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Operations Management
Business Plan:
Manufacturing of Plastic Bags

UniCUJePlastics Pvt. Ltd.

Submitted By:
Chetan Godbole
Dhaval Patel
Dipanjan Dey
Joshi Aniket

04BS0554
04850674

04850698

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Acknowledgements
Any project requires amount of insights & information. Any
information is critical and important. Not only the
information, but also a roadmap to travel with that piece of
information

is also very important.

This project

is no

different.
Infact this project mandated a lot of access to Plastic
industries as we visited PLASTIVISION 2004. We express
our sincere gratitude to organisers of PLASTIVISION
2004. We also express our sincere gratitude towards Mr.
Vijay Kedia of Allied Plastics who guided us throughout
this project
And we thank Prof. Suhas Rane for giving the oppurtunity
to enhance our knowledge about preparation of business
plan.

TABLE OF CONTENTS

Sr No.

Pace
4

Particulars

1 Company Information

Product Details

. Indian Plastic Industry

,.

Market Research

7
10

Product Details

12

3 Process Details

15

. Process flow
. Cost of machines
. Process flow diaQram

16
18
1
23

4 Project Plan

"

. Project plan
. Quality and quantity of manpower
. Financial anlysis and BEP
-

Production and sales

P&L
Raw material cost

- Wages
- Working capital
- Assets
- BEP

24
29
30
31
32
33
34
34
35

36

5 Location & Layout

. selection of location
. Layout

37
38

Chapter

Company Information

Company Information
Name

Unique Plastics Pvt. Ltd.

Board of Dir

Chetan Godbole (CMO)

Dhaval Patel (CFO)
Dipanjan Dey (CMO)
Joshi Aniket (COO)

Product Portfolio.

Side seal-soft loop handle bag

Patched handle carrier bag
Draw String (Future)
Vest styled carrier bag
Central seal pouch (Future)

Factory Location

Kutch (Gujarat)

Chapter 2
Product Details

Indian Plastic Industry

Demand for plastics will grow globally and more so in India. This
assessment is based on facts we all can see. Population worldwide

is

expected to grow from 5.8 billion today to over 8 billion in about twenty
years. Constraints on availability of natural materials will progressively
increase. Demand for synthetic alternatives like plastics will, therefore,
continue to rise. And new frontiers in materials science will come up with
better performing plastics to meet exacting applications.
In India, applications of plastics have permeated deep into our lives.
Increasing population, rising disposable incomes and eagerness to
improve quality of life will lead to unprecedented spurt in demand. India
today is nation of avid shoppers.
Enormous opportunities
opportunity.

are there before us. We have to harness this

We believe India's plastics segment can and will leapfrog

during the next ten years.

As barriers to trade come down with globalisation,

focus will be on

stronger markets like India. The Indian plastics industry today faces
intense competition from companies that are globally consolidated. They
have the advantage of economies of scale, have access to contemporary

technology and enjoy a low cost position. What it boils down to is that we
must be prepared to have the competitiveness
intensively competitive global environment.

to

perform

in an

The plastic industry would need to re-define markets from homogenous

segments to individual customer's preferences. This means that the
plastic industry will have to pursue greater product innovations, use
enterprise wide, real time systems, cut down intermediaries and get close
to the consumer.

THE OPPORTUNITY

The global plastics industry has a size of about one trillion US dollars.
The Indian plastics industry, with about 4 billion USdollars in revenues, is
just 0.4% of the global plastics industry. It is a mere 1.2% of our CDP as
against 3.7% of CDP of the global plastics industry. The per capita
consumption of plastics in India is only 2.4 kg as compared to a world
average of 16 kg and China's 9 kg.
If we aspire to match the word average per capita plastics consumption,
Indian demand will leap to 16 million tonnes from a mere 2.5 million
tonnes.
The Indian plastic industry has enormous opportunities in satisfying
consumer needs in virtually every sector, particularly household goods,
packaging, automotive, appliances, agriculture and construction.
It took India 30 years to consume the first million tonnes of plastics. The
second million tonnes were consumed only in 5 years. Today we are
consuming 2.5 million tonnes a year and racing to 7 million tonnes a year
by the year 2007. However, it would be still lower than China's current
consumption of 10 million tonnes.
All this makes it obvious that plastics have a great future in India. The
fundamentals

in terms of low per capita

plastic consumption

and

potential demand very much exist. In my view, an inherent low

consumption base, coupled with lower prices, will accelerate the rate of
growth of plastics in India.

CHALLENGES

The Indian plastic industry needs a complete change of mindset and

attitude towards customers, management and technology must be totally
changed.
In the processing sector, the Indian plastic industry has over 13,000
units, predominantly in the small-scale sector. While the plastic
processing sector has come a long way in the last few years and invested
Rs. 6,800 crores, it is still constrained by the 'small scale' ethos.
Manufacturing is a sunset industry in the west. Plastics consumption
there is the highest on a per capita basis. A shift in manufacturing base
from the west to a region with low labour cost, high knowledge and
technology base can be expected. India has a competitive advantage in
this respect.
Combine this competitive
advantage
with our
entrepreneurship and we will be unbeatable.

Market Research
Data gathering
We have made visit to exhibition

"Plastvision-2004"

where lots of

information was gathered. We came to know the tremendous

plastic bags in Indian market as we explained earlier.

potential of

The exhibition included various Extrusion machines, Blending machines,

Printing machines, Bag making machines with latest technology
different output.

and

Subsequently we went to in person meeting with a business person, Mr.

Vijay Kedia of Allied Plastic who informed us about their business, the
essential requirement, their approach towards production.
Application of product
The products that we have selected are indirectly used by the customer
but for us, it is Business to Business (B2B) correspondence.
Our
customers are the Shopping Malls like Big Bazar, Inorbit, Crossroads etc.
They have specific requirement and according to the same
Market demand estimations:
Following facts tells us that plastic industry is growing to grow and as
well as consumption of bag:
. India ranks 8th in the world with per capita consumption of 4.1
kgs. which is likely to increase to 7.9 kgs. by 2006. The world
average is around 20 kgs.

Polymer demand in india to touch 7.3 million tons by 2006 - 2007

and 12.4 milliontons by 2010 - 2011.

10

.
.

India is expected to be the 3rd largest consumer of plastics after

USand china by 2010.
Growth rate between 12% - 15%. Consistently

outperforming

GDP.

Competitors / Existing players

All small scale industries but few names are as under:

. Supreme Industries, Mumbai

.
.
.

The Paper Product Ltd.

Flakes
Barrier Films

Substitutes:
Major substitutes are:
. Paper bags - it is non durable bag. Only advantage it is
biodegradable and cheap
. Cloth bag - costly compared to plastic bag. But it is durable and do
not get damaged very often.
Environmental implications:
Due to plastic's non-biodegradability, government has tried to ban the
usage of plastic bags. But problem lies in the practices followed by the
people. Government need to educate the people about how to use and
dispose off the plastic garbage. Because plastic is recyclable and do not
harm environment if used proper disposing practices. And for the benefit
of environment and in public interest government has banned the
production of polythene bag having thickness of less than 20 myc.

11

Product Details
Side seal-soft loop handle bag

Specifications:
Standard size: 1. 15 x 18 + 3
2. 18 x 22 + 3
Standard Gauge: 50 myc to 62.5 myc
Materialused: LDPE
Type of handle: Soft loop / flexiloop
Patched handle carrier bag

(;

'...,.

Specifications:
Standard size: 1. 15 x 18 + 3
2. 22 x 18 + 3
3. 24 x 18 + 3
Standard Gauge: 45 myc to 50 myc
Material used: LDPE
Type of handle: Patch

12

Draw String (Future)

.,.",

.,

.~..

-...-

'Q"'-r-

!l!eJlo

-':.9

Vest styled carrier

bag

Specifications:
Standard size: 1. 10 x 15 x 18

2.11x17x21
3.12x19x23
Standard Gauge: 20 myc to 25 myc
Material used: White HDPE
Type of handle: Vest style
13

",

Central seal pouch (Future)

....
...

~' ~
~
'--

I'"
..t
~

...

...~ ~~.

........

Specifications:

Standard size: 1. lOx 13

2. 11 x 14
3. 12 x 15
Standard Gauge: 20 myc to 25 myc
Material used: PET/ PE
Type of handle: Vest style

14

Chapter 3

Process Details

15

Process Details
Raw materials
HOPE(High Oensity Poly Ethylene), LOPE,PP, PE is commonly used as raw
materials to make plastic bags. HOPE,LOPEare used for making ordinary
shopping bags or T-shirt bags. PP is primarily utilized in transparent and
luxurious packing of stationeries and clothes.
Extrusion
Extruders manufacture plastic film for making plastic bags. Clients need
to specify extruder parameters for film width, thickness, and productivity
according to clients manufacturing schedules. Specifications of extruders
differ in the size of air rings and dies.
Printing
There are two kinds of printing

machinery--flexographic

and roto

gravure. Countries have different preferences about these machineries

but flexographic printing machinery is gaining a better reputation
nowadays because it needs a smaller space, produces less odors and is
cheaper to maintain than the rotogravure printing machinery. Some
countries prefer flexographic printing machinery for hygienic reasons.
Bagmaking process
There are primarily two kinds of plastic bag making processes--bottom
sealing and side sealing. Bottom sealed bags are commonly used for
shopping bags and other applications that require insertion of items into
the bag. Side sealed bags are used for packing stationery, clothes, foods,
etc. In addition to these, there are roll bags and hanger roll bags, vinyl
gloves, etc.

16

Punching
Some models have punching units included. Without a punching unit on
the machine, operators need a punching press to make handles on plastic
bags.
Recycling
During the above processes, clients will see some waste from extruders,
printing machines, bag making machines and punching press. Clients can
use recycling machines to convert the waste into recycled raw materials
and plastic film.
Facilities required and their approximate cost:
Major facilities required for Plastic industry is raw material and
machineries and electricity. Electricity is second biggest contributor in
cost after raw material.
Machineries required as per the process explained above are:
. Blending machine
. Extruder

. Printing machine - Flexographic / rotogrovure

. Bag making machine
- patch handle bag making machine
- High speed auto vest type bag making machine
-

Combined pouch making machine

Recycling machine

17

Their approximate cost:

Serial no.

Machine Name

Cost ( Rs. )
45000

Blending machine

Extruder(2 machines)
Printinq machine - Flexoqraphic

3
4
5
6

Printinq machine - Rotoqravure

Patch handle baq makinq machine
High speed auto vest type bag

130000
350000
500000
1000000
1500000

makinq machine
7

Combined pouch makinq machine

2200000

Recvclinq machine
computers
Furniture and fixtures

50000

9
10

70000
400000

18

r~!
I
I

101

61

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ml 01
I

451

II~~~Jil ~I
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1M,

~
0

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01
451

~I

.
.

j::I III
.

~ ~ ~II

~
rI)
rI)

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0
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p..

. J4 r

Extruder:

)
"..

Flexographic

Printing machine

,,~~'I'~~---

~~~-

~
1/ ""F
'!'

t
.

..

':"
)~ ':I:--"'
.

,~

,\'- -

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11

r\

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C!I

rJOO

c ,...

r
~..",.

~. ~..!.

Rotogravure printing machine:

- --

- --

.-'"

Patch handle bag making machine:

Combined pouch making machine

High speed auto vest type bag making machine

It

21

Plastic Recycling machine:

1Ii

;t>;'
,II 0'": .

01

22

0 ~~"
~"
-,.'"..'
e:.
"

'0

'-

Chapter 4
Project Plan

23

Project Plan
We are planning our project in three different phases.
Phase 1:
Initially in first six months, we are going to manufacture Patch handle
bag. For that we need the following machineries:
. Blending machine
. Extruder

.
.

Flaxographic printing machine

Patch handle bag making machine

We are targeting to reach operational efficiency of 85%, as awe are very

new to the industry and technical expertise is yet to be gained.
The reason for going for Patch handle bag making machine is that it also
facilitates manufacturing of soft loop bags with the help of loop sealing
machine. So that we can tap the market of soft loop bag, when we are
able to achieve customer's trust.
Phase 2:
After six months of business we will be able to understand technicality
and the intricacies involved in the business. We will be able to build an
image in our customers about our quality, our delivery of product. We will
go for expansion for our factory.
We will focus on the vest type bag which is in growing popularity
shopping malls too. We will go for a better printing process.
We will purchase following machines:

.
.

in

High speed auto vest type bag making machine

Rotogravure printing machine

Till this expansion one extruder will be able to produce the input for bag
making machine.

24

Phase 3:
After one year in the business we will have some loyal customers. We will
be recognized in the industry. Therefore we will go for another
expansion. This time we will go another specialty of bag ie pouch.
We will purchase the following machines for further expansion:
. Combined pouch making machine
. Loop sealing machine
Phase 4:
We are planning to add one pouch making machine as it is out most
profitable product. We need to increase one operator and helper we do
not additional extruder machine as we have spare capacity.
Production and sales: Phase 1:
In phase 1, we are having only one bag making machine installed.
We have calculated the production of that Machine
Machine Speed: 80 bags/ min.
Operational efficiency: 85 %
Approximate weight of one bag: 1g
Production of machine / hr in kg: 80 x 1 x 60 x .85 = 4.08 kg/hr
Production in first phase: 4.08 x 24 x 6 x 26 = 15275.52 kg.

Sales Price/kg = Rs. 70/Sales for first phase: 15275.52 x 70 = 1069286.4

Production and sales: Phase 2:
In phase two as mentioned earlier we will introduce one new machine of
vest type bag making. We will improve our operational efficiency to 90 %.
Patch handle bag making Machine Speed: 80 bags/ min.
Operational efficiency: 90%
Approximate weight of one bag: 1g
25

Production of machine / hr in kg: 80 x 1 x 60 x .90

Production in first phase: 4.32 x 24 x 6 x 26
Sales Price/kg

4.32 kg/hr

16174.08 kg.

Rs. 70/-

Sales: 16174.08 x 70

1132185.6

Vest type bag making Machine Speed: 200 bags/ min.

Operational efficiency: 85%
Approximate weight of one bag: 0.66g
Production of machine / hr in kg: 200 x .66 x 60 x .85
Production in first phase: 6.73 x 24 x 6 x 26
Sales Price/kg = Rs. 70/Sales: 25197.12 x 70

6.73 kg/hr

25197.12 kg.

1763798.4

Total sales for second Phase 2: 1132185.6 + 1763798.4

Total sales for year: 2895984 + 1069286.4

2895984

3965270.4

Production and sales: Phase 3:

In phase two as mentioned earlier we will introduce one new machine of
combined pouch making.
95 %.

We will improve our operational efficiency to

Patch handle bag making Machine Speed: 80 bags/ min.

Operational efficiency: 95%
Approximate weight of one bag: 1g
Production of machine / hr in kg: 80 x 1 x 60 x .95
Production in first phase: 4.56 x 24 x 6 x 52
26

4.56 kg/hr

34145.28 kg.

Sales Price/kg = Rs. 70/-

Sales: 34145.28 x 70 = 2390169.6

Vest type bag making Machine Speed: 200 bags/ min.
Operational efficiency: 90%
Approximate weight of one bag: 0.66 g
Production of machine / hr in kg: 200 x .66 x 60 x .90 = 7.12 kg/hr

Production/year: 7.12 x 24 x 6 x52 = 53314.56 kg.

Sales Price/kg = Rs. 70/Sales: 53314.56 x 70 = 3732019.2
Pouch making Machine Speed: 80 bags/ min.
Operational efficiency: 85%
Approximate weight of one bag: 1g

.'

Production of machine / hr in kg: 150 x 1.2 x 60 x 0.85 = 9.18 kg/hr

Production/year: 9.18 x 24 x 6 x52 = 68739.84 kg.
Sales Price/kg = Rs. 70/-

I
~

Sales: 68739.84 x 70 = 4811788.8

Total sales
10933977.6

for year:

2390169.6

~
~

27

3732019.2

+ 4811788.8

After second year of business we will have our full planned capacity. We
will try to achieve 95 % operational efficiency from every machine.
Therefore for third year the production is as follows:
Machine

Production
95 %

Total sales

34145.22

24,37,972.99

56309.76

37,32,019.2

76826.88

69,14,41 9
1,33,70,532

Forth year, we will try to work on 100 % efficiency. And followin'g are the
sales figures:
Machine

I Production

@ Sales
I

95 %

Total sales

34145.22

price/k
Rs. 71.4

24,37,972.99

56309.76

Rs. 71.4

40,18,140.67

76826.88

Rs.96.9

74,44,524

Total sales 1,39,00,638

In the fifth year we will add one pouch making machine because it is the
most profitable product of Unique Pastics.
Machine

I Production

@ Sales
I

95 %
34145.22

24,86,732.45

56309.76

Rs. 72.828

40,98,503.49

153653.76

Rs. 96.9
1,48,89,049
Total sales 2,14,74,285

Total sales

price/k<
Rs. 72.828

28

~
~
~
.
.
.
~
I
.

Quantity and Quality of manpower:

Particulars
Administration
. Accountant
. MarketinQ
. Clerk
Factorv

. Production
manager
. Supervisor
. Storekeeper
. Workers
Total
Grand total

Year 1
S
Us
1
1
1

Year 2
S
Us
1
2
1

Year 3
S
Us
2
2
2

Year 4
S
Us
2
3
2

Year 5
S
Us
2
3
2

2
1
4
11

2
1
7
15

2
1
7
17

2
1
7
18

2
1
10
19

2
2
13

3
3
18

3
3
21

3
3
22

S = Skilled Employee
Us = Unskilled Employee

Machine name
Blending machine
Extruder
PrintinQ Machine
Bag making machine
. Operator
. Helper
Recycling Machine
Total
Grand Total

Year 1
S
Us
1
1
1

Year 2
S
Us
2
2
2

Year 3
S
Us
2
2
2

Year 4
S
Us
2
2
2

Year 5
S
Us
2
2
2

1
1

2
1

2
1

2
1

4
2

1
2

4
6

1
3
10

>
>
>
.
.

3
3
20

29

1
3
10

1
3
10

1
10
3
13

Financialanalysisand BEP:
Productionand Sales:

Year Two

Year One
Product Type

1st half

lind Half

Patch handle bag

Efficiency
Price
Sales

15275.52
85

16174.08
90

1069286

1132186

Opening Debtor
Closing Debtor
Avg Debtor

Opening Debtor

/'

1763798

Closing Debtor
Avg Debtor

Year Four

34145.28
95
71.4
2437972.9M'"
3983617
406328.82
402345.216

34145.28
95
71.4
2437972.99
406328.832
406328.832
406328.832

34145.28
95
72.828
2486732.45
406328.832
414455.409
410392.12

Total
31449.6
70
2201472
0
366912
183456 .

34145.28
95
70'
2390169.6
366912
398361.6
382636.8

53314.56

25197.12
85

Vest Carrier bag

Efficiency
Price
Sales

Year Three

Fig in Kg
oer year
Year Five

70
1763798
0
293966.4
146983.2

56276.48

90
70
3732019.2
293966.4
622003.2
457984.8

95
71.4
4018140.672
622003.2.

68739.84
85
95
6530284.8
0
1088380.8
544190.4

72783.36
90
95
6914419.2
1088380.8
1152403.2
1120392

56276.48

56276.48

95
72.828
71.4.
4018140.67 \4098503.49
669690.112
669690.112
683083.914
669690.1121 669690.112
645846.656
676387.013
669690.112
_5

/
Plastic pouch
Efficiency
Price
Sales
Opening Debtor
Closing Debtor
Avg Debtor
Total Sales

Total Avg. Debtor

1069286

2895984

3965270
330439.2

1.252473.6
1384812

\2-f,,~"'V

30

153653.76

76826.88
95
96.9
7444524.67
1152403.2
1240754.11
1196578.66

95
96.9
14889049.3
1240754.11
2481508.22
1861131 .17

13370532.86

13900638.3

21474285.3

2168583.872

2272597.6

2947910.3

BUDGET P&L Account

Year Two

Year One

Particular

Year Three

Year Four

Year Five

INCOME
3965270.4
311895.7
4277166.1

12652473.6
I 32545
12685018.6

1370532.9

3351441.60
538080

13900638.3

21474285.3

13370532.9

13900638.3

21474285.3

8517120.77
755946

8883011.07
815436

9085995.78
876207

12942705.15
989790

169940
50000
6000
48000

546700
100000
8000
52000

571218
100000
10000
56000

668995
110000
12000
60000

976302
150000
15000
65000

4163461 .60

9979766.77

10435665.07

10813197.78

15138797.15

113704.50

2705251.83

2934867.79

3087440.56

6335488.13

Technical consulting fee

Incorporation Expense
Office Rent

84000
447000
5000
10000
50000
100000
20000
120000

132000
936750
6000
12000
59600
15000
20000
126000

Total FC

836000

-722295.50

Sales
Interest income
Total

EXPENDITURE
A

Variable Cost
Raw Material
Consumed
Waqes
Electricity @ Rs 3 per
Unit
Maintainance & Spares
Stationary
Telephone
Total VC

CONTRIBUTION
C

Fixed Cost
Salarv
Depriciation
Misc. Expenditure
License Fee
Insurance

PROFIT

31

186000
936750
7000
14000
55000
18000
20000
135000

253400
936750
8000
16000
50000
25000
20000
150000

282000
1266750
9000
20000
95000
30000
20000
150000

1307350

1371750

1459150

1872750

1397901.83
, ,

1563117.79

1628290.56
"

4462738.13

,.

RAW MATERIAL

I COST
Year Two

Year One
, Product Type
I -...
I

Patch handle bag

1st half

lind Half

15275.52

16174.08

LDPE Film
I

I
I
I

InventoryHolding
period
.
RM Cost

Closing inventory
Opening inventory
Averaqe inventory'

31449.60
62.50

34145.28
62.50

34145.28
62.50

34145.28
62.50

34145.28
62.50

15.00
1965600.00

15.00
2134080.00
87701.92
80778.08
84240.00
2141003.84

12.00
2134080.00
70161.53
87701.92
78931.73
2116539.62

10.00
2134080.00
58467.95
70161.53
64314.74
2122386.41

6.00
2134080.00
35080.77
58467.95
46774.36
2110692.82

53314.56
55.00

56276.48
55.00

56276.48
55.00

56276.48

55.00
15.00
1385841.60
56952.39
0.00
28476.20
1442793.99

15.00
2932300.80
120505.51
56952.39
88728.95
2995853.92

12.00
3095206.40
101760.21
120505.51
111132.86
3076461.10

10.00
3095206.40
84800.18
101760.21
93280.19
3078246.36

6.00
3095206.40
50880.11
84800.18
67840.14
3061286.33

68739.84
50.20

72783.36

76826.88

153653.76

50.20

50.20

50.20

15.00
3450739.97
141811.23
0.00
70905.62
3592551.20

15.00
3653724.67
150153.07
141811.23
145982.15
3662066.51

12.00
3856709.38
126795.92
150153.07
138474.50
3833352.23

10.00
7713418.75
211326.54
126795.92
169061.23
7797949.37

3351441.60

8517120.77

8883011.07

9085995.78

12942705.15

3489172.08

8729408.95
243874.57

8855067.22

9033985.01

12969928.52

336046.74

296069.43

283675.73

0.00
40389.04
2046378.08

Purchase

Year Four

Total

80778.08

Year Three

Fig in Kg per
year
Year Five

Vest Carrier bag

I
I

HM HDPE Film
InventoryHolding
period
RM Cost
Closing inventory
Opening inventory
Averaqe inventory
Purchase

25197.12

25197.12

Plastic pouch
Polyester PET
Inventory Holding
period
RM Cost
Closing inventory
Opening inventory
Average inventory
Purchase

Total Cost
Total Purchase
Total RM inventory

68865.24

32

55.00

~
~

WAGES PARTICULARS

,
~

Particular

Year
One

Year
Two

Year
Three

Year
Four

Year
Five

I
~
~

Wages
A
Worker
Skilled
Unskilled
Store KeeDer
B
C
Supervisor
Production
D
Manaaer'
Total
Salary
A
B
C

Clerk
Accountant
Sales Person
Total

192000
43680
14400
144000

352800
68796
15150
151200

370440
72336
15900
158760

388962
75845
16700
166700

453600
79640
17550
175000

144000
538080

168000
755946

198000
815436

228000
876207

264000
989790

18000
30000
36000
84000

19800
33000
79200
132000

21600
74400
90000
186000

24000
78200
151200
253400

26400
86400
169200
282000

33

WORKING CAPITALCALCULATION
Year
lOne

Particular
Current Asset
A
B

I 330439.2 I
I

Current
Liability
A

Stock
Debtors
Raw Material
Finished Goods
(MTO
Cash and Bank
balance
Total CA

Three

I Year

I Year

Four

243874.57

336046.74

296069.43

250000
1878686.57

250000
2754630.61

250000
2818667.03

0
0

0
0

0
0

0
0

499304.4 I 1878686.57 I 2754630.61 I 2818667.03

I 283675.73
260000
3491586

o.
0
3491586

I
Investment in ASSETS

Sr.
no

Particulars
1 Blending Machine
2 Extruder
3 Printing Machine - Flexographic
4 Printing Machine - Rotogravure
Patch handle bag making
5 machine
6 Vest type bag making machine
Combined pouch making
7 machine
8 Recycling machine
9 computer
10 Furniture and fixtures
Total Investment

Five

1384812 I 2168583.87 I 2272597.6 I 2947910.3

I 68865.24 I

Creditors*
Total CL
Net Workina Capital

I Year Two I Year

Year 1
45000
65000
350000
500000

Year 2

Year 3

Year 4

Year 5

0
0
0
0

0
0
0
0

0
0
0
0

0
0
0
0

1000000
1500000

0
0

0
0

0
0

0
0

50000
70000
400000
3980000

2200000
0
0
0
2200000

0
0
0
0

2200000
0
0
0
2200000

34

0
0
0
0

Fincncial Break Even Analysis

Present Value of Investment

Break Even Sales

= ---------------------------------PN ratio
9972848.96
- ----------------------------

0.2309

43177366.11

Present Value of Investment

Year of Investment
1
2
3
4
5

Investment
6013804.00
3579382.00
875944.00
64036.00
2872919.00
P.V. of Investment

P.V. Factor
0.869
0.756
0.658
0.572
0.497

P.V. of Inv
5225995.68
2706012.79
576371.15
36628.59
1427840.74
9972848.96

So, we can conclude here that we will be able to reach break even in approximately 4
years.

35

.
.
)
>
>
>
>
>

~
~
~
~
~

~
~
>

~
~
>
>

Chapter 5
Location & Layout

>

,
>

~
~
>
.

36

Location & Layout

Location decision is one of the important decision in business plan. It
depends on various factors lik:e
Availability of raw material
Availability of labour
Availability of power
Availability of water and other amenities
Infrastructure facilities
Government incentives
We had two locations in mind for selection.
1. Kachh district
2. Himachal Pradesh
The reason for considering these two district is that both the states are
offering various excise and sales tax incentives. The reason for selecting
kachh is that our customer base is mainly Gujarat and Maharashtra. So we
decided to establish our factory at Rampur village in Kachh District. As
raw material is supplied and delivered by Reliance at the same price, with
nominal change in its freight rate. So availability of raw material is not the
matter of concern for us.
Other reasons are that:

.
.

Infrastructure facilities are good

It is on national highway No.8

It is near to Bhuj city which will provide us skilled labour.

It is having bright prospects for exports due to nearness to port

!
I

Because of this location, we can get excise duty exemption of16% and
Sales tax exemption of 4%. So, this enables us to compete on cost
effective basis.

I
I
!.

37

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