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Business plan.(vader bhavesh) Document Transcript

  • 1. A BUSINESS PLAN ON PAPER BAGS PREPARED BY: Vadher Bhavesh J. (ENRL. NO. 117360592053) M.B.A. Sem.-III Year- 2012-13. SUBMITTED TO: Prof. Dr. Rajesh Patel. INSTITUTE:N.R. Vekaria Institute of Business Management Studies, Junagadh.
  • 2. STUDENT DECLARATION I the undersigned Vadher Bhavesh J. student of M.B.A. (Sem-III of N.R. VekariaInstitute of Business Management Studies – Junagadh), hereby declare that thisBUSINESS PLAN is the record of authentic work carried out by my own efforts, under theguidance of Prof. Dr. Rajesh Patel during the academic year 2012-13.Place:-Junagadh.Date: - Your sincerely, (Vadher Bhavesh j.) 2
  • 3. INDEXSR. P ARTICULAR P AGENO. NO. 1 Executive summery 2 Business plan at a glance 3 Management setup 4 Vision 5 Mission 6 Justification of location 7 Raw materials 8 Machines 9 Product details10 Market potential11 Manufacturing process12 Organization structure13 SW OT analysis14 Production capacity schedule15 Staff and labour16 Total fixed assets17 Cost of production18 W orking capital19 Sources of finance20 Interest of capital21 Depreciation22 Fixed and variable cost23 Break even analysis24 Cost of capital25 Profitability analysis26 Conclusion 3
  • 4. Executive summery A business plan is an essential tool for anyone trying to obtain fundingfor an innovative project, regardless of the type of funding, be it a grantapplication, approaching a bank for a loan, getting in contact with a ventur ecapitalist. The business plan should be well developed as this will be your wayof presenting the current state of our company and detailed strategy of howyou plan to carry out your project. The business plan will need to conveythe strength of your idea and how it can be implemented successfully. In this business plan to use totally eco-friendly papers. To make theproduct popular in every place of Gujarat and gradually cover all nearbystates. To make the firm a medium scale industry and then a large scale. Ifpossible I would expor t my product, as they are highly in demand in foreigncountries. Let’s hope for the best and work hard to make all future planscome true. W ith the expectation of high profitability it is assumed that it would bethe perfect product to be manufactured in today’s environment. AFTER ALLIT’S AN ENVIRONMENTAL FRIENDLY PRODUCT! !! Its Save-“E” paperbags. Today market of paper bags is expanding; demand for the product isincreasing day by day. The return on this business is also satisfactory. 4
  • 5. BUSINESS PLAN AT A GLANCEName of the Unit Paper BagsRegistered Office Plot No. 228, GIDC, Lodhika, Kalawad Road, Metoda, Rajkot-360 005.Location of the Unit Plot No. 228, GIDC, Lodhika, Kalawad Road, Metoda, Rajkot-360 005.Form of Organization Sole proprietor FirmName of Owner Vadher Bhavesh j.Name of Product Paper BagsSize of the Unit Small ScaleCost of Project Rs. 40,00,000Means of Finance SIDBI,HDFC Own Capital 5
  • 6. MANAGEMENT SETUP (Owner’s Background)Name Vadher Bhavesh J.Age 22 YearsAddress “At- Olvan, TA-Una, Dist- Junagadh.Academic Qualification MBA (Finance)Role in the Unit FinanceFinancial Contribution 40% of Owned Capital 6
  • 7. VISION Vision is a picture of what a firm want to be in broad terms what itcome to altimetry achieve it is what ultimately the firm or person would liketo become. Therefore vision statement articulate the ideal description oforigination give shape to it interr elated future “Vision is a description of something (an organization, corporateculture, a business, a technology) in the future “Following vision of paper bags  To use totally eco -f riendly papers, which are made not tree.  To make the product popular in every place of Gujarat and gradually cover all nearby states.  To offer continuous value added product to our customer .  To make the firm a medium scale industry and then a large scale.  If possible I would export my product, as they are highly in demand in foreign countries. Let’s hope for the best and work hard to make all vision come true. 7
  • 8. MISSION Mission is what an organization is and why it exists. Organization relates theirexistence to satisfying particular need of the society. They do this in term of their mission.Thus, Organization finds a role for its self to pay in the society in by playing this roleorganization meet the requirement of so city. The role organization play whether it isproducing a product or services that role describe by strategic mission. “Mission is a statement which defines the role that an organization plays in a society “ The Eco friendly paper bags manufacturing industry is poised for a higher growth with a bright future. Now a day’s paper bags have become the way of the modern world. It is eco-friendly and attractive as well. Paper bags are proffered more today because it makes astyle statement and adds to your appearance. Due to the increasing awareness of the hazards of plastic bags to the environmentamong the public and the ban imposed on plastic bags throughout India and abroad bythe government, there is a great demand for eco-friendly paper bags. So, I prepared plan of own eco- friendly paper bags manufacturing unit at nominalinvestment, and to provide employment opportunity to decrease unemployment in thecountry, to earn profit and save the environment in our own respective way. 8
  • 9. GENERAL INFORMATION JUSTIFICATION OF LOCATION Location plays an important role in starting industry. Before startingany industry entrepreneurs have to take a decision about the location ofindustry. They have to select that location where all the facilities must beavailable. They have to take right decision about the selection of locationbecause once a location selected it cannot be changed in the near future.The following should be taken into consideration.1. Availability of market: - Market plays an important role in the selection of location. Marketshould be near to the industry so; t he immediate sale of product is possible.It also help in reduction of cost by reducing storing of finished goods, avoidthe cost of transportation etc.2. Availability of Labour: - W ithout manpower no one can start his or her industry. If you have amachine but not manpower you cannot start your industry. So, Labourshould be available at cheap rate.3. Availability of transport: - It is required for assembling of raw material & distribution of finishedproduct. So, all type of transportation facility should be available.4. Availability of pow er & w ater: - Power & water is pre -requirement of an industry. So, the facility ofpower & water use to be sufficiently available. Thus, all the above factors justif y the selection of the location. So, t heselection would definitely contribute to the profitability. 9
  • 10. RAW MATERIALS The raw material i s the base for the production. The required rawmaterial is paper in roll, gum, printing ink, string and misc. chemicals. The raw material of this unit is easily obtained from the market and fromthe paper mills. The raw materials required in this unit are: Paper in roll Gum Printing ink Misc. chemical String MACHINES Automatic paper bag machine - 3 Nos. Stereo Press - 2 Nos. Stereo Grinder - 2 Nos. Roll Slitter motorized with 2 HP packing machine - 2 Nos. Testing equipment - 1 No. Punching Machine - 1 No. 10
  • 11. PRODUCT DETAILSPRODUCT:- The people regularly use paper bag now a days. If we go to theshopping center & purchase some goods the shopkeeper gives the good inthe paper bag. The option is also to use a polythine or plastic bag but theyare harmful to use because we can produce the plastic bag but we cannotdestroyed it.PRODUCT’S FE ATURS: - There are many features of paper bag are as fol lows.  It is very economical. : - Paper bags are very economic in nature. It is cheaply available in the market.  It is eco-friendl y in nature. : - It is very easy to produce a paper bags and we can also easily destroyed it. So, it is less harmful to nature as compare to plastic bags.PRODUCT’S USES : - Paper bags are common packing ma terial being used by bakers ,grocers, textile and cloth merchant, dry cleaner, sweet shopkeeper etc. Dueto lower price, paper bags are used even by hawkers and vendors on th efootpath for packing fruits and vegetables etc.BRAND NAME:- Brand also plays an important role in marketing. Good brand has toface less competition in the increasing market. 11
  • 12. MARKET POTENTIAL Just consider the sheer size of the existing market for plastic carry bags. It amountsto 600 billion bags. Many governments today are increasingly becoming environment-sensitive and at least project themselves to be so. Big business too wants to be seen aseco-friendly. Several local government bodies such as city municipal corporations and town-planning bodies have banned usage of plastic bags. In fact in all hill stations in India, theuse of plastic bags has been banned. Also Before some time people are usingplastic bags. But now a day’s people are realize that plastic bags areharmful to the nature. Because we can produce plastic bags but we cannotdestroy it. So, now a day people are moving toward to use a paper bagsrather than plastic bags. So it is highly demanded and profitable product. The introduction of shopping complexes & consumer stores in thesemi-urban & rural areas are creating additional demand for paper bags,paper bags manufacturer, therefore, may be taken up as a profitablemanufacturing activity in selected areas.Paper bags can be used for  Carrying household articles  Garments, toys  Stationary items  Foods & vegetables  Medicines  Cosmetic items etc. 12
  • 13. MANUFACTURING PROCESS Raw Material (Paper Roll) Cutting through Automatic Machine Stereo pressing with the help of gum & chemical Grinding Printing through ink Punching Packing TestingMANUFACTURING PROCESS IN DETAIL The required raw material is in the form of roll, the cutting of roll isdone through the automatic paper bag machine according to the size, andthen pressing of required size is done through stereo pressing machine withthe help of gum & chemical. Then side grinding of paper bag is done. Thenthe process of printing is done and after that punching is done and after thi sstring is tied in these holes and at last they are tested for bursting pressureand packing is done. 13
  • 14. ORG ANIZATION STRUCTURE The organization is establishing of effective authority relationship among selectedworks, persons and work places in order for the group to work together efficiently.Organization is a basic activity of any business firm. Ow ner Production Personnel Marketing Finance Manager Manager Salesman Accountant W orkers 14
  • 15. SWOT ANALYSIS Every existing firm has their own strength, weakness, opportunities and threat.There four aspects have their importance in each and every existing business. It ispossible that strength of one unit may be weakness for another and opportunity for onebecomes threat for another. As every company, PAPER BAGS also have their own strength, weakness,opportunity and threats.STRENGTHS  It is eco-friendly in nature.  lower price  less competitors  Quality of product.  Use of modern technology.  Current fashion trendWEAKNESSES  Plant capacity.  It is not useful in monsoon season  Less advertising effort 15
  • 16. OPPORTUNITIES  Increasing awareness of hazards of plastic  Ban imposed on plastic bags in many states  It is opportunity to in a normal market purchase comes with a packaging and a bag Form a stall on the road to superstore in big malls, everywhere bags are provided.  This is something which will never end packaging and visibility provides companies the added advantage.THREATS  Government policies  Introduce new product similar to plastic bags.  Increase raw material price. 16
  • 17. STAFF & LABOURNo. Staff & Labour No.1. Factory Staff Skilled 4 Unskilled 62. Technical Supervisor 13. Clerk cum typist 14. Accountant 15. Peon cum W atchman 16. Salesman 27. Manager 1 17
  • 18. TOTAL FIXED ASSETSNO. P ARTICULAR AMOUNT1. Land (400 Sqm @ Rs.1100) 4,40,0002. Building (275 Sqm @ Rs.1800) 4,95,0003. Boundary W all & Gate 35,0004. Plant & Machinery Automatic Paper Bag 15,00,000 Stereo Press 5,00,000 Stereo Grinder 7,00,000 Roll Slitter 2,50,000 Testing Equipment 80,000 Punching Machine 50,0005. Furniture & Fixtures 1,50,0006. Electrification & Installation Charges 75,0007. Computer, Telephones & Fax Machine 1,00,000Total 43,65,000 18
  • 19. COST OF PRODUCTIONRaw Material Particulars RatePerkg. Req.perda y Req.permonth Req.per year Paper in roll 10 2,950 73,750 8,85,000 Total (Rs.) 29,500 7,37,500 88,50,000 Gum 8 35 875 10,500 Total (Rs.) 280 7,000 84,000 Printing Ink 65 20 500 6,000 Total (Rs.) 1,300 32,500 3,90,000 Misc. 4 40 1,000 12,000 Chemical Total (Rs.) 160 4,000 48,000 String 7 50 1,250 15,000 Total (Rs.) 350 8,750 1,05,000 Net Total 7,89,750 94,77,000Staff & Labour Particulars No. Rate P.M. P. A. Factory Staff Skilled 4 2,000 8,000 96,000 Unskilled 6 1,800 10,800 1,29,600 Technical Supervisor 1 5,000 5,000 60,000 Salesman 2 3,000 6,000 72,000 Manager 1 7,000 7,000 84,000 Clerk cum typist 1 2,500 2,500 30,000 Accountant 1 3,500 3,500 42,000 Peon cum W atchman 1 2,000 2,000 24,000 Total 44,800 5,37,600 19
  • 20. OTHER EXPENSES & UTILITIES Sr. Particulars P.M. P. A. 1. Electricity 17,000 2,04,000 2. W ater Charges 1,500 18,000 3. Postage & Telegram 2,000 24,000 4. Stationery 1,200 14,400 5. Repairs 2,000 24,000 6. Telephone Expense 1,800 21,600 7. Transport inward 2,000 24,000 outward 2,000 24,000 8. Packing 3,000 36,000 9. Miscellaneous Exp. 2,000 24,000 10. Audit Fees 21,500 11. Professional Tax 1,000 12. Legal Fees 15,500 13. Insurance 1,02,000 14. Selling Exp. 16,750 2,01,000 Total 51,250 7,55,000TOTAL COST OF PRODUCTION Sr. Particulars P.M. P. A. 1. Raw Material 7,89,750 94,77,000 2. Staff & Labour 44,800 5,37,600 3. Other Expenses 51,250 7,55,000 Total 8,85,800 1,07,69,600 20
  • 21. TOTAL WORKING CAPITAL REQUIREMENT Working capital is very important for every business unit; either it might be small scale or large scale. Working capital is capital which is invested for daily use of the firm. Mainly working capital is used for salary purpose, rent, and repair work & for paying off allowances. Sr. Particulars P.M. P. A. 1. Raw Material 7,89,750 94,77,000 2. Staff & Labour 44,800 5,37,600 3. Other Expenses 51,250 7,55,000 Total 8,85,800 1,07,69,600 TOTAL PROJECT FUND Sr. Particulars Amount 1. Fixed Cost 43,65,000 2. W orking Capital (2 months) 16,75,550 Total 60,40,550SOURCES OF FINANCE Sr. Particulars Rate Amount 1. Own Capital (40%) 30,00,050 2. Borrowed Capital (60%) HDFC 12% 22,50,000 SIDBI 10% 22,50,000 Total 75,00,000 21
  • 22. INTEREST ON CAPITAL Sr. Particulars Rate Amount 1. Own Capital (40%) 8% 2,40,000 2. Borrowed Capital (50%) HDFC 12% 2,70,000 SIDBI 10% 2,25,000 Total 7,35,000DEPRECI ATIONSr. Particulars Value Amount1. Building (10%) 4,50,000 49,5002. Plant & Machinery (25%) 30,80,000 7,70,0003. Other Fixed Assets (15%) 3,10,000 46,5004. Computer (40%) 40,000 16,000Total 8,82,000ANNUAL COST OF PRODUCTION Sr. Particulars Amount 1. Raw Material 94,77,000 2. Recurring Expenses 12,92,600 3. Depreciation 8,82,000 4. Interest on Investment 7,35,000 Total 1,23,86,600 22
  • 23. SCHEDULE OF FIXED & V ARI ABLE COST Variable cost Fixed cost Particulars Amount Amount Depreciation - 8,82,000 Int. on capital - 7,35,000 Salary 3,22,560 2,15,000 Other expenses 4,53,000 3,02,000 Raw Materials 94,77,000 - TOTAL 1,02,52,560 21,34,000FIXED COST Particulars Amount Depreciation 8,82,000 Interest on capital 7,35,000 Salary (40%) 2,15,040 Other Expenses (40%) 3,02,000 Total 21,34,040Fixed cost/unit = Total Fixed Cost/Total no. of units = 21,34,040/1,06,20,000 = 0.20 ps. /unit 23
  • 24. V ARI ABLE COST Particulars Amount Raw Materials 94,77,000 Salary (60%) 3,22,560 Other Expenses (60%) 4,53,000 Total I,02,52,560Variable cost/unit = Total Variable Cost/ Total no. of units = 1,02,52,560/1,06,20,000 = 0.96ps. /unitContribution/unit = S.P./unit -V.C./unit = 1.25 -0.96 = 0.29 ps. /unit 24
  • 25. BREAK EVEN ANALYSIS Break-even point is that point of achieving, where total revenue andtotal expenses are equal. It is the point of zero profit. If the sales exceedBEP the business will earn profit and if it decreases from BEP the businesswill incur loss. Thus, BEP may take, as the minimum level of productionand sales and company must attain in order to be economically viable.B.E.P. (%)= {Fixed Cost / (Fixed Cost + Profit)} X 75= 21,34,040/ (21,34,040 + 12,09,900) X 75= 47.86%B.E.P. (units)= Fixed Cost/ (Contribution/unit)= 21,34,040/0.29= 73,58,759 bagsB.E.P. (Rs.)= B.E.P. x S.P./unit= 73,58,759 x 1.25= Rs.91,98,449 25
  • 26. P. V. Ratio= Contribution per unit / Sales X 100= 0.29 / 1.25 X 100= 23.2%Gross Profit Ratio= Profit (EBIT) / Sales X 100= 31,10,100/ 1,28,61,500 X 100= 4.18%Net Profit Ratio= Profit after Tax / Sales X 100= 4,44,770 /1,28,61,500 X 100= 3.46 %Fixed Assets Ratio= Fixed Assets/ Sales X 100= 43,65,000/1,28,61,500 X100= 33.94% 26
  • 27. PROFITABILITY ANALYSISParticulars AmountSales 1,28,61,500Less: Cost of Production 1,61,51,600E.B.I.T. 12,09,900Less: Interest on Capital 7,35,000E.B.T. 4,74,900Less: Tax 88,970Net Profit after tax 3,85,930 27
  • 28. CONCLUSION In the product project report on paper bags I have discussed allfinancial data and other relevant information . The market of paper bags is expanding; demand for the product isincreasing day by day. The return on this business is also sati sfactory. W ith the expectation of high profitability it is assumed that it would bethe perfect product to be manufactured in today’s environment. AFTER ALLIT’S AN ENVIRONMENTAL FRIENDLY PRODUCT! !!Its Save-“E” paperbags. At last it can be said that future of this product is very bright. 28