Plastic Recycling Business Plan [PDF]

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Plastic Recycling Business Plan Hind Plastics High Quality Delievered

Group 22

ANKUR VERMA BALVINDER PRATEEK DAHIYA SHIVAM RAJAT

Executive summary COMPANY OVERVIEW .................................................................................................... 6 Mission Statement ..................................................................................................... 6 Markets and Products .................................................................................................... 7 Objectives................................................................................................................... 7 Key to success: ........................................................................................................... 7 Product and services ...................................................................................................... 8 Market comparison .................................................................................................... 8 Possible obstacles .......................................................................................................... 9 Industry and marketplace analysis ................................................................................ 9 Industry analysis ........................................................................................................ 9 STRUCTURE OF THE PLASTICS INDUSTRY .................................................................... 11 Raw Material Producers........................................................................................... 11 Compounders........................................................................................................... 11 Stockists ................................................................................................................... 11 Specialist Manufacturers or Molders ...................................................................... 11 Other Manufacturers ............................................................................................... 12 Fabricators ............................................................................................................... 12 Marketplace analysis ................................................................................................... 13 Customer analysis ........................................................................................................ 13 Competitor analysis ..................................................................................................... 13 Marketing strategy....................................................................................................... 15 Product/ service strategy ............................................................................................. 15 Pricing strategy ............................................................................................................ 15 2|

Distribution strategy .................................................................................................... 16 Advertising & promotion strategy ............................................................................... 16 Sales strategy ............................................................................................................... 16 Marketing & sales forecast .......................................................................................... 17 Development................................................................................................................ 18 Development strategy ............................................................................................. 18 Management ................................................................................................................ 19 Job description ......................................................................................................... 19 Operations ................................................................................................................... 20 Stages of Recycling and Production ......................................................................... 21 Chipping ................................................................................................................... 21 Segregation .............................................................................................................. 21 Cleaning.................................................................................................................... 21 Agglomerating / Colouring ....................................................................................... 22 Extrusion / Palletisation ........................................................................................... 22 Fabrication into end Product ................................................................................... 22 Scope of operations ................................................................................................. 22 Supply chain ............................................................................................................. 22 Gantt chart .............................................................................................................. 25 FACILITY LAYOUT ............................................................................................... 25 Financials.................................................................................................................... 26 Income statement ........................................................................................................ 27 Balance sheet ............................................................................................................ 28 Break Even Point .......................................................................................................... 30 3|

Appendix ...................................................................................................................... 31 Annuity table:........................................................................................................... 31 Bibliography ................................................................................................................ 36

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EXECUTIVE SUMMARY Plastic is the basic need of our day-to-day life. During recent years the plastic industry has grown with a substantial growth rate. This growth is driven by three sectors viz. packaging, infrastructure and agriculture. There are the various verities of plastics out of which PVC (Polyvinyl chloride) and PET (Polyethylene Terephthylene) plastics have their considerable contribution. PET plastics are generally used in the manufacturing of beverage bottles for the packaging and PVC plastic is used in the production of household plastic materials. The growing utilization of plastics in industrial and consumer applications and surrounding solid waste recycling, has led to an increased demand for recycled plastic resins and products. We the Hind plastics provide a wide range of plastic solutions for household and raw material for packaging of various companies. As a part of our ongoing efforts to exploit this opportunity we will recycle the plastics and then produce kitchenware items and other related plastic material. We will also sell the recycled plastics to the companies in the plastic business. We will have a recycling plant along with the production unit. The raw material will be procured from the waste collectors. The raw material will be post-consumed beverage bottles and other soft plastic materials Our main focus is our industrial customer whom we will sell PET bottles and PET flakes. It will contribute more than 60% of our sales. We will also focus on the household plastic business, which is the part of our portfolio. The initial set up cost will be Rs 34, 40,000. Hind plastics will be a solution proprietorship business run by the promoters. Since plastic material does not carry any brand name so it will give us an addition benefit in long term to establish our brand name. To exploit the market we will use penetration pricing as our marketing strategy and utilize our stringent distribution network and strong industrial relationship. As a future plan in coming years we will increase the variety of plastics like LDPE (Low density polyethylene) and HDPE (High density polyethylene). By doing this we will be able to produce plastic carry bags and raw material for production for plastic chairs and tables and other fiber based products.

5|

COMPANY OVERVIEW Hind Plastics provide a wide range of plastic solutions for households and raw material for packaging to the various companies. Allahabad is the place where the facility will be established and other operation will commence. We will collect the plastic garbage like consumer beverage bottles, plastic bags from various garbage stores and then our recycle unit will process it which eventually be used for the production of finished goods. The plastic garbage we are getting as raw material has two components one is PVC (Polyvinyl chloride) and other is PET (Polyethylene Terephthylene). Firstly the whole garbage is melted and then PVC and PET are separated from each other by froth flotation technique. We will create a plant (actual facilities to be shared with the recycling unit) to manufacture extruded plastic flakes (purified plastic). The extruded plastic is then molded in the various products. We will produce two types of replay plastics  

PVC (Polyvinyl chloride) PET (Polyethylene terephthylene)

Mission Statement   

6|

Strive to provide the excellent plastic solution to the customers at competitive prices. Continually expand our range of products. Poised to service both large and small customers.

MARKETS AND PRODUCTS The plastic products usually do not carry a brand name so intruding in the business like plastic will not be too hard with low price strategy. The population of Allahabad and the cities around it like Varanasi, Gorakhpur, Johnpur is around 3 Crores and this area basically comprises of low to middle income group families so they focus on plastic products rather than fiber since it is a cheaper. Hence it is huge market to exploit. From Allahabad city 500 tons of solid waste is produced from that 15tons of plastic bags and around 7 tons of plastic bottles is generated per day. So the supply of raw material will be continuous. Apart from this we will sell raw material for packaging to the various small companies in this area. Around 30 small and medium scale companies are working in this region. So a large amount of industrial customer is also available. There are two folds of products that we are providing one are industrial and other is household.

Objectives    

Develop a business that survives on its own cash. Create a company that exceeds customer satisfaction level. Expand the service to whole UP in first five years and then to Delhi. Extending the services to electronic component manufacturing companies for production of capacitors printed circuit boards etc.

Key to success:     

7|

The main keys to the success of the Company are: Secure Supply- Contract for supply of post-consumer bottles and postindustrial manufacturing waste for PET raw material feed stock. Satisfy our customer so that we can retain them Maintain low overhead and operating costs Provide better prices than all our competitors

PRODUCT AND SERVICES We will provide a wide range of plastic products for households and raw material for packaging. The recycled plastic is processed to Polyethylene Terephthalate (PET). PET is a thermoplastic polymer viscous of polyester family. The biggest property of this compound is it transparent. This is the reason why it is used for packaging. Apart from this PET have good strength, ductility, stiffness and hardness. After the recycling process completed an extruded plastic is generated. Plastics extrusion is a high volume manufacturing process in which raw plastic material is melted and formed into a continuous profile. The products we are producing are 

 

Cleaned and recycled plastic flakes of PET and bottles, recovered from postconsumer beverage bottles. (This PET will work as raw material for packaging to various firms, not for the end user) Household finished plastic goods. We will manufacture plastic tubes of various diameters, plastic kitchenware. (For the end user) PET flake will be sold to thermo formers (those who mold plastic sheets into usable products) primarily to be used to produce high-visibility packaging. And also to the beverage companies for packaging.

Recycled plastic is widely used in mainstream construction products such as damp proof membrane, drainage pipes, ducting and flooring. Bins, street signs and planters are frequently made from plastic. They are cost competitive and resistant to damage. Local authorities and schools are able to demonstrate recycling in action by specifying recycled products High strength PET is used in the clothing, furnishings, tyre cord and technical textiles. Apart from PET the household plastic will be directly sold to the end customers. In day-to-day life plastic items like water bottles, shop case scrubber etc. is frequently used. So there is a big demand of these in local market.

Market comparison While quality and delivery are important factors to our potential clients, price is most often the determining factor in a buying decision. Good-quality packaging products manufactured from recycled (less expensive) resins, as close as practical to the end customer's operations, will be most competitive and achieve a significant market share. These factors have helped to determine the business parameters of Replay Plastics. 8|

POSSIBLE OBSTACLES The product is completed and ready for the market launch. The possible obstacles are: Unavailable or scarce raw material stock for production Replay is confident that it has secured good availability of low cost post-consumer PET bottles (feed stock) derived from post-consumer beverage bottles. It may be possible that we would not get desired raw material. Company may not meet environmental standards This environmentally-favorable venture provides for the development of technically feasible and economically viable solutions to PET plastic beverage bottle recycling, as well as environmentally aware in-house re-use practices which filter and return nearly all of the process water to the production lines

INDUSTRY AND MARKETPLACE ANALYSIS Industry analysis Plastic recycling is an industry in itself in India. According to the Crisil research 7360 companies are working in this industry with a turnover of Rs 9200 Crore provides employment to 3.5 million people. In India, per capita plastic consumption is one of the lowest in the world. The per capita consumption is just one fifth of world average that is 5kg. The domestic demand of plastic has grown by 9% and reached to 4.5MMT in year 2005.The GDP has grown during this period at 6.3% and plastic industry 1.3 times of GDP. According to the Crisil report the demand of plastic by 2012 will be around 12MMT. The plastic consumption in India is booming. Demand for commodity plastics is growing at the rate of 15% per year. . India holds immense potential for the use of plastic in the infrastructure and agriculture. In case of packaging industry we are using more plastic than the developed countries. The growth is driven in three major sectors – infrastructure that is 13%% of the total, packaging is 15% of the total and 10% for plastic consumer durables. It is projected that the plastic waste generation will reach the will reach the level of 1.6 million tons annually. India produces 5600 tons of plastic waste per day.

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Region wise and polymer wise turnover of recycling industry in Rs.Crore Region

PVC

PET

West

156

383

East

75

86

North

338

158

South

111

139

Total

680

766

Each region is specialized in one type of plastic viz south: PET; north: PVC; Plastic India Foundation estimates the current plastic recycling rate at 60%. One estimate is that about 20,000 microenterprises are engaged in reprocessing and recovery of plastic waste in addition to 180,000 of various sorting and washing units, 60% of which are unregistered. Delhi alone has estimated 53,400 units and Delhi and Bombay together process over 50% of India's waste plastics.

STRUCTURE OF THE PLASTICS INDUSTRY Raw Material Producers These are chemical and petroleum companies who produce "virgin" plastic (sometimes called resin or polymer) in huge quantities. The main influence they have on the recycler is to fix prices and availability of virgin materials. Virgin material is delivered in powder or pellet form, in plastic or paper sacks of around 20 kilos weight, in large cardboard drums that hold many times that quantity or even by road tanker.

Compounders These specialist companies, usually small, stock various polymers and provide the manufacturers of plastic goods with technical advice and the most suitable materials or mixtures for each individual need. The compounder is often the best market for the recycler because he possesses superior technical knowledge and has a large volume throughput of virgin material, in which small percentages of reclaim will reduce cost without seriously affecting the quality required by the molder.

Stockists These warehouses stock polymers and compounds but neither manufacture themselves, nor provide a compounding service. They may be agents or subsidiaries of the producer companies or departments of companies concerned with the supply of other materials such as chemical, rubber or paper. They may be willing to stock reclaim alongside virgin materials, especially if these are in short supply.

Specialist Manufacturers or Molders These buy their raw materials from compounders. If they do their own compounding, or if the material is used as produced and does not need compounding, they may buy direct from stockists or producers. They are specialists in plastics and do not perform other types of manufacturing. They may be an attractive market to the recycler because they operate at high volume, but rarely have as much flexibility to vary product quality as molders who know, accurately, the final market for the product. 11 |

Other Manufacturers Many companies are not plastics specialists but employ molding operations in the manufacture of some other product. For example shoe and boot makers use plastics extensively and may carry out the various plastics molding operations in the same production sequence as the work in leather, canvas, rubber etc. Many manufacturers use plastic packaging machinery at the end of a production operation.

Fabricators These firms cut and join sheet, rod or extrusion to manufacture a variety of products. They have no opportunity to use reclaim. Machinery and Tool Makers and other sector of the plastics industry justifies mention although not customers for reclaim. The makers and suppliers of plastics manufacturing machinery, tools, moulds and dies are well informed about who does what, who makes what and who uses what within the local plastics industry. They may advise who is likely to buy material.

12 |

MARKETPLACE ANALYSIS Various overseas players wish to explore the Indian market and invest in opportunities thrown open by the country, projected to be world number 3 in plastics consumption by 2010. As shown above the north region of India is specialized in recycling of PVC. So there is a great scope of PET recycling. Apart from this the other    

A huge market with full of opportunity. Absence of standard product and service Well connected with other rural areas Having good transportation facility

CUSTOMER ANALYSIS Since we are new player in the market so we need to make some stringent strategies to penetrate market and grab customers. The customers of the plastic industry are scattered due to lack well known brand names. So our first priority will be to accumulate the defused customers. The direct customers are the customers whom we are selling our product regularly. So for us households whom we are selling plastic goods and companies who are getting raw materials for packaging are direct customers (PET bottles). So only in Allahabad around 20,000 families are our direct prospective customers and in terms of business-to-business market around 20 small and medium scale companies are our direct customers Apart from them there are few small companies that are giving compounding services. They use to collect various types of plastics flakes along with the virgin plastic and suggest customer (companies) in choosing appropriate plastic. An Asha enterprise is one compounder whom we will sell our plastics.

COMPETITOR ANALYSIS In plastic manufacturing market there is no specific brand name exists so small companies that are in this business flood the market. So they are our biggest direct competitors. As we are also not alone as a supplier of PET to the companies as raw materials there are many companies in this region that are supplying PET. Indira Plastics is one of 13 |

them who is currently selling all types of plastics items. So in case of business-tobusiness market they are our direct competitors. Kanpur is plastic recycling city of UP. The direct threat we will also have is with the companies operating in Kanpur. But as the distance between Kanpur and Allahabad is 200km as well as the road is not in good condition, so it will not affect much.

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MARKETING STRATEGY The Company has chosen to focus on the production of plastic packaging materials from recycled post-consumer beverage bottles. We have identified a significant available market in the eastern part of UP. All of our initial marketing strategy will be to secure contracts in that segment, and after reaching full planned capacity, look to grow in concert with that segment and related markets. We see little need at present for further market research and development, and will focus on continually updating our production technology in an effort to remain in the forefront of our chosen marketplace.

PRODUCT/ SERVICE STRATEGY The packaging companies require high quality and highly transparent PET bottles. The companies that are producing mineral water will reject PET bottles with even small impurity/ opaqueness. So we the Hind Plastics provide high-end PET flakes for the perfect packaging. Hind Plastics will apply recycling and extrusion technology managed by decades of industry specific expertise to create a competitive advantage for its clients. These processes will produce clean, cost-efficient, recycled raw material for manufacturers of thermoform, laminate and other high value-added products, and high strength packaging strapping for shippers of large products and pallets, thereby reducing costs and creating a clear pricing edge among their competitors . Plastic bags and plastic sheets are now in high demand. And this demand is driven by continuously increasing promotional activities.

PRICING STRATEGY As plastic products do not carry any brand name so only pricing and distribution strategies will works to achieve competitive edge. The pricing strategy we will use is penetration pricing. The price of all household plastic goods we will sell will be lower than the market price. Also for the PET flakes and bottles the price will be lower than the competitors. A lower price enables me to get contracts of PET bottles and sheets from various companies. In case of kitchenware and other household products we will provide combo offers and discounts which a common customer expects.

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DISTRIBUTION STRATEGY As I described before that firstly we will target Allahabad city and villages close to it. We will have a distribution center in the Allahabad city that continuously maintains the supply of goods. So the household plastics will be sold through small local grocery shops from which the customers can get them easily. Apart from this we will hire street hawkers who will roam around the city and sell the goods door to door. PET bottles will be stored in warehouse that is close to the facility itself. The sales people will directly contact to the companies that require these bottles for packaging and look for the contracts. In city as stated above that we will have a distribution center, from that center we will distribute to whole sellers.

ADVERTISING & PROMOTION STRATEGY As I described we are in both B2C and B2B so for this we will use two different promotional strategies. For B2C business we will use flyers that will have full detail of our product range, price, combo offers and discounts. These flyers will circulate through the newspapers across whole city. For B2B business we will promote through online social media and we will also develop our website through which enable us to widely spread our contact among various companies. The site will have full details of product that are available for companies as well as end user.

SALES STRATEGY The strategy of sales effort will be to convert potential and first time customers into long term customers. Our sales strategy is totally based upon the distribution channel and the pricing strategies. We will have a distribution centre in the city that will take care of sales of household and also supply products to the wholesalers. We will also give the industrial customers a facility to order the products through our website which will help them in reducing the delivery time. To market the products, the Company will use a number of sales agents/brokers. They have a customer base of their own, having developed successful relationships with their client over the years. Their customer base is currently demanding product so they can expand upon their current base. Of course, they will expand that to new customers when product is available. If the Company grows faster than its prime customer base, additional capacity may be developed. We will identify additional prospective customers who can be attracted for our products. 16 |

MARKETING & SALES FORECAST The first month prior to the opening will be used to get the new office in order, set up appointment and begin marketing activities. In the first month we will focus on the generating public visibility. The sales forecast is based on the assumption that we will sell all of the highest volume PET bottles that we can produce. This flake will be sold to other manufacturing companies. Recycling industry is growing with 15-20% each year. So we can assume that we will grow with at least 20%. There is a continuing strong demand for flake and extruded products made from recycled PET. Sales forecast Year 1

Year 2

Year 3

Year 4

1620000

2106000

2737800

3559140

Monthly sales

135000

175500

228150

296595

PET Sales

94500

122850

159705

207617

Household items

40500

52650

68445

88978.5

Annual sales

17 |

DEVELOPMENT The development of Hind plastics required accomplishing a series of action and formalities. Since we are new in the market we kept our production is low initially, as demand will increase the production will be enhanced respectively. Now we are recycling and producing only two types of plastics i.e. PVC and PET, as we grow we will produce a wide the range of plastics and its finished product. . The development process involves following steps:   

Legal formalities Office/business setup Future offerings and expansion plan

Development strategy In future we are looking for the production of a variety of plastic. These plastics will be  

LDPE (Low density polyethylene) HDPE (High density polyethylene)

LDPE plastic is used in the production carry bags and other plastic sheets as well as cling wrap, car covers, squeeze bottles, liners for tanks and ponds, moisture barriers in construction. And HDPE plastics are used in production of freezer bags, water pipes, wire and cable insulation, extrusion coating. Our development strategy will base on timely completion of the establishment of the business centre with low execution cost. Our strategy will focus not only the current uninterrupted production of PVC and PET and acquisition of customer as fast as we can, but we will also look for the future expansion plan and execution strategy. Our future development strategy will focus on to chart out a careful plan for the future expansion and growth of our business. The development strategy will address following issue:   

How will we expand our services? Which are the new areas we will include to provide our services? What will be the format of the business

Our development strategy will address all those above-mentioned point. As we will grow and our earning will increase, we will produce more of PVC and PET as well as expand in new area. We have a development strategy to expand our facility size in order to meet the production size. 18 |

MANAGEMENT Promoters and six supporting staff will manage the company. There will be five promoters of Hind Plastics. Marketing skills like convincing power, negotiating ability, creating promotional strategies and sales skills will all be extremely helpful in taking the business a long way and will prove intensely valuable to take Hind Plastics to flaring heights. Thus with such potential skills, and other qualities like efficient interpersonal skills, leadership skills and decision making quality, aptly makes him the best promoter and eligible founder and owner of Hind Plastics Along with promoters five more employees will work for the accomplishment of companies’ objective. One supervisor will work on the facility along with two supporting staff. Supervisor who will work upon the facility does not need to be a chemical engineer a simple technician has experience on working upon the facility can be able to do this.

Job description Process

No of employees

Proficiency

Sorting

2

Unskilled

Belt Conveyer

1

Semiskilled

PET Separator

1

Semiskilled

Packaging

4

Unskilled

19 |

OPERATIONS The operations is defined as the process used to deliver your products and service to the customer market place and also include manufacturing transportation logistics travel and after sales services. The facility is located at outside the city. Facility is divided in two parts  

Recycling and Production unit Warehouse

The facility is located in an area of 3000 sqft. Apart from these two units there will be an office that will look for the perpetual supply of required raw material and also take care about the outbound logistics. The production capacity is 80kg/hr. The operations will be based upon JIT i.e. just in time. We will have contracted with the suppliers who can supply the raw material as quickly as we want. The raw material contains post consumer beverage bottles and other plastic materials. The bottles and other plastic material that can be recycled have a specific sign from which it can be identified that it can be recycled or not. The plastic is then transferred to respective unit to be recycled because PET and PVC cannot be recycled simultaneously due to their different properties. There will be two units running parallel to each other. On unit will recycle and produce PVC plastic and other will perform the same for the PET plastic. The recycled PVC is then moved for the plastic injection-molding unit in the various shapes. Since there are a variety of product is being produced so the preference will be given to that product whose demand is high. All the products will not be produced each and every day. There will be different products that will be produced on different day according to the demand in market. After the recycling process is completed one part of PET flake is moved to the warehouse according to the demand of raw material that different companies need and other part will move for the molding in bottles. The recycled PET flake is then heated and made the viscous solution of it. The PET resin is then feeded to the molder and molder will give it various shape bottles. And then it left for drying. Those products that further need for processing like buckets; the handle will be inserted after the bucket is dried.

20 |

Stages of Recycling and Production The process of recycling of waste plastics into products of varying usefulness involves the following essential steps:      

Sizing / Chipping Cleaning Segregation. Agglomerating / Colouring Extrusion / Palletisation Fabrication into end Product.

Chipping The plastics waste should be properly sized so that those may be fed into the extruders for processing and palletizing. The sizing operation depends on the type and shape of the waste plastics. During this process, attention is required to separate any powdery material from the sized / chipped plastics.

Segregation Certain polymeric materials are compatible with each other at all proportions. For example LDPE and Lldpe are generally compatible to each other at all proportions. The advanced technology of separating / segregating different types of waste plastics involves ‘Floatation Process’. In this process the property of the varying densities of different plastics is made use of for segregating different types of plastics. However in the Indian Context, this separation or segregation process, in many cases, are done by manual process utilizing the availability of cheap and expert labor force. In case the waste is contaminated with embedded metals, proper method of separating the metals / other contaminants is required.

Cleaning The scale of cleaning depends on the type of waste. Whenever a cleaning operation is involved, it is to be ensured that the water or any other cleaning material used, should be discharged after ascertaining that the discharge does not contain any objectionable substance. A proper Treatment Device may have to be deployed – like a water treatment plant / effluent treatment plant. For drying, a suitably designed drier is used. 21 |

Many industries situated outside the metropolises, use open space for natural drying of the cleaned waste.

Agglomerating / Colouring In the next operation the sized plastics waste is mixed with colour master batch in high-speed mixers / agglomerators and the output is ready for extrusion into pellets.

Extrusion / Palletisation This is the most important part of the process wherein the sized / chipped plastics are plasticized and granulated to make the plastics material ready for fabrication next. The type and size of the Extruder depend on the type and volume of the plastics waste.

Fabrication into end Product Finally the reprocessed plastics granules are used as raw material for producing end products using similar fabrication machines like Injection Molding / Extrusion etc., depending upon specific requirement.

Scope of operations Now presently our production capacity is 200kg/day from which in initial stages we are utilizing around 50% of it. As the business expands we will reach to optimum capacity utilization. We are expecting that we will start producing more advance plastics in the fourth year of our operations and accordingly the sales will increase and the facility will have to be expanded.

Supply chain In the city there are various small post consumer plastic bottle collectors. To make a continuous supply of raw material we will have four suppliers with us. There will be one permanent supplier that will continuously supply the raw material. In case of excess demand other suppliers will be taken into consideration. Supplier will cover the transportation cost only. The finished product will be stored in the warehouse and according to the demand it will be send to city distribution center. The distribution center will directly sell the finished household plastics as well as to the small shops. Our average daily demand of raw material is 300kg and the lead-time we will keep lead-time of 6hrs. We keep a safety stock of 50 kg. So the reorder point is given by 22 |

Reorder point= average daily uses x lead time + safety stock Reorder point = 300 X .25day + 50 = 125 kg. So at each and every day we will have minimum of 125kg (safety stock+ reorder point) of raw material in our inventory.

This means that when the raw material level reaches to 125kg we will place the next order. The difference time in which we will place the order and receive the order is the lead-time that is 6hrs.

23 |

PROCESS FLOW CHART

24 |

Gantt chart

As it is an assembly line the output of one stage is feeded to the input of next stage. The whole process will run in series format. That is the reason why no parallel process is mentioned in the gantt chart.

FACILITY LAYOUT

25 |

FINANCIALS The startup cost of our business is as follows: Start-up Requirements

Amount

Start-up Expenses Legal

6,000

Stationery

500

Business Cards

500

Initial Mailing

100

Process Funding

400

Office Equipment

2,500

26 |

Total Start-up Expenses

10,000

Start-up Assets Cash Required

1,00,000

Other Current Assets

0

Long-term Assets

33,30,000

Total Assets

34,30,000

Total Requirements

34,40,000

INCOME STATEMENT The projected income is as shown below it shows that first year we will end up with loss but from second year we will start making profits. Particulars

YEAR 1

YEAR 2

YEAR 3

Year 4

Net sales

1620000

2106000

2737800

3285360

Cost of good sales

891000

1158300

1505790

1806948

Gross margin

729000

947700

1232010

1478412

Admin exp.

3000

3150

3308

3473

Advertisement

6000

7200

8640

10368

Salaries

192000

211200

232320

255552

Transportation

96000

105600

116160

127776

Maintenance

15000

15750

16538

17364

Operating expenses:

27 |

Electricity

4800

5040

5292

5557

Telephone

10000

11000

12100

13310

Legal exp.

10000

1000

1000

1000

Insurance

20000

20000

20000

20000

Rent

24000

26400

29040

31944

Other exp

6000

6600

7260

7986

386800

412940

451657

494330

EBITDA

342200

534760

780353

984082

less depreciation

303000

272700

245430

220887

EBIT

39200

262060

534923

763195

Less interest paid

175550

165061

153243

139926

EBT

-136350

96999

381680

623269

tax @ 30%

0

29100

114504

186981

PAT

-136350

67899

267176

436288

BALANCE SHEET The projected balance sheet of four years is as follows: Sources of Funds

Year-1

Year-2

Year-3

Year-4

Owner's capital

1930000

1930000

1930000

1930000

Surplus

-136350

-68451

130274

765287

Net worth

1793650

1861549

2060274

2695287

Capital

28 |

Long Term loan Loan

1417302

1324116

1219111

1100789

Creditors

70500

56722

68066

81680

Total liabilities

3281452

3242387

3347451

3877756

Plant & M/C

3030000

2727000

2454300

2208870

Less depreciation

303000

272700

245430

220887

2727000

2454300

2208870

1987983

Land

300000

300000

300000

300000

Actual Fixed Asset

3027000

2754300

2508870

2287983

Inventory

97200

315900

410670

821340

Bank

10000

40000

100000

100000

Debtors

147252

132187

117911

232703

Advance to suppliers’

0

0

210000

335730

Current Liabilities

Application of fund

Current Assets:

Investment Total Assets

29 |

100000 3281452

3242387

3347451

3877756

BREAK EVEN POINT VC

Amount in Rs

FC

Amount in Rs

Admin

3000

Other exp

6000

Interest

175550

Transportation

96000

Advertisement

6000

Telephone

10000

Insurance

20000

Wages

119250

Salary

192000

Carriage inward

238500

Rent

24000

Power

119250

Maintenance

15000

Raw material

414000

Depreciation

303000

Legal

10000

Total

748550

Total

1003000

Contribution

617000

pv ratio

0.3808642

BEP units

1965398.703

BEP SALES

15

in months

1.21

In years

135000

As the BEP is 15months it means that at 15th month we will be in a trade off total expenses and revenue.

30 |

APPENDIX Annuity table: total loan amt.= pmt[1-1/(1-i)^n]/i n is number of years i is interest rate loan amount

1500000

######

interest rate annually

0.12

######

pmt

21521

21520.64

=

month

EMI

Interest

principle

balance O/S Annual interest

1

21521

15000

6521

1493479

2

21521

14935

6586

1486894

3

21521

14869

6652

1480242

4

21521

14802

6718

1473524

5

21521

14735

6785

1466738

6

21521

14667

6853

1459885

7

21521

14599

6922

1452963

8

21521

14530

6991

1445972

9

21521

14460

7061

1438911

10

21521

14389

7132

1431780

11

21521

14318

7203

1424577

12

21521

14246

7275

1417302

13

21521

14173

7348

1409954

14

21521

14100

7421

1402533

31 |

175550

15

21521

14025

7495

1395038

16

21521

13950

7570

1387468

17

21521

13875

7646

1379822

18

21521

13798

7722

1372099

19

21521

13721

7800

1364300

20

21521

13643

7878

1356422

21

21521

13564

7956

1348466

22

21521

13485

8036

1340430

23

21521

13404

8116

1332313

24

21521

13323

8198

1324116

25

21521

13241

8279

1315836

26

21521

13158

8362

1307474

27

21521

13075

8446

1299028

28

21521

12990

8530

1290498

29

21521

12905

8616

1281882

30

21521

12819

8702

1273180

31

21521

12732

8789

1264391

32

21521

12644

8877

1255515

33

21521

12555

8965

1246549

34

21521

12465

9055

1237494

35

21521

12375

9146

1228348

36

21521

12283

9237

1219111

37

21521

12191

9330

1209782

32 |

165061

153243

38

21521

12098

9423

1200359

39

21521

12004

9517

1190842

40

21521

11908

9612

1181229

41

21521

11812

9708

1171521

42

21521

11715

9805

1161716

43

21521

11617

9903

1151812

44

21521

11518

10003

1141810

45

21521

11418

10103

1131707

46

21521

11317

10204

1121504

47

21521

11215

10306

1111198

48

21521

11112

10409

1100789

49

21521

11008

10513

1090277

50

21521

10903

10618

1079659

51

21521

10797

10724

1068935

52

21521

10689

10831

1058103

53

21521

10581

10940

1047164

54

21521

10472

11049

1036115

55

21521

10361

11159

1024955

56

21521

10250

11271

1013684

57

21521

10137

11384

1002300

58

21521

10023

11498

990803

59

21521

9908

11613

979190

60

21521

9792

11729

967461

33 |

139926

124920

61

21521

9675

11846

955615

62

21521

9556

11964

943651

63

21521

9437

12084

931567

64

21521

9316

12205

919362

65

21521

9194

12327

907035

66

21521

9070

12450

894584

67

21521

8946

12575

882010

68

21521

8820

12701

869309

69

21521

8693

12828

856481

70

21521

8565

12956

843526

71

21521

8435

13085

830440

72

21521

8304

13216

817224

73

21521

8172

13348

803876

74

21521

8039

13482

790394

75

21521

7904

13617

776777

76

21521

7768

13753

763024

77

21521

7630

13890

749134

78

21521

7491

14029

735104

79

21521

7351

14170

720935

80

21521

7209

14311

706624

81

21521

7066

14454

692169

82

21521

6922

14599

677570

83

21521

6776

14745

662825

34 |

108010

84

21521

6628

14892

647933

85

21521

6479

15041

632892

86

21521

6329

15192

617700

87

21521

6177

15344

602356

88

21521

6024

15497

586859

89

21521

5869

15652

571207

90

21521

5712

15809

555398

91

21521

5554

15967

539432

92

21521

5394

16126

523305

93

21521

5233

16288

507018

94

21521

5070

16450

490567

95

21521

4906

16615

473952

96

21521

4740

16781

457171

97

21521

4572

16949

440222

98

21521

4402

17118

423104

99

21521

4231

17290

405814

100

21521

4058

17462

388352

101

21521

3884

17637

370715

102

21521

3707

17813

352901

103

21521

3529

17992

334910

104

21521

3349

18172

316738

105

21521

3167

18353

298385

106

21521

2984

18537

279848

35 |

88957

67486

107

21521

2798

18722

261126

108

21521

2611

18909

242216

109

21521

2422

19098

223118

110

21521

2231

19289

203829

111

21521

2038

19482

184346

112

21521

1843

19677

164669

113

21521

1647

19874

144795

114

21521

1448

20073

124722

115

21521

1247

20273

104449

116

21521

1044

20476

83973

117

21521

840

20681

63292

118

21521

633

20888

42404

119

21521

424

21097

21308

120

21521

213

21308

0

43293

16031

BIBLIOGRAPHY  Crisil report on plastic industry  Plastic waste option for small scale recourse recovery by Inge Lardinois  Small scale recycling of plastic by- Jon Vogler

36 |