School of Business POKHARA UNIVERSITY

PRESENTATION
Business Development Plan
(Graduate Seminar- 1 credit Hour)

MBA IV Trimester August 23, 2011

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Business Development Plan of

Annapurna Organic Tea Sardhikhola, Kaski

Name of Student: Binay Thapa Roll No.: 6 IV Trimester

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Highlights of the Project

Name of Company : Name of Project : Promoter(s) :
Annapurna Organic Tea Organic Tea Production Binay Thapa & Community People International Market.

Objective of Project: To export Organic Tea In

Capacity : 40,000 Kgs Duration of Projection: 5 years Major products: Organic Tea (Grade 1-5)
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History
Tea was discovered accidentally by Emperor Shen Nung back in 2700BC. He was relaxing in the garden with a cup of boiling water. At that time some leaves from a nearby tree fell into the cup. Unnoticed he consumed the drink. He enjoyed the taste of the tea and the pain relief of the drink was so much. The first tea used in England came from China. The UK is the largest importer of tea. The English quickly developed an almost unquenchable thirst for the drink and began searching for a way to get tea in other countries.

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Introduction
Reason for selecting this project
The Annapurna Organic Tea is a gift from the silvery mountains. It is grown organically from the high elevation gardens of Himalayan range close to Mount Annapurna and Fishtail. The local farmers are the growers and processors of the tea.

Uniqueness / product features :

The quality and high value of this tea is attributed to the fresh soil and, the fresh water and the fresh air of the Annapurna region. It possesses delicate flavour along with strength and brightness. You will enjoy the freshest and finest tea with exclusive taste and aroma from the Annapurna Himalayas.

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Production Plan
First the company will focus on the plantation of tea in Sardikhola VDC about 3000 hectares with the coordination of ACAP, technical/resources people, local communities, clubs, etc. After two years the company will collect the raw material from the farmers for the production of tea. Step I Collection of green leaf from collection centre Step II Weathering Step III Rolling Step IV Fermentation Step V Heating Step VI Shorting Step VII Savaging Step VIII Separating Grade Step IX Packaging
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Project Management Plan

BOD
CEO would be the major person in this organization with President, Vice president, Secretary .

Expert in this project

ACAP will be the prime organization that will provide the technical assistance.

HR Policy HR policy will be based on the nations law.

Compensation based on performance. Performance appraisal on every quarter.
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Management Plan
Organization Chart
CEO

Finance/Account Manager

Marketing Manager

Supervisor

Labors
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 Strength

SWOT Analysis

Local community will favor. Increasing importance of organic foods in the world. Emerging issues of the health of the people.

Weakness
Nepal is out of insurgency and the nation have instable politics. New company - needs to establish its position in the market place.

Opportunity
Consumers are living a more healthy lifestyle. Consumers prefer quality products that offer true value. Demand all over the world.

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SWOT
Threats
Needs to compete with foreign goods that are produced with sophisticated technology. Limited number of raw materials . Unstable tea supply of high quality tea. High quality tea prices will increase moderately.

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Marketing Plan
Marketing Strategy
With the brand Anna Organic Tea we are going to introduce innovative products in an existing market and focus on Market Development We will spread awareness about the health betterment by consuming the Tea and capture the educated and health conscious class of people.

Marketing Plan
Marketing communication campaign Marketing Promotion Campaign.
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Marketing Plan
Role of Marketing Departments & Staffs The selling process is vital in the decision making process.
The selling is making by the advice. The clients needs to be assured in quality in order to make them more confident the product.

Promotion
The promotion is the most important point to launch our products because we want to be able to compete with our competitors. We are going to set up original events in order to attract new customers and consumers of other tea brands.
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Financial Projection
Assumption of Financial Calculations:
Year 1 2 3 4 5 40 % 50% 60% 70% 80% Capacity % Sales Rs. 1,06,92,000 1,33,65,000 1,60,38,000 1,87,11,000 2,13,84,000

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Financial Projection
Assumption of Financial Calculations: Demand :3000 Kgs Variable Cost :- Rs. 1,26,80,000 Fixed Cost :- Rs.27,00,000

Market Scenario :
Since people are being aware of the importance of the organic foods, they are ready to pay high for these goods. The tea industry in Nepal is about 150 years old. It occupies an important place and plays a very useful part in the national economy . Major competitive countries in tea in the world are Sri Lanka, Kenya, China and Indonesia.

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Market Scenario
Government Policy Industry related factors
Tea is hot beverage consumed by people all over the world at highest after water. Tea proves as refreshing drink as well as medicine and offer better health & immunization as it is consumed twice to thrice a day.

Internal factor
The employees are very important since they represents the image of the brand. The employees and more particularly the commercial people are trained in order to know the product and sell it properly. The employees explains the quality, the taste of the product.
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Financial Projection
Initial Investment :
Fixed Assets Requirements: Rs. 45,26,500 Working Capital Requirements: Rs. 34,73,500

Initial Capital Structure

Current Assets: Rs. 50,03,868 Current Liabilities: Rs. 2,08,011 Fixed Assets: Rs.40,97,350 Long Term Loan: Rs. 34,40,88 Total Assets: Rs. 91,01,218 Equity Capital: Rs. 54.52,319 Total Equity & Liabilities: Rs. 91,01,218

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Financial Projection
Income Statement Summary
100% Year Sales VC 26.73 12.65 40% 1 10.69 5.06 50% 2 13.36 6.32 60% 3 16.03 7.59 70% 4 18.71 8.85
In Million

80% 5 21.38 10.12

Contribution Margin
FC

5.63
6.08

7.03
6.08

8.44
6.08

9.85
6.08

11.26
6.08

EBIT
Interest EBT Tax Earning After Tax Dividend Retained Earnings
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4.59
0.72 3.87 0.96 2.90 1.45 1.45

6.08
0.61 5.46 1.36 4.09 2.04 2.04

7.52
0.50 7.02 1.75 5.26 2.63 2.63

8.95
0.36 8.59 2.14 6.44 3.22 3.22

10.39
0.19 10.19 2.54 7.64 3.82 3.82
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Financial Projection
Cash Flow Summary
Year Operating cash inflow Financing cash inflow Investing cash Inflow Total cash Inflow (A) Operating cash outflow Financing cash outflow Investing cash outflow Total cash outflow Operating cash Outflow (B) Cash Balance (A)-(B) Add :Opening Cash balance Closing Cash Balance
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In Million
1
3.4

4 8.0 6.7

5 10.5 7.7

4.3 5.9

4.1 4.8 5.7

Financial Projection
Capital Budgeting Summary Initial Investment Total Present Value Non Discounted Pay Back Period Discounted Pay Back Period Net Present Value (NPV) Internal Rate of Return(IRR) Profitability Index
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Projected Balance Sheet

Year Current Assets 1 50,03,868 2 67,90,372 3 4 5 90,10,996 1,16,54,230 1,47,05,977

Fixed Assets Total Assets

Current liabilities Long Term Loan Total equity Total Equity &liabilities

40,97,350

37,52,690

34,39,242

31,54,048

28,94,437

91,01,218 1,05,43,062 1,24,50,239 1,48,08,278 1,76,00,415

2,08,011 34,40,889 4,52,319 2,60,014 27,81,137 3,12,016 20,02,631 3,64,019 10,83,993 4,16,022 0

75,01,911 1,01,35,592 1,33,60,266 1,71,84,393

91,01,218 1,05,43,062 1,24,50,239 1,48,08,278 1,76,00,415

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BEP & Major Financial Ratio

Year BEP Sales 1
1,970,284 18% 31.91% 53.27% 31.91% 24.1

2
1,809,839 14% 38.88% 54.64% 38.88% 26.1

3
1,750,568 11% 42.3% 51.9% 42.3% 28.9

4
1,696,915 9% 43.55% 48.27% 43.55% 32.0

5
1,648,333 8% 43.45% 44.51% 43.45% 35.3

BEP %
ROI

ROE
ROA

Current Ratio
Interest/Sales
6.73% 4.63% 3.12% 1.93% 0.91%

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Sensitivity Analysis
If sales price decreases by 10%
Year 1 2
6,580,080 8,225,100

5
13,160,160

BEP Sales

9,870,120 11,515,140

If cost increases by 10%

Year BEP Sales
7,238,088 9,047,610 10,857,132 12,666,654 14,476,176

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Sensitivity Analysis
If cost increases by 5% and sales decreases by 10%.
Year BEP Sales 1 6909084 2 8636355 3 10363626 4 12090897 5 13818168

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Recommendation
Considering the above analysis and projection based on above assumptions, I would like to recommend that : -. The concept of the project is good and well planned. The customers are large in numbers and the product has high demand all over the world. Net Present Value of the project is positive. The Internal Rate of Return (28%) is greater than project cost of capital (18%). Expand its production in others places of Nepal. Advertisement should be done consistently

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Any Questions???
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Thank You
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