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School of Business

POKHARA UNIVERSITY

PRESENTATIONBusiness Development Plan

(Graduate Seminar- 1 credit Hour)

MBA –

IV TrimesterAugust 23, 2011

3/22/2012 1Binay Thapa MBA IV Trimester, SOB,PU



Business Development Plan of

Annapurna Organic Tea

Sardhikhola, Kaski

Name of Student: Binay ThapaRoll No.: 6

IV Trimester




Highlights of the Project

• Name of Company : Annapurna Organic Tea

• Name of Project : Organic Tea Production

• Promoter(s) : Binay Thapa & Community

People

• Objective of Project: To export Organic Tea In

International Market.

•

Capacity : 40,000 Kgs

• Duration of Projection: 5 years

• Major products: Organic Tea (Grade 1-5)




History•

Tea was discovered accidentally by Emperor Shen Nung backin 2700BC.

• He was relaxing in the garden with a cup of boiling water. At

that time some leaves from a nearby tree fell into the cup.

Unnoticed he consumed the drink. He enjoyed the taste of the tea and the pain relief of the drink was so much.

• The first tea used in England came from China.

• The UK is the largest importer of tea.

•

The English quickly developed an almost unquenchable thirstfor the drink and began searching for a way to get tea in other

countries.

3/22/2012 Name of student MBA IV Trimester, SOB,PU 4



Introduction

• Reason for selecting this project The Annapurna Organic Tea is a gift from the silvery mountains. It is grown

organically from the high elevation gardens of Himalayan range close to

Mount Annapurna and Fishtail. The local farmers are the growers and

processors of the tea.

• Uniqueness / product features : The quality and high value of this tea is attributed to the fresh soil and, the

fresh water and the fresh air of the Annapurna region. It possesses

delicate flavour along with strength and brightness. You will enjoy thefreshest and finest tea with exclusive taste and aroma from the

Annapurna Himalayas.




Production Plan

First the company will focus on the plantation of tea in Sardikhola VDCabout 3000 hectares with the coordination of ACAP, technical/resources

people, local communities, clubs, etc.

After two years the company will collect the raw material from the

farmers for the production of tea.

Step I Collection of green leaf from collection centre Step II Weathering

Step III Rolling

Step IV Fermentation

Step V Heating

Step VI Shorting

Step VII Savaging

Step VIII Separating Grade

Step IX Packaging




Project Management Plan

• BOD CEO would be the major person in this organization with

President, Vice president, Secretary .

• Expert in this project

ACAP will be the prime organization that will provide the

technical assistance.

• HR Policy

HR policy will be based on the nations law.

Compensation based on performance.

Performance appraisal on every quarter.




Management Plan

• Organization Chart

3/22/2012 Binay Thapa MBA IV Trimester, SOB,PU 8

CEO

Finance/Account

Manager

Marketing

ManagerSupervisor

Labors



SWOT Analysis• Strength Local community will favor.

Increasing importance of organic foods in the world.

Emerging issues of the health of the people.

• Weakness Nepal is out of insurgency and the nation have instable politics.

New company - needs to establish its position in the market place.

• Opportunity Consumers are living a more healthy lifestyle.

Consumers prefer quality products that offer true value.

Demand all over the world.




SWOT

• Threats

Needs to compete with foreign goods that are produced with

sophisticated technology.

Limited number of raw materials . Unstable tea supply of high quality tea.

High quality tea prices will increase moderately.




Marketing Plan

• Marketing Strategy

With the brand Anna Organic Tea we are going to introduce

innovative products in an existing market and focus on Market

Development We will spread awareness about the health betterment by

consuming the Tea and capture the educated and health

conscious class of people.

• Marketing Plan Marketing communication campaign

Marketing Promotion Campaign.




Marketing Plan•

Role of Marketing Departments & Staffs The selling process is vital in the decision making process.

The selling is making by the advice.

The clients needs to be assured in quality in order to make

them more confident the product.

• Promotion

The promotion is the most important point to launch our

products because we want to be able to compete with ourcompetitors.

We are going to set up original events in order to attract new

customers and consumers of other tea brands.




Financial Projection

• Assumption of Financial Calculations:

Year Capacity % Sales Rs.

1 40 % 1,06,92,0002 50% 1,33,65,000

3 60% 1,60,38,000

4 70% 1,87,11,000

5 80% 2,13,84,000





Assumption of Financial Calculations:

• Demand :- 3000 Kgs

• Variable Cost :- Rs. 1,26,80,000

•Fixed Cost :- Rs.27,00,000

• Market Scenario : Since people are being aware of the importance of the organic foods, they

are ready to pay high for these goods.

The tea industry in Nepal is about 150 years old.

It occupies an important place and plays a very useful part in the nationaleconomy .

Major competitive countries in tea in the world are Sri Lanka, Kenya,China and Indonesia.




Market Scenario•

Government Policy• Industry related factors Tea is hot beverage consumed by people all over the world at highest after

water.

Tea proves as refreshing drink as well as medicine and offer better health& immunization as it is consumed twice to thrice a day.

Internal factor The employees are very important since they represents the image of the

brand.

The employees and more particularly the commercial people are trained

in order to know the product and sell it properly.

The employees explains the quality, the taste of the product.





• Initial Investment :

– Fixed Assets Requirements: Rs. 45,26,500

– Working Capital Requirements: Rs. 34,73,500

• Initial Capital StructureCurrent Assets: Rs. 50,03,868 Current Liabilities: Rs. 2,08,011

Fixed Assets: Rs.40,97,350 Long Term Loan: Rs. 34,40,88

Total Assets: Rs. 91,01,218 Equity Capital: Rs. 54.52,319Total Equity & Liabilities: Rs. 91,01,218

3/22/2012 16Name of student MBA IV Trimester, SOB,PU




• Income Statement Summary In Million

100% 40% 50% 60% 70% 80%

Year 1 2 3 4 5

Sales 26.73 10.69 13.36 16.03 18.71 21.38

VC 12.65 5.06 6.32 7.59 8.85 10.12

Contribution Margin 5.63 7.03 8.44 9.85 11.26FC 6.08 6.08 6.08 6.08 6.08

EBIT 4.59 6.08 7.52 8.95 10.39

Interest 0.72 0.61 0.50 0.36 0.19

EBT 3.87 5.46 7.02 8.59 10.19

Tax 0.96 1.36 1.75 2.14 2.54

Earning After Tax 2.90 4.09 5.26 6.44 7.64

Dividend 1.45 2.04 2.63 3.22 3.82

Retained Earnings 1.45 2.04 2.63 3.22 3.82





• Cash Flow Summary In Million

Year 1 2 3 4 5

Operating cash inflow 3.4 4.3 5.9 8.0 10.5

Financing cash inflow 4.1 4.8 5.7 6.7 7.7

Investing cash Inflow

Total cash Inflow (A)

Operating cash outflow

Financing cash outflow

Investing cash outflow

Total cash outflow

Operating cash Outflow (B)

Cash Balance (A)-(B)

Add :Opening Cash balance

Closing Cash Balance3/22/2012 18Name of student MBA IV Trimester, SOB,PU




Capital Budgeting Summary

Initial Investment

Total Present Value

Non Discounted Pay Back Period

Discounted Pay Back Period

Net Present Value (NPV)

Internal Rate of Return(IRR)

Profitability Index




Projected Balance Sheet

Year 1 2 3 4 5

Current Assets 50,03,868 67,90,372 90,10,996 1,16,54,230 1,47,05,977

Fixed Assets 40,97,350 37,52,690 34,39,242 31,54,048 28,94,437

Total Assets 91,01,218 1,05,43,062 1,24,50,239 1,48,08,278 1,76,00,415

Current liabilities 2,08,011 2,60,014 3,12,016 3,64,019 4,16,022

Long Term Loan 34,40,889 27,81,137 20,02,631 10,83,993 0

Total equity 4,52,319 75,01,911 1,01,35,592 1,33,60,266 1,71,84,393

Total Equity

&liabilities

91,01,218 1,05,43,062 1,24,50,239 1,48,08,278 1,76,00,415




BEP & Major Financial Ratio

Year 1 2 3 4 5

BEP Sales1,970,284 1,809,839 1,750,568 1,696,915

1,648,333

BEP % 18% 14% 11% 9% 8%

ROI 31.91% 38.88% 42.3% 43.55% 43.45%

ROE 53.27% 54.64% 51.9% 48.27% 44.51%

ROA 31.91% 38.88% 42.3% 43.55% 43.45%

Current Ratio24.1 26.1 28.9 32.0 35.3

Interest/Sales6.73% 4.63% 3.12% 1.93% 0.91%




Sensitivity Analysis

If sales price decreases by 10%


Year 1 2 3 4 5

BEP Sales6,580,080 8,225,100 9,870,120 11,515,140 13,160,160

If cost increases by 10%

Year 1 2 3 4 5

BEP Sales

7,238,088 9,047,610 10,857,132 12,666,654 14,476,176



Sensitivity Analysis

• If cost increases by 5% and sales decreases by

10%.


Year 1 2 3 4 5

BEP Sales6909084 8636355 10363626 12090897 13818168



Recommendation

• Considering the above analysis and projection based on above

assumptions, I would like to recommend that : -.

• The concept of the project is good and well planned. The

customers are large in numbers and the product has high

demand all over the world.

• Net Present Value of the project is positive.

• The Internal Rate of Return (28%) is greater than project cost

of capital (18%).

• Expand its production in others places of Nepal.

• Advertisement should be done consistently




Any Questions???




Thank You


binay bdp presentation aug 23

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