Business plan Of ECO FASHION PAPER BAGS By- SANTOSH WATPADE (MBA finance) [email protected] co. in , [email protected] com Eco-Fashion Bags Pvt. Ltd. MIDC, Patalganga, Dist- Raigad, Maharashtra. Email- [email protected] com, [email protected] com Telephone No. Fax No. – 1 Table of contents Sr. No. 1 2 3 4 5 6 7 8 9 Topic Head Table of contents Executive summary Company profile Product profile Marketing plan Operation plan Human resources plan Finance plan Abbreviations Page No. 03 04 05 07 09 14 18 22 2
Executive Summary EFBPL Company offers eco-friendly paper bags to the people who adore nature at the Same time believe in following current fashion trends. Our clients are malls, multiplexes, Departmental stores, gift shops, hyper markets, super markets, specialty stores, etc. GG Company offers variety of paper bags of proven quality to satisfy different requirements of customer. Changing lifestyle & fashion has been a major factor of growth of this industry. Ban on plastic bags in many states is like a ray of hope for this ndustry. Market penetration strategy has been used to gain & expand market share. Trusted employees and skilled employees secure future growth of the organization. EFBPL Company is a private company formed by eleven promoters. Promoters will be taking hands on management roles in the company. Each Promoters contribution will be Rs. 200000 and rest of capital will be raised through bank loan. Based on the size of our market and our defined market area, our sales projections for the first year are 7200000 units.
Because of our endless efforts we are confident to achieve our vision which is “To become a proactive, integral & responsible member of our environment & communities & become a strong global supply base for world class products. ” 3 Company profile: Eco fashion paper bags pvt. Ltd. Is one of the emerging paper bags company in Maharashtra. We are into the manufacturing of eco friendly paper bags as there is increasing awareness of hazards of plastic bags to the environment among the people, and the ban imposed on plastic bags throughout India Vision :
To become a proactive, integral and responsible member of our environment and communities making us a strong global supply base for world class products. Mission: To constantly grow the customers by designing superior and cost effective product through contribution of ideas. Values: Excellence Integrity Passion Teamwork Commitment 4 Company logo: The logo contains the picture of earth supported by three green arrows. The blue colour of earth symbolizes coolness, royalty and consistency. The supporting three green arrows indicate that the company is highly concerned about protecting the earth environment.
We are focussing on automated processes and quality of products where as most of the industries in this sector are still using manual and semiautomated processes. We are stirving to replace the plastic bags by our ecofriendly paper bags. 5 PRODUCT PROFILE: Environmental issues have been driving market towards use of more eco-friendly products. Government also join hand by banning the plastic and environmental hazardous products. This has been a motivation for us to venture in this field. We are using recycled paper to produce eco friendly paper bags as it not only stop cutting of trees but also prevent degradation of environment.
Our product is an eco friendly and also stylish, trendy and of high strength and unique design, we are having flexible manufacturing facilities to produce bags as per customers specification and needs. Products range: The bags of six sizes are being manufactured, Size ranges from; 18”? 24” to 40”? 50”. We can also manufacture bags according to the customers? specifications & requirement. Product strength: Our entire product having good busting strength and it is between 18 to 36 g/inch. Product quality: We are committed to produce superior quality products. Raw material is being purchased from selected reputed supplier.
Product price: Our price range is between Rs 3 to Rs10. 6 Total Company Risk Product Market Risk Customer loss Product Obsolescence Competition Increases Product Demand Decreases Financial Risk Capital cost change Inflation Default on debt Exchange rate changes Legal Risk Shareholder lawsuits Employee discrimination lawsuits Regulatory Risk Environmental law change Price support ends Tax Risk Income tax increases VAT and Excise tax increases Input risk Input price increases Labor strikes Key employees leave Supplier fails Operational Risk Machinery breakdown Product defect increases Inventory Obsolescence MARKETING PLAN EXECUTIVE SUMMARY (Marketing): With paper bags we would first target the big cities of Maharashtra like Mumbai, Pune, Nagpur, Nasik, Aurangabad and Kolhapur. And our plant location would be a place between Mumbai and Pune [Patalganga] which is very advantages because our majority of customer resides in Mumbai and Pune. The current demand of the product in six cities is around 40lakhs/month and is expected to go high because the customer becoming more environment friendly and the government restriction on plastic bags has been helping this industry to grow.
Fashion and lifestyle of the customers are also changing has been an important factor for the growth of this industry. Consumer acceptance and brand recognition are the major barriers for us to enter in the market. We are new in this industry we need to first build trust, develop relationship with customer, develop our brand and win customer loyalty. Our product quality is as good as our competitors but our USP is price of products, we operate at low margin to build market share excellent network of transport help us to reach customers at right time, at right place with right product.
We are ready to provide the higher credit than the existing supplier initially. We are committed to excellent quality of high strength and flawless products. The key to success would be excellent service, quality products at a reasonable price and sales force capabilities. 8 SWOT analysis Strength: Low cost with high quality Dedicated & punctual staff On time delivery Favorable access to distribution networks Weaknesses: Entry. Inexperience. High cost structure. Limited area of operation. Not able to enjoy economy of scale. Opportunities: Scope of export. Large market. Changing of lifestyle / fashion.
Environmental conscious customer. Threats: Large number of competitors. Threats of substitute product. Highly sensitive & volatile market. New regulation. 9 MARKETING STRATEGY Marketing objective: Within three years we would like to expand our business to rest of the big cities of India and will become important domestic player in terms of market share. In fourth year of our business we will export our product and would go for backward integration. Target market: Our customers would be malls, multiplexes, hypermarkets, supermarkets, departmental stores, speciality stores, gift shops etc.
Our target market is six cities in Maharashtra and we are focussing primarily on Mumbai, Pune but there are also plan for other cities too. Demand forcast: The Demand of the product in six cities is around 40lakhs units/month. 10 Strategies: Low pricing strategy we are using because of large number of competitors in the market. We are using market penetration strategy by keeping low price we would enter in to the market and expand our customer base and increase our market share. Promotion: For promoting our product we using following strategies like; Discounts, Salesperson incentives, Word of mouth, Friends? etwork, Commission to sale person, credit to customers, catalogs, Contract with the NGOs working on environment friendly projects like use of paper bags, Travelling and other incentives etc. Promotion budget would be Rs 3 lakhs for first year, 5 and 8 lakhs for second and third year respectively. Market research: Data is collected by two ways primary data collection and secondary data. Primary data through buyers? intention survey in which information is collected about their buying intensions, buying quantities, their existence suppliers etc. Secondary data is collected from industry trade journals, experienced industry people i. . experts etc. Sample size were 170[6 cities] and conveyance sampling is used. Competitors: 1. 2. 3. A. L paper house, jaipur, Rajasthan. Delhi paper bag manufacturer, Delhi. Vishal paper bag company, Mumbai, Maharashtra. 11 Sales forecast: On the basis of buyer intention survey the sales is forecasted to be around 6 lakhs units/ month. Our capacity is 10 lakhs units/ month. We have decided to use only 60% of our production capacity in first year. Our target sales would be around 6 lakhs units/month in 6 cities which is under our production capacity. CONTROLS: Marketing organisation: sales manager will be responsible for the sale in six cities. 7 salesmen; 3 for Mumbai, 2 for Pune, 1 for Nasik and Nagpur and 1 for Aurangabad and Kolhapur [first year] 12 OPERATION PLAN A) Plant Location:The plant location for the manufacturing of paper bags is at PATALGANGA MIDC (RAIGAD) Maharashtra. Distance from Mumbai is 75 kms. Distance from Pune is 77 kms. Size of land= 2000 Sq ft. Approximate cost of land= Rs 540000 (270 Rs, per Sq Ft). Approximate construction cost= Rs 510000. Power requirement for plant= 3phase, Location Advantages:1) 2) 3) 4) 5) Reasonable cost of land. Infrastructure facilities.
Transportation facilities. Near to target market. Easy availability of skilled and unskilled labour. B) Plant Machineries and Equipment:I) Automatic Paper Bag Manufacturing Machine. Number of machine= 1. Cost of machine = Rs 4,80,000/Size of machine= 12? x 6? x 5? (in feet). Production capacity= 30,000 bags per shift (8 hrs). Utilized capacity = 24,000 bags per shift II) Automatic Screen Printing Machine. Number of machine= 2. Cost of each machine= Rs 22,000/- for 1 machine. Size of machine= 3? x4 ? x 4 ? (in feet). Production capacity = 12000 bags per shift (8 hrs). (Single machine) 13 III) Eylet Machine. Number of machine=3.
Cost of each machine= Rs 20,000/- for 1 machine. Size of machine= 2? x 1, 1/2? x 4? (in feet). Production capacity =6000 bags per shift (8 hrs). IV) D-Shape Eylet Machine. Number of machine=1. Cost of machine= Rs18, 000 /Size of machine= 2? x 1. 1/2? x 4? (in feet). Production capacity= 6000 bags per shift (8hrs). C) Plant Layout:The „U? shape plant layout is taken into consideration for easy and smooth flow of materials from one machine to another. The sequence of machineries is arranged in specific manner according to their respective production capacity and flow of materials so that there should not be the problem of Bottle Necks. 4 FIGURE OF PLANT LAYOUT:- P R I E E 1 2 E 3 E M A C H RAW N T I N G A U A U T O M A T I C U L O A MATERIAL 4 – I N D ROOM R A W E 2 P A P E R N L FINISH GOODS M A T ROOM 2 2 ROOM MAINTANSE 2 1 1 1 2 D B A G S E R I PARKING A L M G F M ADMINISTRATIVE SPACE DEPARTMENT / 15 C . D D) Raw Material Requirement:For producing the paper bags the CRAFT Paper is used as a raw material. The required specification is in terms of Busting Factor and GSM of the paper. For producing the quality bags the busting factor of the craft paper should range between 18 to 36 g/inch and the GSM of the paper is between 120 to 400.
Average paper consumption for 1 bag= 125 gm (Avg. of all sizes of bags). In one shift of 8 hours 24000 bags are produced and required approximate 3000 kgs of raw materials i. e. 3 tones of craft paper every day. In a month of 25 working days 75 tones of craft paper is needed. E) Suppliers :The supplier plays an important role for supplying the raw materials on time, at reasonable cost and at high quality. If the supplier fails then production of bags becomes in danger so the company have 4 suppliers to avoid the risk of falling short of raw materials.
I) Name of supplier: – Premium Paper & Board Industries Ltd. Address: – A/604, Kol-Dongri Cooperative Housing Society, Parsiwada International Airport Road, Andheri East, Mumbai, Maharashtra. Contact No. :-91-22-3294187, 91-22-2825212 E-mail id:- II) Name of supplier:-Rama Pulp & Paper Ltd. Address:-1, Chateau Windsar, 86 Veer Nariman Road, Mumbai, Maharashtra. Contact No. :-91-22-22875653, 91-22-22875652 E-mail id:III) Name of supplier:-Kay Pulp & Paper Mill Ltd. Address:-Mai-fair Eleganza, B-7, NIBM Road, Kondhawa, Pune, Maharashtra. Contact No. :-020- 26833754, 020 -26831787.
E-mail id:IV) Name of supplier:-Aerographic Papers Pvt. Ltd. Address:-E-40, MIDC, Hingna Industries Area, Nagpur, Maharashtra. Contact No. :-91-7104-234689, 919422146489. E-mail id:- 16 HUMAN RESOURCE PLAN The most important asset of EFBPL is the workforce alleged in it. In our organisation, the human asset will be considered as profit centre, not as cost centre. Organisation structure of the company shows the line of authority and the work function in the concerned organisation. The organisation structure of the company is stated as belowThe employees in an organisation are differentiated as1.
Administration workforce 2. Manufacturing workforce a. Administrative workforce – The administrative workforce will include the management which includes the people which are not involved in production of the product directly but they play important role in generating desired profit for company. The administrative workforce will deal with the business policy and strategies required for the growth of the organisation. The administrative workforce and their payment are stated as below- Name of position Finance Manager Sales Manager Clerk Salesman Guard Asst. sales manager st year Salary/ No. of head / position month (Rs. ) 1 1 1 7 3 12000 12000 4000 8000 2500 2nd year Salary/ No. of head / position month (Rs. ) 1 1 1 10 3 13000 13000 4500 8000 2500 3rd year No. of position 1 1 1 12 3 1 Salary/ head / month (Rs. ) 14000 14000 5000 8500 3000 9000 17 b. Manufacturing workforceThe manufacturing workforce will be the people who are actually working on the machine and they are related to the plant level processes. They are the people who are actually producing the desired product. It includes the plant-level employees and deals with daily functions in company.
The manufacturing workforce and their payment are stated as below1st year 2 year nd 3rd year Name of position Supervision 1 Skilled Unskilled Helper 1 6 1 Salary/wages Salary/wages Salary/wages No. of No. of No. of per head per per head per per head per position position position month (Rs. ) month (Rs. ) month (Rs. ) 8000 6000 4000 2000 1 2 8 1 8500 6500 4500 2500 2 2 12 2 9000 7000 5000 3000 Various HR related issues? Bonus – The bonus will be given as per the guidelines provided by the law. As the company is stared newly, the rate of bonus will be minimum, i. e. 8. 33% of the annual income.
The rate of bonus will be revised in coming years depending on the net profit of the company. ? Attendance Every employee is bound to present in the company premises during the working hours. The employee is supposed to make an entry before entering in and leaving company premises. 18 ? Annual leave with wages – As per the factories Act, 1948 the employees are liable to annual leave with wages if they complete 240 days in a calendar year. So the employee will be entitled for one leave for 20 days actual working. ? Holidays- Every employee will be entitled for holiday for 15 days (including National holidays).
It will be decided as per the list of holidays provided by Maharashtra state. ? Working hours- The minimum hour of working is 8 hours per day. There will be six working days per week. If required, the employee can do overtime but the total no of working hours should not exceed than 14 hours in a day. ? Safety and health- All the machinery will be properly fenced with safeguard. The machines which are involved are so sophisticated and safe, that it reduced the probability of accidents in company. The company will also pay attention to the guidelines for the safety and health given in Factories Act, 1948. Benefits – The employee will be entitled for the different benefits provided by the Employer? s State Insurance Act, 1948. Different benefits such as disability benefit, sickness benefit, dependant benefits etc. will be provided by the company under the law. ? Record Maintenance The record will be maintained related to the workforce such as time keeping and attendance leaves, and other issues as well. 19 Measures for motivating our employeesAs we stated before, the human workforce is the highly-ranked source for the company. Hence we are paying proper attention to this area of concern.
We will be handling the issues related to employees with great care. At initial stage, we are planning to schedule a small meeting every Saturday before leaving the premises. The meeting would be conducted in presence of every employee of the company. This session will be for open discussion. Here, the workman can discuss any important point related to working condition and such issues. This will help in enhancing the communication between different departments of the organisation and help to reduce disputes. Also we are bound to maintain proper working environment for our employees.
The employees will be provided by safe and excellent working condition, so the desired productivity can be achieved. 20 FINANCIAL PLANNING Assumptions a) Inflation rate may vary between 4%-6%. b) Sales target will be achieved according market research and production capacity. c) Capital cost may vary but marginally Financial policies a) The rate of depreciation of fixed assets is 10% per annum b) Purchases will be purchased on 45 days credit. c) Sales will be made on one month credit. d) Raw material will be in stock for 1 month for 1st year and for 15 days from 2nd year onwards e) Finished goods will be in stock for 15 days. ) Extra cash will be invested in treasury bills and government bonds. g) Profit margin will be 6 % on cost of capital 21 Financial details a) Capital requirement i) Fixed assets Particulars Furniture Land and building Machinery Amount Rs. 50000 1050000 602000 Total ii) Working capital requirement Particulars Current assets Closing stock Loan and advances Sundry debtors Cash in hand Investment (short term) 1702000 Amount Rs. 3611241 400000 2666483 20765 1800000 4556000 275000 758851 637633 Current liabilities Sundry creditors Dividend Tax provision Indirect tax Direct tax Net working capital 271008 iii) Capital requirement Particulars Fixed assets requirement Working capital requirement Total Amount Rs. 1702000 2271008 3973008 b) Capital sources Particulars Promoters contribution Bank() Loan Total Amount Rs. 2200000 1800000 4000000 22 c) Projected Cost Sheet Particulars Raw Material Labour Power Fuel & Others Direct cost Administrative exp. Electricity Repairs Postage Packaging & forwarding Telephone Legal charges Salary Interest Stationary bonus & other Depreciation Insurance Administrative cost Selling and distribution Travelling & Conveyance Promotion Sales exp.