Business plan-plastic

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Objectives
The objectives for this business plan are specific goals which are achievable by Kshitiz
Multicraft in the first few years of operation. These objectives are outlined below:
1. To Make Sales of over 30 million in 3rd year and over 60 million in 6th year.
2. To increase from single industry to three industry in 10 years.
3. To Increase gross margins.
4. To export our products in foreign market.

1


Mission
The mission of Kshitiz Multicraft is to become a recognized manufacturer of quality plastic
materials such as; tank, buckets, jugs etc. in the Nepal. The company guarantees 100 percent
customer satisfaction and values friendly service. Kshitiz Multicraft seeks to manufacture plastic
products by exceeding minimum acceptable quality standards and by providing the highest
quality product at the lowest possible price. We value our relationships with current and future
customers and hope to communicate our appreciation to them through our outstanding,
guaranteed product quality, personal service, and efficient delivery. Our commitment to our
customers and the country will be reflected through honest and responsible business.

Keys to Success
The following facts of Kshitiz Multicraft ensure its financial success:
1. Unique services, unmatched in both quality and presentation.
2. Low operating overhead.
3. Beneficial word-of-mouth advertising.
4. A healthy, versatile plastic products which is suitable for all community.
5. Bringing the new facility to maximum production within three years of operation.
6. Increasing our profit margin with the use of improved technology in the new facility.

2


Company Summary

Kshitiz multicraft sells quality products and provides excellent customer service for customers
seeking a reliable domestic plastic utilities and water storage solutions. In the future Kshitiz
intends to enter the extensive Plastic market.

Company Ownership
Kshitiz Multicraft is a privately held organization. Production takes place in Kathmandu and
sales and marketing are focused on the whole of the country.
Ownership:
Founder’s (40%)
Others (60%)

Start-up Summary
Sixty percent (60%) of start-up costs will go to assets. Start-up costs will be financed through the
owners' investments, and loans. The assumptions are shown in the following chart.
Startup Investment

Nrs. In ‘000

1. Land and land development 44000
2. Building and civil construction 25245
3. Plant, machineries & equipments 20700
4. Furniture & fixture 1000
5. Vehicles 12000
6. Pre-operating cost 1000

Total Fixed Assets 103945
Long Term Loans @ 60% 62367
Owner’s Equity @ 40% 41578

3


Startup Investments
50000
NPR 44,000.00
45000
40000
35000
30000
NPR 25,245.00
25000
NPR 20,700.00
20000
15000 NPR 12,000.00
10000
5000
NPR 1,000.00 NPR 1,000.00
0
Land and land Building and civil Plant, machineriesFurniture & fixture Vehicles Pre-operating cost
development construction & equipments

4


Company Locations and Facilities

The Kathmandu Factory is located at Chovar, Kathmandu
The factory is 1000 square meters and should be large enough for the first three years of the
company's growth.
The products will be transported to and distributed from from various company offices at Itahari,
Hetauda, Butwal and Central office at Kathmandu. The infrastructure at factory consists of:
 Administration Block
 Manufacturing Building
 Storage/Ware House

Site Selection
Chovar, Kathmandu will be our site where our industry naming “Kshitiz Multicraft Pvt. Ltd.”
Will be established. The basic reasons behind this site selection are as follows
1. Easy access to transportation as this location.
2. Since our products will be focused on Kathmandu and other districts of Nepal, it will be
easier to deliver our products to all places as required.
3. Land cost are quite cheaper in comparison to other places of Kathmandu.
4. Kathmandu is selected as industry location so that technical manpower are easily
available.
5. There are proper facilities available in the site like water, electricity and communication.
6. Easy availability of labour, skilled and unskilled manpower.
7. The cost of living is superior than other places.

5


Plant Layout

Domestic Products and
Tank Manufacturing Unit other plastic Items
production units

Power Parking
Station

Park
Finished Goods Warehouse

Guard
House
Raw Material Storage
Entrance

6


Production Scheme
There will be various production scheme for polyethene tanks and domestic plastic products. The
production scheme are shown in table below.
Production Scheme for Tank

Sn. Particular Volume Unit Remark

1 250 ltr 70

2 500 ltr 70

3 1000 ltr 150

5 Tank 2000 ltr 40

6 4000, 10000 ltr On demand

Production Scheme for Plastic utilities

Sn. particular Sizes unit Remark
1 Bucket Large 200
2 Bucket Small Various sizes 100 Various colors
3 Jug 200
4 Tub 300

For Recycled Product

Sn. particular sizes unit Remark
1 Dustbin 50 Green
2 Road Divider 10 Orange

7


Market Analysis Summary
The purchase of domestic and other Plastic Products has increased by 50 percent over the past
two years. We expect the sales to continue growing, and to capitalize on this ever-present market
for products - people will always need and buy daily plastic products.

Market Needs
Growing Population in city areas needs domestic plastic products and water storage tanks. Water
tanks are essential for the city people as well as all industrial and service sectors like hotels,
hospitals etc, as there is increasing problem of water. So for storing the water for daily
consumption water tanks will be must.

Market Trends
Kshitiz Multicraft will distribute the Products to Kathmandu and various other outlets from
various company agents.

 The cost of marketing the new product is expected to be the biggest challenge for Kshitiz.
The initial use of Hardware shops for water tanks and Departmental Stores and other
wholesalers for domestic plastic products, facilitates as a distribution channel will allow
for cost savings.

 The lack of an existing recognized brand name will be an initial problem, but in a few
years Kshitiz intends to have achieved powerful brand equity - allowing it to rely on, and
succeed because of its brand name.

Market Growth
The leading competitor is Hilltake Polytank and Gem Plasticrafts.
Consumers often only buy a new water tanks 5 to 10 years, and domestic plastic products very
frequently. Therefore, advertising of water tanks will be increased during the Dry seasons. Due
to the unmatched quality we are quite sure that our market grows upto 50% of total market
within few years.

8


Main Competitors
The main competitor of Kshitiz Multicraft poly tank is as follows:
Hilltake Industries pvt. Ltd.
Nepatop Tank Industries .
Rijalco Polytank industries.
Detail analysis of one of the tank industries is mentioned below

Hill Take
Hilltake industries is located in Biratnagar and Balaju. In Balaju it is located within BID (Balaju
Industrial District) and its production facility is accommodated in two ropani of land. The land
has been taken in lease with BID.
It is one of the leading poly tank producing industries of Nepal. It can produce six tanks at a
time. Hill take is the major contributor to market. It occupies nearly 65% of the market share and
no single industry is able to compete with Hilltake. Besides tank, it also produces dust pan, road
divider, PPR pipes etc.
Established: 2052 B.S
Raw materials:
LLDPE
Master granules/batch
Imported from Saudi Arabia, Malaysia
Machines and equipments:

s.n. Machines specification Nos. Unit price Total

1 Screw m/c 2

2 Heater (12000 watt) 2

3 Powder m/c 2

4 Die ----

5 Control panel 1

6 Electric fan ----

9


Produces tank of following capacities
100 lt. 1500 lt.
250 lt. 2000 lt.
500 lt. 5000 lt.
750 lt. 10000 lt.
1000 lt.
Daily production capacity:
Can produce six tanks at a time
Takes nearly 25 min to produce one tank
Operates 8 hrs a day
So, total capacity is around 115 tank per day
Employment generated:
General manager-1
Manager-3
Operator-10
Officer level employee-20
Labours-35
Drivers-7
Other staffs-15
Total- nearly 95

10


The main competitor Kshitiz Multicraft HDPE plastic products is:
Gem plasticrafts pvt. Ltd.
Bagmati polyethene industries.

Gem Plasticrafts Ltd.
Introduction:
Established in 2041 B.S.
Located in Basundhara, Kathmandu.
Produces household products such as; Buckets, Jugs, Mugs, Hangers etc.
Production facility is accommodated in three ropani of land.

Raw material:
HDPE(high density poly ethylene)
HDPE is imported from Saudi Arabia
Cost of HDPE is Rs.160 per kilogram
Consumes one ton per day
Machines and equipments:

sn. Machine specifications Unit Cost

1 DGP WINOSOR Polo-180 (Chinese) 1 35 lakh

2 Indian machine 1 40 lakh

3 Mitsubishi 550 HG 1 2 crore

Products:

s.n. Product name Weight (gm.) Volume (lt.) Price(Rs.)

1 Bucket big 740-750 30

Bucket small 450 15

2 Jug 120-125 2

3 Mug 50 1

11


Strategy and Implementation Summary
Kshitiz Multicraft strategy is to serve niche markets of the plastic industry. There are
many untapped potential markets that desire high-quality goods, but do not know where to
purchase them. Kshitiz Multicrafts' marketing strategy will alleviate this problem.
Marketing Strategy
The marketing strategy will focus on two segments:

1. The company will benchmark the objectives for promotion, outlet selling, and personal
selling.
2. The marketing budget will be Rs 6,00,000 per year.
3. Financial scheme such as cash discount, turnover discount etc will be provided to dealers
and other schemes like cash prizes will be for customers.

Pricing Strategy
The pricing strategy will be to initially undercut our price from our main competitors by 10%,
using a market penetration strategy. Then, pricing will be adjusted to be directly competitive
with the other major competitors.
Promotion Strategy
Promotion will be initially spearheaded by public relations because of its low cost, and then
through advertising once the company begins to increase cash flow to an acceptable figure.
Sales Strategy
Kshitiz Multicraft’s sales force will move form shop to shop for initial marketing and launch
various schemes like warranty, 50% value on return of damaged products after use and other
various financial benefits scheme.

12


Sales Forecast
The following table and chart show our present sales forecast for first six years.

Year Year 1 Year 2 Year 3 Year 4 Year 5 Year 6
Sales 203152.50 270870.00 338587.50 406305.00 474022.50 541740.00
Others 0 0 0 0 0 0
Total Sales 203152.50 270870.00 338587.50 406305.00 474022.50 541740.00

Table No: 5 Sales Forecast1

Sales Forecast
600000.00

500000.00

400000.00

300000.00

200000.00

100000.00

0.00
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6

Sales Programs
Sales will be made by Hardware and sanitary wares shops for water tanks and all daily utilities
stores and departmental store for domestic products. Outlets that achieve the highest figures in
sales will receive 2% discounts in order to encourage increasing sales.

1 See financial analysis for detail

13


Organizational Chart

General Manager

Production & sales & Marketing
Maintenance Finance & Admin Manager

Maintenance Marketing
Production engineer Accountant
Engineer

PRO Driver
Clerk
Operator Technician

administration Staff

14


Organizational Structure

Kshitiz Multicraft will be a Partnership Organization. Legal matters and written
agreements are being handled by Thapa & associates.

The company is organized into three main functional areas:

 Sales and marketing.

 Finance and administration.

 Production & maintenance

Management Team

 Kamal Bdr. Shahi: Managing Director. Graduated from the Tribhuwan University of
Kathmandu (major: management). Originally from Kalikot and has worked for a Khalid
Mohammad company for two years in Dubai, UAE. Familiar with the government,
policies and key people.

 Bikash Acharya: Sales Incharge. Previously manager of an exclusive plastic industries in
India, for three years. MBA in Marketing from Kathmandu University.

 Shiva Kumar Thapa: Production Incharge. Will be in charge of production and
maintenance. Graduated from Tribhuwan University with B.E. degree in industrial.

 Narendra Kr. Mandal: Finance and Administration Incharge.

Management Team Gaps
Each of the three employees is responsible for managing his or her area of expertise. The
problems with having only one individual in charge of a department are as follows:

1. Lack of understanding of other departments.

2. Minimal management experience.
3. Sole control over all operations.

Personnel Plan

The personnel plan indicates one employee for each department:

• Production/Fulfillment.

• Sales and Marketing.
• Administration.

Beginning in 2014, there will be two employees in both Sales and Marketing and Administration.

15


Production plan
The raw materials, after purchasing is stored in store room. It is then fed to the production floor
to obtain the product as required. The type of process that must be carried out in production floor
depends upon the nature, size and type of finished product.

Production of Tank

Raw material Storeage

Accelerator operation

Screw Machining

Powder Machining

Temporary Storage

Die filling

uniform heating

Tank

Fig. Process flow diagram for tanks

16


Tank manufacturing process
Raw material
The raw materials are purchased from Saudi Arabia, Malaysia, and Hong Kong. The main raw
materials used are LLDPE and master granules.
Accelerator operation
In this process, the LLDPE and master granules are mixed in the ratio of 6:1 by weight. The
resulting mixture is then heated gently to produce solid homogenous mixture. The function of
LLDPE is to impart color on tank while master granules are used for the formation of structure
of tank.
Screw machining
The solid homogenous mixture obtained from above process is transformed into the thin wire
form of diameter approximately 0.7mm by drawing process through the screw machining. The
mixture obtained is in hot state so it is passed through the cold water to cool it. The obtained wire
is then cut into small pieces of length of approximately 0.9mm. This process is called wire
cutting.
Powder machining
The material obtained from screw machining is fed to the hoper of the powder machine and is
grinded to obtain the powder. The obtained powder might contain some granules which is
separated by driving the powder to the height of 3m with the help of two motors at the bottom
surface.
Temporary storage
The powdery material obtained from powder machine is stored into dry nylon sack, which is
frequently used for tank production.
Die filling
The die is coated with a fine grease layer to its internal surface and then the powder obtained
from the powder machine is fed to the die and is capped properly.
Uniform heating
The die along with mixture is heated uniformly. The rotating motion of die is controlled by
electronic control panel. The process where the rotating motion of die is controlled through
control panel and die is heated uniformly by rotating it is called roto molding process. The die is
heated for 15-20 minute and temperature of die is controlled by control panel.
Tank
The tank is taken out of the die and then it is cooled by means of air (either by use of electric fan
or by use of natural air). The tank taken out of die the normally need no additional finishing
process but in some cases soft filing can be carried out to remove some unwanted plastic scraps
associated with the product.

17


Production of Buckets, Jugs etc.

Raw material Storeage

Injection Moulder

Required Product (bucket, jug etc)

Fig. Process flow diagram for household items

Raw material
The raw materials are purchased from Saudi Arabia, Malaysia, and Hong Kong. The
main raw material used is HDPE.
Injection molder
One of the most common methods of shaping plastic resins is a process called injection
molding. Injection molding is accomplished by large machines called injection molding
machines.
Resin is fed to the machine through the hopper. Colorants are usually fed to the machine
directly after the hopper. The resins enter the injection barrel by gravity though the feed throat.
Upon entrance into the barrel, the resin is heated to the appropriate melting temperature.

18


The resin is injected into the mold by a reciprocating screw or a ram injector. The reciprocating
screw offers the advantage of being able to inject a smaller percentage of the total shot (amount
of melted resin in the barrel). The ram injector must typically inject at least 20% of the total shot
while a screw injector can inject as little as 5% of the total shot. Essentially, the screw injector is
better suited for producing smaller parts.

The mold is the part of the machine that receives the plastic and shapes it appropriately. The
mold is cooled constantly to a temperature that allows the resin to solidify and be cool to the
touch. The mold plates are held together by hydraulic or mechanical force. The clamping force
is defined as the injection pressure multiplied by the total cavity projected area. Typically molds
are overdesigned depending on the resin to be used. Each resin has a calculated shrinkage value
associated with in.
Required Product
The required product is then obtained from the injection molding process. The size and type of
product can be varied by varying the molder. By this process, we can obtain jugs, mugs and
buckets.

19


Plastic Recycling
The slogan “GO GREEN” is increasingly becoming popular and in fact essential to protect
environment. As we know, plastics are non degradable they help to pollute environment. If it is
recycled, then environment pollution due to plastics can be reduced.
It is difficult to trace back when exactly the recycling would have started. On the basis of
informal interaction with various people in the field of recycling it may be suggested that
recycling of the waste generated from the manufacturing and processing units would have been
the first step. The machinery required for the reprocessing is technically similar to the processing
machinery.

Process flow diagram

Plastic Waste Collection

Plastic Waste Storage

Washing

Crushing

Temopary storage

injection moulder

Required Product

Fig. Process flow diagram for dustbins and road dividers

20


Plastic waste collection
Plastics are widely used and are one of the main ingredients of environment pollution. The waste
plastics collected by scavengers are bought by the company which is later utilized to produce
various plastic products.

Plastic waste storage
The waste plastics that is bought by company is then stored in raw storage.
Washing
The collected plastics may contain unwanted particles; they may contain those particles which
may affect the production process. So, to remove those unwanted particles it is first fed to the
washing room where it is washed by water, detergents and other chemicals if required.

Crushing
The washed plastic waste is then sent to crusher for crushing. Crusher transforms those plastic
waste into small granular particles.
Injection molder
A mold is bolted into the Clamping section of the machine. The machine closes the mold, then
applies a large force to “Lock” the mold closed. Inside the closed mold is a cavity that is the
exact shape of the plastic part.

The Injection section of the machine has a hopper to hold plastic pellets; a barrel with
heater bands to liquefy the plastic pellets; a feed screw to move the pellets forward in the barrel;
a check valve to force the liquid plastic into the mold, and a nozzle to seal the injection section to
the mold. The liquefied plastic is forced into the cavity of the mold with high pressure.

21


Once the liquid plastic has been injected into the mold, the machine goes into the Cooling phase.
The liquid plastic must cool enough to turn solid so it takes on the shape of the cavity and stays
that way. While the cooling take place, the screw will rotate, bringing in more pellets for next
part.

When the part is ready to be removed from the mold, the clamp will open, and the part will be
removed from one half of the mold. Then the part will be Ejected from the other half of the
mold, and the machine will start a new cycle.
Required product
Finally, we can obtain dust pans, toys etc.

22


Financial Analysis
Nrs. In’000

1. Fixed Assets Investment 103945
a) Long Term Loan 62367
b) Owner’s Equity 41578
2. Initial Working Capital 66334.01
a) Short Term Loan 24756.01
b) Owner’s Equity 41578
3. Total Investment (initially) 128701.01
a) Long term Loan 62367
b) Short term Loan 24756.01
c) Owner’s Equity 41578

Fixed Asset Investment

Nrs. In ‘000

7. Land and land development 44000
a) Land 5 ropani@ 80 lakh/ropani 40000
b) Land development @ 10% 4000

8. Building and civil construction 25245
a) Manufacturing facility
i) Manufacturing area including all sections 5400 sq.ft. @1500 8100
ii) Quality control, store and administration 10800 sq.ft. @1200 12960
b) Refreshment and guard house 2700 sq.ft. @ 700 1890
c) Waste disposal management
Subtotal 22950
Contingencies @ 10% 2295

23


9. Plant, machineries & equipments 20700
For PVC Tank
a) Plastic Extruder 200
b) Plastic Crusher 150
c) Rock n Roll type Roto Moulding Machine 200
d)Bi-axial Moving Oven Type Machine 500
e) Dies 1000

For Plasticraft
a) Injection Moulder (Indian+ Chinese) 9000
b) Control Panel 500

Recycling Plant
a) Crusher 150
b) Extruder 200
c) Injection Moulder 4000

 Transformer (250KVA) + stabilizers 800

 Generator 4000

10. Furniture & fixture 1000
a) Office furniture 350
b) Factory furniture 150
c) Office equipments + computers 500

11. Vehicles 12000
a) Delivery van-2 3000
b) Truck-1 2000
c) Car-3 6000
d) Motorcycle-5 1000

12. Pre-operating cost 1000
a) Feasibility report 100
b) Engineering design, construction & management 500
c) Registration 100
d) Technical consultancy 200
e) Miscellaneous 100

Total Fixed Assets 103945
Long Term Loans @ 60% 62367
Owner’s Equity @ 40% 41578

24


Annual Operating Cost

A] Fixed Cost
1. Depreciation 5116.25
a) Building & civil construction @ 5% 1526.25
b) Machinery & equipments @ 10% 1590
c) Vehicles @ 15% 1800
d) Furniture & fixture @ 20% 200

2. Amortization on pre-operating expenses @ 10% 100
3. Insurance on fixed asset (except land &
pre-operating expenses) @ 1% (1% of 59425000) 594.25

4. Office overheads 1270
a) Office material/stationery 200
b) Advertisement & Goodwill 500
c) Audit & legal expenses 100
d) Communication 120
e) Repair & maintenance 250
f) Miscellaneous 100

5. Interest on long term loan Rs 62655000 @ 15% 9398.52

6. Indirect labor (23-number) 4778.80
a) Managing director-1 @ Rs.50,000/month 600
b) Production manager-1 @ Rs.40,000/month 480
c) Marketing manager-1 @ R.s40,000/month 480
d) Finance manager-1 @ Rs.20,000/month 240
e) Administration manager-1 @ Rs.20,000/month 240
f) Sales Officers-5 @ Rs. 15,000/month 900

25


g) Accountant-1 @ Rs. 15,000/month 180
h) Administrative staffs-3 @ Rs. 10,000/month 360
i) Storekeeper-2 @ Rs. 10,000/month 240
j) Drivers-3 @ Rs. 8,000/month 288
k) Watchmen & Helpers- 3 @ Rs. 6,000/month 216
l) Sweepers @ cleaners-2 @ Rs. 5,000/month 120
Subtotal 4344
Plus 10% fringe bonus 434.40

Total Fixed Cost 21257.82

B] Variable Cost
1. Utilities 57650
a) Electricity 4000000 units @ Rs 8/unit 32000
b) Water 50
c) Fuel(LPG) 25600

2. Repair & maintenance 1907.45
a) Building & civil construction @ 1% 252.45
b) Vehicle @ 5% 600
c) Machinery & equipment @ 5% 1035
d) Furniture & office equipment @ 2% 20

3. Raw material & Inputs ( ref. Annex) 384180
a) Active raw material (pellet); (7520 X 300) @ Rs.160 360960
b) Raw material from recycle plastics (430 X 300) @ Rs. 180 23220

26


4. Interest on short term loan Rs. 81279990 @ 14% 11379.20

5. Variable Overheads 400
a) For production 250
b) For administration 150

6. Direct Labor (no-18) 3300
a) Supervisior-3 @ Rs. 20000/month 720
b) Skilled labor (Operator)-10 @ Rs. 15000/month 1800
c) Unskilled labor-5 @Rs. 8000/month 480

Subtotal 3000
Plus 10% fringe benefits 300

7. Sales Promotional Expenses (10% of net income Rs.677.175 X106 )
67717.50

Total variable costs 526534.15

27


Annual Production Cost

S.N. Year of Operation 1 2 3 4 5 6 7
% Capacity utilization 30 40 50 60 70 80 100
1 Raw materials 115254.00 153672.00 192090.00 230508.00 268926.00 307344.00 384180.00
2 Direct Labour 990.00 1320.00 1650.00 1980.00 2310.00 2640.00 3300.00
3 Utilities 17295.00 23060.00 28825.00 34590.00 40355.00 46120.00 57650.00
4 Repair Maintenance 572.24 762.98 953.73 1144.47 1335.22 1525.96 1907.45
5 Prime Cost(1+2+3+4) 134111.24 178814.98 223518.73 268222.47 312926.22 357629.96 447037.45
6 Varriable Overhead 120.00 160.00 200.00 240.00 280.00 320.00 400.00
7 Sales Promotion Expenses 20315.25 27087.00 33858.75 40630.50 47402.25 54174.00 67717.50
Administration
8 6643.05 6643.05
6643.05 6643.05
6643.05 6643
Overheads* 6643.05
9 Factory cost(5+6+7+8) 161189.54 212705.03 264220.53 315736.02 367251.52 418767.01 521798.00
10 Maturities** 5216.25 5216.25 5216.25 5216.25 5216.25 5216.25 5216.25
11 Financial Costs*** 12864.09 13994.57 14185.23 14375.88 14566.54 14757.19 16078.32
Production
12
Costs(9+10+11) 179269.88 231915.85 283622.01 335328.15 387034.31 438740.45 543092.57

*Administrative Overheads include indirect labour, Insurance and Office Overhead
**Maturities include depreciation and amortization
*** Financial Costs from loan repayment

28


Working Capital Estimation

Year of Operation 1 2 3 4 5 6 7
M
% Capacity Utilization 30 40 50 60 70 80 100
I Current Assets
1.Inventories
a) Raw material 25 9604.50 12806.00 16007.50 19209.00 22410.50 25612.00 32015.00 3
b)Work in Progress* 2 894.08 1192.10 1490.13 1788.15 2086.18 2384.20 2980.25
c) Finished Goods** 15 8059.48 10635.25 13211.03 15786.8 18362.58 20938.35 26089.9
2. Account Receivable*** 30 20315.25 27087.00 33858.75 40630.50 47402.25 54174.00 67717.50 6
3.Cash in Hand
/requirement**** 25 3827.96 4919.42 6010.88 7102.34 8193.79 9285.25 11468.17 1
42701.2 56639.7 70578.2 84516.7 98455.3 112393.8 140270.8 1
Total Current Assets 7 7 9 9 0 0 2
II Current Libalities
Account payable***** 25 1441.25 1921.67 2402.09 2882.50 3362.92 3843.34 4804.17

41260.0 54718.1 68176.2 81634.2 95092.3 108550.4 135466.6 1
III Net Working Capital 1 0 0 9 8 6 5
Increase In working Capital 41260.01 13458.09 13458.10 13458.09 13458.09 13458.09 26916.19

IV Working Capital Mangement
Short term loan(60% of NWC) 24756.01 32830.86 40905.72 48980.57 57055.43 65130.28 81279.99 8
Owner's Equity (40% ofNWC) 16504.01 21887.24 27270.48 32653.72 38036.95 43420.19 54186.66 5
Increase in Owner's Equity 16504.01 5383.24 5383.24 5383.24 5383.24 5383.24 10766.47

29


Term Loan Repayment
Long Term Loan Repayment
Year of Operation
1 2 3 4 5 6 7 8
Loan at the
beginning 62655.00 62655.00 56389.50 50124.00 43858.50 37593.00 31327.50 25062.00
Repayment on
annual basis 0.00 6265.50 6265.50 6265.50 6265.50 6265.50 6265.50 6265.50
Loan at the end of
year 62655.00 56389.50 50124.00 43858.50 37593.00 31327.50 25062.00 18796.50
Interest payment
@ 15% 9398.25 9398.25 8458.43 7518.60 6578.78 5638.95 4699.13 3759.30
Debt Servicing* 9398.25 15663.75 14723.93 13784.10 12844.28 11904.45 10964.63 10024.80

*debt servicing=amount to be paid annually =repayment of LTL+interest in LTL

Short Term Loan Repayment
Year of Operation
1 2 3 4 5 6 7 8
STL 24756.01 32830.86 40905.72 48980.57 57055.43 65130.28 81279.99 81279.99
Interest on STL @
14% 3465.84 4596.32 5726.80 6857.28 7987.76 9118.24 11379.20 11379.20
Financial costs** 12864.09 13994.57 14185.23 14375.88 14566.54 14757.19 16078.32 15138.50

**financial costs= interest on STL and LTL

30


Profit and Loss Statement

Year of Operation 1 2 3 4 5 6 7
% Capacity utilization
30 40 50 60 70 80 100
Sale Revenue/net income 203152.50 270870.00 338587.50 406305.00 474022.50 541740.00 677175.00
less: Operating cost 161189.54 212705.03 264220.53 315736.02 367251.52 418767.01 521798.00
Gross Operating Profit 41962.96 58164.97 74366.97 90568.98 106770.98 122972.99 155377.00
Less: maturities* 5216.25 5216.25 5216.25 5216.25 5216.25 5216.25 5216.25
EBIT 36746.71 52948.72 69150.72 85352.73 101554.73 117756.74 150160.75
Less: Financial Cost** 12864.09 13994.57 14185.23 14375.88 14566.54 14757.19 16078.32
EBT 23882.62 38954.15 54965.49 70976.85 86988.19 102999.55 134082.43
Less: Tax @ 20% 4776.52 7790.83 10993.10 14195.37 17397.64 20599.91 26816.49
profit after tax 19106.10 31163.32 43972.39 56781.48 69590.55 82399.64 107265.94
Less: Profit distributed
+commission+bonus 11463.66 18697.99 26383.44 34068.89 41754.33 49439.78 64359.57
Net saving 7642.44 12465.33 17588.96 22712.59 27836.22 32959.86 42906.38
Cumulative saving 7642.44 20107.77 37696.72 60409.32 88245.54 121205.39 164111.77

*maturities include Depreciation and amortization
** Financial cost s= interest on STL and LTL
Operating cost =factory cost
Corparate tax rate is 25% but accorfing to industrial policy 2067, we get tax concession of 5%

31


Cash Flow Projection

Year of operation 0 1 2 3 4 5 6 7
% Capacity utilization 0 30 40 50 60 70 100 100
A. Cash Inflow
1.Equity on
a)Fixed Assets 41770.00
b)Working Capital 16504.01 21887.24 27270.48 32653.72 38036.95 43420.19 54186.66
2.Long Term Loan 62655.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
3.Short Term Loan 24756.01 32830.86 40905.72 48980.57 57055.43 65130.28 81279.99
4.Gross Operating Profit 41962.96 58164.97 74366.97 90568.98 106770.98 122972.99 155377
Total Inflows 104425.00 83222.98 112883.07 142543.17 172203.27 201863.36 231523.46 290843.65 2
B. Cash Outflow
1.Capital Expenditure 104425.00
2.Repayment of STL 0.00 24756.01 32830.86 40905.72 48980.57 57055.43 65130.28
3.Repayment of LTL 0.00 6265.50 6265.50 6265.50 6265.50 6265.50 6265.50
4.Interest on STL 3465.84 4596.32 5726.80 6857.28 7987.76 9118.24 11379.20
5.Interest on LTL 9398.25 9398.25 8458.43 7518.6 6578.78 5638.95 4699.13
6.Working Capital (increase) 16504.01 5383.24 5383.24 5383.24 5383.24 5383.24 10766.47
7.Tax 4776.52 7790.83 10993.1 14195.37 17397.64 20599.91 26816.49
8. Profit distributed
+bonus +commission 11463.66 18697.99 26383.44 34068.89 41754.33 49439.78 64359.57
Total Outflow 104425.00 45608.28 76888.14 96041.37 115194.60 134347.82 153501.05 189416.64 1
C. Net Cash Flow 0.00 37614.70 35994.93 46501.80 57008.67 67515.54 78022.41 101427.01
D.Cumulative Cash Flow 0.00 37614.70 73609.63 120111.43 177120.10 244635.64 322658.05 424085.06 5

32


Balance Sheet

Year
Items 1 2 3 4 5 6 7 8
Assets
Long term Assets: Land,
plant and equipment 104425.00 104425.00 98159.50 91894.00 85628.50 79363.00 73097.50 66832.
Current Assets:
Accounts receivable 20315.25 27087.00 33858.75 40630.50 47402.25 54174.00 67717.50 67717.
Inventories (goods and
materials 18558.06 24633.35 30708.66 36783.95 42859.26 48934.55 61085.15 61085.
Cash In Hand 3827.96 4919.42 6010.88 7102.34 8193.79 9285.25 11468.17 11468.
Total Current Asset 42701.27 56639.77 70578.29 84516.79 98455.30 112393.80 140270.82 140270
Total Assets 147126.27161064.77168737.79 176410.79184083.80191756.80 213368.32 207102

Liabilities
Long-term liabilities:
Total long-term loans 62655.00 62655.00 56389.50 50124.00 43858.50 37593.00 31327.50 25062.
Current liabilities:
Account Payable 1441.25 1921.67 2402.09 2882.50 3362.92 3843.34 4804.17 4804.
working Capital 41260.01 54718.10 68176.20 81634.29 95092.38 108550.46 135466.65 135466.
Total Current Liabilities 42701.26 56639.77 70578.29 84516.79 98455.30 112393.80 140270.82 140270.
Owner's Equity 41770.00 41770.00 41770.00 41770.00 41770.00 41770.00 41770.00 41770.
Total Liabilities + Equity 147126.26 161064.77 168737.79 176410.79 184083.80 191756.80 213368.32 207102

33


Payback Period
Payback Period
Nrs. In'000
Year Net Cash Flow Cumulative Cash Flow

0 -104425.00 -104425.00

1 37614.7 -66810.30
2 35994.93 -30815.37
3 46501.8 15686.43
4 57008.67 72695.10
5 67515.54 140210.64
6 78022.41 218233.05
7 101427.01 319660.06
8 96344.53 416004.59
9 96645.26 512649.85
10 96946.02 609595.87

discount rate 15%

payback perid 2 years 8 months
NPV at 15% discount 180027.22
rate
IRR for 10 year period 46%

Ratio Analysis
Current Ratio 1.52
Debt/Equity Ratio 1.50
Inventory Turnover 1.80
Gross Profit Margin 0.23
Net Profit Margin 0.16
Return on Assets 0.50

34


Sensitivity Analysis
Nrs. In'000
Sale Revenue 677175.00
Annual Operating Cost
Fixed Cost 21257.82
Variable Cost 526534.15
BEP 14.11%
Raw material Cost 384180.00

Material Cost Variable Cost Revenue BEP %
A.If 10% decrease on raw material cost
345762.00 488116.15 677175.00
11.24
677175.00
B. If 10% increase on raw material cost 422598.00 564952.15 18.94

C. If 10% decrease on revenue 384180.00 526534.15 609457.50 25.00

D.If 10% increase on revenue
384180.00 526534.15 744892.50 9.74

Hence 10% decrease on the revenue is highly sensitive

35


Environmental Assessment

1. Kshitiz Multicraft is located at chovar and site is far from residential area.
2. All machine and equipment are modern and environment friendly and energy efficient.
3. There will be noise control mechanism in the Industry so there will be no sound pollution
4. Safe and healthy working environment will be incorporated in the industry.
5. Awareness will be encouraged to keep the area close to the plant neat and clean.
6. Baseline studies on the existing environmental quality at the project site will be done and
any affect resulting from the plant will be studied.
7. Implementation of Waste water treatment system reduces risk of water contamination.

36


SWOT Analysis
Strengths
 Sound economic condition of organization
 Simplification and diversification of products
 Products are reliable
 Emissions of less pollutants and chemicals
 Increasing demand of products
Weakness
 Difficult to tackle the existing products
 Poor penetration strategy
 Limited infrastructure
 Lack of qualified workers
 Politically motivated workers
 Less utilization of space and poor plant layout
 Improper maintenance
Opportunity
 Increasing industries
 Nepal entering WTO
 Increasing modernization
 Increase in per capita income
 Possibility of training and skill development programs for the personnel as well as
operator
Threat
 Competitive market
 Instable political scenario
 Poor and ineffective government policy
 Global recession
 Possibility of decreasing demand
 Change in consumer behavior about plastics
 Insufficient electrical power

37


Existing Rules and Regulations
Kshitiz Multicraft is a partnership form of organization consisting of six members as
partners. All the rules and regulation as per the general partnership organization are followed.
The company is registered under the act of large scale industry and is vowed to fulfill all the
rules, regulation and norms of the company act.

Documents required for the company registration:
1. Registration Application
2. Citizenship certificate of the owner
3. Agreement paper between the partners if the company is Partnership Company
4. Certificate of EIA.
5. No objection letter from the boundary of the neighbourhood of the landsite.
6. Busines plan of the firm.
7. Private, Partnership or joint stock is registered under small, medium or large industries
according to the amount of capital investment under company act 2008
8. Design of trademark & structure of the company.

Services Provided by Dept. of Industry
A) Related to Company Property
1. Trademark Registration
Documents: Application and required document
Apply to: Director of Industrial department branch
Time: 4 months
2. Industrial Design Registration
Documents: Appplication and required document
Time: one month
3. Patent Registration
Time: 12 month

B) Related to technology and environment
1. Approval of work list ( terms of reference)
Time: 3 days
2. Approval of Initial Environment Examination(IEE)
Time: 6 days.
3. Approval of Environment Impact Assessment(EIA)
Time: 3 days
4. Determine and approval of norms:
Time: 5 days

38


C) Related to permission and industry registration

Apply: To permission and registration department
1. Industry registration
Time: 6 days
2. Increment of capital, capacity of industry
Time: 6 days

39


Expansion Possibility

Kshitiz Multicraft Pvt. Ltd. Has great expansion goal. Kshitiz is planning to extend its products
in near future to following products

1. PVC Pipes and fitings
2. PPR Pipes and fittings
3. HDPE pipes
4. Polyethene cabinets for television, air conditioners etc.
5. Containers for colors.
6. Polycarbonate corrugated sheet.
7. Multifibre window glass.

40


Bibliography

1. Websites:
a. www.google.com
b. www.cro.gov.np
c. www.nepalchamber.org

2. Export Watch Manufacturer Business Plan from www.bplans.com

3. Business Start-up Proposal by David Cutler, Lym Close and Lyme Regis june
2010
4. Various Previous business plan reports
i. A report on Packaging Industry
ii. Business plan report on Patal PVC tank.

41


Annex

Production Cost

Price Weight Rate(Kg) Total weight of
Items Quantity Rates(Rs) Total Cost(Rs) of pellet pellet(kg)
Plasticraft
Bucket (Big) 200 250 50000 0.75 150
Bucket (Small) 100 100 10000 0.3 30
Tub 200 250 50000 0.75 150
Jug 300 25 7500 0.1 30
Total 117500 360

Water storage Tank
250 l 70 1875 131250 8 560
500 l 70 3750 262500 15 1050
1000 l 150 7200 1080000 25 3750
2000 l 40 14000 560000 45 1800
Total 2033750 7160

Recyling Product
Dustbin 50 2000 100000 8 400
Traffic Divider 10 600 6000 3 30
Total 106000 430

NOTE: The above data are of only one day,when the plants are operating at 100% capacity
Sale Revenue=Rs. 77175000
Working day = 300/year

Payback Period Calculation
Payback period = year before full recovery + unrecovered cost at start of year
Cash flow during that year

42

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