 1000 12000 Delivery boy 2 500 1000 12000 Peon 1 500 500 6000 Watchman 1 500 500 6000 Semi-skilled labour 3 2000 6000 72000 Unskilled labour 2 1000 2000 24000 Total Salary: 16500 198000 BREAK EVEN ANALYSIS 26
  27. 27. Break even point is the point of sale at which company makes neither profit nor loss. The marginal costing technique is based on the idea that difference of sales and variable cost of sales provides for a fund, which is referred to as contribution. Contribution provides for fixed cost and profit. At break-even point, the contribution is just enough to provide for fixed cost. If actual sales level is above break-even point, the company will make profit. If actual sales level is below break-even point, the company will incur loss. When cost-volume-profit relationship is presented graphically, the point, at which total cost line and total sales line intersect each other will be the break-even point. Break-even point is that point of achieving; where total revenue & total expenses are equal. It is the point of zero profit. If the sales exceed BEP the business will earn profit & if it decreases from BEP the business will incur loss. Thus, BEP can be defined as the minimum level of production & sales & company must attain in order to be economically viable BREAK EVEN ANALYSIS 27
  28. 28. Variable Cost Particulars Amount (Rs.) Raw Materials 360000 Salary (labourers) 96000 Other expenses (40%) 69840 Utilities (60%) 57600 Total Variable Cost: 560160 Fixed Cost Particulars Amount (Rs.) Depreciation 211250 Interest on Capital 222300 Salary (wages) 102000 Other expenses (60%) 69840 Preliminary Expenses 20000 Utilities (40%) 38400 Total Fixed Cost: 663790 28
  29. 29. Fixed cost per unit = 663790 180000 = Rs. 3.68/- Variable cost per unit = 560160 180000 = Rs. 3.112/- Total cost per unit = 3.96 + 3.11 = Rs.6.80/- 29
  30. 30. RATIO ANALYSIS A comparative study of the relationship, between various items of financial statements, expressed as ratios, reveals the profitability, liquidity, solvency as well as the overall financial position of the enterprises. Ratio analysis helps to analyze and understand the financial health and trend of a business, its past performance makes it possible to have forecast about future state of the business. Inter-firm comparison and intra- firm comparison becomes easier through the analysis. Past performance and future projections could be reviewed through ratio analysis easily. The ratio analysis provides useful data to the management, which would help them in taking important policy decisions. Diverse groups of people make use of ratios, to determine a particular aspect of the financial position of the company, in which they are interested. 30
  31. 31. 1. Contribution Per Unit = Sales Price - Variable Cost per unit per unit = 9.5 – 3.11 = Rs.6.39/- 2. BEP (in Units) = Fixed Cost _ Contribution per unit = 663790 6.39 = 103880 units. 3. BEP (in Rs.) = BEP * Sales Price per unit = 103880*9.5 = Rs. 986860/- 4. BEP (in %) = Fixed Cost _ * Utilized Capacity Contribution = 663790 *60 864840 = 46.05% 5. P/V Ratio = Contribution * 100 Sales = 864840 * 100 1425000 = 60.69% 31
  32. 32. 6. Gross Profit Ratio = Gross Profit Net Sales = 873000 1425000 – 203700 = 0.72% 7. Net Profit Ratio = Net Profit *100 Sales = 322870 * 100 1425000 = 22.65% 32
  33. 33. PROFITABILITY ANALYSIS “Profit planning is the planning of future operations to attain maximum profit or to maintain a specific level of profit.” Profit is not merely a result of enough financial investment but it is a result of collective efforts of management, their decision capacity, proper planning of production and marketing and proper use of professional skills. Profit means excess of revenue after deducting all expenditures, inclusive of all cost. 33
  34. 34. Profitability & Ratio Analysis Particulars Amount (Rs.) Sales 1425000 Less: Variable Expenses Raw Materials 360000 Salary (labourers) 96000 Other Expenses (40%) 46560 Utilities (60%) 57600 560160 Contribution 864840 Less: Fixed Expenses Preliminary Expenses 20000 Depreciation 211250 Salary (Wages) 102000 Other Expenses (60%) 69840 Utilities (40%) 38400 441490 EBIT 423350 Less: Interest on Capital 222300 EBT 201050 Less: Tax 70370 EAT 130680 34
  35. 35. 8. Return on investment = EBIT * 100 Total project fund = 423350 * 100 2778700 = 15.23% Projected Trading Account Particulars Amt (Rs.) Particulars Amt (Rs.) To Purchase A/c By Sales A/c 1425000 Wax 270000 Cotton thread 18000 Color (red) 24000 (Brown) 24000 (Yellow) 24000 360000 To Expenses A/c Direct wages 96000 Utilities 96000 192000 Gross Profit 873000 1425000 1425000 Projected Profit and Loss Account Particulars Amt (Rs.) Particulars Amt (Rs.) To Salary A/c By Gross Profit 873000 35
  36. 36. Managers 66000 Salesman 12000 Watchman 6000 Delivery boy 12000 Peon 6000 102000 To Depreciation A/c: Building 15000 0 Furniture 7500 Delivery van 37500 Computer 14000 Equipments 2250 211250 To Indirect expenses: Postage stationery 2400 Telephone Exps 24000 Transport 14400 Insurance Exp. 3600 Selling 6000 Packing 60000 Contingency 3600 Miscellaneous Exps 2400 116400 To Income Tax A/c 110480 NET PROFIT 322870 873000 873000 36
  37. 37. Projected Balance Sheet Liabilities Amt (Rs.) Assets Amt (Rs.) Capital Accounts: FIXED ASSETS: Twinkal sureja 694675 Land 810000 Ankit sureja 208402 5 Secured Loans: - Building 1500000 Less: Depreciation 150000 1350000 Unsecured Loans: - Other equipments 15000 Accounts Payable: - Less: Depreciation 2250 12750 Provisions: - Delivery Van: 250000 Less: Depreciation 37500 212500 Net Profit: 322870 Furniture 50000 Less: Depreciation 7500 42500 Computer 35000 Less: Depreciation 14000 21000 Accounts Receivables: Debtors 200000 Bank Balance: ICICI Bank A/c 200000 Cash - in - hand: Cash Balance 212820 Preliminary Exps: 40000 310157 0 3101570 37
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  40. 40. FUTURE PLANS Candle has specified future plans to follow. It has fixed goals to be achieved in future. Certain future plans of this unit are as under. 0 Company wants to increase its sales and profit and be a large scale industry. 0 Company wants to wider its network in whole country. For it they are deciding to establish branches in most of the state in India. 0 To increase the production capacity and thereby employing more and more number of workers. 0 The risk of failure of the project is that initially the required amount of sales will not be achievable & will result in loss. 0 Initially productive would be low but cost of production may be higher. 0 The unit will operate in highly competitive market where already other such products have gained important position. 40
  41. 41. 0 It may take time to beat the competitor’s products. Thus, this company has bright future vision and it wants to extend its coverage. 41
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  43. 43. COMPETITORS Looking for the government for globalization in fast industrial development liberalization and relaxation policy of Govt. has given very much boosting up to the growth of industries small & big produces in India. But now-a-days market competition has increased in all fields. Particularly, for this product at small business concern the owner should not fight out with the competition because there are no more than 15 small & tiny industries of Candle products in Rajkot district. We can see that there is keen competition for such small products among big industries. But small scale industries are trying to develop their market all over India. 43
  44. 44. Risk Factors 44
  45. 45. Every new business requires to determine its risk factors involved in the business. As the product is new the main risk is that whether market will readily accept the product or not. It will prove success if it properly marketed. Following are some of the risk factors the new business may face:- 1. The unit will operate in competitive market where other units have already achieved a good name in the market. 2. It may take time to beat the competitors market. 45
  46. 46. CONCLUSION 46
  47. 47. In the product project report on Candle I have discussed all financial data relevant information. The market of Candle is expanding & demand for the product is increasing day by day. The return in this business is also satisfactory. At last it can be said that future of this product is very bright. With the expectation of high profitability & good completing of high is assumed That it would be the perfect product to be manufactured in today’s environment. 47
  48. 48. PREPARED BY TWINKAL SUREJA MBA-III Roll no:- 91 COLLEGE N.R.V.I.B.M.S. GUIDED BY DR.RAJESH PATEL 48
  49. 49. INDEX Sr. No. Particular Page No. 1 Introduction 2 Aims & Objective 3 Company Profile 4 Technical Aspect 5 Marketing Aspect 6 Financial Aspect 7 Future Aspect 8 Competitiors 9 Risk Factors 10 Conclusion 49

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