Assignment

On

Business Plan on Paper Bag

MBA – II Section - A

Subject: New Business Development

Prepared By:

No. Name Roll No.1 Dave Bhavesh G. 222 Kalathiya Ajay K. 393 Maniya Dilip B. 50

Submitted To:

Mr. Jaydeep Chaudhry

INDEX

SR No. PARTICULAR PAGE NO.1 Executive summery2 Business plan at a glance3 Management setup4 Vision5 Mission6 Justification of location7 Raw materials8 Machines9 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 Cost of capital24 Break even analysis25 Profitability analysis26 Conclusion

1. EXECUTIVE SUMMARY

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.

2. . BUSINESS PLAN AT A GLANCE

Name of the Unit Paper BagsRegistered Office Plot No. 228, GIDC,Lodhika,

Kalawad Road,

Metoda,

Rajkot-360 005Location of the Unit Plot No. 228, GIDC,

Lodhika,

Kalawad Road,

Metoda,

Rajkot-360 005.

Form of Organization Partnership firmName of Owner Dave Bhavesh

Kalathiya Ajay

Maniya DilipName of Product Paper BagsSize of the Unit Small ScaleSSI Registration Number Applied forSubsidy Registration No Applied forCost of Project Rs. 40,00,000Means of Finance SIDBI,

HDFC

Rs. 10, 00, 000 by each Partner

3. . MANAGEMENT SETUP

Partner’s Backgorund

1. Name Dave Bhavesh G.Age 22 YearsAddress At Varachha Area,

Surat. Academic Qualification MBA (Finance)Role in the Unit FinanceFinancial Contribution Rs. 10, 00, 000.00

2. Name Ajay KalathiyaAge 23 YearsAddress At Katargam Area,

Surat.Academic Qualification MBA (Marketing)Role in the Unit MarketingFinancial Contribution Rs. 10, 00, 000.00

3. Name Dilip ManiyaAge 22 YearsAddress At, Varachha Area,

Surat.Academic Qualification MBA (Production)Role in the Unit ProductionFinancial Contribution Rs. 10, 00, 000.00

ORGANIZATION STRUCTURE

The organization is establishing of effective authority relationship among selected works, persons and work places in order for the group to work together efficiently. Organization is a basic activity of any business firm.

owner

Production

Manager

Workers

Personnel

Manager

Marketing

Salesman

Finance

Accountant

4. VISION OF THE COMPNAY

Vision is a picture of what a firm want to be in broad terms what it come to altimetry achieve it is what ultimately the firm or person would like to become. Therefore vision statement articulate the ideal description of origination give shape to it interrelated future

“Vision is a description of something (an organization, corporate culture, a business, a technology) in the future

“Following vision of paper bags

To become a proactive, integral and responsible member of our environment and community, making us a strong global supply base for world class products.

To use totally eco friendly papers, which are made not from 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.

5. MISSION

Mission is what an organization is and why it exists. Organization relates their existence 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 role organization meet the requirement of so city. The role organization play whether it is producing 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.

To constantly grow the customers by designing superior and cost effective product through contribution of ideas.

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 a style statement and adds to your appearance.

Due to the increasing awareness of the hazards of plastic bags to the environment among the public and the ban imposed on plastic bags throughout India and abroad by the government, there is a great demand for eco-friendly paper bags.

We prepared plan of own eco- friendly paper bags manufacturing unit at nominal investment, and to provide employment opportunity to decrease unemployment in the country, to earn profit and save the environment in our own respective way.

GENERAL INFORMATION

6. JUSTIFICATION OF LOCATION

Location plays an important role in starting industry. Before starting any industry entrepreneurs have to take a decision about the location of industry. They have to select that location where all the facilities must be available. They have to take right decision about the selection of location because once a location selected it cannot be changed in the near future. The following should be taken into consideration.

1. Availability of market2. Availability of Labour3. Availability of transport4. Availability of Power & water.

Thus, all the above factors justify the selection of the location. So, the selection would definitely contribute to the profitability. Metoda METODA Highway G.I.D.C Mani Dwip Temple“SAV – EPaper bags”AtulMarblesPvt Ltd.

Map

PRODUCT DETAILS

PRODUCT

The people regularly use paper bag now a days. If we go to the shopping center & purchase some goods the shopkeeper gives the good in the paper bag. The option is also to use a polythine or plastic bag but they are harmful to use because we can produce the plastic bag but we can not destroyed it.

PRODUCT’S FEATURS

There are many features of paper bag are as follows. .1. It is very economical. :- Paper bags are very economic in nature. It is cheaply available in

the market. 2. It is eco-friendly 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 material being used by bakers and confectioners, grocers, textile and cloth merchant, dry cleaner, sweet shopkeeper etc. Due to lower price, paper bags be used even by hawkers and vendors on the footpath for packing fruits and vegetables etc.

BRAND NAME

Brand also plays an important role in marketing. Good brand has to face less competition in the increasing market.

MARKET POTENTIAL

Just consider the sheer size of the existing market for plastic carry bags. It amounts to 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 as eco-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, the use of plastic bags has been banned. Also Before some time people are using plastic bags. But now a day’s people are realize that plastic bags are harmful to the nature. Because we can produce plastic bags but we cannot destroy it. So, now a day people are moving toward to use a paper bags rather than plastic bags. So it is highly demanded and profitable product. The introduction of shopping complexes & consumer stores in the semi-urban & rural areas are creating additional demand for paper bags, paper bags manufacturer, therefore, may be taken up as a profitable manufacturing activity in selected areas.

Paper bags can be used for

Carrying household articles Garments, toys Stationary items Foods & vegetables Medicines Cosmetic items etc.

The introduction of shopping complexes & consumer stores in the semi-urban & rural areas are creating additional demand for paper bags, paper bags manufacturer, therefore, may be taken up as a profitable manufacturing activity in selected areas.

Before some time people are using plastic bags. But now a day’s people are realize that plastic bags are harmful to the nature. Because we can produce plastic bags but we cannot destroy it. So, now a day people are moving toward to use a paper bags rather than plastic bags. So it is highly demanded and profitable product.

RAW MATERIALS

The raw material is the base for the production. The required raw material is paper in roll, gum, printing ink, string and misc. chemicals.

The raw material of this unit is easily obtained from the market and from the 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.

MANUFACTURING PROCESS

Raw Material (Paper Roll)

Cutting through Automatic Machine

Stereo pressing with the help of gum & chemical Grinding

Printing through ink

Punching

Packing

Testing

MANUFACTURING PROCESS IN DETAIL

The required raw material is in the form of roll, the cutting of roll is done through the automatic paper bag machine according to the size, and then pressing of required size is done through stereo pressing machine with the help of gum & chemical. Then side grinding of paper bag is done. Then the process of printing is done and after that punching is done and after this string is tied in these holes and at last they are tested for bursting pressure and packing is done.

PRODUCTION CAPACITY SCHEDULE

Production Capacity 1,06,20,000 UnitsNo. of Working Days in a month 25No. of Working Days in a Year 300No. of Shifts per day 1No. of Working hours per shift 8Production Capacity per month 8,85,000 Units

STAFF & LABOUR

No. Staff & Labour No.1 Factory Staff

SkilledUnskilled

46

2 Technical Supervisor 13 Clerk cum typist 14 Accountant 15 Peon cum Watchman 16 Salesman 27 Manager 1

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 is possible that strength of one unit may be weakness for another and opportunity for one becomes 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 Fewer competitors Quality of product. Use of modern technology. Current fashion trend

WEAKNESSES

Plant capacity It is not useful in Monsoon season Less advertising effort

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.

COST OF PRODUCTION

Raw Material

Particulars Rate/kg. Req/day Req.per month Req.per yearPaper in roll 10 2,950 73,750 8,85,000Total (Rs.) 29,500 7,37,500 88,50,000Gum 8 35 875 10,500Total (Rs.) 280 7,000 84,000Printing Ink 65 20 500 6,000Total (Rs.) 1,300 32,500 3,90,000Misc. Chemical 4 40 1,000 12,000Total (Rs.) 160 4,000 48,000String 7 50 1,250 15,000Total (Rs.) 350 8,750 1,05,000Net Total 7,89,750 94,77,000

Staff & Labour

Particulars No. Rate P.M. P. A.Factory StaffSkilledUnskilled

46

2,0001,800

8,00010,800

96,0001,29,600

Technical Supervisor

1 5,000 5,000 60,000

Salesman 2 3,000 6,000 72,000Manager 1 7,000 7,000 84,000Clerk cum typist 1 2,500 2,500 30,000Accountant 1 3,500 3,500 42,000Peon cum W atchman

1 2,000 2,000 24,000

Total 44,800 5,37,600

OTHER EXPENSES & UTILITIES

Sr. Particulars P.M. P. A.1. Electricity 17,000 2,04,0002. Water Charges 1,500 18,0003. Postage & Telegram 2,000 24,0004. Stationery 1,200 14,4005. Repairs 2,000 24,0006. Telephone Expense 1,800 21,6007. Transport

Inwardoutward

2,0002,000

24,00024,000

8. Packing 3,000 36,0009. Miscellaneous Exp 2,000 24,00010. Audit Fees 21,50011. Professional Tax 1,00012. Legal Fees 15,00013. Insurance 1,02,00014. Selling Exp 16,750 2,01,000Total 51,250 7,55,000

Sr. Particulars P.M. P. A.1. Raw Material 7,89,750 94,77,0002. Staff & Labour 44,800 5,37,6003. Other Expenses 51,250 7,55,000Total 8,85,800 1,07,69,600

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 94,77,0002. Staff & Labour 44,800 5,37,6003. Other Expenses 51,250 7,55,000Total 8,85,800 1,07,69,600

TOTAL PROJECT FUND

Sr. Particulars Amount1. Fixed Cost 43,65,0002. W orking Capital (2 months) 16,75,550Total 60,40,550

SOURCES OF FINANCE

Sr. Particulars Rate Amount1. Own Capital(40%) 30,00,0502. Borrowed Capital (60%)

HDFCSIDBI

12%10%

22,50,00022,50,000

Total 75,00,000

INTEREST ON CAPITAL

Sr. Particulars Rate Amount1. Own Capital(40%) 8% 2,40,0002. Borrowed Capital (60%)

HDFCSIDBI

12%10%

2,70,000 2,25,000

Total 7,35,000

DEPRECI ATION

Sr. 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 16,000

Total 8,82,000

ANNUAL COST OF PRODUCTION

Sr. Particulars Amount1. Raw Material 94,77,0002. Recurring Expenses 12,92,6003. Depreciation 8,82,0004. Interest on Investment 7,35,000Total 1,23,86,600

SALES FORECAST (NEXT 5 YEAR)

Year Units per Annum Rate per Unit Amount (Rs.)1 1,04,50,000 1.25 1,30,62,5002 1,18,40,000 1.25 1,48,00,0003 1,39,50,000 1.25 1,74,37,5004 1,42,00,000 1.50 2,13,00,0005 1,45,50,000 1.50 2,18,25,000

SCHEDULE OF FIXED & V ARI ABLE COST

Particulars Variable cost Fixed costAmount Amount

Depreciation -- 8,82,000Int. on capital -- 7,35,000Salary 3,22,560 2,15,000Other expenses 4,53,000 3,02,000Raw Materials 94,77,000 --TOTAL 1,02,52,560 21,34,000

Fixed cost/unit = Total Fixed Cost/Total no. of units

= 21, 34,040/1, 06, 20,000

= 0.20 ps. /unit

Variable cost/unit = Total Variable Cost/ Total no. of units

= 1,02,52,560/1,06,20,000

= 0.96ps. /unit

Contribution/unit = S.P./unit -V.C./unit

= 1.25 -0.96

= 0.29 ps. /unit

BREAK EVEN ANALYSIS

Break-even point is that point of achieving, where total revenue and total expenses are equal. It is the point of zero profit. If the sales exceed BEP the business will earn profit and if it decreases from BEP the business will incur loss. Thus, BEP may take, as the minimum level of production and sales and company must attain in order to be economically viable.

B.E.P. (%) = {Fixed Cost / (Fixed Cost + Profit)} * 75

= 21, 34,040/ (21, 34,040 + 12, 09,900) * 75

= 47.86%

B.E.P. (units) = Fixed Cost/ (Contribution/unit)

= 21, 34,040/0.29

= 73, 58,759 Bags

B.E.P. (Rs.) = B.E.P. * S.P./unit

= 73, 58,759 * 1.25

= Rs.91, 98,449

P. V. Ratio= Contribution per unit / Sales *100

= 0.29 / 1.25 * 100

= 23.2%

Gross Profit Ratio= Profit (EBIT) / Sales * 100

= 31,10,100/ 1,28,61,500 * 100

= 4.18%

Net Profit Ratio = Profit after Tax / Sales * 100

= 4, 44,770 /1,28,61,500 * 100

= 3.46 %

Fixed Assets Ratio = Fixed Assets/ Sales * 100

= 43, 65,000/1, 28, 61,500 * 100

= 33.94% 26

PROFITABILITY ANALYSIS

Particulars AmountSales

Less: Cost of Production

1,28,61,500

1,61,51,600E.B.I.T.

Less: Interest on Capital

12,09,900

7,35,000E.B.T.

Less: Tax

4,74,900

88,970Net Profit after tax 3,85,930

CONCLUSION

In the product project report on paper bags I have discussed all financial data and other relevant information.

The market of paper bags is expanding; demand for the product is increasing day

by day. The return on this business is also satisfactory.

With the expectation of high profitability it is assumed that it would bethe perfect product to be manufactured in today’s environment. AFTER ALL, IT’S AN ENVIRONMENTAL FRIENDLY PRODUCT! !!

Its Save-“E” paper bags. At last it can be said that future of this product is very bright.

LOAN REPAYMENT SCHEDULE

IDFC bank

Year Openingbalance Installment Closingbalance Interest1 22,50,000 2,25,000 20,25,000 2,70,0002 20,25,000 2,25,000 18,00,000 2,43,0003 18,00,000 2,25,000 15,75,000 2,16,0004 15,75,000 2,25,000 13,50,000 1,89,0005 13,50,000 2,25,000 11,25,000 1,62,0006 11,25,000 2,25,000 9,00,000 1,35,0007 9,00,000 2,25,000 6,75,000 1,08,0008 6,75,000 2,25,000 4,50,000 81,0009 4,50,000 2,25,000 2,25,000 54,00010 2,25,000 2,25,000 0 27,000

SHRINATHJI INVESTMENTS

Year Opening balance Installment Closing balance Interest1 22,50,000 1,50,000 21,00,000 2,25,0002 21,00,000 1,50,000 19,50,000 2,10,0003 19,50,000 1,50,000 18,00,000 1,,0004 18,00,000 1,50,000 16,50,000 1,80,0005 16,50,000 1,50,000 15,00,000 1,65,0006 15,00,000 1,50,000 13,50,000 1,50,0007 13,50,000 1,50,000 12,00,000 1,35,0008 12,00,000 1,50,000 10,50,000 1,20,0009 10,50,000 1,50,000 9,00,000 1,05,00010 9,00,000 1,50,000 7,50,000 90,00011 7,50,000 1,50,000 6,00,000 75,00012 6,00,000 1,50,000 4,50,000 60,00013 4,50,000 1,50,000 3,00,000 45,00014 3,00,000 1,50,000 1,50,000 30,00015 1,50,000 1,50,000 0 15,000