Plastic recycling business plan Report

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Plastic recycling business plan Report

  1. 1. Plastic Recycling Business PlanHind PlasticsHigh Quality Delievered Group 22 ANKUR VERMA BALVINDER PRATEEK DAHIYA SHIVAM RAJAT
  2. 2. Executive summaryCOMPANY OVERVIEW .................................................................................................... 6 Mission Statement ..................................................................................................... 6Markets and Products .................................................................................................... 7 Objectives................................................................................................................... 7 Key to success: ........................................................................................................... 7Product and services ...................................................................................................... 8 Market comparison .................................................................................................... 8Possible obstacles .......................................................................................................... 9Industry and marketplace analysis ................................................................................ 9 Industry analysis ........................................................................................................ 9STRUCTURE OF THE PLASTICS INDUSTRY .................................................................... 11 Raw Material Producers........................................................................................... 11 Compounders........................................................................................................... 11 Stockists ................................................................................................................... 11 Specialist Manufacturers or Molders ...................................................................... 11 Other Manufacturers ............................................................................................... 12 Fabricators ............................................................................................................... 12Marketplace analysis ................................................................................................... 13Customer analysis ........................................................................................................ 13Competitor analysis ..................................................................................................... 13Marketing strategy....................................................................................................... 15Product/ service strategy ............................................................................................. 15Pricing strategy ............................................................................................................ 152|
  3. 3. Distribution strategy .................................................................................................... 16Advertising & promotion strategy ............................................................................... 16Sales strategy ............................................................................................................... 16Marketing & sales forecast .......................................................................................... 17Development................................................................................................................ 18 Development strategy ............................................................................................. 18Management ................................................................................................................ 19 Job description ......................................................................................................... 19Operations ................................................................................................................... 20 Stages of Recycling and Production ......................................................................... 21 Chipping ................................................................................................................... 21 Segregation .............................................................................................................. 21 Cleaning.................................................................................................................... 21 Agglomerating / Colouring ....................................................................................... 22 Extrusion / Palletisation ........................................................................................... 22 Fabrication into end Product ................................................................................... 22 Scope of operations ................................................................................................. 22 Supply chain ............................................................................................................. 22 Gantt chart .............................................................................................................. 25 FACILITY LAYOUT ............................................................................................... 25Financials.................................................................................................................... 26Income statement ........................................................................................................ 27Balance sheet ............................................................................................................ 28Break Even Point .......................................................................................................... 303|
  4. 4. Appendix ...................................................................................................................... 31 Annuity table:........................................................................................................... 31Bibliography ................................................................................................................ 364|
  5. 5. EXECUTIVE SUMMARYPlastic is the basic need of our day-to-day life. During recent years the plasticindustry has grown with a substantial growth rate. This growth is driven by threesectors viz. packaging, infrastructure and agriculture. There are the various veritiesof plastics out of which PVC(Polyvinyl chloride) and PET(Polyethylene Terephthylene)plastics have their considerable contribution. PET plastics are generally used in themanufacturing of beverage bottles for the packaging and PVC plastic is used in theproduction of household plastic materials.The growing utilization of plastics inindustrial and consumer applications and surrounding solid waste recycling, has ledto an increased demand for recycled plastic resins and products.We the Hind plastics provide a wide range of plastic solutions for household and rawmaterial for packaging of various companies. As a part of our ongoing efforts toexploit this opportunity we will recycle the plastics and then produce kitchenwareitems and other related plastic material.We will also sell the recycled plastics to thecompanies in the plastic business. We will have a recycling plant along with theproduction unit.The raw material will be procured from the waste collectors. Theraw material will be post-consumed beverage bottles and other soft plastic materialsOur main focus is our industrial customer whom we will sell PET bottles and PETflakes. It will contribute more than 60% of our sales. We will also focus on thehousehold plastic business, which is the part of our portfolio. The initial set up costwill be Rs 34, 40,000.Hind plastics will be a solutionproprietorship business run by the promoters.Since plastic material does not carry any brand name so it will give us an additionbenefit in long term to establish our brand name. To exploit the market we will usepenetration pricing as our marketing strategy and utilize our stringent distributionnetwork 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 wewill be able to produce plastic carry bags and raw material for production for plasticchairs and tables and other fiber based products.5|
  6. 6. COMPANY OVERVIEWHind Plastics provide a wide range of plastic solutions for households and rawmaterial for packaging to the various companies. Allahabadis the place where thefacility will be established and other operation will commence.We will collect the plastic garbage like consumer beverage bottles, plastic bags fromvarious garbage stores and then our recycle unit will process it which eventually beused for the production of finished goods.The plastic garbage we are getting as raw material has two components one isPVC(Polyvinyl chloride) and other is PET (Polyethylene Terephthylene). Firstly thewhole garbage is melted and then PVC and PET are separated from each other byfroth flotation technique.We will create a plant (actual facilities to be shared with the recycling unit) tomanufacture extruded plastic flakes (purified plastic). The extruded plastic is thenmolded in the various products.We will produce two types of replay plastics PVC (Polyvinyl chloride) PET (Polyethyleneterephthylene)Mission Statement Strive to provide the excellent plastic solution to the customers at competitive prices. Continually expand our range of products. Poised to service both large and small customers.6|
  7. 7. MARKETS AND PRODUCTSThe plastic products usually do not carry a brand name so intruding in the businesslike plastic will not be too hard with low price strategy. The population of Allahabadand the cities around it like Varanasi, Gorakhpur,Johnpur is around 3Crores and thisarea basically comprises of low to middle income group families so they focus onplastic products rather than fiber since it is a cheaper. Hence it is huge market toexploit.From Allahabad city 500 tons of solid waste is produced from that 15tons of plasticbags and around 7 tons of plastic bottles is generated per day. So the supply of rawmaterial will be continuous.Apart from this we will sell raw material for packaging to the various smallcompanies in this area. Around 30 small and medium scale companies are working inthis region. So a large amount of industrial customer is also available.There are two folds of products that we are providing one are industrial and other ishousehold.Objectives Develop a business that survives on its own cash. Create a company that 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 Supply- Contract for supply of post-consumer bottles and post- industrial 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 competitors7|
  8. 8. PRODUCT AND SERVICESWe will provide a wide range of plastic products for households and raw material forpackaging.The recycled plastic is processed to Polyethylene Terephthalate (PET). PETis a thermoplastic polymer viscous of polyester family. The biggest property of thiscompound is it transparent. This is the reason why it is used for packaging. Apartfrom this PET have good strength, ductility, stiffness and hardness. After therecycling process completed an extruded plastic is generated. Plastics extrusion is ahigh volume manufacturing process in which raw plastic material is melted andformed into a continuous profile.The products we are producing are Cleaned and recycled plastic flakes of PET and bottles, recovered from post- consumer beverage bottles. (This PET will work as raw material for packaging to various firms, not for the end user) Household finished plastic goods. We willmanufacture plastic tubes of various diameters, plastic kitchenware.(For the end user) PET flake will be sold to thermo formers (those who mold plastic sheets into usable products) primarily to be used to produce high-visibility packaging. And also to the beverage companies for packaging.Recycled plastic is widely used in mainstream construction products such as dampproof membrane, drainage pipes, ducting and flooring. Bins, street signs andplanters are frequently made from plastic. They are cost competitive and resistant todamage. Local authorities and schools are able to demonstrate recycling in action byspecifying recycled productsHigh strength PET is used in the clothing, furnishings,tyre cord and technical textiles. Apart from PET the household plastic will be directlysold to the end customers. In day-to-day life plastic items like water bottles, shopcase scrubber etc. is frequently used.So there is a big demand of these in localmarket.Market comparisonWhile quality and delivery are important factors to our potential clients, price ismost often the determining factor in a buying decision. Good-quality packagingproducts manufactured from recycled (less expensive) resins, as close as practical tothe end customers operations, will be most competitive and achieve a significantmarket share. These factors have helped to determine the business parameters ofReplay Plastics.8|
  9. 9. POSSIBLE OBSTACLESThe product is completed and ready for the market launch. The possible obstaclesare:Unavailable or scarce raw material stock for productionReplay is confident that it has secured good availability of low cost post-consumerPET bottles (feed stock) derived from post-consumer beverage bottles. It may bepossible that we would not get desired raw material.Company may not meet environmental standards This environmentally-favorable venture provides for the development of technically feasible and economically viable solutions to PET plastic beverage bottle recycling, as well as environmentally aware in-house re-use practices which filter and return nearly all of the process water to the production lines INDUSTRY AND MARKETPLACE ANALYSISIndustry analysisPlastic recycling is an industry in itself in India. According to the Crisil research 7360companies are working in this industry with a turnover of Rs 9200 Crore providesemployment to 3.5 million people. In India, per capita plastic consumption is one ofthe lowest in the world. The per capita consumption is just one fifth of worldaverage that is 5kg. The domestic demand of plastic has grown by 9% and reached to4.5MMT in year 2005.The GDP has grown during this period at 6.3% and plasticindustry 1.3 times of GDP. According to the Crisil report the demand of plastic by2012 will be around 12MMT. The plastic consumption in India is booming. Demandfor commodity plastics is growing at the rate of 15% per year.. India holds immensepotential for the use of plastic in the infrastructure and agriculture. In case ofpackaging industry we are using more plastic than the developed countries. Thegrowth is driven in three major sectors – infrastructure that is 13%% of the total,packaging is 15% of the total and 10% for plastic consumer durables. It is projectedthat the plastic waste generation will reach the will reach the level of 1.6 million tonsannually. India produces 5600 tons of plastic waste per day.9|
  10. 10. Region wise and polymer wise turnover of recycling industry in Rs.CroreRegion PVC PETWest 156 383East 75 86North 338 158South 111 139Total 680 766Each region is specialized in one type of plastic viz south: PET; north: PVC;Plastic India Foundation estimates the current plastic recycling rate at 60%. Oneestimate is that about 20,000 microenterprises are engaged in reprocessing andrecovery of plastic waste in addition to 180,000 of various sorting and washing units,60% of which are unregistered. Delhi alone has estimated 53,400 units and Delhi andBombay together process over 50% of Indias waste plastics.
  11. 11. STRUCTURE OF THE PLASTICS INDUSTRYRaw Material ProducersThese are chemical and petroleum companies who produce "virgin" plastic(sometimes called resin or polymer) in huge quantities. The main influence theyhaveon the recycler is to fix prices and availability of virgin materials. Virginmaterialis delivered in powder or pellet form, in plastic or paper sacks of around 20 kilosweight, in large cardboard drums that hold many times that quantity or even by roadtanker.CompoundersThese specialist companies, usually small, stock various polymers and provide themanufacturersof plastic goods with technical advice and the most suitable materialsor mixtures for eachindividual need. The compounder is often the best marketforthe recycler because he possesses superior technical knowledge and has a largevolumethroughput of virgin material, in which small percentages of reclaim willreduce cost withoutseriously affecting the quality required by the molder.StockistsThese warehouses stock polymers and compounds but neither manufacturethemselves, norprovide a compounding service. They may be agents or subsidiariesof the producer companiesor departments of companies concerned with the supplyof other materials such as chemical,rubber or paper. They may be willing to stockreclaim alongside virgin materials, especially ifthese are in short supply.Specialist Manufacturers or MoldersThese buy their raw materials from compounders. If they do their owncompounding, or if thematerial is used as produced and does not needcompounding, they may buy direct from stockistsor producers.They are specialists inplastics and do not performother types of manufacturing. They maybe an attractivemarket to the recycler because they operate at high volume, but rarely have asmuchflexibility to vary product quality as molders who know, accurately, the final marketforthe product.11 |
  12. 12. Other ManufacturersMany companies are not plastics specialists but employ molding operations in themanufactureof some other product. For example shoe and boot makers use plasticsextensively and may carryout the various plastics molding operations in the sameproduction sequence as the work inleather, canvas, rubber etc. Many manufacturersuse plastic packaging machinery at the end of aproduction operation.FabricatorsThese firms cut and join sheet, rod or extrusion to manufacture a variety ofproducts. They haveno opportunity to use reclaim. Machinery and Tool Makers andother sector of the plasticsindustry justifies mention although not customers forreclaim. The makers and suppliers ofplastics manufacturing machinery, tools, mouldsand dies are well informed about who doeswhat, who makes what and who useswhat within the local plastics industry. They may advisewho is likely to buy material.12 |
  13. 13. MARKETPLACE ANALYSISVarious overseas players wish to explore the Indian market and invest inopportunities thrown open by the country, projected to be world number 3 inplastics consumption by 2010.As shown above the north region of India is specializedin recycling of PVC. So there is a great scope of PET recycling. Apart from this theother A huge market with full of opportunity. Absence of standard product and service Well connected with other rural areas Having good transportation facilityCUSTOMER ANALYSISSince we are new player in the market so we need to make some stringent strategiesto penetrate market and grab customers. The customers of the plastic industry arescattered due to lack well known brand names. So our first priority will be toaccumulate the defused customers.The direct customers are the customers whom we are selling our product regularly.So for us households whom we are selling plastic goods and companies who aregetting raw materials for packaging are direct customers(PET bottles). So only inAllahabad around 20,000 families are our direct prospective customers and in termsof business-to-business market around 20 small and medium scale companies areour direct customersApart from them there are few small companies that are giving compoundingservices. They use to collect various types of plastics flakes along with the virginplastic and suggest customer (companies) in choosing appropriate plastic. An Ashaenterprise is one compounder whom we will sell our plastics.COMPETITOR ANALYSISIn plastic manufacturing market there is no specific brand name exists so smallcompanies that are in this business flood the market. So they are our biggest directcompetitors.As we are also not alone as a supplier of PET to the companies as raw materials thereare many companies in this region that are supplying PET. Indira Plastics is one of13 |
  14. 14. 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 ofUP. The direct threat we will also have is with the companies operating in Kanpur.But as the distance between Kanpur and Allahabad is 200km as well as the road isnot in good condition, so it will not affect much.14 |
  15. 15. MARKETING STRATEGYThe Company has chosen to focus on the production of plastic packaging materialsfrom recycled post-consumer beverage bottles. We have identified a significantavailable market in the eastern part of UP. All of our initial marketing strategy will beto secure contracts in that segment, and after reaching full planned capacity, look togrow in concert with that segment and related markets. We see little need atpresent for further market research and development, and will focus on continuallyupdating our production technology in an effort to remain in the forefront of ourchosen marketplace.PRODUCT/ SERVICE STRATEGYThe packaging companies require high quality and highly transparent PET bottles.The companies that are producing mineral water will reject PET bottles with evensmall impurity/ opaqueness. So we the Hind Plastics provide high-end PET flakes forthe perfect packaging.Hind Plastics will apply recycling and extrusion technology managed by decades ofindustry specific expertise to create a competitive advantage for its clients. Theseprocesses will produce clean, cost-efficient, recycled raw material for manufacturersof thermoform, laminate and other high value-added products, and high strengthpackaging strapping for shippers of large products and pallets, thereby reducingcosts and creating a clear pricing edge among their competitors.Plastic bags and plastic sheets are now in high demand. And this demand is driven bycontinuously increasing promotional activities.PRICING STRATEGYAs plastic products do not carry any brand name so only pricing and distributionstrategies will works to achieve competitive edge. The pricing strategy we will use ispenetration pricing. The price of all household plastic goods we will sell will be lowerthan the market price. Also for the PET flakes and bottles the price will be lower thanthe competitors. A lower price enables me to get contracts of PET bottles and sheetsfrom various companies.In case of kitchenware and other household products we will provide combo offersand discounts which a common customer expects.15 |
  16. 16. DISTRIBUTION STRATEGYAs I described before that firstly we will target Allahabad city and villages close to it.We will have a distribution center in the Allahabad city that continuously maintainsthe supply of goods. So the household plastics will be sold through small localgrocery shops from which the customers can get them easily. Apart from this we willhire street hawkers who will roam around the city and sell the goods door to door.PET bottles will be stored in warehouse that is close to the facility itself. The salespeople will directly contact to the companies that require these bottles for packagingand look for the contracts. In city as stated above that we will have a distributioncenter, from that center we will distribute to whole sellers.ADVERTISING & PROMOTION STRATEGYAs I described we are in both B2C and B2B so for this we will use two differentpromotional strategies. For B2C business we will use flyers that will have full detail ofour product range, price, combo offers and discounts. These flyers will circulatethrough the newspapers across whole city. For B2B business we will promotethrough online social media and we will also develop our website through whichenable us to widely spread our contact among various companies. The site will havefull details of product that are available for companies as well as end user.SALES STRATEGYThe strategy of sales effort will be to convert potential and first time customers intolong term customers. Our sales strategy is totally based upon the distributionchannel and the pricing strategies. We will have a distribution centre in the city thatwill take care of sales of household and also supply products to the wholesalers. Wewill also give the industrial customers a facility to order the products through ourwebsite which will help them in reducing the delivery time.Tomarket the products, the Company will use a number of sales agents/brokers.They have a customer base of their own, having developed successful relationshipswith their client over the years. Their customer base is currently demanding productso they can expand upon their current base. Of course, they will expand that to newcustomers when product is available.If the Company grows faster than its prime customer base, additional capacity maybe developed. We will identify additional prospective customers who can beattracted for our products.16 |
  17. 17. MARKETING & SALES FORECASTThe first month prior to the opening will be used to get the new office in order, setup appointment and begin marketing activities. In the first month we will focus onthe generating public visibility. The sales forecast is based on the assumption that wewill sell all of the highest volume PET bottles that we can produce. This flake will besold to other manufacturing companies.Recycling industry is growing with 15-20%each year. So we can assume that we will grow with at least 20%. There is acontinuing strong demand for flake and extruded products made from recycled PET. Sales forecast Year 1 Year 2 Year 3 Year 4 Annual sales 1620000 2106000 2737800 3559140 Monthly sales 135000 175500 228150 296595 PET Sales 94500 122850 159705 207617 Household items 40500 52650 68445 88978.517 |
  18. 18. DEVELOPMENTThe development of Hind plastics required accomplishing a series of action andformalities. Since we are new in the market we kept our production is low initially, asdemand will increase the production will be enhanced respectively. Now we arerecycling and producing only two types of plastics i.e. PVC and PET, as we grow wewill produce a wide the range of plastics and its finished product. . The developmentprocess involves following steps: Legal formalities Office/business setup Future offerings and expansion planDevelopment strategyIn future we are looking for the production of a variety of plastic. These plastics willbe LDPE (Low density polyethylene) HDPE (High density polyethylene)LDPE plastic is used in the production carry bags and other plastic sheets as well ascling wrap, car covers, squeeze bottles, liners for tanks and ponds, moisture barriersin construction. And HDPE plastics are used in production of freezer bags, waterpipes, wire and cable insulation, extrusion coating.Our development strategy will base on timely completion of the establishment ofthe business centre with low execution cost. Our strategy will focus not only thecurrent uninterrupted production of PVC and PET and acquisition of customer as fastas 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 thefuture expansion and growth of our business. The development strategy will addressfollowing 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 businessOur development strategy will address all those above-mentioned point. As we willgrow and our earning will increase, we will produce more of PVC and PET as well asexpand in new area. We have a development strategy to expand our facility size inorder to meet the production size.18 |
  19. 19. MANAGEMENTPromoters and six supporting staff will manage the company.There will be fivepromoters of Hind Plastics.Marketing skills like convincing power, negotiating ability, creating promotionalstrategies and sales skills will all be extremely helpful in taking the business a longway and will prove intensely valuable to take Hind 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 andeligible founder and owner of Hind PlasticsAlong with promoters five more employees will work for the accomplishment ofcompanies’ objective. One supervisor will work on the facility along with twosupporting staff. Supervisor who will work upon the facility does not need to be achemical engineer a simple technician has experience on working upon the facilitycan be able to do this.Job descriptionProcess No of employees ProficiencySorting 2 UnskilledBelt Conveyer 1 SemiskilledPET Separator 1 SemiskilledPackaging 4 Unskilled19 |
  20. 20. OPERATIONSThe operations is defined as the process used to deliver your products and service tothe customermarket placeand also includemanufacturing transportation logisticstraveland after sales services.The facility is located at outside the city. Facility is divided in two parts Recycling and Production unit WarehouseThe facility is located in an area of 3000 sqft.Apart from these two units there will bean office that will look for the perpetual supply of required raw material and alsotake care about the outbound logistics. The production capacity is 80kg/hr.The operations will be based upon JIT i.e. just in time. We will have contracted withthe suppliers who can supply the raw material as quickly as we want. The rawmaterial contains post consumer beverage bottles and other plastic materials. Thebottles and other plastic material that can be recycled have a specific sign fromwhich 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 PVCcannot be recycled simultaneously due to their different properties. There will betwo units running parallel to each other. On unit will recycle and produce PVC plasticand other will perform the same for the PET plastic.The recycled PVC is then moved for the plastic injection-molding unit in the variousshapes. Since there are a variety of product is being produced so the preference willbe given to that product whose demand is high. All the products will not beproduced each and every day. There will be different products that will be producedon different day according to the demand in market.After the recycling process is completed one part of PET flake is moved to thewarehouse according to the demand of raw material that different companies needand other part will move for the molding in bottles.The recycled PET flake is then heated and made the viscous solution of it. The PETresin is then feeded to the molder and molder will give it various shape bottles. Andthen it left for drying.Those products that further need for processing like buckets;the handle will be inserted after the bucket is dried.20 |
  21. 21. Stages of Recycling and ProductionThe process of recycling of waste plastics into products of varying usefulnessinvolves the following essential steps: Sizing / Chipping Cleaning Segregation. Agglomerating / Colouring Extrusion / Palletisation Fabrication into end Product.ChippingThe plastics waste should be properly sized so that those may be fed into theextruders for processing and palletizing. The sizing operation depends on the typeand shape of the waste plastics.During this process, attention is required to separate any powdery material from thesized / chipped plastics.SegregationCertain polymeric materials are compatible with each other at all proportions.Forexample LDPE and Lldpe are generally compatible to each other at all proportions.The advanced technology of separating / segregating different types of wasteplastics involves ‘Floatation Process’. In this process the property of the varyingdensities of different plastics is made use of for segregating different types ofplastics.However in the Indian Context, this separation or segregation process, in manycases, are done by manual process utilizing the availability of cheap and expert laborforce.In case the waste is contaminated with embedded metals, proper method ofseparating the metals / other contaminants is required.CleaningThe scale of cleaning depends on the type of waste. Whenever a cleaning operationis involved, it is to be ensured that the water or any other cleaning material used,should be discharged after ascertaining that the discharge does not contain anyobjectionable substance. A proper Treatment Device may have to be deployed – likea water treatment plant / effluent treatment plant. For drying, a suitably designeddrier is used.21 |
  22. 22. Many industries situated outside the metropolises, use open space for natural dryingof the cleaned waste.Agglomerating / ColouringIn the next operation the sized plastics waste is mixed with colour master batch inhigh-speed mixers / agglomerators and the output is ready for extrusion into pellets.Extrusion / PalletisationThis is the most important part of the process wherein the sized / chipped plasticsare plasticized and granulated to make the plastics material ready for fabricationnext.The type and size of the Extruder depend on the type and volume of the plasticswaste.Fabrication into end ProductFinally the reprocessed plastics granules are used as raw material for producing endproducts using similar fabrication machines like Injection Molding / Extrusion etc.,depending upon specific requirement.Scope of operationsNow presently our production capacity is 200kg/day from which in initial stages weare utilizing around 50% of it. As the business expands we will reach to optimumcapacity utilization. We are expecting that we will start producing more advanceplastics in the fourth year of our operations and accordingly the sales will increaseand the facility will have to be expanded.Supply chainIn the city there are various small post consumer plastic bottle collectors. To make acontinuous supply of raw material we will have four suppliers with us. There will beone permanent supplier that will continuously supply the raw material. In case ofexcess demand other suppliers will be taken into consideration. Supplier will coverthe transportation cost only. The finished product will be stored in the warehouseand according to the demand it will be send to city distribution center. Thedistribution center will directly sell the finished household plastics as well as to thesmall shops.Our average daily demand of raw material is 300kg and the lead-time we willkeep lead-time of 6hrs.We keep a safety stock of 50 kg. So the reorder point isgiven by22 |
  23. 23. Reorder point= average daily uses x lead time + safety stockReorder point = 300 X .25day + 50 = 125 kg.So at each and everyday we will have minimum of 125kg (safety stock+reorder point) of raw material in our inventory.This means that when the raw material level reaches to 125kg we will place the nextorder. The difference time in which we will place the order and receive the order isthe lead-time that is 6hrs.23 |
  24. 24. PROCESS FLOW CHART24 |
  25. 25. Gantt chartAs it is an assembly line the output of one stage is feeded to the input of next stage.The whole process will run in series format. That is the reason why no parallelprocess is mentioned in the gantt chart.FACILITY LAYOUT25 |
  26. 26. FINANCIALSThe startup cost of our business is as follows:Start-upRequirements AmountStart-up ExpensesLegal 6,000Stationery 500Business Cards 500Initial Mailing 100Process Funding 400Office Equipment 2,50026 |
  27. 27. Total Start-up Expenses 10,000Start-up AssetsCash Required 1,00,000Other Current Assets 0Long-term Assets 33,30,000Total Assets 34,30,000Total Requirements 34,40,000INCOME STATEMENTThe projected income is as shown below it shows that first year we willend up with loss but from second year we will start making profits.Particulars YEAR 1 YEAR 2 YEAR 3 Year 4Net sales 1620000 2106000 2737800 3285360Cost of good sales 891000 1158300 1505790 1806948Gross margin 729000 947700 1232010 1478412Operating expenses:Admin exp. 3000 3150 3308 3473Advertisement 6000 7200 8640 10368Salaries 192000 211200 232320 255552Transportation 96000 105600 116160 127776Maintenance 15000 15750 16538 1736427 |
  28. 28. Electricity 4800 5040 5292 5557Telephone 10000 11000 12100 13310Legal exp. 10000 1000 1000 1000Insurance 20000 20000 20000 20000Rent 24000 26400 29040 31944Otherexp 6000 6600 7260 7986 386800 412940 451657 494330EBITDA 342200 534760 780353 984082less depreciation 303000 272700 245430 220887EBIT 39200 262060 534923 763195Less interest paid 175550 165061 153243 139926EBT -136350 96999 381680 623269tax @ 30% 0 29100 114504 186981PAT -136350 67899 267176 436288BALANCE SHEETThe projected balance sheet of four years is as follows:Sources of Funds Year-1 Year-2 Year-3 Year-4CapitalOwners capital 1930000 1930000 1930000 1930000Surplus -136350 -68451 130274 765287Net worth 1793650 1861549 2060274 269528728 |
  29. 29. Long Term loanLoan 1417302 1324116 1219111 1100789Current LiabilitiesCreditors 70500 56722 68066 81680Total liabilities 3281452 3242387 3347451 3877756Application of fundPlant & M/C 3030000 2727000 2454300 2208870Less depreciation 303000 272700 245430 220887 2727000 2454300 2208870 1987983Land 300000 300000 300000 300000Actual Fixed Asset 3027000 2754300 2508870 2287983Current Assets:Inventory 97200 315900 410670 821340Bank 10000 40000 100000 100000Debtors 147252 132187 117911 232703Advance to suppliers’ 0 0 210000 335730Investment 100000Total Assets 3281452 3242387 3347451 387775629 |
  30. 30. BREAK EVEN POINTVC Amount in Rs FC Amount in Rs Admin 3000Otherexp 6000 Interest 175550Transportation 96000 Advertisement 6000Telephone 10000 Insurance 20000Wages 119250 Salary 192000Carriage inward 238500 Rent 24000Power 119250 Maintenance 15000Raw material 414000 Depreciation 303000 Legal 10000Total 1003000 Total 748550Contribution 617000pv ratio 0.3808642BEP units 1965398.703 135000BEP SALES 15 in months 1.21 In yearsAstheBEP is 15months it means that at 15th month we will be in a trade off totalexpenses and revenue.30 |
  31. 31. APPENDIXAnnuity table:total loan amt.= pmt[1-1/(1-i)^n]/in is number of yearsi is interest rateloan amount 1500000 ######interest rate annually 0.12 ######pmt = 21521 21520.64month EMI Interest principle balance O/S Annual interest1 21521 15000 6521 14934792 21521 14935 6586 14868943 21521 14869 6652 14802424 21521 14802 6718 14735245 21521 14735 6785 14667386 21521 14667 6853 14598857 21521 14599 6922 14529638 21521 14530 6991 14459729 21521 14460 7061 143891110 21521 14389 7132 143178011 21521 14318 7203 142457712 21521 14246 7275 1417302 17555013 21521 14173 7348 140995414 21521 14100 7421 140253331 |
  32. 32. 15 21521 14025 7495 139503816 21521 13950 7570 138746817 21521 13875 7646 137982218 21521 13798 7722 137209919 21521 13721 7800 136430020 21521 13643 7878 135642221 21521 13564 7956 134846622 21521 13485 8036 134043023 21521 13404 8116 133231324 21521 13323 8198 1324116 16506125 21521 13241 8279 131583626 21521 13158 8362 130747427 21521 13075 8446 129902828 21521 12990 8530 129049829 21521 12905 8616 128188230 21521 12819 8702 127318031 21521 12732 8789 126439132 21521 12644 8877 125551533 21521 12555 8965 124654934 21521 12465 9055 123749435 21521 12375 9146 122834836 21521 12283 9237 1219111 15324337 21521 12191 9330 120978232 |
  33. 33. 38 21521 12098 9423 120035939 21521 12004 9517 119084240 21521 11908 9612 118122941 21521 11812 9708 117152142 21521 11715 9805 116171643 21521 11617 9903 115181244 21521 11518 10003 114181045 21521 11418 10103 113170746 21521 11317 10204 112150447 21521 11215 10306 111119848 21521 11112 10409 1100789 13992649 21521 11008 10513 109027750 21521 10903 10618 107965951 21521 10797 10724 106893552 21521 10689 10831 105810353 21521 10581 10940 104716454 21521 10472 11049 103611555 21521 10361 11159 102495556 21521 10250 11271 101368457 21521 10137 11384 100230058 21521 10023 11498 99080359 21521 9908 11613 97919060 21521 9792 11729 967461 12492033 |
  34. 34. 61 21521 9675 11846 95561562 21521 9556 11964 94365163 21521 9437 12084 93156764 21521 9316 12205 91936265 21521 9194 12327 90703566 21521 9070 12450 89458467 21521 8946 12575 88201068 21521 8820 12701 86930969 21521 8693 12828 85648170 21521 8565 12956 84352671 21521 8435 13085 83044072 21521 8304 13216 817224 10801073 21521 8172 13348 80387674 21521 8039 13482 79039475 21521 7904 13617 77677776 21521 7768 13753 76302477 21521 7630 13890 74913478 21521 7491 14029 73510479 21521 7351 14170 72093580 21521 7209 14311 70662481 21521 7066 14454 69216982 21521 6922 14599 67757083 21521 6776 14745 66282534 |
  35. 35. 84 21521 6628 14892 647933 8895785 21521 6479 15041 63289286 21521 6329 15192 61770087 21521 6177 15344 60235688 21521 6024 15497 58685989 21521 5869 15652 57120790 21521 5712 15809 55539891 21521 5554 15967 53943292 21521 5394 16126 52330593 21521 5233 16288 50701894 21521 5070 16450 49056795 21521 4906 16615 47395296 21521 4740 16781 457171 6748697 21521 4572 16949 44022298 21521 4402 17118 42310499 21521 4231 17290 405814100 21521 4058 17462 388352101 21521 3884 17637 370715102 21521 3707 17813 352901103 21521 3529 17992 334910104 21521 3349 18172 316738105 21521 3167 18353 298385106 21521 2984 18537 27984835 |
  36. 36. 107 21521 2798 18722 261126108 21521 2611 18909 242216 43293109 21521 2422 19098 223118110 21521 2231 19289 203829111 21521 2038 19482 184346112 21521 1843 19677 164669113 21521 1647 19874 144795114 21521 1448 20073 124722115 21521 1247 20273 104449116 21521 1044 20476 83973117 21521 840 20681 63292118 21521 633 20888 42404119 21521 424 21097 21308120 21521 213 21308 0 16031BIBLIOGRAPHY Crisil report on plastic industry Plastic waste option for small scale recourse recovery by IngeLardinois Small scale recycling of plastic by- Jon Vogler36 |

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