Plastic Recycling Capstone Project

Capstone Project
Plastic Recycling Business Plan
RG Recyclers
Prepared by-
Rohit Gandhi
PGDM Marketing
(2016-2018)
Table of Contents
1.0 Executive Summary ................................................................................................................ 1

Chart: Highlights ...................................................................................................................... 2
1.1 Objectives ............................................................................................................................... 2
1.2 Mission ..................................................................................................................................... 2
1.3 Keys to Success .................................................................................................................... 2
1.4 Potential Risks ....................................................................................................................... 3
2.0 Company Summary................................................................................................................. 3
2.1 Company Ownership ........................................................................................................... 4
2.1.1 Potential Conflict ........................................................... Error! Bookmark not defined.
2.2 Start-up Summary ............................................................................................................... 4
Table: Start-up Funding ........................................................................................................ 4
3.0 Products ...................................................................................................................................... 5
3.1 Product Description ............................................................................................................. 5
3.2 Competitive Comparison.................................................................................................... 6
3.3 Sourcing .................................................................................................................................. 6
3.4 Technology ............................................................................................................................. 6
4.0 Market Analysis Summary .................................................................................................... 6
4.1 Target Market Segment Strategy ................................................................................... 7
4.2 Market Segmentation ......................................................................................................... 8
Chart: Market Analysis (Pie) ................................................ Error! Bookmark not defined.
Table: Market Analysis ........................................................... Error! Bookmark not defined.
4.3 Industry Analysis.................................................................................................................. 9
4.3.1 Barriers to Entry ........................................................................................................... 9
4.3.2 Competition and Buying Patterns ......................................................................... 10
4.3.3 Main Competitors ......................................................... Error! Bookmark not defined.
5.0 Strategy and Implementation Summary........................................................................ 10
5.1 Value Proposition ............................................................................................................... 11
5.2 Competitive Edge ............................................................................................................... 11
5.3 Marketing Strategy ............................................................................................................ 11
5.4 Sales Strategy ..................................................................................................................... 11
5.4.1 Sales Forecast ............................................................................................................. 12
Chart: Sales Monthly .......................................................... Error! Bookmark not defined.
Chart: Sales by Year ........................................................... Error! Bookmark not defined.
Table: Sales Forecast ....................................................................................................... 13
5.5 Milestones ............................................................................................................................. 13
Table: Milestones ................................................................................................................... 13
6.0 Management Summary ........................................................................................................ 14
6.1 Organizational Structure.................................................................................................. 14
6.2 Management Team ............................................................................................................ 14
6.3 Personnel Plan ..................................................................................................................... 15
7.0 Financial Plan .......................................................................................................................... 16
7.1 Important Assumptions...................................................... Error! Bookmark not defined.
7.2 Break-even Analysis ............................................................ Error! Bookmark not defined.
Table: Break-even Analysis ................................................................................................ 17
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Table of Contents
7.3 Projected Profit and Loss ................................................................................................. 17

Chart: Profit Yearly................................................................................................................ 18
Chart: Gross Margin Yearly ................................................................................................ 18
Table: Profit and Loss ........................................................................................................... 19
7.4 Projected Cash Flow ........................................................................................................ 204

Chart: Cash ................................................................................ Error! Bookmark not defined.
Table: Cash Flow .................................................................................................................... 21
7.5 Projected Balance Sheet .................................................................................................. 22
Table: Balance Sheet ............................................................................................................ 22
7.6 Business Ratios ................................................................................................................... 22
Table: Ratios ........................................................................................................................... 23
7.7 Long-term Plan ................................................................................................................. 248
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1.0 Executive Summary
The growing utilization of plastics in industrial and consumer applications, combined with
increased consumer awareness surrounding solid waste recycling, has led to an increased
demand for recycled plastic resins and products. One of the fastest growing types of collected
plastic materials for recycling is polyethylene terephthalate ("PET") from post-consumer
beverage and water bottles. RG Recyclers will capitalize on the opportunities in the recycled
resin and packaging markets through two main divisions: a Recycling Division and a
Packaging Division.
The Company will create a PET cleaning and refining plant located in the Dapoli,Dist:- Ratnagiri.
Its initial capacity will be A million pounds, and it will utilize post-consumer bottle feed stock
presently collected in Dapoli. The Company will be vertically integrated, and use almost all of its
recycled material in its Packaging Division. Any surplus materials (clean flake) produced will be
sold to outside companies. The extruded sheet may then be sold to manufacturers, who will
thermoform it into high-visibility packaging or use it in other high value added manufacturing
operations. The strapping will be sold to companies who ship large packages or pallets, such as
the lumber milling industry.
MANAGEMENT
Rohit Gandhi, President, has a MBA degree from iFEEL college and is currently employed at
TATA AIG and successfully completed online courses on entrepreneurship. Amol Kashid
Executive VP and COO, is a graduate Engineer in Rubber technology with over 06 years
experience in the post-consumer plastics recycling industry and is the inventor of the primary
cleaning & refining technology used in the process for this project. CA. Sachin Gandhi, CFO,
has over 15 years of experience in investment and merchant banking and management
experience.
FINANCIAL SUMMARY
After a six month start-up period to build the recycling and packaging facilities, buy equipment,
and incorporate the business, RG Recyclers will begin a quick turnaround of product. Sales will
begin in June 2019, and with over 10 lakhs in sales the first year, we will see a first year net
profit of 2.5 lakhs. The owners are investing 20 Lakhs each, for a total of 1.1 crore, and are
securing an 50 lakhs long-term loan.
The Company is also seeking an investment 20 Lakhs in order to begin operations. These funds
will be used for the purchase of one recycling line and one manufacturing line, for the set up of
the plant facilities and for working capital. An outside investor providing this amount would
receive 18% equity in RG Recyclers. After 6 years, we will consider a public offering of stock or
a buy-out by a related business.
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Chart: Highlights
70
60 Fig are in Lakhs on Y-axis
50
40 Sales
30 Gross Margin
20 Net Profit
10
0
Year 1 Year 2 Year 3 Year 4
1.1 Objectives
1. Sales passing 10 lakhs in first year, 21 lakhs in year 2, growing to 68 lakhs.

2. Gross margin of 35% or more in first year, 45% in second year then 50% or more.
3. Net profit of 13% in year one, then exceeding 20% annually starting in year two.
1.2 Mission
RG Recyclers is a manufacturing company dedicated to converting waste plastic materials into

commercially viable products, utilizing environmentally friendly recycling and manufacturing
methods. We intend to make enough profit to generate a significant return for our investors
and to finance continued growth and continued development in quality products. We will also
maintain a friendly, fair, and creative work environment, which respects diversity, new ideas
and hard work.
1.3 Keys to Success
The main keys to the success of the Company are:
 Secure Supply- Contract for supply of post-consumer bottles and post-industrial

manufacturing waste for PET raw material feed stock.
 Marketing - Contractual arrangements for the sale of virtually all initial production.
 Management - Strong senior management with extensive, broad-based, industry-specific
experience.
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1.4 Potential Risks
Unavailable or scarce raw material feed stock for production
 RG Recyclers is confident that it will secure good availability of low cost post-consumer PET
bottles (feed stock) derived from post-consumer beverage bottles from Dapoli based
recycling collectors, and has back up sources identified.
Technology employed may be unreliable or unproven
 RG Recyclers will use a proven, patented technology that was developed by one of its
principle for the cleaning and recycling phase. The extrusion division will employ
commercially proven technology - the industry is employing unique recycled PET technology
which is used by prominent Indian manufacturers of PET extrusions.
There may not be a market for the Company's products
 The Industry-wide experience of the Management Team has allowed them to

identify markets for the Company's products. Their expertise and reputations have allowed
them to obtain commitments for virtually all of the planned initial production.
The location may not be near enough to markets
 The markets that have been identified are primarily in western Maharashtra which will
provide a distinct advantage to the Company because of freight costs and delivery timing.
The Company may not be able to attract top management
 The Company has assembled a world class management team with proven ability and direct
experience in the Company's market segments.
2.0 Company Summary
The Company will capitalize on the opportunities in the recycled resin and packaging markets
through two main divisions: a Recycling Division and a Packaging Division.
Recycling Division
Using a patented process, the Company will create a PET cleaning and refining plant located in
the Dapoli; we have chosen this region because of its unique location and availability of ample
raw material. Its initial annual capacity will be A million pounds and it will utilize bottle feed
stock from dapoli,khed,chiplun,Mahad, which collect over 500000 pounds per year. The
Company will become totally vertically integrated, and use all or almost all of its recycled
material in its Packaging Division. Any surplus material produced will be sold to outside
companies.
Packaging Division
We will create a plant to manufacture extruded plastic roll stock sheet or high-strength
strapping, employing state-of-the-art technology developed to utilize recycled PET resin.
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The extruded sheet will be primarily sold to thermo formers who will convert it into high
visibility packaging, as well as laminators and fabricators. The strapping will be sold to
commercial users for use as package.
2.1 Company Ownership
RG Recyclers is owned by the initial founders, Rohit Gandhi, Amol Kashid, Sachin Gandhi, who
are the proposed three executives of the operating entity. The plan was conceived and
developed by these individuals, with the intent to apply their extensive experience and contacts
in the industry to building a successful profitable corporation.
2.1 Start-up Summary
Our start-up expenses are budgeted at 1.5 lakh, which is mostly for on-site contractor services
during facility preparation. 10 Lakhs has been set aside for legal and accounting, 2Lakh for
special consulting that may be required during start up and 5 lakhs each for local engineering
and lab equipment and supplies. 3 lakhs has been set aside as a contingency for the start up
period.
Our largest Start-up Requirement is the building of the recycling and extrusion facility. Its final
value at completion is listed below as a long-term asset of 1.1 crore (excluding expensed items
like consultants and engineering listed above). Aside from the building itself, we need 25 Lakhs
in machinery and fixtures, 5 Lakhs of inventory (plastic bottle feed stock) and cash to cover us
through the initial year.
Table: Start-up Funding
Start-up Funding
Start-up Expenses to Fund 12 Lakhs
Start-up Assets to Fund 1.6 Crore
Total Funding Required 1.72 Crore
Assets
Non-cash Assets from Start-up 1.1 Crore
Cash Requirements from Start-up 25 Lakh
Additional Cash Raised 0
Cash Balance on Starting Date 25 Lakh
Total Assets 1.6 Crore
Liabilities and Capital
Liabilities
Current Borrowing $0
Long-term Liabilities 800,000
Accounts Payable (Outstanding Bills) 0
Other Current Liabilities (interest-free) 0
Total Liabilities 800,000
Capital
Planned Investment
Founders 60,00,000
Investor 20,00,000
Additional Investment Requirement 0
Total Planned Investment 82,00,000
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Loss at Start-up (Start-up Expenses) (1200,000)
Total Capital 70,00,000
Total Capital and Liabilities 1.6 Crore
Total Funding 1.72 Crore
Table: Start-up
Start-up
Requirements
Start-up Expenses
Legal & Accounting 1000000
Stationery etc. 50,000
Consultants 200000
Lab Equipment 500000
Local Engineering
Misc Start up
Other 0
Total Start-up Expenses 1200000
Start-up Assets
Cash Required 2500000
Start-up Inventory 500000
Other Current Assets 25,0000
Long-term Assets 2500000
Total Assets 16000000
Total Requirements 17200000
3.0 Products
RG Recyclers will utilize two processes in the same facility to produce:
 Cleaned and recycled plastic PET flake (RPET), recovered from post-consumer beverage
bottles and manufacturing waste produced by its sheet customers
 Extruded roll stock sheet PET.
 Extruded PET high-strength strapping for securing large packages ; each using 100% RPET
produced in-house
3.1 Product Description
Roll stock sheet will be sold to custom thermoformers primarily to be used to produce high-
visibility packaging. It will also be sold to manufacturers of laminates and fabricated plastic
products.
High strength PET packaging strapping is used to secure packages or pallets in such industries
as lumber milling and corrugated and other paper production.
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Using an organized process, RG Recyclers will clean and refine the PET material from the post-
consumer bottle stock and post-industrial manufacturing waste. The PET flake resin produced
will be extruded into roll stock sheet or high-strength strapping.
Although the Company expects to convert all of its bottle feed stock into extruded products,
any surplus flake will be sold to outside manufacturers.
3.2 Competitive 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 RG Recyclers.
3.3 Sourcing
In excess of a million pounds of post-consumer PET beverage bottles are collected and available
as feed stock for manufacturers who can re-process this material into commercial products. The
Company will have excellent relations with the firms and associations that collect and distribute
these materials and have been assured that its requirements will be available for the
foreseeable future.
Currently, the majority of the post-consumer PET bottles collected in Dapoli,Khed,Chiplun are
exported to Big Cities. Their interest has kept the industry in the position of being able to
maintain a steady price range for this bottle stock.
There are other sources of post-consumer feed stock known to RG Recyclers, and we are
confident that we will have sufficient materials available for our production needs.
3.4 Technology
Amol Kashid, a key member of our Management team, is thoroughly aware of the cleaning and
refining technology for post-consumer PET, and we will be utilizing his detailed knowledge
about the process in our recycling facility. Amol has worked in the establishment and operation
of facilities employing similar technologies over the last several years.
On the manufacturing side, Management has been an integral part of the advancement of
industry practices over next decade, and includes in their knowledge base most, if not all, of
the state-of-the-art available equipment and manufacturing techniques.
4.0 Market Analysis Summary
Strong demand for recycled plastics is working in the industry's favor. Major users of plastic
packaging, apparently responding to consumer desires, have begun incorporating at least some
recycled plastic content in their products as part of the growing interest in recycling. Recycled
resin demand is on the rise as prices for the two major recycled resins, PET and HDPE, continue
to hold value or appreciate against their virgin counterparts.
In volume, PET is currently the number one recycled resin. Supply of recycled PET is in excess
of 900 million pounds per year. This figure is expected to grow, reaching over 1.5 billion pounds
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during the next few years. The plastics industry has developed new markets and applications
for recycled resins from both post-consumer and post-industrial sources.
PET leads the recycled recovered resins as the most visible and valuable, and its use is
increasing. Of the total 3.7 billion pounds of PET consumed in 2015, just 16% was from
recycled sources. Of the more than 90 billion pounds of plastics produced annually in the India,
less than 5% is from recycled sources. Plastics, after aluminum, represent the second highest
value material in the waste stream and have the highest projected growth rate.
Markets and uses for recycled plastics are rapidly expanding. Plastic containers are being
collected at the curb for recycling , demand for recycled plastic will continue to expand and new
markets will develop as technologies permit the efficient segregation and reprocessing of high-
purity resins. Improved quality of resins, environmental issues and higher prices for virgin resin
will contribute to growth.
Packaging is expected to be the largest market segment for recycled plastics, with sheet and
lumber following. Surveys indicate that Indians are increasingly willing to collect and separate
discarded packages, foregoing a degree of convenience to make products more disposable, and
even paying a premium for a recycled item.
Increasingly, communities are refusing to consider incineration until every effort is made first to
recycle; public sentiment is strongly in favor of products that can be recycled or are made of
recycled materials. In recent years, the household recycling rate of PET bottles has more than
doubled to 30% of all PET soft drink bottles sold. In fact, PET's recycling rate is the fastest
growing among all beverage containers. The future of PET recycling is even brighter than it has
been in the past. PET intrinsic scrap value is second only to aluminum among container
materials. The plastics industry has launched a research and development program aimed at
increasing PET recycling. According to a recent survey, plastic soft drink bottles account for
approximately 2% of the solid waste discarded in India. The EPA has set a national goal to
recycle 25% of the municipal solid waste stream and the industry is committed to achieving its
share of that important goal.
The recycling industry intends to accelerate the rate of plastic recycling as part of its
commitment to develop solutions to the solid waste problem. Industry analysts have projected
that 50% of all PET containers will be recycled by the year 2025. More plastics will be recycled
annually than any other recyclable material. RG Recyclers believes a significant answer to
India’s waste problem lies in creating high value, recycled thermoformable sheet and other
extruded products for the packaging market.
Our founders recognize that an opportunity exists and propose a vertically

integrated conversion facility that will employ state-of-the-art technologies to produce extruded
sheet and high strength strapping from 100% recycled PET post-consumer bottle stock, cleaned
and refined in our own facility.
4.1 Target Market Segment Strategy
The Company has chosen its target markets because recycled PET (RPET) is in high demand as
flake resin by converters, as roll stock sheet used to produce high visibility packaging and as
high strength strapping for the lumber industry. Sales are price-sensitive, so that proximity to
markets and feed stock source provide a competitive edge.
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RPET Flake
Total market demand is reported as 1.2 billion pounds per year. Since only 900 million pounds
are processed in the India, consumers are forced to look at wide spec virgin PET (virgin resin
that is outside of spec but still usable) which is normally sold at a discount to virgin prices, but
still higher than recycled (RPET) pricing. Some manufacturers are also forced to import
materials from china. Some converters are being forced to use more expensive virgin resin.
PET Film & Sheet
The total reported market of extruded film and sheet is 872 million pounds, of which identified
industry usage of RPET is 160 million pounds.
The reported market demand (to replace virgin PS, PVC and PET) if RPET was available
is estimated at 1 billion pounds.
4.2 Market Segmentation
The primary market can be broken down as follows.
Consumers of PET in:
 Mahad: 62
 Dapoli: 8
 Khed: 9
Consumers of HDPE in:
Mahad: 73
Dapoli: 10
Khed : 12
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4.3 Industry Analysis
Currently there is no direct competition in Dapoli for either of the two divisions of the Company.
Any production in the trading area remains captive and not available to our target market.
The ability of the Company to obtain a source of post-consumer bottle stock is an integral
component of the strategy to vertically integrate operations and manufacture products in
demand by consuming industries. Without the cleaning and refining division, it would be difficult
to source sufficient RPET flake resin at costs that would allow the Company to be competitive.
4.3.1 Barriers to Entry
Limited Supply of raw material
Recycled PET (RPET) resins are in high demand, and demand is currently under-supplied. Many
manufacturers are delaying expansion because of uncertainty of supply. Entrants would have to
consider sourcing post-consumer or post-industrial waste and clean and refine it rather than
attempting to purchase flake on the open market. Even at that, there is not an over-abundance
of post-consumer or post industrial material in the marketplace.
Equipment costs are high and industry specific, resulting in a high exit cost.
Because of the scarcity of RPET flake, entrants may be forced to establish cleaning and refining
facilities for post-consumer bottles. The equipment required is costly and very industry specific.
It would not easily be re-sold as a system.
There is a market for used extrusion equipment, which normally sees 60-70% of new value
being realized.
Vertical integration is an important consideration and difficult to accomplish

successfully.
Because of the scarcity of RPET resin, and to maximize profit potential, entrants must consider
a two-stage production facility. Cleaning and refining post-consumer bottles and extruding the
resulting flake into commercial products requires a management team such as RG Recyclers
Firm contracts for supply and sales.

RG Recyclers Management's industry contacts will allow us to secure contracts for both supply
of feed stock and sale of finished goods.
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Freight is a major cost of operations; proximity to source of supply and markets is
crucial.
Hauling plastic materials is expensive so entrants will have to consider establishing facilities
close to materials and markets. Entrants with existing operations would have to consider new
separate facilities in many cases, reducing economies of scale and making management more
difficult.
4.3.2 Competition and Buying Patterns
There has been a strong demand (sellers' market) for our products for several years.
Traditional buying patterns in this industry are based on quality, price, reputation of
manufacturer, freight costs, delivery times and proximity to markets. During such a sellers'
market, buying patterns are often more influenced by availability.
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5.0 Strategy and Implementation Summary
RG Recyclers will utilize its strong industry-wide relationships to obtain significant contracts for
its production. Some business will be obtained directly by Management, while some amount of
product will be sold by sales agents well known to the Company
These industry-wide relationships will also provide the Company the ability to secure contracts
for the supply of its raw material at competitive pricing.
5.1 Value Proposition
In a vertically integrated environment, RG Recyclers will apply state-of-the-art 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.
5.2 Competitive Edge
RG Recyclers' competitive edge rests with its proximity to its target markets, as well as the
industry knowledge, reputation and contacts of its senior management. Their many years of
direct experience have led them to identify this unique opportunity and put together the
technology and sources to take advantage of it. Their reputation in the specific market segment
will result in the achievement of long-term commitments for our production.
5.3 Marketing Strategy
The Company has chosen to focus on the production of plastic packaging materials from
recycled post-consumer beverage bottles. Because of the industry experience and expertise of
the management, we have identified a significant available market in the Konkan Region. 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.
5.4 Sales Strategy
Because of the unique extensive experience and reputation of our Management in the
Company's chosen industry segment, we are able to identify all of the potential customers for
each of the products we will produce in our facility. While most of the production of flake is
ultimately intended to be used internally, we are confident that any developed surplus will be
sold immediately.
All of the production of the initial facility is committed for, and should there be any capacity not
consumed by these commitments, once again we are confident that the contacts of our senior
management will allow for the rapid sale of any such capacity.
If the Company grows faster than its prime customer base, additional capacity may be
developed. Mr. Gandhi many years of sales and sales development will be utilized to identify
additional customers and/or sales agents currently servicing the Company's target markets.
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To market the products, the Company will use a number of sales agents/brokers well known to
the founders from business transactions over more than 10 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 from RG Recyclers. Those agents are
located in:
 Khed
 Mahad
 Chiplun
 Mangaon
As stated, Mr Gandhi, himself, is a strong marketing individual. He has consulted to many and
has been personally responsible for sourcing raw materials and converted sheet for customers
in this industry.
Custom formers, extruders, laminators, and end user markets will be called upon by Sachin and
the sales agent team to promote and generate demand from those that buy and use RPET
packaging materials.
5.4.1 Sales Forecast
The sales forecast is based on the assumption that we will sell all of the highest value extruded
products that we can produce. In addition, it is expected that there will be amounts of refined
flake surplus to our extrusion capacity. This flake will be sold to other manufacturing
companies. There is a continuing strong demand for flake and extruded products made from
recycled PET.
Cost of raw materials includes 24% allowance for price variation and 15% non-recoverable
waste.
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Table: Sales Forecast
Sales Forecast
Year 1 Year 2 Year 3 Year 4 Year 5
Unit Sales
Recycled Flake PET 20,00,000 1000000 0 0 0
Extruded Roll Stock Sheet 8,00,000 1700000 2400000 2400000 2400000
Extruded Strapping 0 500000 800000 800000 800000
Total Unit Sales 28,00,000 3200000 3200000 3200000 3200000
Unit Prices Year 1 Year 2 Year 3 Year 4 Year 5

Recycled Flake PET 30 35 40 44 49
Extruded Roll Stock Sheet 60 65 69 74 80
Extruded Strapping 0.00 Rs55 67 80 84
Sales
Total Sales 1700000 2100000 2300000 2400000
Direct Unit Costs Year 1 Year 2 Year 3 Year 4 Year 5

Direct Cost of Sales

Extruded Strapping 0 120000 450000 $400000 450000
Subtotal Direct Cost of Sales 7,651,87 2,863,010 3,618,605 4,222,535 5,002,962
5.5 Milestones
Because the Company is a start-up, our milestones will surround the establishment of
continuing facilities, confirmation of sourcing and sales contracts, equipment acquisition and
installation, staffing and training, and initiating production.
Table: Milestones
Milestones
Milestone Start Date End Date Budget Manager Department

Order Equipment 2/1/2019 31/1/2019 n/a Senior Mgmnt n/a
Secure Location 2/1/2019 31/1/2019 n/a Senior Mgmnt n/a
Secure Orders/Contracts 2/1/2019 31/1/2019 n/a Senior Mgmnt n/a
Site Preparation 1/2/2019 25/2/2019 n/a Senior Mgmnt n/a
Hire Plant Manager 28/2/2019 15/3/2019 n/a Senior Mgmnt n/a
Receive Equipment 28/2/2019 31/3/2019 n/a Senior Mgmnt n/a
Hire & Train Skilled Labor 15/4/2019 30/3/2019 n/a Senior Mgmnt n/a
Begin Production 1/5/2019 1/5/2019 $0 Senior Mgmnt Department
Hire & Train Unskilled Labor 30/4/2019 15/5/2019 n/a Senior Mgmnt n/a
Install Equipment 1/4/2019 30/4/2019 n/a Senior Mgmnt n/a
Totals $0
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Chart: Milestones
6.0 Management Summary
The three founders form the senior management group. Several qualified candidates have been
identified for the position of plant manager. The balance of the employees will be hired and
trained during the equipment purchase and installation phase (first five months after funding).
Because the sales management function will be the responsibility of Rohit Gandhi, with
projected use of familiar sales agents, there are no plans for additional inside sales people or
managers.
Sachin Gandhi has agreed to remain with the Company for a minimum of three years, and will
assume the responsibility of locating and training a replacement before the end of his
employment.
6.1 Organizational Structure
The Organizational Structure of RG Recyclers is planned to be a simple and traditional one. All
recycling and manufacturing operations will report to the COO. All administrative and finance
functions will report to the CFO. Both the COO and CFO will report to the CEO, who will also
have the responsibility for Sales and Marketing.
6.2 Management Team
Rohit Gandhi, has a 10-year history of experience encompassing all aspects of Polymer Raw
Material, Plastic Conversion Methods, and Venture Development..
Amol Kashid, Executive VP and COO, is a graduate engineer with over 10 years experience in
the post-consumer plastics recycling industry and is the inventor of the primary recycling
technology used in the process for this project.Amol has played a major role in the design and
manufacture of specific recycling equipment as well as playing a key management role in the
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design, construction, installation, commissioning and operation of several independent recycling
businesses.
In the past five years, Amol has successfully completed projects in Mumbai, Chennai.
Sachin Gandhi, CFO, has over 20 years of investment, merchant banking and management
experience. Sachin is the former CEO of Shree Samarth Pvt Ltd a company manufacturing
plastic injection molded products. Prior to 1993 he was a partner in two independent
investment banking firms.
6.3 Personnel Plan
The Company expects to have total employees of 20 by the end of year one, 50 in year two,
and 75 in year three through five at full capacity. We have budgeted for labor rates ranging
from 4000 for unskilled labor to 6000 per month for machine operators and Maintenance
Technicians. We expect to pay 10000 per month to supervisors. We have also included 30%
burden for benefits and employee costs, as well as a 25% bonus potential for all plant
employees.
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FINANCIAL PLAN
Once the equipment arrives and is installed, production will start, with sales
beginning in the fifth month after funding. Positive cash flow and net profit
are achieved within the first year.
Important Assumptions
 RG Recyclers will collect receivables for 26 days ,due to knowledge
in the recycling industry.
 Inventory turnover is predicted at 5 times, which is extremely
conservative.
 The personnel burden includes contribution by the Company to
employee health care.
 General annual growth rates of 5.5% have been assumed on all sales
prices and material and labor costs.
 It is assumed that additional extrusion lines will be added in the third
year, with down payments of 30% at time of order and balance paid at
time of shipment (see Cash Flow for details). These will be purchased as
long-term assets out of the cash flows of the business.
 We have allowed for Accounts Receivable financing of 60% at an
interest rate of 11.50% per annum.
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General Assumption
Particulars Year 1 Year 2 Year3 Year 4 Year 5
Plan Month 1 2 3 4 5
Current 11.50% 11.50% 11.50% 11.50% 11.50%

Interest Rate
Long interest 7.50% 7.50% 7.50% 7.50% 7.50%
rate term
Tax Rate 24.99% 24.99% 24.99% 24.99% 24.99%
Other 0 0 0 0 0
Break-even Analysis
With fixed costs of about 3 Lakhs per month in the first year, and variable unit costs at roughly
52% of prices, we need to produce and sell 250000 units per month to break even. We will far
exceed the break-even point in our first year of sales.
Table: Break-even Analysis
Break-even Analysis
Monthly Units Break-even 250000

Monthly Revenue Break-even 127000
Assumptions:
Average Per-Unit Revenue 40
Average Per-Unit Variable Cost 35
Estimated Monthly Fixed Cost 300,000
7.3 Projected Profit and Loss
The rapid growth of sales in year one and two is due primarily to increase in capacity over that
period, as we add new extrusion equipment. The plan assumes the sale of all production
capacity as it is added. The favorable gross margin projections are in part due to the vertical
integration of the two processes. Our Managements' ability to handle all initial sales and
marketing allows us to predict virtually no sales or marketing expense.
Page 17
Chart: Profit Yearly
18
16
14
12
10
Net Profit
8
6
4
2
0
Chart: Gross Margin Yearly
35
30
25
20
15 Gross Margin
10
5
0
Page 18
Table: Profit and Loss
Pro Forma Profit and Loss

Sales 1500000 31,553,774 39,169,900 41,128,395 43,146,315
Direct Cost of Sales 7,651,875 12,863,01 13,618,605 14,222,535 15,002,962
Production Payroll 953,657 1,713,01 1,963,829 2,062,020 2,165,121
Packaging 150,791 315,53 391,699 411,284 431,463
Sales Commission 733,102 1,501,89 1,871,678 1,965,261 2,063,524
Total Cost of Sales 9,489,42 16,393,45 17,845,811 18,661,100 19,663,071
Gross Margin 5,589,6 15,160,32 21,324,090 22,467,295 23,483,244

Gross Margin % 37.07% 48.05% 54.44% 54.63% 54.43%
Operating Expenses
Sales and Marketing Expenses

Sales and Marketing Payroll 0 0 $0 0 0
Advertising/Promotion 6,000 50,000 100,000 150,000 200,000
Travel 0 $0 0 0 0
Total Sales and Marketing Expenses 6,000 50,000 100,000 150,000 200,000
Sales and Marketing % 0.04% 0.16% 0.26% 0.36% 0.46%
General and Administrative Expenses

General and Administrative Payroll 362,200 585,417 630,189 678,747 731,440
Sales and Marketing and Other 0 0 0 0 0
Expenses
Depreciation 241,740 405,992 562,908 562,908 562,908
Payroll Burden 394,757 689,529 778,205 822,230 868,968
Office Equipment Rent 6,000 6,000 8,000 8,000 8,000
Office Supplies/Expense 12,000 15,000 20,000 2,500 25,000
Travel & Entertainment 16,000 30,000 35,000 40,000 45,000
Leased Vehicles 18,000 25,000 30,000 30,000 30,000
Utilities 678,560 1,419,920 1,762,646 1,850,778 1,941,584
Insurance 24,000 25,000 25,000 25,000 25,000
Misc Plant & Maintainence Supplies 60,000 63,000 66,150 69,458 72,930
Other $0 $0 0 0 0
Total General and Administrative 1,813,257 3,264,858 3,918,098 4,109,621 4,310,831
Expenses
General and Administrative % 12.02% 10.35% 10.00% 9.99% 9.99%
Other Expenses:
Other Payroll 0 0 0 0 0
Misc (contingency) 90,661 163,239 195,905 205,481 215,542
Prof Fees ( Includ legal & accounting) 300,000 330,000 363,000 399,300 439,230
Total Other Expenses 390,661 493,239 558,905 604,781 654,772
Other % 2.59% 1.56% 1.43% 1.47% 1.52%
Total Operating Expenses 2,209,918 3,808,097 4,577,003 4,864,402 5,165,603
Profit Before Interest and Taxes 3,379,758 11,352,223 16,747,087 17,602,893 18,317,641
EBITDA 3,621,498 11,758,215 17,309,995 18,165,801 18,880,549
Interest Expense 60,568 54,464 48,064 41,664 35,264
Taxes Incurred 995,757 3,389,328 5,009,707 5,268,369 5,484,713
Net Profit 2,323,433 7,908,431 11,689,316 12,292,860 12,797,664

Net Profit/Sales 15.41% 25.06% 29.84% 29.89% 29.66%
Page 19
7.4 Projected Cash Flow
Cash flow is predicted to turn positive in the sixth month of operations, which is the tenth
month after funding. The Cash Flow table shows our planned repayment of the long-term loan,
as well as the purchase of new extrusion equipment in the first two year of the plan. Dividends
to founders and the outside investor are shown near the bottom of the table.
Page 20
Table: Cash Flow
Pro Forma Cash Flow

Cash Received
Cash from Operations

Cash Sales 0 0 0 0 0
Cash from Receivables 13,094,2 29,385,1 38,167,3 40,870,6 42,880,3
Subtotal Cash from Operations 13,094,2 29,385,1 38,167,3 40,870,6 42,880,3
Additional Cash Received

Sales Tax, VAT, GST Received 0 0 0 0 0
New Current Borrowing 0 0 0 0 0
New Other Liabilities (interest-free) 0 0 0 0 0
New Long-term Liabilities 0 0 0 0 0
Sales of Other Current Assets 0 0 0 0 0
Sales of Long-term Assets 0 0 0 0 0
New Investment Received 0 0 0 0 0
Subtotal Cash Received 194,219 29,3892 38,6,380 40,80,96 42,880,3
Expenditures Year 1 Year 2 Year 3 Year 4 Year 5
Expenditures from Operations

Cash Spending 1,35,857 298,430 2,59018 2,70,767 2,96,561
Bill Payments 9,72,949 2,455,972 23,69920 25,40,297 2636,546
Subtotal Spent on Operations 11,08,806 2,754,402 26,29938 28,11,064 233,107
Additional Cash Spent

Sales Tax, VAT, HST/GST Paid Out 0 0 0 0 0
Principal Repayment of Current Borrowing 0 0 0 0 0
Other Liabilities Principal Repayment 0 0 0 0 0
Long-term Liabilities Principal Repayment 79,200 80,000 80,000 80,000 80,000
Purchase Other Current Assets 0 0 0 0 0
Purchase Long-term Assets 1,5,000 3,9,000 0 0 0
Dividends 0 3,0,000 8,0,000 1000,000 10,0,000
Subtotal Cash Spent 12,7,006 30,0,402 34,0,938 341,064 39,3,107
Net Cash Flow 345,213 (68211) 3,7441 2,6,532 3,7,586

Cash Balance 990,213 312,002 4,18,444 737,976 9,8,562
Page 21
7.5 Projected Balance Sheet
The vertical integration, immediate sales contracts and rapid ramp up of production combine to
project a Net Worth at the end of year one in excess of the total invested capital. By staying on
plan, the Company will achieve rapid growth compared to invested capital.
Table: Balance Sheet
Pro Forma Balance Sheet

Assets
Current Assets
Cash 90,213 312,02 4,108,44 6,737,96 9,805,52
Accounts Receivable 984,881 4,153,43 5,155,93 5,413,72 5,679,43
Inventory 510,125 1,371,97 914,88 942,46 1,004,19
Other Current Assets 25,000 25,00 25,00 25,000 25,00
Total Current Assets 510,219 5,862,42 10,204,24 13,119,14 16,514,14
Long-term Assets
Long-term Assets 211,000 8,440,00 8,440,00 8,440,00 8,440,00
Accumulated Depreciation 241,740 647,72 1,210,60 1,773,58 2,336,46
Total Long-term Assets 69,260 7,792,28 7,229,30 6,666,42 6,103,54
Total Assets ,479,479 13,654,60 17,433,64 19,785,66 22,617,68
Liabilities and Capital Year 1 Year 2 Year 3 Year 4 Year 5
Current Liabilities
Accounts Payable ,445,246 1,792,05 1,961,64 2,100,76 2,215,14
Current Borrowing 0 0 0 0 0
Other Current Liabilities 0 0 0 0 0
Subtotal Current Liabilities ,445,246 1,792,05 1,961,64 2,100,76 2,215,14
Long-term Liabilities 720,800 640,80 560,80 480,80 400,80

Total Liabilities ,166,046 2,432,85 2,522,44 2,581,56 2,615,94
Paid-in Capital ,200,000 4,200,00 4,200,00 4,200,00 4,200,00

Retained Earnings (210,000) (886,57) (978,16) 711,10 3,004,00
Earnings 323,433 7,908,41 11,689,16 12,292,80 12,797,64
Total Capital 313,433 11,221,84 14,911,80 17,204,00 20,001,74
Total Liabilities and Capital 479,479 13,654,60 17,433,14 19,785,66 22,617,68
Net Worth 313,433 1,221,84 14,911,10 17,204,0 20,001,4
7.6 Business Ratios

Standard business ratios are included in the following table, along with comparison ratios for
the Thermoplastic Materials industry. The ratios show a plan for healthy growth. Our return on
investment increases each year and will allow for new equipment to be financed internally
should the Company choose to do so. While the ratios indicate rapid growth and profitability, it
may be explained in part by the fact of the integration of three business sections into the one
facility. Our ratios differ significantly from the rest of the industry because of our ability to use
low-cost recycled materials to manufacture our products.
Page 22
Table: Ratios
Ratio Analysis
Year 1 Year 2 Year 3 Year 4 Year 5 Industry Profile
Sales Growth n.a. 109.26% 24.14% 5.00% 4.91% 9.27%
Percent of Total Assets

Accounts Receivable 23.41% 30.42% 29.57% 27.36% 25.11% 24.83%
Inventory 6.02% 10.05% 5.25% 4.76% 4.44% 11.53%
Other Current Assets 0.29% 0.18% 0.14% 0.13% 0.11% 32.03%
Total Current Assets 41.40% 42.93% 58.53% 66.31% 73.01% 68.39%
Long-term Assets 58.60% 57.07% 41.47% 33.69% 26.99% 31.61%
Total Assets 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Current Liabilities 17.04% 13.12% 11.25% 10.62% 9.79% 26.62%

Long-term Liabilities 8.50% 4.69% 3.22% 2.43% 1.77% 25.26%
Total Liabilities 25.54% 17.82% 14.47% 13.05% 11.57% 51.88%
Net Worth 74.46% 82.18% 85.53% 86.95% 88.43% 48.12%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Gross Margin 37.07% 48.05% 54.44% 54.63% 54.43% 28.02%
Selling, General & Administrative 22.36% 22.63% 24.36% 24.16% 24.37% 15.89%
Expenses
Advertising Expenses 0.04% 0.17% 0.27% 0.38% 0.48% 0.17%
Profit Before Interest and Taxes 22.41% 35.98% 42.75% 42.80% 42.45% 2.46%
Main Ratios
Current 2.43 3.27 5.20 6.24 7.46 1.79
Quick 2.08 2.51 4.74 5.80 7.00 1.22
Total Debt to Total Assets 25.54% 17.82% 14.47% 13.05% 11.57% 57.88%
Pre-tax Return on Net Worth 52.57% 100.68% 111.99% 102.08% 91.40% 2.22%
Pre-tax Return on Assets 39.14% 82.74% 95.79% 88.76% 80.83% 5.28%
Additional Ratios Year 1 Year 2 Year 3 Year 4 Year 5

Net Profit Margin 15.41% 25.06% 29.84% 29.89% 29.66% n.a
Return on Equity 36.80% 70.47% 78.39% 71.45% 63.98% n.a
Activity Ratios
Accounts Receivable Turnover 7.60 7.60 7.60 7.60 7.60 n.a
Collection Days 29 36 43 47 47 n.a
Inventory Turnover 15.76 13.67 11.91 15.32 15.41 n.a
Accounts Payable Turnover 7.76 12.17 12.17 12.17 12.17 n.a
Payment Days 27 27 29 29 29 n.a
Total Asset Turnover 1.78 2.31 2.25 2.08 1.91 n.a
Debt Ratios
Debt to Net Worth 0.34 0.22 0.17 0.15 0.13 n.a
Current Liab. to Liab. 0.67 0.74 0.78 0.81 0.85 n.a
Liquidity Ratios
Net Working Capital 064,973 070,396 8,242,62 11,018,38 14,298,96 n.a
Interest Coverage 55.80 208.44 348.43 422.50 519.44 n.a
Additional Ratios
Assets to Sales 0.56 0.43 0.45 0.48 0.52 n.a
Current Debt/Total Assets 17% 13% 11% 11% 10% n.a
Acid Test 0.70 0.19 2.11 3.22 4.44 n.a
Sales/Net Worth 2.39 2.81 2.63 2.39 2.16 n.a
Dividend Payout 0.00 0.38 0.68 0.81 0.78 n.a
Page 23
7.7 Long-term Plan
The plan calls for maximum production rate for flake in the sixth month from funding.
Approximately one third of that production will be converted into extruded sheet beginning
approximately at the same time. A second sheet extruder, which will also consume one third of
the flake produced, is planned to be added at the end of year one, coming on line mid year two.
A third extruder, which is planned to produce high-strength strapping, is expected to come on
line late in year two. By the beginning of year three, it is expected that all of the 1300000 lbs.
of RPET cleaned & recycled annually will be converted into extruded products. Up until this
time, excess flake produced will be sold to other extruder companies.
The plan assumes a 5% increase in the sales price of all products and a 5% increase in the cost
of raw materials and labor in each of years 2 through 5.
The result of the above is rapid growth in revenue and profit through year three, and moderate
growth in years four and five, assuming no expansion of capacity during that time.
Page 24

Plastic Recycling Capstone Project

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Plastic Recycling Capstone Project

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Capstone Project

Plastic Recycling Business Plan

1.0 Executive Summary ................................................................................................................ 1

7.3 Projected Profit and Loss ................................................................................................. 17

7.4 Projected Cash Flow ........................................................................................................ 204

1. Sales passing 10 lakhs in first year, 21 lakhs in year 2, growing to 68 lakhs.

RG Recyclers is a manufacturing company dedicated to converting waste plastic materials into

1.3 Keys to Success

The main keys to the success of the Company are:

 Secure Supply- Contract for supply of post-consumer bottles and post-industrial

Unavailable or scarce raw material feed stock for production

Technology employed may be unreliable or unproven

There may not be a market for the Company's products

 The Industry-wide experience of the Management Team has allowed them to

The location may not be near enough to markets

The Company may not be able to attract top management

2.0 Company Summary

2.1 Company Ownership

2.1 Start-up Summary

Table: Start-up Funding

Liabilities and Capital

Total Capital and Liabilities 1.6 Crore

Total Funding 1.72 Crore

Total Requirements 17200000

RG Recyclers will utilize two processes in the same facility to produce:

3.1 Product Description

3.2 Competitive Comparison

4.0 Market Analysis Summary

Our founders recognize that an opportunity exists and propose a vertically

4.1 Target Market Segment Strategy

PET Film & Sheet

4.2 Market Segmentation

The primary market can be broken down as follows.

Consumers of PET in:

Consumers of HDPE in:

4.3.1 Barriers to Entry

Limited Supply of raw material

Vertical integration is an important consideration and difficult to accomplish

Firm contracts for supply and sales.

4.3.2 Competition and Buying Patterns

5.1 Value Proposition

In a vertically integrated environment, RG Recyclers will apply state-of-the-art recycling and

5.2 Competitive Edge

5.3 Marketing Strategy

5.4 Sales Strategy

5.4.1 Sales Forecast

Unit Prices Year 1 Year 2 Year 3 Year 4 Year 5

Direct Unit Costs Year 1 Year 2 Year 3 Year 4 Year 5

Direct Cost of Sales

Milestone Start Date End Date Budget Manager Department

6.0 Management Summary

6.1 Organizational Structure

6.2 Management Team

6.3 Personnel Plan

Current 11.50% 11.50% 11.50% 11.50% 11.50%

Tax Rate 24.99% 24.99% 24.99% 24.99% 24.99%

Table: Break-even Analysis

Monthly Units Break-even 250000

7.3 Projected Profit and Loss

Chart: Gross Margin Yearly

Pro Forma Profit and Loss

Gross Margin 5,589,6 15,160,32 21,324,090 22,467,295 23,483,244

Sales and Marketing Expenses