Managerial Economics

Business Model
for Jute Products

Presented by:
61 Anshari Naved Abdul Vahid
67 Dhuri Swapnil Manohar
74 Jain Ashish Ganpathlal
77 Kadam Mandar Prabhakar
82 Khedekar Pooja Shravan
 Objectives:
For creating pollution free environment as jute is eco-friendly
products.

Making low cost carry bags and fashionable jute products.

To make jute products as a part of our daily living.

Creating awareness about jute products.

Last but not the least to earn profit.

Introduction:
Jute is a natural fiber popularly known as The golden fiber.

One of the cheapest and the strongest of all natural fiber.

Jute is a bio-degradable eco-friendly item.

India, Bangladesh, China and Thailand are the leading

producers of Jute.

India is the largest producer of jute goods in the world,

while Bangladesh is the largest cultivator of raw jute.
Our Product Range:

Jute Bags

Printed & Decorated Jute Shopping Bags

Designer Laptop Bags

Jute Folders

Mens Handbags
Market and Demand Aspects:
Every responsible citizen considering the black future of ours next
generation shall stop using plastic carrier bags used for shopping as
much as possible.
Plastic bags in general take anywhere from 20 to 1000 years to
breakdown in the environment. The natural alternative is jute bag.
Decorated jute bags and shopping bags are very much in demand both
for domestic and international market.
With the increase of population the scope of trade and industry is also
increasing. As the bags are an essential commodity for human, so the
demand of the product is growing day by day.
The demands of the product remain consistent through out the year.
So, it is presumed that there is a good scope for starting of such type of
industry with a huge export potential.
Government Bodies:

Jute Manufacturer Development Council (JMDC)

National Centre for Jute Diversification (NCJD)

National Jute Board (NJB)

Alternates and Substitutes:

Paper Bags:
- Manufacturing process of paper bags results in plenty of leftover waste.
- Environmental Damage
- They are meant for short term usage.

Cotton Bags:
- They are costly as compared to jute.
- Scarce raw material

Plastics or Polyethene Bags:

Manufacturing Process:
Laminated & Non-Laminated Jute Facbrics

Design & Size Cutting

Printing

Stitching and Finishing

Checking & Packing

Dispatching Market for Sale

Presumptions:
Unit will operate 9 hours daily and 25 days in month.

Capacity utilization will be 75% which will remain constant.

The salary and wages of staff has been taken as per present market rate.

Cost of Assets, Raw Materials and Selling price of Finished product are
those generally obtained at the time of preparation of Business Model.

The rate of interest on Bank Loan may vary from time to time.

Since the project is small the financial calculation has been done for one
year only.
 Financial Aspects:
Suggested Location
Dahisar (East)
Mira Road (East)

Production Programme for a year

Sr. No. Items Qty (Nos) Rate (Rs.) Total Amount
1 Jute Bags 75,000 35 2,625,000
2 Printed & Decorated Jute Shopping Bags 30,000 65 1,950,000
3 Designer Laptop Bags 2,000 300 600,000
4 Jute Folders 7,500 30 225,000
5 Mens Handbags 3,000 260 780,000
Total 6,180,000
 Financial Aspects:
Fixed Capital:
1. Land & Building
Workspace 750 sq. mtrs on long term monthly rental basis Rs.20,000/-

2. Machinery / Equipment

Sr. No. Items Qty (Nos) Rate (Rs.) Total Amount

1 Industrial Sewing Machines 31K 5 7,500 37,500
2 Screen of Diff. Designs 15 350 5,250
3 Rubber Wiper 10 125 1,250
4 Dye Paste Stirrer 4 3,600 14,400
5 Cottage Steamer 1 17,500 17,500
6 Water Drum 2 1,500 3,000
Scissors, Measuring Tapes and other
7 Equipments L.S 3,800
Total 82,700
 Financial Aspects:
Fixed Capital (Contd.)
3. Furniture & Fixtures
Sr. No. Items Qty (Nos) Rate (Rs.) Total Amount
1 Cutting Table 1 1,700 1,700
2 Wooden Woking Table 2 2,000 4,000
3 Chair 5 500 2,500
4 Almirah 2 4,000 8,000
5 Reck 1 3,500 3,500
6 Electrical Fittings 4,500
7 Misc. Items (Stools) L.S 5,500
Total 29,700

Total Fixed Capital

Particulars Amount
Land & Building Nil
Machinery / Equipment 82,700
Furniture & Fixtures 29,700
Total 112,400
 Financial Aspects:
Working Capital per month
1. Salary & Wages Expenses

Sr. No. Particulars Employee Remunarration Total Amount Annually

1 Manager Cum-Supervisor (Promotor) 1 14,000 14,000 168,000

2 Accountant 1 10,000 10,000 120,000

4 Master Tailor and Cutter 1 8,500 8,500 102,000

5 Tailor 4 7,500 30,000 360,000

6 Skilled Printer 1 6,500 6,500 78,000

7 Unskilled workers / Helpers 2 4,500 9,000 108,000

8 Marketing and Salesmen 3 5,500 16,500 198,000

9 Peon / Chowkidar 1 3,500 3,500 42,000

Total 14 98,000 1,176,000

 Financial Aspects
Working Capital per month
2. Raw Material Consumption

No. Items Qty Rate (Rs.) Total Amount Annually

1 Cloth for Shopping Bags 2200m 28 61,600 739,200
2 Laptop Bags 800m 35 28,000 336,000
3 Jute Floder 550m 18 9,900 118,800
4 Mens Handbags 1100m 30 33,000 396,000
5 Jute Fabric 9500 bags 13 123,500 1,482,000
6 Dye Stuff 15 kg 450 6,750 81,000
7 Chemicals and Auxiliaries L.S 3,500 42,000
8 Printing Gum 15 kg 50 750 9,000
9 PVC buckle or Bamboo Stick 1200 pcs. 1.50 1,800 21,600
10 Sewing Thread, Needle, Label L.S 4,500 54,000
11 Buckles, Hook, Runner, Chain, Lining etc.. L.S 3,500 42,000
12 Transportation & Freight 8,000 96,000
Total 284,800 3,417,600
 Financial Aspects:
Working Capital per month
3. Monthly other Expenses

Sr. No. Items Amount Annually

1 Rent 20,000 240,000
2 Electricity 11,500 138,000
3 Utilities 2,500 30,000
4 Office & Administrative Expenses 4,500 54,000
5 Travelling and Transportation 2,200 26,400
6 Repair and Maintainence 1,200 14,400
7 Sales Promotion 15,000 180,000
8 Misc. Expenses 2,500 30,000
Total 59,400 712,800
 Financial Aspects:
Norms of Working Capital
Sr. No Description Norms Margin Total Amount Margin Money
1 Raw Materials 1 month 25% 284,800 71,200
2 Wages & Salaries 1 month 100% 98,000 98,000
3 Utility 1 month 100% 2,500 2,500
Total 385,300 171,700

Total Working Capital per month

Particulars Amount
Monthly Other Expenses 59,400
Margin Money for Working Capital 171,700
Total 231,100
Financial Aspects:
Total Capital Investment
Particulars Amount
Total Fixed Capital 112,400
Total Working Capital per month 231,100
Total 343,500

Means of Finance
Sr. No. Particulars Total Amount
1 Promoter's Contribution (35%) 120,225
2 NCJD's Interest Free Loan (20%) 68,700
3 Bank Loan (45%) 154,575
Total 343,500
Financial Aspects:
Profitability Analysis
Sr. No. Particulars Value (Rs)
a Sales Revenue 6,180,000
b Cost of Production
Raw Material 3,417,600
Utilities 30,000
Salaries & Wages 1,176,000
Rent 240,000
Repairs & Maintainence 14,400
Adminsitrative Overheads 54,000
Selling and Distribution Expenses 180,000
Electricity 138,000
Depreciation @ 10% 11,240
Interest on Term Loan @ 12.50% 19,322
Interest on Proprietor @ 10% 12,023
Total (b) 5,292,584
c Operating Profit (a-b) 887,416
d % of Profit on Sales 14.36
e % of Profit on Investment 258.35
Financial Aspects:
Break Even Point Analysis
(75% Capacity Utilisation)
Sr. No. Particulars Value (Rs)
a Variable Cost:
Raw Materials 3,417,600
Utilities 30,000
Selling and Distribution Expenses 180,000
Total (a) 3,627,600
b Semi-Variable and Fixed Cost
Salaries & Wages 1,176,000
Repairs & Maintainence 54,000
Adminsitrative Overheads 54,000
Rent 240,000
Selling and Distribution Expenses 180,000
Depreciation @ 10% 11,240
Interest on Term Loan @ 12.50% 19,322
Interest on Proprietor @ 10% 12,023
Total (b) 1,746,584
c Sales Realisation 6,180,000
d Contribution (c-a) 2,552,400
e B.E.P = b/d*75 47.90
Marketing Strategies:

Word of Mouth:
Comprehensive Website:
Social Marketing:
Direct Marketing:
Major Festivals:
Online Shopping Sites:
NGO Tie-ups:
Local Tie-ups:
Corporate Gifting:
Conferences and Seminars:
 Future Scope:
We will be focusing on more on product segmentation like introducing
new products wallets, water resistance bags, designers ladies handbags
etc.

Expansion of our business by introducing new outlets at prime locations

across the country which will result in creating more employment
opportunities.

To focus more on the Marketing:

Promoting our eco-friendly products through newspapers, hoarding, Radio
etc.
Ad Campaign.
Focusing more on tie-ups like Award ceremonys, Standard Chartered
Mumbai Marathon, DNA Half Marathon other the major event happens
in Mumbai.
Conclusion:
These reusable 100% natural bags are biodegradable, ethically sourced,
eco friendly, long lasting. They are a sustainable alternative to plastic
and most other Green or Eco-friendly type bags available in the market.

As well as their stylish looks jute bags carry a positive environmental

message about your brand when printed with your logo.

Go plastic bag free and make a difference to our planet.

Jute is
Natural Fibre
Biodegradable
Sustainable
Stylish
Reusable
Thank
You