Business Plan On Plastic Recycling & Manufacturing

Business Plan QUASAR PLASTICS Rajnish Chaubey

[year-

2008-2010]

IBMR Bangalore

Quality at the BEST

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“This is business plan is submitted to the IBMR Bangalore as a part of curriculum.”

Submitted by: Rajnish kumar Chaubey PGDM (2008-2010)

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TABLE OF CONTENT EXECUTIVE SUMMARY……………………………………………………………………………………… ………………….4 COMPANY OVERVIEW……………………………………………………………………………………… …………………..5 MISSION…………………. ……………………………………………………………………………………………………… ………….5 MARKET AND PRODUCT………………………………………………………………………………………… …………………..6 OBJECTIVE……………………………………………………………………………………… …………………………………………..6 KEY TO SUCCESS.. ……………………………………………………………………………………………………… ………………..6 PRODUCT AND SERVICE DESCRIPTION…………………………………………………………………………………. .7 MARKET COMPARISON…………………………. ……………………………………………………………………………………7 POSSIBLE OBSTACLES…….…………………………………. ………………………………………………………………………..7 INDUSTRY AND MARKET PLACE ANALYSIS…………. ………………………………………………………………….9 INDUSTRY ANALYSIS…………………………………………………….. …………………………………………………………….6 MARKETPLACE ANALYSIS……………………………………………………………………. ……………………………………..6

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CUSTOMER ANALYSIS………………………………………………………………………………………… ………………….…11 COMPETITOR ANALYSIS………………………………………………………………………………………… …………………12 MARKETING STRATEGY…………. ……………………………………………………………………………………………12 PRODUCT SERVICE STRATEGY.. …………………………………………………………………………….………………….13 PRICING STRATEGY………………………………………….. ………………………………………………………………….…13 DISTRIBUTION STRATEGY………………………………………………………………………………………… ………………13 ADVERTISEMENT AND PROMOTION STRATEGY……………………………………………………………………….13 SALES STRATEGY………………………………………………………………………………………… ……………………………13 SALES FORECAST……………………………………………………………………………………… ………………………………13 DEVELOPMENT ……………………………………………………………………………………………………… ………….14 DEVELOPMENT STRATEGY…. …………………………………………………………………………………………………….1 4 MANAGEMENT……. ……………………………………………………………………………………………………… …….15

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OPERATIONS…. ……………………………………………………………………………………………………… …………..16 SCOPE OF OPERATIONS…………………………………………………………………………………… ………………..…….20 SUPPLY CHAIN……………….. ……………………………………………………………………………………………………… …21 PROCESS FLOWCHART…………………………. ………………………………………………………………………………….22 GANTT CHART…………………………………………………………………………………………… …………………………….23 FACILITY LAYOUT…………………………………………………………………………………………… ………………………..24 FINANCIAL STATEMENT…………………………………. …………………………………………………………………..25 STARTUP EXPENCES………………………………………………………………………………………… ………………………25 INCOME STATEMENT……………………………………………………………………………………… ……………………….26 BALANCE SHEET………………………. …………………………………………………………………………………………….…27 BREAK EVEN POINT……………………………………………………………………………………………… ………………….28 APPENDIX……………………………………………………………………………………… ………………………………….29

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Bibliography ……………………………………………………………………………………………………… ………………33

Executive summary Plastic is the basic need of our day to day life. During recent years the plastic industry has grown with a substantial growth rate. This growth is driven by three sectors viz packaging, infrastructure and agriculture. There are the various verities of plastics out of which PVC (Polyvinyl chloride) and PET (Polyethylene terephthylene) plastics have their considerable contribution. PET plastics are generally used in the manufacturing of beverage bottles for the packaging and PVC plastic is used in the production of household plastic materials. The growing utilization of plastics in industrial and consumer applications and surrounding solid waste recycling, has led to an increased demand for recycled plastic resins and products. We the Quasar plastics provide a wide range of plastic solutions for household and raw material for packaging of various companies. As a part of our ongoing efforts to exploit this opportunity we will recycle the plastics and then produce kitchen ware items and other related plastic material. We will also sell the recycled plastics to the companies in the plastic business. We will have a 7 | Quasar Plastics

recycling plant along with the production unit. The raw material will be procured from the waste collectors. The raw material will be post consumed beverage bottles and other soft plastic materials Our main focus is our industrial customer whom we will sell PET bottles and PET flakes. It will contribute more than 60% of our sales. We will also focus on the household plastic business which is the part of our portfolio. The initial set up cost will be Rs 34, 40,000. Quasar plastics will be a solution proprietorship business run by the promoter Rajnish Kumar Chaubey who is a MBA graduate with finance and marketing as specialization. Since plastic material does not carry any brand name so it will give us an addition benefit in long term to establish our brand name. To exploit the market we will use penetration pricing as our marketing strategy and utilize our stringent distribution network and strong industrial relationship. As a future plan in coming years we will increase the variety of plastics like LDPE (Low density polyethylene) and HDPE (High density polyethylene). By doing this we will be able to produce plastic carry bags and raw material for production for plastic chairs and tables and other fiber based products.

COMPANY OVERVIEW Quasar Plastics provide a wide range of plastic solutions for households and raw material for packaging to the various companies. Allahabad is the place where the facility will be established and other operation will commence. We will collect the plastic garbage like consumer beverage bottles, plastic bags from various garbage stores and then our recycle unit will process it which eventually be used for the production of finished goods. The plastic garbage we are getting as raw material has two components one is PVC (Polyvinyl chloride) and other is PET (Polyethylene terephthylene ). Firstly the whole garbage is melted and then PVC and PET are separated from each other by froth flotation technique.

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We will create a plant (actual facilities to be shared with the recycling unit) to manufacture extruded plastic flakes (purified plastic). The extruded plastic is then molded in the various products. We will produce two types of replay plastics •

PVC( Polyvinyl chloride)

•

PET( Polyethylene terephthylene )

Mission Statement Quasar Plastics • • •

Strive to provide the excellent plastic solution to the customers at competitive prices. Continually expands our range of products. Is poised to service both large and small customers.

Markets and Products The plastic products usually do not carry a brand name so intruding in the business like plastic will not be too hard with low price strategy. The population of Allahabad and the cities around it like Varanasi, Gorakhpur, Johnpur is around 3Cr. and this area is basically comprises of low to middle income group families so they focus on plastic products rather than fiber since it is a cheaper. Hence it is huge market to exploit. From Allahabad city 500 tons of solid waste is produced from that 15tons of plastic bags and around 7 tons of plastic bottles is generated per day. So the supply of raw material will be continuous. Apart from this we will sell raw material for packaging to the various small companies in this area. Around 30 small and medium scale companies are working in this region. So a large amount of industrial customer is also available. There are two folds of products that we are providing one is industrial and other is household. 9 | Quasar Plastics

Objectives •

• • •

Key

Develop a business that survives on its own cash. Create a company which exceeds customer satisfaction level. Expand the service to whole UP in first five years and then to Delhi. Extending the services to electronic component manufacturing companies for production of capacitors printed circuit boards etc. to success:

The main keys to the success of the Company are: •

Secure Supply- Contract for supply of post-consumer bottles and postindustrial manufacturing waste for PET raw material feed stock.

•

Satisfy our customer so that we can retain them

•

Maintain low overhead and operating costs

•

Provide better prices than all our competitors

Product and services We will provide a wide range of plastic products for households and raw material for packaging. The recycled plastic is processed to Polyethylene Terephthalate (PET). PET is a thermoplastic polymer viscous of polyester family. The biggest property of this compound is it transparent. This is the reason why it is used for packaging. Apart from this PET have good strength, ductility, stiffness and hardness. After the recycling process completed an extruded plastic is generated. Plastics extrusion is a high volume manufacturing process in which raw plastic material is melted and formed into a continuous profile. The products we are producing are • Cleaned and recycled plastic flakes of PET and bottles, recovered from post-consumer beverage bottles. (this PET will work as raw material for packaging to various firms, not for the end user) • Household finished plastic goods. We are manufacturing plastic tubes of various diameter, plastic kitchen ware. ( for the end user) 10 | Q u a s a r P l a s t i c s

PET flake will be sold to thermo formers (those who mold plastic sheets into usable products) primarily to be used to produce high-visibility packaging. And also to the beverage companies for packaging. Recycled plastic is widely used in mainstream construction products such as damp proof membrane, drainage pipes, ducting and flooring. Bins, street signs and planters are frequently made from plastic. They are cost competitive and resistant to damage. Local authorities and schools are able to demonstrate recycling in action by specifying recycled products High strength PET is used in the clothing, furnishings, tyre cord and technical textiles Apart from PET the household plastic will be directly sold to the end customers. In day to day life plastic items like water bottles, shop case scrubber etc is frequently used. So there is a big demand of these in local market.

Market 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 Replay Plastics.

Possible obstacle The product is completed and ready for the market launch. The possible obstacles are Unavailable or scarce raw material stock for production •

Replay is confident that it has secured good availability of low cost postconsumer PET bottles (feed stock) derived from post-consumer beverage bottles. It may be possible that we would not get desired raw material.

Company may not meet environmental standards This environmentally-favorable venture provides for the development of technically feasible and economically viable solutions to PET plastic beverage bottle recycling, as well as environmentally aware in-house reuse practices which filter and return nearly all of the process water to the production lines

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Industry and marketplace analysis Industry analysis Plastic recycling is an industry in itself in India. According to the Crisil research 7360 companies are working in this industry with a turnover of Rs 9200 Crore provides employment to 3.5 million people. In India per capita plastic consumption in lowest in the world. The per capita consumption is just one fifth of world average which is 5kg. the domestic demand of plastic has grown by 9% and reached to 4.5MMT in year 2005.The GDP has grown during this period at 6.3% and plastic industry 1.3 times of GDP. According to the Crisil report the demand of plastic by 2012 will be around 12MMT. The plastic consumption in India is booming. Demand for commodity plastics is growing at the rate of 15% per year. .India holds immense potential for the use of plastic in the infrastructure and agriculture. In case of packaging industry we are using more plastic than the developed countries. The growth is driven in three major sectors – infrastructure which is 13%% of the total, packaging is 15% of the total and 10% for plastic consumer durables. It is projected that the plastic waste generation will reach the will reach the level of 1.6 million tons annually. India produces 5600 tons of plastic waste per day. Region wise and polymer wise turnover of recycling industry in Rs.Crore Region

PVC

PET

West

156

383

East

75

86

North

338

158

South

111

139

Total

680

766

Each region is specialized in one type of plastic viz south: PET; north: PVC; The current plastic recycling rate is estimated as 60% by Plastic India Foundation. One estimate is that about 20,000 microenterprises are engaged in reprocessing and recovery of plastic waste in addition to 180,000 of various sorting and washing units, 60% of which are unregistered .Delhi alone has estimated 53,400 units and Delhi and Bombay together process over 50% of India's waste plastics. 12 | Q u a s a r P l a s t i c s

STRUCTURE OF THE PLASTICS INDUSTRY The following pattern is likely to be general but there will be some variation from country to country.

Raw Material Producers These are chemical and petroleum companies who produce "virgin" plastic (sometimes called resin or polymer) in huge quantities. The main influence they have on the recycler is to fix prices and availability of virgin materials. Virgin material is delivered in powder or pellet form, in plastic or paper sacks of around 20 kilos weight, in large cardboard drums that hold many times that quantity or even by road tanker. Compounders These specialist companies, usually small, stock various polymers and provide the manufacturers of plastic goods with technical advice and the most suitable materials or mixtures for each individual need. The compounder is often the best market for the recycler because he possesses superior technical knowledge and has a large volume throughput of virgin material, in which small percentages of reclaim will reduce cost without seriously affecting the quality required by the molder. Stockists These warehouses stock polymers and compounds but neither manufacture themselves, nor provide a compounding service. They may be agents or subsidiaries of the producer companies or departments of companies concerned with the supply of other materials such as chemical, rubber or paper. They may be willing to stock reclaim alongside virgin materials, especially if these are in short supply. Specialist Manufacturers or Molders These buy their raw materials from compounders. If they do their own compounding, or if the material is used as produced and does not need compounding, they may buy direct from stockists or producers. They are specialists in plastics and do not perform other types of manufacturing. They may be an attractive market to the recycler because they operate at high volume, but rarely have as much flexibility to vary product quality as molders who know, accurately, the final market for the product. Other Manufacturers Many companies are not plastics specialists but employ molding operations in the manufacture of some other product. For example shoe and boot makers use plastics extensively and may carry out the various plastics molding operations in the same production sequence as the work in leather, canvas, rubber etc. Many 13 | Q u a s a r P l a s t i c s

manufacturers use plastic packaging machinery at the end of a production operation.

Fabricators These firms cut and join sheet, rod or extrusion to manufacture a variety of products. They have no opportunity to use reclaim. Machinery and Tool Makers One other sector of the plastics industry justifies mention although not customers for reclaim. The makers and suppliers of plastics manufacturing machinery, tools, moulds and dies are well informed about who does what, who makes what and who uses what within the local plastics industry. They may advise who is likely to buy material. Marketplace analysis Various overseas players wish to explore the Indian market and invest in opportunities thrown open by the country, projected to be world number 3 in plastics consumption by 2010.As shown above the north region of India is specialized in recycling of PVC. So there is a great scope of PET recycling. Apart from this the other •

A huge market with full of opportunity.

•

Absence of standard product and service

•

Well connected with other rural areas

•

Having good transportation facility

Customer analysis Since we are new player in the market so we need to make some stringent strategies to penetrate market and grab customers. The customers of the plastic industry are scattered due to lack well known brand names. So our first priority will be to accumulate the defused customers. The direct customers are the customers whom we are selling our product regularly. So for us households whom we are selling plastic goods and companies who are getting raw materials for packaging are direct customers (PET bottles). So only in Allahabad around 20,000 families are our direct prospective customers and in terms of business to business market around 20 small and medium scale companies are our direct customers Apart from them there are few small companies which are giving compounding services. They use to collect various types of plastics flakes along with the virgin plastic and suggest customer (companies) in choosing appropriate plastic. An Asha enterprise is one compounder whom we will sell our plastics. 14 | Q u a s a r P l a s t i c s

Competitor analysis In plastic manufacturing market there is no specific brand name is existing so the market is flooded by small companies which are in this business. So they are our biggest direct competitors. As we are also not alone as a supplier of PET to the companies as raw materials there are many companies in this region which are supplying PET. Indira Plastics is one of them who is currently selling all types of plastics items. So in case of business to business market they are our direct competitors. Kanpur is plastic recycling city of UP. The direct threat we will also have is with the companies operating in Kanpur. But as the distance between Kanpur and Allahabad is 600km as well as the road is not in good condition, so it will not affect much.

Marketing strategy The Company has chosen to focus on the production of plastic packaging materials from recycled post-consumer beverage bottles. we have identified a significant available market in the eastern part of UP. 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. Product/ service strategy The packaging companies require high quality and highly transparent PET bottles. The companies which are producing mineral water will reject PET bottles with even a small impurity/ opaqueness. So we the Quasar Plastics provide high end PET flakes for the perfect packaging. Quasar Plastics will apply 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. Plastic bags and plastic sheets are now in high demand. And this demand is driven by continuously increasing promotional activities. Pricing strategy As plastic products do not carry any brand name so only pricing and distribution strategies will works to achieve competitive edge. The pricing strategy we will use is penetration pricing. The price of all household plastic goods we will sell will 15 | Q u a s a r P l a s t i c s

be lower than the market price. Also for the PET flakes and bottles the price will be lower than the competitors. A lower price enables me to get contracts of PET bottles and sheets from various companies. In case of kitchenware and other household products we will provide combo offers and discounts which a common customer expects.

Distribution strategy As I described before that firstly we will target Allahabad city and villages close to it. We will have a distribution center in the Allahabad city which continuously maintains the supply of goods. So the household plastics will be sold through small local grocery shops from which the customers can get them easily. Apart from this we will hire street hawkers who will roam around the city and sell the goods door to door. PET bottles will be stored in warehouse which is close to the facility itself. The sales people will directly contact to the companies which require these bottles for packaging and look for the contracts. In city as stated above that we will have a distribution center, from that center we will distribute to whole sellers.

Advertising & promotion strategy As I described we are in both B2C and B2B so for this we will use two different promotional strategies. For B2C business we will use flyers which will have full detail of our product range, price, combo offers and discounts. These flyers will circulate through the newspapers across whole city. For B2B business we will promote through online social media and we will also develop our website through which enable us to widely spread our contact among various companies. the site will have full details of product which are available for companies as well as end user.

Sales strategy The strategy of sales effort will be to convert potential and first time customers into long term customers. Our sales strategy is totally based upon the distribution channel and the pricing strategies. We will have a distribution centre in the city that will take care of sales of household and also supply products to the wholesalers. We will also give the industrial customers a facility to order the products through our website which will help them in reducing the delivery time. To market the products, the Company will use a number of sales agents/brokers. They have a customer base of their own, having developed successful relationships with their client over the 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. If the Company grows faster than its prime customer base, additional capacity may be developed. We will identify additional prospective customers who can be attracted for our products.

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Marketing & sales forecast The first month prior to the opening will be used to get the new office in order, set up appointment and begin marketing activities. In the first month we will focus on the generating public visibility. The sales forecast is based on the assumption that we will sell all of the highest volume PET bottles that we can produce. This flake will be sold to other manufacturing companies. Recycling industry is growing with 15-20% each year. So we can assume that we will grow with at least 20%. There is a continuing strong demand for flake and extruded products made from recycled PET.

Sales forecast year 1

year 2

year 3

year 4

Annual sales Monthly sales PET Sales Household items

1620000

2106000

2737800

3559140

135000

175500

228150

296595

94500

122850

159705

207617

40500

52650

68445

88978.5

Development The development of Quasar plastics required to accomplish a series of action and formalities. Since we are new in the market we kept our production is low initially, as demand will increase the production will be enhanced respectively. Now we are recycling and producing only two types of plastics i.e. PVC and PET, as we grow we will produce a wide the range of plastics and its finished product. . The development process involves following steps: • • •

Legal formalities Office/business setup Future offerings and expansion plan

Development strategy In future we are looking for the production of a variety of plastic. These plastics will be •

LDPE ( Low density polyethylene)

•

HDPE ( High density polyethylene)

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LDPE plastic is used in the production carry bags and other plastic sheets as well as cling wrap, car covers, squeeze bottles, liners for tanks and ponds, moisture barriers in construction. And HDPE plastics are used in production of freezer bags, water pipes, wire and cable insulation, extrusion coating. Our development strategy will base on timely completion of the establishment of the business centre with low execution cost. Our strategy will focus not only the current uninterrupted production of PVC and PET and acquisition of customer as fast as we can, but we will also look for the future expansion plan and execution strategy. Our future development strategy will focus on to chart out a careful plan for the future expansion and growth of our business. The development strategy will address following issue: • • •

How will we expand our services? Which are the new areas we will include to provide our services? What will be the format of the business

Our development strategy will address all those above mentioned point. As we will grow and our earning will increase, we will produce more of PVC and PET as well as expand in new area. We have a development strategy to expand our facility size in order to meet the production size.

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Management The company will be managed by promoter and six supporting staff. Rajnish Kumar Chaubey, a MBA graduate with specialization in Marketing and Finance is the owner and promoter of Quasar Plastics. He has intensive knowledge and vast understanding in financial areas like Risk and Return management, Investment portfolio and Capital Budgeting, which undoubtedly will be of intense help in the business. Apart from this he also has a good knowledge of chemicals and their properties Marketing skills like convincing power, negotiating ability, creating promotional strategies and sales skills will all be extremely helpful in taking the business a long way and will prove intensely valuable to take Quasar Plastics to flaring heights. Thus with such potential skills, and other qualities like efficient interpersonal skills, leadership skills and decision making quality, aptly makes him the best promoter and eligible founder and owner of Quasar Plastics Along with promoter five more employees will work for the accomplishment of companies’ objective. One supervisor will work on the facility along with two supporting staff. Supervisor who will work upon the facility does not need to be a chemical engineer a simple technician has experience on working upon the facility can be able to do this. Job description Process

No of employees

Sorting 19 | Q u a s a r P l a s t i c s

2

Proficiency unskilled

Belt Conveyer

1

semiskilled

PET Separator

1

semiskilled

Packaging

4

unskilled

Operations The operations is defined as the process used to deliver your products and service to the customer market place and also include manufacturing transportation logistics travel and after sales services. The facility is located at outside the city. Facility is divided in two parts •

Recycling and Production unit

•

Warehouse

The facility is located in an area of 3000 sqft..Apart from these two units there will be an office which will look for the perpetual supply of required raw material and also take care about the outbound logistics. The production capacity is 80kg/hr. The operations will be based upon JIT i.e. just in time. We will have contracted with the suppliers who can supply the raw material as quickly as we want. The raw material contains post consumer beverage bottles and other plastic materials. The bottles and other plastic material that can be recycled have a specific sign from which it can be identified that it can be recycled or not. The plastic is then transferred to respective unit to be recycled because PET and PVC cannot be recycled simultaneously due to their different properties. There will be two units running parallel to each other. On unit will recycle and produce PVC plastic and other will perform the same for the PET plastic. The recycled PVC is then moved for the plastic injection molding unit in the various shapes. Since there are a variety of product is being produced so the preference will be given to that product whose demand is high. All the products will not be produced each and every day. There will be different products which will be produced on different day according to the demand in market. After the recycling process is completed one part of PET flake is moved to the warehouse according to the demand of raw material which different companies need and other part will move for the molding in bottles. 20 | Q u a s a r P l a s t i c s

The recycled PET flake is then heated and made the viscous solution of it. The PET resin is then feeded to the molder and molder will give it various shape bottles. And then it left for drying. Those products which further need for processing like buckets, the handle will be inserted after the bucket is dried.

Stages of Recycling and Production The process of recycling of waste plastics into products of varying usefulness involves the following essential steps: •

Sizing / Chipping

•

Cleaning

•

Segregation.

•

Agglomerating / Colouring

•

Extrusion / Palletisation

•

Fabrication into end Product.

Chipping: The plastics waste is then required to be properly sized so that those may be fed into the extruders for processing and palletizing. The sizing operation depends on the type and shape of the waste plastics. During this process, attention is required to separate any powdery material from the sized / chipped plastics. Segregation: Certain polymeric materials are compatible with each other at all proportions. For example LDPE and Lldpe are generally compatible to each other at all proportions. The advanced technology of separating / segregating different types of waste plastics involves ‘Floatation Process’. In this process the property of the varying densities of different plastics is made use of for segregating different types of plastics. However in the Indian Context, this separation or segregation process, in many cases, are done by manual process utilizing the availability of cheap and expert labor force. In case the waste is contaminated with embedded metals, proper method of separating the metals / other contaminants is required.

Cleaning: The scale of cleaning depends on the type of waste. Whenever a cleaning operation is involved, it is to be ensured that the water or any other cleaning 21 | Q u a s a r P l a s t i c s

material used, should be discharged after ascertaining that the discharge does not contain any objectionable substance. A proper Treatment Device may have to be deployed – like a water treatment plant / effluent treatment plant. For drying, a suitably designed drier is used. Many industries situated outside the metropolises, use open space for natural drying of the cleaned waste. Agglomerating / Colouring In the next operation the sized plastics waste is mixed with colour master batch in high-speed mixers / agglomerators and the output is ready for extrusion into pellets. Extrusion / Palletisation This is the most important part of the process wherein the sized / chipped plastics are plasticized and granulated to make the plastics material ready for fabrication next. The type and size of the Extruder depend on the type and volume of the plastics waste. Fabrication into end Product Finally the reprocessed plastics granules are used as raw material for producing end products using similar fabrication machines like Injection Molding / Extrusion etc., depending upon specific requirement. Scope of operations Now presently our production capacity is 200kg/day from which in initial stages we are utilizing around 50% of it. As the business expands we will reach to optimum capacity utilization. We are expecting that we will start producing more advance plastics in the fourth year of our operations and accordingly the sales will increase and the facility will have to be expanded. Supply chain In the city there are various small post consumer plastic bottle collectors. To make a continuous supply of raw material we will have four suppliers with us. There will be one permanent supplier which will continuously supply the raw material. In case of excess demand other suppliers will be taken into consideration. The transportation cost will be covered by supplier only. The finished product will be stored in the warehouse and according to the demand it will be send to city distribution centre. The distribution center will directly sell the finished household plastics as well as to the small shops. Our average daily demand of raw material is 300kg and the lead time we will keep lead time of 6hrs. We keep a safety stock of 50 kg. So the reorder point is given by Reorder point= average daily uses x lead time + safety stock 22 | Q u a s a r P l a s t i c s

Reorder point = 300 X .25day + 50 = 125 kg. So at each and every day we will have minimum of 125kg (safety stock+ reorder point) of raw material in our inventory.

This means that when the raw material level reaches to 125kg we will place the next order. The difference time in which we will place the order and receive the order is the lead time which is 6hrs.

23 | Q u a s a r P l a s t i c s

Process flow chart Gantt chart

24 | Q u a s a r P l a s t i c s

As it is an assembly line the output of one stage is feeded to the input of next stage. The whole process will run in series format. That is the reason why no parallel process is mentioned in the gantt chart.

Facility Layout

25 | Q u a s a r P l a s t i c s

Financials 26 | Q u a s a r P l a s t i c s

The startup cost of our business is as follows:

Start-up Requirements Start-up Expenses Legal Stationery Business Cards Initial Mailing Process Funding Office Equipment Total Start-up Expenses

Amount 6,000 500 500 100 400 2,500 10,000

Start-up Assets Cash Required Other Current Assets Long-term Assets Total Assets

1,00,000 0 33,30,000 34,30,000

Total Requirements

34,40,000

Income statement The projected income is as shown below it shows that first year we will end up with loss but from second year we will start making profits.

Particulars

YEAR 1

27 | Q u a s a r P l a s t i c s

YEAR 2 YEAR 3

Year 4

net sales cost of good sales gross margin operating expenses: admin exp. Advertisement Salaries Transportation Maintenance Electricity Telephone Legal exp. Insurance Rent other exp

EBITDA less depreciation EBIT Less interest paid EBT tax @ 30% 28 | Q u a s a r P l a s t i c s

16200 00 89100 0 72900 0

210600 0 115830 0 947700

273780 0 150579 0 123201 0

3000 6000 19200 0 96000 15000 4800 10000 10000 20000 24000 6000 38680 0 34220 0 30300 0 39200 17555 0 13635 0 0

3150 7200

3308 8640

3473 10368

211200 105600 15750 5040 11000 1000 20000 26400 6600

232320 116160 16538 5292 12100 1000 20000 29040 7260

255552 127776 17364 5557 13310 1000 20000 31944 7986

412940

451657

494330

534760

780353

984082

272700 262060

245430 534923

220887 763195

165061

153243

139926

96999 29100

381680 114504

623269 186981

3285360 1806948 1478412

13635 0

PAT

67899

267176

436288

Balance sheet The projected balance sheet of four years is as follows: Sources of Funds

Year-1

Year-2

Year-3

Year-4

Capital Owner's capital

1930000

1930000

1930000

1930000

Surplus

-136350

-68451

130274

765287

Net worth

1793650

1861549

2060274

2695287

1417302

1324116

1219111

1100789

70500

56722

68066

81680

3281452

3242387

3347451

3877756

3030000

2727000

2454300

2208870

303000

272700

245430

220887

2727000

2454300

2208870

1987983

300000

300000

300000

300000

3027000

2754300

2508870

2287983

Inventory

97200

315900

410670

821340

Bank

10000

40000

100000

100000

147252

132187

117911

232703

0

0

210000

335730

Long Term loan Loan Current Liabilities Creditors Total liabilities Application of fund Plant & M/C Less depreciation Land Actual Fixed Asset Current Assets:

Debtors Advance to suppliers’ Investment Total Assets

100000 3281452

29 | Q u a s a r P l a s t i c s

3242387

3347451

3877756

Break Even Point

VC

Amount in Rs

other exp transportati on telephone wages carriage inward

6000 96000 10000 119250

raw material total contributio n

BEP units BEP SALES

Admin Interest advertisem ent Insurance Salary

238500 Rent maintenan 119250 ce depreciatio 414000 n Legal 1003000 Total

power

pv ratio

FC

Amount in Rs 3000 175550 6000 20000 192000 24000 15000 303000 10000 748550

617000 0.3808642 1965398.70 3 15 in months 1.21 In years

30 | Q u a s a r P l a s t i c s

135000

As the BEP is 15months it means that at 15th month we will be in a trade off total expenses and revenue.

Appendix Annuity table: total loan pmt[1-1/(1amt.= i)^n]/i n is number of years i is interest rate

loan amount interest rate annually

pmt =

150000 ### 0 ### ### 0.12 ### 21521

month 1 2 3 4 5 6 7 8 9 10 11

EMI Interest 2152 1 15000 2152 1 14935 2152 1 14869 2152 1 14802 2152 1 14735 2152 1 14667 2152 1 14599 2152 1 14530 2152 1 14460 2152 1 14389 2152 1 14318

31 | Q u a s a r P l a s t i c s

21520. 64 princi ple 6521 6586 6652 6718 6785 6853 6922 6991 7061 7132 7203

balanc Annual e O/S interest 149347 9 148689 4 148024 2 147352 4 146673 8 145988 5 145296 3 144597 2 143891 1 143178 0 142457 7

12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35

2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1

14246

7275

14173

7348

14100

7421

14025

7495

13950

7570

13875

7646

13798

7722

13721

7800

13643

7878

13564

7956

13485

8036

13404

8116

13323

8198

13241

8279

13158

8362

13075

8446

12990

8530

12905

8616

12819

8702

12732

8789

12644

8877

12555

8965

12465

9055

12375

9146

32 | Q u a s a r P l a s t i c s

141730 2 140995 4 140253 3 139503 8 138746 8 137982 2 137209 9 136430 0 135642 2 134846 6 134043 0 133231 3 132411 6 131583 6 130747 4 129902 8 129049 8 128188 2 127318 0 126439 1 125551 5 124654 9 123749 4 122834 8

175550

165061

36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59

2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1

12283

9237

12191

9330

12098

9423

12004

9517

11908

9612

11812

9708

11715

9805

11617

9903

11518

10003

11418

10103

11317

10204

11215

10306

11112

10409

11008

10513

10903

10618

10797

10724

10689

10831

10581

10940

10472

11049

10361

11159

10250

11271

10137

11384

121911 1 120978 2 120035 9 119084 2 118122 9 117152 1 116171 6 115181 2 114181 0 113170 7 112150 4 111119 8 110078 9 109027 7 107965 9 106893 5 105810 3 104716 4 103611 5 102495 5 101368 4 100230 0

10023

11498

990803

9908

11613

979190

33 | Q u a s a r P l a s t i c s

153243

139926

60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83

2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1

9792

11729

967461

9675

11846

955615

9556

11964

943651

9437

12084

931567

9316

12205

919362

9194

12327

907035

9070

12450

894584

8946

12575

882010

8820

12701

869309

8693

12828

856481

8565

12956

843526

8435

13085

830440

8304

13216

817224

8172

13348

803876

8039

13482

790394

7904

13617

776777

7768

13753

763024

7630

13890

749134

7491

14029

735104

7351

14170

720935

7209

14311

706624

7066

14454

692169

6922

14599

677570

6776

14745

662825

34 | Q u a s a r P l a s t i c s

124920

108010

84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102 103 104 105 106 107

2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1

6628

14892

647933

6479

15041

632892

6329

15192

617700

6177

15344

602356

6024

15497

586859

5869

15652

571207

5712

15809

555398

5554

15967

539432

5394

16126

523305

5233

16288

507018

5070

16450

490567

4906

16615

473952

4740

16781

457171

4572

16949

440222

4402

17118

423104

4231

17290

405814

4058

17462

388352

3884

17637

370715

3707

17813

352901

3529

17992

334910

3349

18172

316738

3167

18353

298385

2984

18537

279848

2798

18722

261126

35 | Q u a s a r P l a s t i c s

88957

67486

108 109 110 111 112 113 114 115 116 117 118 119 120

•

2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1 2152 1

2611

18909

242216

2422

19098

223118

2231

19289

203829

2038

19482

184346

1843

19677

164669

1647

19874

144795

1448

20073

124722

1247

20273

104449

1044

20476

83973

840

20681

63292

633

20888

42404

424

21097

21308

213

21308

0

Bibliography Crisil report on plastic industry

36 | Q u a s a r P l a s t i c s

43293

16031

• •

Plastic waste option for small scale recourse recovery by Inge Lardinois Small scale recycling of plastic by- Jon Vogler

37 | Q u a s a r P l a s t i c s