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Gepack Sabic Business Plan
Gepack Sabic Business Plan
Gepack Sabic Business Plan
Gepack Sabic Business Plan
Gepack Sabic Business Plan
Gepack Sabic Business Plan
Gepack Sabic Business Plan
Gepack Sabic Business Plan
Gepack Sabic Business Plan
Gepack Sabic Business Plan
Gepack Sabic Business Plan
Gepack Sabic Business Plan
Gepack Sabic Business Plan
Gepack Sabic Business Plan
Gepack Sabic Business Plan
Gepack Sabic Business Plan
Gepack Sabic Business Plan
Gepack Sabic Business Plan
Gepack Sabic Business Plan
Gepack Sabic Business Plan
Gepack Sabic Business Plan
Gepack Sabic Business Plan
Gepack Sabic Business Plan
Gepack Sabic Business Plan
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Gepack Sabic Business Plan

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  • 1. Management and Main Office Factory and Warehouse:Tbilisi, St. Nutsubidze District of Stskheta, Agdgomiantkari,GEPACK BLDG, P.O.Box: 59842, Georgia P.O.Box: 23548, GeorgiaTel:+955 32 216632 – Ext:11 Tel:+955 32 216632 – Ext:12Fax:+955 32 317423 Fax:+955 32 317423 GEPACK-SABIC Business plan Page 1
  • 2. Management and Main Office Factory and Warehouse:Tbilisi, St. Nutsubidze District of Stskheta, Agdgomiantkari,GEPACK BLDG, P.O.Box: 59842, Georgia P.O.Box: 23548, GeorgiaTel:+955 32 216632 – Ext:11 Tel:+955 32 216632 – Ext:12Fax:+955 32 317423 Fax:+955 32 317423Business Plan Mahmoud Al-Jammal, DDS, DESS, MS Business Development Manager m.jammal@gepack.net 21 August 2008 GEPACK-SABIC Business plan Page 2
  • 3. Management and Main Office Factory and Warehouse: Tbilisi, St. Nutsubidze District of Stskheta, Agdgomiantkari, GEPACK BLDG, P.O.Box: 59842, Georgia P.O.Box: 23548, Georgia Tel:+955 32 216632 – Ext:11 Tel:+955 32 216632 – Ext:12 Fax:+955 32 317423 Fax:+955 32 317423OwnersGEPACK LLC, Georgia.Address: District of Stskheta, village Agdgomiantkari, Georgia.Tel: +955 32 216632Fax: +955 32 317423E-mail: info@gepack.netwww.gepack.net GEPACK-SABIC Business plan Page 3
  • 4. Management and Main Office Factory and Warehouse: Tbilisi, St. Nutsubidze District of Stskheta, Agdgomiantkari, GEPACK BLDG, P.O.Box: 59842, Georgia P.O.Box: 23548, Georgia Tel:+955 32 216632 – Ext:11 Tel:+955 32 216632 – Ext:12 Fax:+955 32 317423 Fax:+955 32 317423 Table of Contents1. Table of Contents………………………………….……………………………. 42. Executive Summary……………………………………………………….…… 53. General Company description …………………………………………… 64. Market Overview & Proposal……………………………………………… 75. Products & Demand………………………………………………….………… 86. Development Strategy……………………………………………………….. 147. Administrative Contracture……………………………………………….. 178. Financial Plan…………………………………………………………….……….. 189. Time Management……………………………………………………………… 2110. Project Plan………………………………………………………………………… 2211. Georgian Taxation System…………………………………….…………… 2312. Legal Environment……………………………………………………………… 2313. Management Team…………………………………………………………….. 23 GEPACK-SABIC Business plan Page 4
  • 5. Management and Main Office Factory and Warehouse: Tbilisi, St. Nutsubidze District of Stskheta, Agdgomiantkari, GEPACK BLDG, P.O.Box: 59842, Georgia P.O.Box: 23548, Georgia Tel:+955 32 216632 – Ext:11 Tel:+955 32 216632 – Ext:12 Fax:+955 32 317423 Fax:+955 32 317423 2. Executive SummaryPresented project of GEPACK obtain im porting, storing, reselling, and distribution process ofSABIC™ plastics in Georgia.Products: Polyethylene Terephthalate (PET), Polyvi nyl chloride (PVC), Polyethylene granules(HDPE, LDPE, LLDPE), Polypropylene granules (PP), Expanded polystyrene (EPS).GEPACK will be pioneer in dist ributing SABIC™ plastics in Georgia because of the growingdemand of this industry, and the lack of quality th at Georgian market disparately needs, as theimported products form Ukraine, Russia, Ira n & Azerbaijan are very low quality, not tomention the fact that the recent events of th e past m onths with the Russian invasion, andsubsequent military conflict had a big negative impact on im ports and exports from Russia ingeneral, which is for the best of SABIC™ if a good plan is im plemented to fill-in the Russiangap, and win their market share.(Attachment 1: Georgian Export Trends 2004-2006, the drop in Russian share after 2006).Source: siteresources.worldbank.org/INTGEORGIA/Resources/PublicLecture.pptGEPACK thinks that presented project will be successful, W hy? Because of non com petitionfrom the other m anufacturers, as the quality of products of neighbouring countries is very lowcomparing with SABIC™ plastics, and the relatively better m anufacturers are very fargeographically, so the shipping cost and delivery terms are in m ost cases not satisfactory tomajor local customers, while KSA is very near to Georgia, and land shipments can be deliveredin just few days.(Attachment 2: SABIC™ Annual Report for 2007).(Attachment 3: SABIC™ Corporate Brochure).In the other hand, im porter companies can be “defeated” through our pricing and distributionpolices. The only source of SABIC™ products in Georgia is a very lim ited one, throughSABIC™ Turkish distributor, but unfortunately m ost of m ajor local custom ers f ind it sodifficult to im port from Turkey for m any reasons, m ainly the delivery term s which gives allpriority to Turkish m arket, and secondly pricing i ssues, as there are definite increase of costinvolved in re-exporting from Turkey, and double shipment cost, also extra custom fees.Plastic product dem and in Georgia grew rapidl y especially after “Rose Revolution 2003”, asthe Georgian GDP (Gross Domestic Product: The total market value of all final goods andservices produced in a country in a given year) at 2006 reached $ 17.88 billion growing 10%(comparing with the past year), in this year the World Bank named Georgia the top reformer inthe world.Source: http://en.wikipedia.org/wiki/Economy_of_GeorgiaAt 2007 Georgian GDP growth reached even 12% (w hich is one of the m ost rapid rates in theworld) and based on the governm ental reports the annual grow of 2008 will not be less than11% despite the m ilitary conflict with Russia. All those aspects creates good field of newinvestment in FMCP (Fast Moving Consumer Products) as a result of the growing individualincome in Georgian.Source: https://www.cia.gov/library/publications/the-world-factbook/geos/gg.html#Econ www.geplac.org/newfiles/others/Merab%20Tallinn(ENG).pdf GEPACK-SABIC Business plan Page 5
  • 6. Management and Main Office Factory and Warehouse: Tbilisi, St. Nutsubidze District of Stskheta, Agdgomiantkari, GEPACK BLDG, P.O.Box: 59842, Georgia P.O.Box: 23548, Georgia Tel:+955 32 216632 – Ext:11 Tel:+955 32 216632 – Ext:12 Fax:+955 32 317423 Fax:+955 32 317423 3. General Company DescriptionGEPACK (Limited Liability Company) is planning to go into SABIC™ plastics im portingand distribution business. W e are going to esta blish the first local distribution network inGeorgia dedicated for SABIC™ plastics.GEPACK is looking on investment injection of about 2.5 Million USD. Those investments willbe directed mainly for infrastructure, distribution network, management, human resources, andmarketing. The cost of raw m aterials (it can r each multi millions of dollars) is not included inthis introductory business plan, as it is subject of discussion and negotiations with SABIC™.We are aim ing to professionally distribute SABIC™ high quality products in Georgia, bycovering sim ultaneously both wholesales and re tail dem and in the country, noting that ourpricing policy will be strongly based on the local market requirements, and the global policiesof SABIC™. W e’ll be the only local trader to offer SABIC™ plastics in carefully designedprices, and accurate delivery terms, which is the one and only demand of this market, after highquality.(Attachment 4: SABIC™ plastics certif icates and declarations of quality of one of SABIC™products, as an example of superior quality).GEPACK owns 3000 m 2 land in Agdgom iantkari (District of Stskheta), which is only 20 kmfrom Tbilisi (The capital of Georgia), and the distance to the m ain West Georgian highway isjust 700 m , remembering the capital is in the ge ographic centre of the country; our location isconsidered just the perfect selection for such project.(Attachment 5: Map of Georgia).(Attachment 6: Diagram of GEPACK land and building).GEPACK plan is to initiate the distribution network in 2009 depending on our storage capacitywhich is a three floors concrete building with total area of 2109 m2 (703 m2 for each floor).(Attachment 7: Diagram of GEPACK concrete storage building).The quality and the capacity of our distribution system will be covenant f or maximum 1 year,after that we have to expand our f acilities, theref ore GEPACK already decided to buildadditional warehouse which consists of two fl oors, and a total area of 1200 m 2 (600 m2 each)(Attachment 8: Diagram of GEPACK Additional warehouse).At the same time with storage capacity growt h, we’ll buy new distribution vans for expandingour distribution network to all other main cities of Georgia.(Attachment 9: Distribution fleet for 2009).GEPACKs m ost powerful point is that SABI C™ products are already highly dem anded inGeorgian and Caucasian market, and our inquirers clearly shows that m ost importers are readyto convert to SABIC™ plastics if (and only if) a local agent or branch is established, andcommitted to agreed delivery terms.(Attachment 10: Copies of letters of intend from some Georgian suppliers). GEPACK-SABIC Business plan Page 6
  • 7. Management and Main Office Factory and Warehouse: Tbilisi, St. Nutsubidze District of Stskheta, Agdgomiantkari, GEPACK BLDG, P.O.Box: 59842, Georgia P.O.Box: 23548, Georgia Tel:+955 32 216632 – Ext:11 Tel:+955 32 216632 – Ext:12 Fax:+955 32 317423 Fax:+955 32 317423 4. Market Overview & ProposalIn order to show in details the capacity of the Georgian market, and the feasible business valueof this m arket, we w ould like to show one important report from the Georgiancustoms authority showing the exact im port of the Georgian com panies in 2007, and also theexact names of international exporters of plastics to Georgia in the same year.Based on this report, one can notice that the to tal annual im port of plastics raw m aterials is233,3 thousand MT, with a total m arket value of $ 366,6 m illions, so the average m onthlyconsumption of the Georgian m arket for 2007 is 19.441 MT per m onth, and if we presum edthat the dem and is growing annually in 20% (which is m uch m ore than reality), then theforecast of the Georgian market in 2009 is 28.000 MT per month.GEPACK is proud to offer direct import from SABIC™ of more than 11.000 MT as aninitial plan for cooperation in 2009, which equals more than one third of the total marketvolume, and to double this amount in 2010.As a brief summary, we would like to show the exact imports of plastics to Georgia in 2007 inmonthly bases, with the official cost: January 2007 February 200713,799.535 MT $ 19,688,658.00 8,287.860 MT $ 13,216,248.00 March 2007 April 200712,954.480 MT $ 20,296,624.00 22,605.585 MT $ 35,302,123.00 May 2007 June 200720,742.255 MT $ 29,240,521.00 12,250.095 MT $ 20,166,136.67 July 2007 August 200725,243.395 MT $ 38,657,628.06 19,931.160 MT $ 33,793,322.82 September 2007 October 200723,914.335 MT $ 36,949,328.02 28,493.715 MT $ 45,505,131.00 November 2007 December 200727,160.240 MT $ 46,411,020.5 17,919.435 MT $ 27,403,254.47(Attachment 11: Copy of the Georgian Customs Authority record for 2007).(Attachment 12: Copy of the Georgian Customs Authority record for main exporters in 2007). GEPACK-SABIC Business plan Page 7
  • 8. Management and Main Office Factory and Warehouse: Tbilisi, St. Nutsubidze District of Stskheta, Agdgomiantkari, GEPACK BLDG, P.O.Box: 59842, Georgia P.O.Box: 23548, Georgia Tel:+955 32 216632 – Ext:11 Tel:+955 32 216632 – Ext:12 Fax:+955 32 317423 Fax:+955 32 317423 5. Products & Demand1- PET Resin:Polyethylene Terephthalate, widely referred to as (PET), the required material by our clients isPET with intrinsic viscosity (I.V.) in-between 0.83 – 0.85 dlgr.Our f eedback showed that m ost of Georgian m anufacturers pref er the crystalline PET f orinjection stretch blow m oulding, SABIC® P ET BC-112, which is m ainly used for carbonatedsoft drinks, and SABIC® PET BC-111, which is mainly used for water bottles.The recent demand for 2009 plan is 1200 MT per m onth for Georgia, and for 2010 our plan isto distribute double this amount to exceed 1600 MTmonth.For SABIC® PET BC-112 the dem and is 800 MT per, and for SABIC® PET BC-111 thedemand is 400 MT per month.(Attachment 13: SABIC® PET BC-112 official data sheet).(Attachment 14: SABIC® PET BC-111 official data sheet). GEPACK-SABIC Business plan Page 8
  • 9. Management and Main Office Factory and Warehouse: Tbilisi, St. Nutsubidze District of Stskheta, Agdgomiantkari, GEPACK BLDG, P.O.Box: 59842, Georgia P.O.Box: 23548, Georgia Tel:+955 32 216632 – Ext:11 Tel:+955 32 216632 – Ext:12 Fax:+955 32 317423 Fax:+955 32 3174232- PVC Resin:Polyvinyl chloride, widely referred to as (PVC ), the required m aterial by our clients is forbuilding m aterials, windows and doors, panels, se wer pipers, m etal-plastic profiles, plasticpipes, laminated floor, metal tiles, sandwich Panels, panels, foam, etc.Our feedback showed that both SABIC® SPVC 57S, SABIC® SPVC 67S, are equallydemanded in Georgia.The recent dem and for 2009 plan is 1600 MT per m onth for Georgia, and for 2010 ourguaranteed demand is 2600 MTmonth.(Attachment 15: SABIC® SPVC 57S official data sheet).(Attachment 16: SABIC® SPVC 67S official data sheet). GEPACK-SABIC Business plan Page 9
  • 10. Management and Main Office Factory and Warehouse: Tbilisi, St. Nutsubidze District of Stskheta, Agdgomiantkari, GEPACK BLDG, P.O.Box: 59842, Georgia P.O.Box: 23548, Georgia Tel:+955 32 216632 – Ext:11 Tel:+955 32 216632 – Ext:12 Fax:+955 32 317423 Fax:+955 32 3174233- HDPE Granules:High density Polyethylene, widely referred to as (HDPE), is the m ost dem anded plastic rawmaterial for the Georgian m arket of today, our clients demand the HDPE - PE-100, which ourfeedback showed that the m ajor clients gl adly accept SABIC® Vestolen A6060R for theknown preferable properties for m anufacturing pressure pipes for various applications, such asdrinking water, sewage, and Gas.The recent dem and for 2009 plan is 3600 MT per m onth for Georgia, and for 2010 ourguaranteed demand is 6000 MTmonth.(Attachment 17: SABIC® HDPE P6006 official data sheet).We also a secondary dem and for one kind of HDPE called (HDPE-F00952), m ainly used forvery thin film s, and as a result all the relate d industries such as shopping bags, and wall sackliners … etc.The equivalent product from SABIC™ is SABIC® HDPE F00952.The recent dem and for 2009 plan is 300 MT per m onth for Georgia, and for 2010 ourguaranteed demand is 650 MTmonth.(Attachment 18: SABIC® HDPE F00952 official data sheet). GEPACK-SABIC Business plan Page 10
  • 11. Management and Main Office Factory and Warehouse: Tbilisi, St. Nutsubidze District of Stskheta, Agdgomiantkari, GEPACK BLDG, P.O.Box: 59842, Georgia P.O.Box: 23548, Georgia Tel:+955 32 216632 – Ext:11 Tel:+955 32 216632 – Ext:12 Fax:+955 32 317423 Fax:+955 32 3174234- LDPE Granules:Low density Polyethylene, widely referred to as (LDPE), it is also dem anded in the Georgianmarket, our clients dem and for this m aterial is 400 MT per m onth for 2009, and we estim ate850 MT per month in 2010.The mentioned demand for 2009 is divided into four parts:1- LDPE 2100TN00 – 100 MT per month.(Attachment 19: SABIC® LDPE 2100TN00 official data sheet).2- LDPE 2100TN21 – 100 MT per month.(Attachment 20: SABIC® LDPE 2100TN21 official data sheet).3- LDPE HP0722N – 100 MT per month.(Attachment 21: SABIC® LDPE HP0722N official data sheet).4- LDPE 2600TC00 – 100 MT per month.(Attachment 22: SABIC® LDPE 2600TC00 official data sheet). GEPACK-SABIC Business plan Page 11
  • 12. Management and Main Office Factory and Warehouse: Tbilisi, St. Nutsubidze District of Stskheta, Agdgomiantkari, GEPACK BLDG, P.O.Box: 59842, Georgia P.O.Box: 23548, Georgia Tel:+955 32 216632 – Ext:11 Tel:+955 32 216632 – Ext:12 Fax:+955 32 317423 Fax:+955 32 3174235- LLDPE Granules:Linear Low density Polyethylene, widely refe rred to as (LLDPE), our clients im port it f ormanufacturing bags and films for many applications such as frozen food, waste bags, and filmsfor food-wrapping.There is only one SABIC™ product demanded from this category; SABIC® LLDPE 118W.The recent demand for 2009 plan is 100 MT per month, and for 2010, it is 200 MTmonth.(Attachment 23: SABIC® LLDPE 118W official data sheet). GEPACK-SABIC Business plan Page 12
  • 13. Management and Main Office Factory and Warehouse: Tbilisi, St. Nutsubidze District of Stskheta, Agdgomiantkari, GEPACK BLDG, P.O.Box: 59842, Georgia P.O.Box: 23548, Georgia Tel:+955 32 216632 – Ext:11 Tel:+955 32 216632 – Ext:12 Fax:+955 32 317423 Fax:+955 32 3174236- PP Granules:Polypropylene, or easier to say (PP), is the s econd most demanded plastic raw m aterial for theGeorgian market, our clients dem and the PP -R "R200P", which our feedback showed that themajor clients gladly accept SABIC® Sheet extrusion 83EK10.The recent dem and for 2009 plan is 3300 MT per m onth for Georgia, and for 2010 ourguaranteed demand is 5000 MTmonth.(Attachment 24: SABIC® PP 83EK10 official data sheet).We also a secondary dem and for one kind of PP mainly used for woven bags, the equivalentgrade from SABIC™ is SABIC® PP 500P .The recent dem and for 2009 plan is 100 MT per m onth for Georgia, and for 2010 ourguaranteed demand is 200 MTmonth.(Attachment 25: SABIC® PP 500P official data sheet). GEPACK-SABIC Business plan Page 13
  • 14. Management and Main Office Factory and Warehouse: Tbilisi, St. Nutsubidze District of Stskheta, Agdgomiantkari, GEPACK BLDG, P.O.Box: 59842, Georgia P.O.Box: 23548, Georgia Tel:+955 32 216632 – Ext:11 Tel:+955 32 216632 – Ext:12 Fax:+955 32 317423 Fax:+955 32 3174237- EPS Granules:Expanded polystyrene (EPS), our dem and for this material is relatively good com paring withrecent consumption rates, 420 MT per m onth for 2009, and we estim ate 950 MT per m onth in2010.The m ain application f or this m aterial is to achieve im pact resistance property for furniture,partitions, and containers.Our clients dem and is 100 MT per m onth for 2009 of "EPS – F103" grade, which is used forshape molding for more than 1 cm thickness, and also medium to high density block molding.Our feedback showed that the m ajor clients gladly accept SABIC® EPS 552 as an equivalentfor this grade.In 2010 our plan is to distribute 650 MT per month.(Attachment 26: SABIC® EPS 552 official datasheet).The second dem anded grade by our clients is"EPS – F104" with 320 MT per m onth for 2009,which is used for large shape and m ediumdensity molding.Our feedback showed th at m ajor clients acceptSABIC® EPS 652 as an equivalent for thisgrade.In 2010 our plan is to distribute 300 MT permonth.(Attachment 27: SABIC® EPS 652 official datasheet). GEPACK-SABIC Business plan Page 14
  • 15. Management and Main Office Factory and Warehouse: Tbilisi, St. Nutsubidze District of Stskheta, Agdgomiantkari, GEPACK BLDG, P.O.Box: 59842, Georgia P.O.Box: 23548, Georgia Tel:+955 32 216632 – Ext:11 Tel:+955 32 216632 – Ext:12 Fax:+955 32 317423 Fax:+955 32 317423 6. Development Strategy1- MarketingGeorgia is sm all country, with an area of 69,700 sq km , approxim ately one third the size ofOman, just to give you an idea, KSA is th irty (30) tim es bigger, bordered by Turkey,Azerbaijan, Arm enia, Russia and the Black Sea . Strategically located east of the Black Sea;Georgia controls m uch of the Caucasus Mountains and the routes through them . Population:4,646,003 (July 2007 Est).Georgian m arket is part of the Caucasian Ma rket which total size is 185 000 square km andpopulation of 16 256 360 (2007 Est).The recorded history of Georgia dates back m ore than 4,000 years. The culture of Georgia hasevolved over the country s long history, providi ng it with strong literary tradition. The uniqueGeorgian alphabet, which is am ong the fourteen existing ones in the world dates back to the5th century BC.In Georgian m arket there is big dem and on high quality plastic products and we have a veryreal chance to win 50% of the m arket share, de finitely it’s not a lim it even f or the f irst year.Our main care will be the guaranteed permanent grow of our distribution network and services.Our m ain advantage will be the brand recognition subject; it is a usual problem for the newbrands, but for SABIC™ the products quality is known to be superior, and its already highlydemanded, but we are going to launch well targeted advertisement campaign, to make sure thatall manufacturers and major clients know about th e instant and direct availability of SABIC™in the Georgian market.Our m arketing strategy will be based on perm anent m arketing works. GEPACK will alwaysmonitor the Georgian m arket to locate new m arket players, and to m ake sure that our superiorpricing structure is always known. GEPACK-SABIC Business plan Page 15
  • 16. Management and Main Office Factory and Warehouse: Tbilisi, St. Nutsubidze District of Stskheta, Agdgomiantkari, GEPACK BLDG, P.O.Box: 59842, Georgia P.O.Box: 23548, Georgia Tel:+955 32 216632 – Ext:11 Tel:+955 32 216632 – Ext:12 Fax:+955 32 317423 Fax:+955 32 3174232- PromotionWe think that our promotion and advertising companies have to begin one month or two beforeproduct launching on the market. Serious promotion event will be new storage facility openingand products presentation in Tbilisi Marriott Hote l where will be invited owners and m anagersof biggest Georgian com panies and (Chamber of Comers & Business Federation), also will beinvited popular Georgian social and political celebrities.Our presentation party will be coverage by Georgian public and privet TV and Radio stations.GEPACK advertising strategy is including participation at Trade Shows in Georgia, Azerbaijanand Armenia. Those are tree main Trade Shows in Caucasus Region.In our region very necessary is to have TV and Radio advertisem ent during the m ost popularprograms. Especially for first year is very im portant to have such advertisem ent but it have tobe well organized from m onth to m onth, adve rtisement schedule in TV, Radio, and streetbillboards will replace each other.The images of our product have to be the best quality in best price for the perm anent freshnessof our clients.Occasionally, GEPACK will host national TV pr ograms discussing Georgian and Caucasianeconomic issues,All above m entioned ideas will im prove our sells capacity but we thinks that the m ain ouradvantages have to be sells offers for endures and major manufacturers. GEPACK-SABIC Business plan Page 16
  • 17. Management and Main Office Factory and Warehouse: Tbilisi, St. Nutsubidze District of Stskheta, Agdgomiantkari, GEPACK BLDG, P.O.Box: 59842, Georgia P.O.Box: 23548, Georgia Tel:+955 32 216632 – Ext:11 Tel:+955 32 216632 – Ext:12 Fax:+955 32 317423 Fax:+955 32 3174233- Distribution ChannelsWe already m entioned above that GEPACK m ain susses depends on well organizeddistribution network.GEPACK m ain concern is the perm anent grow of our direct distribu tion network. W e havealready very clear distribution m ap of capital Tbilisi (1,8 m illion population), and the rest ofthe Georgian territories, also strategic plan for next year.Definition: • Indirect distribution: reselling SABIC™ plastics to major retailers in Georgia. • Direct distribution: reselling SABIC™ plastics to Georgian manufacturers directly.Year One: - GEPACK distribution for capital Tbilisi depends on the direct method, while in the rest of the country, the indirect method is to be implemented.Year Tow: - GEPACK distribution for capital Tbilisi rem ains direct, while in the rest of the country the indirect methods are to be suspended. - In order for GEPACK to implement direct method in the rest of Georgia, GEPACK will open store houses (rentals) in each of the fo llowing cities during last three m onths of the first year, to be operational in the beginning of the second year, as follows: • Batumi (population, 210 000) • Kutaisi (285 000) • Rustavi (175000) • Bojomi & Bakuriani (65 000) • Telavi (28000) • Zugdidi (120 000) • Gori (60 000) GEPACK-SABIC Business plan Page 17
  • 18. Management and Main Office Factory and Warehouse: Tbilisi, St. Nutsubidze District of Stskheta, Agdgomiantkari, GEPACK BLDG, P.O.Box: 59842, Georgia P.O.Box: 23548, Georgia Tel:+955 32 216632 – Ext:11 Tel:+955 32 216632 – Ext:12 Fax:+955 32 317423 Fax:+955 32 317423 7. Administrative Contracture General Manager Secretary Assistance Manager Secretary Financial Dept.Chief Accountant - 1 Person Procurement Dept.Assistant - 2 Persons Head of Dept. - 1 Marketing & Person Sales Dept. Assistant – 1 Person Head of Dept. - 1 Person Service Dept. Marketing Officer - 1 Person IT engineer – 1 Salesmen - 4 Person Persons Please refer to Sanitary - 3 Persons "Financial Plan, Human Store Labour - 3 Resources", Page 20 Persons Security - 2 Persons Drivers - 6 Persons GEPACK-SABIC Business plan Page 18
  • 19. Management and Main Office Factory and Warehouse: Tbilisi, St. Nutsubidze District of Stskheta, Agdgomiantkari, GEPACK BLDG, P.O.Box: 59842, Georgia P.O.Box: 23548, Georgia Tel:+955 32 216632 – Ext:11 Tel:+955 32 216632 – Ext:12 Fax:+955 32 317423 Fax:+955 32 317423 8. Financial Plan1. Fixed Operational Costs (FOC) After carefully approaching the expected ope rational costs, and estim ating the average monthly costs of services and operational requirem ents, we cam e to the following conclusion of fixed operational costs for 2009. While examining the mentioned study, please note the following:1. GEPACK is planning to organize a grand ceremony for launching the project, this ceremony should be in the end of January 2009 (for further details, please refer to "GEPAC – SABIC Project Plan", in page 22).2. The fixed continues cost of advertisem ent was determ ined to be $ 5000 per m onth, separated from the cost of m onthly prom otion which is $ 500, a very big m argin for distribution business, however sill an essen tial m ilestone to ref lect the strength of GEPACK and guarantee full media exposure on SABIC™ brand name.3. GEPACK is sitting beside a budget of $ 7,000.00 fo r organising an entertainment event for all m anagement and staff of GEPACK in mid March 2009, with one week vacation, to allow all HR to rest after excessive activities of launching the project. 2009 (Unit = $ 1000) Activity Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Minor 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 0.05 Supplies Opening 10 0 0 0 0 0 0 0 0 0 0 0 Ceremony Advertising 15 18 10 5 5 5 5 5 5 5 5 5 Entertainment 0 0 7 0 0 0 0 0 0 0 0 0 Literature 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 0.02 Promotions 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 Trade Shows 0 0 0 1.5 0 0 0 0 1.5 0 0 0 Travel 1 1 1 1 1 1 1 1 1 1 1 1 Consulting 2 2 0 0 0 0 0 0 0 0 0.5 0.5 Depreciation 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 Insurance 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 Legal Fees 0.35 0.35 0.35 0.35 0 0 0 0 0 0 0 0 Licenses & 0.4 0 0 0 0 0 0 0 0 0 0 0 Permits Office 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 Expenses Telephone 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 0.15 Fast Internet 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 Utilities 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 Uncounted 10 0 0 0 0 0 0 0 0 0 0 0 Expenses Totals 40.1 22.7 19.7 9.2 7.35 7.35 7.35 7.35 8.85 7.35 7.85 7.85 GEPACK-SABIC Business plan Page 19
  • 20. Management and Main Office Factory and Warehouse: Tbilisi, St. Nutsubidze District of Stskheta, Agdgomiantkari, GEPACK BLDG, P.O.Box: 59842, Georgia P.O.Box: 23548, Georgia Tel:+955 32 216632 – Ext:11 Tel:+955 32 216632 – Ext:12 Fax:+955 32 317423 Fax:+955 32 3174232. Human ResourcesGEPACK LLC consists of three m ain depa rtments (Service Dept. in Adm inistrativeContracture "Page 17" is under direct control of AM, and not considered an independentdepartment "Adm inistratively"), the total num ber of em ployees is 30 persons, Managem entDept. (9 persons), Marketing and Sales Dept. (9 persons), and Service Dept. with (12 persons),the total salaries and expenses of HR are $ 20,700.00 per m onth, thoroughly detailed in thefollowing three tables (1 $ = 1.5 Georgian Laris): Sub- No. Management Qty Salary $ Total $ Lari 1 General Manager 1 2,000.0 2,000.0 3,000.0 2 Assistant Manager 1 1,500.0 1,500.0 2,250.0 3 Secretary of GM 1 600.0 600.0 900.0 4 Secretary of AM 1 600.0 600.0 900.0 5 Chief Accountant 1 1,100.0 1,100.0 1,650.0 6 Assistant of CA 2 750.0 1,500.0 2,250.0 7 Head of Procurement Department 1 1,000.0 1,000.0 1,500.0 8 Assistant of PD 1 750.0 750.0 1,125.0 Total : 9 9,050 13,575.0 Sub- No. Marketing & Sales Dept. Qty Salary $ Total $ Lari 9 Head of Marketing and Sales Dept. 1 1,100.0 1,100.0 1,650.0 10 Marketing Officer 1 800.0 800.0 1,200.0 11 Salesmen 4 500.0 2,000.0 3,000.0 Store, Person in 1 600.0 600.0 900.0 12 Charge 13 Labours (store) 2 350.0 700.0 1,050.0 Total : 9 5,200.0 7,800.0 Sub- No. Service Dept. Qty Salary $ Total $ Lari 14 IT Expert 1 800.0 800.0 1,200.0 15 Sanitary 3 350.0 1,050.0 1,575.0 16 Security 2 500.0 1,000.0 1,500.0 17 Drivers 6 600.0 3,600.0 5,400.0 Total : 12 6,450.0 9,675.0 GRAND TOTAL: 30 20,700.0 31,050.0 GEPACK-SABIC Business plan Page 20
  • 21. Management and Main Office Factory and Warehouse: Tbilisi, St. Nutsubidze District of Stskheta, Agdgomiantkari, GEPACK BLDG, P.O.Box: 59842, Georgia P.O.Box: 23548, Georgia Tel:+955 32 216632 – Ext:11 Tel:+955 32 216632 – Ext:12 Fax:+955 32 317423 Fax:+955 32 3174233. Offices & Stationary:Based on the above m entioned HR study, 12 offices are needed (for item s 1-10, and item 14),accompanying all the necessary tools for their professional efficiency and productivity, andsimultaneously implementing a very strict PC networking system, mainly used for m onitoringdaily work and preventing unnecessary expenses in terms of actual finance or in time.Hereunder is a detailed description of needed hardware and stationary expenses: Name of Item Quantity Unit Cost $ Sub - Total $ Sub - Total GEL PC 12 400 4800 7200 PC Networking 1 3000 3000 4500 Laser Printer 2 500 1000 1500 Scanner 2 100 200 300 Copy machine 1 950 950 1425 Telephone 20 85 1700 2550 Telephone Server 1 1400 1400 2100 Fax 2 350 700 1050 Stationary For 3 months 250 250 375 Office Furniture 12 950 11400 17100 TOTAL 25400 381004. Buying Machinery & Equipment:Based on m arket prices of late 2008, the estim ated cost of the m entioned equipm ent(Automatic & manual Forklifts, automatic conveyer - transporters, distribution tracks "loadingcapacity 30 tons"), is between 120 – 140 thousand US Dollars, so we decided to estim ate thefixed cost of equipment 130 thousand US Dollars.Upon real launch of project, a new cost estimation study is a must.5. Building additional warehouse :The additional 600 m2 warehouse planned to be built near the main storage facility, consists oftwo floor metal building, with both storage and office facilities, the total cost of this plan basedon late 2008 quotations is $ 360,000.006. Renting 7 warehouses around Georgia:As mentioned earlier (Ref: Development Plan, Distribution Channels, "Page 16"), GEPACK isto rent 7 warehouses around the country, the best-offered m onthly rentals were $ 1000 permonth according to 2008 market prices, so the whole budget is averagely $ 7000 monthly. GEPACK-SABIC Business plan Page 21
  • 22. Management and Main Office Factory and Warehouse: Tbilisi, St. Nutsubidze District of Stskheta, Agdgomiantkari, GEPACK BLDG, P.O.Box: 59842, Georgia P.O.Box: 23548, Georgia Tel:+955 32 216632 – Ext:11 Tel:+955 32 216632 – Ext:12 Fax:+955 32 317423 Fax:+955 32 317423 9. Time ManagementHereunder is the Time Chart of GEPACK-SABIC Project, with the main phases illustrated, thelaunching period for the whole project is 9 months, starting from January till September 2009. Registrations of legal documents & brand name Offices furniture, communication devices, PCs, and stationary Marketing, Advertising, & Promotion 2008 Market Research & Analysis Buying all necessary machinery & equipment Instillation of building anti fire system Completed Hiring Human Resource Plan Additional warehouse at main location On Progress Storehouses Rentals Delayed Daily Operations 2009 Date 3 10 Jan 17 24 31 7 14 Feb 21 28 4 11 18 Mar 25 4 11 Apr 18 25 1 May 15 29 4 June 11 18 25 1 July 15 29 1 Aug 15 29 1 Sep 15 29 GEPACK-SABIC Business plan Page 22
  • 23. Management and Main Office Factory and Warehouse: Tbilisi, St. Nutsubidze District of Stskheta, Agdgomiantkari, GEPACK BLDG, P.O.Box: 59842, Georgia P.O.Box: 23548, Georgia Tel:+955 32 216632 – Ext:11 Tel:+955 32 216632 – Ext:12 Fax:+955 32 317423 Fax:+955 32 317423 10. Project PlanAs you know, the project plan is just an overl apping of two charts, which are Finance, andTime, and as we already went through both charts, the projects plan chart is as follows: Land (3000 m2) $ 330,000.00 Main storage (3 floors concrete building, 2109 m2) $ 1,170,000.00 Registrations of legal documents & brand name Offices furniture, communication devices, PCs, and stationary 2008 Marketing, Advertising, & Promotion Market Research & Analysis Buying all necessary machinery & equipment Instillation of building anti fire system Completed Human Resource (Management & Staff) Plan Additional warehouse at main location On Progress Storehouses Rentals Delayed Fixed Operational Costs (FOC) 2009 Sub - Totals Date 51.10 20.7 15 15 0.4 3 20.10 0.1 20 10 Jan 50.70 40.1 10 0.6 17 30.70 0.3 5 25.4 24 90.70 80 0.6 10 0.1 31 28.70 20.7 8 7 22.70 22.7 14 Feb 0.00 21 10.60 0.6 10 28 20.70 20.7 4 19.70 19.7 11 Mar 0.00 18 10.60 0.6 10 25 100.95 80 20.7 0.25 4 9.20 9.2 11 Apr 80.00 80 18 5.60 0.6 5 25 20.70 20.7 1 May 120.00 120 15 12.95 7.35 0.6 5 29 100.70 80 20.7 4 June 0.00 11 7.35 7.35 18 5.60 0.6 5 25 27.95 7 20.7 0.25 1 July 7.35 7.35 15 5.60 0.6 5 29 27.70 7 20.7 1 Aug 7.35 7.35 15 5.60 0.6 5 29 27.70 7 20.7 1 Sep 8.85 8.85 15 5.60 0.6 5 29 Land & Building $ 1,500,000.00 Total Cost $ 2,443,050.00 Plan 2009 $ 943,050.00 GEPACK-SABIC Business plan Page 23
  • 24. Management and Main Office Factory and Warehouse: Tbilisi, St. Nutsubidze District of Stskheta, Agdgomiantkari, GEPACK BLDG, P.O.Box: 59842, Georgia P.O.Box: 23548, Georgia Tel:+955 32 216632 – Ext:11 Tel:+955 32 216632 – Ext:12 Fax:+955 32 317423 Fax:+955 32 317423 11. Georgian Taxation SystemAlthough it is considered one of the m ost transparent and even inspiring system s of the world,but in our project we have a separate plan to legally avoid paying so much Taxes.The Georgian governm ent charges 25% of net income as Incom e Tax, and for our kind ofactivity there is no Social Tax, while the Tax of Added Value (VAT) is 18% (to be paid withcustoms).The Property Tax is 1%, and finally the Profit tax is 15%.(Attachment 28: Georgian Tax Code) 12. Legal Environment License……………………………………………………………….… Available Permits.………………………………………………………………… Not required Health, workplace, or environmental regulations...…………………… Available Special regulations………………………………….…..…………...… Not required Zoning or building code…………………………………..…………… #174 Insurance coverage……………………………………..……………… Yes Trademarks, copyrights or patents…………………………...………... Available 13. Management Team ● Board of Directors: ● Management advisory board: Mr. Archil Mkheidze, Chairman. Dr. Mahmoud Al-Jammal, Dr. Mahmoud Al-Jammal Manager. Mr. Zviadi Baramia ● Attorney: ● Accountant: Mr. Nino Chokheli Mr. Russudan Mikadze. ● Banker : ● Consultant : TBC Bank, Mr. Nato Chokheli, Mr. George Akhaladze, Back-office Manager. Coca-Cola Bottlers Georgia, Financial Manager. GEPACK-SABIC Business plan Page 24

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