Final Sharmila Bdp.pdf

Everest Dairy Private Limited

Business Development Plan Complete Business Development Plan for a dairy project Submitted to:

Ace Institute of Management Pokhara University Submitted by: Sharmila Rai EMBA Spring 2017 15 March, 2019

DECLARATION

I hereby declare that the Business Development Plant has been prepared as a per the course of Executive MBA degree from Pokhara University. This is an academic plan that is submitted to Ace Institute of Management. Dairy is totally a new business venture in Lukla area. So, there are no any companies in that region which makes us with no detailed study and demand forecasting of the dairy. The businessmen buy powder milk from Kathmandu thus there is not ample research and statistical data provided by the government. So, I have less data to present here.

........................................... Sharmila Rai EMBA Spring 2017 Ace Institute of Management

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ACKNOWLEDGEMENT

It would not have been possible without the support and help of my academic supervisors and other individuals directly or indirectly involved in this plan. I would like to extend my sincere thanks to all of them. I wish to express my deep gratitude to our project guide, Dr. Pradeep Rajopadhya, Mr. Sohan Babu Khatri and Mr. Rabindra Silwal for guiding me throughout the process of this Business Development Plan. I sincerely acknowledge them for their constant supervision and for giving me their valuable guidance, critical reviews and comments for helping me to complete the plan successfully. I would like to thank and give appreciation to my colleagues of Ace Institute of Management for their kind support and cooperation. And I would also extend my gratitude to Mr. Fahim Shah and Mr. Ajab Lal Yadav for giving me a clear idea on the Dairy business in Nepal. I would also like to thank C.A/C.F.A Mrs. Apsara Upreti for financial planning, Mr. Raj Giri and my family members for their support

........................................... Sharmila Rai EMBA Spring 2017

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TABLE OF CONTENT Content

Page No.

DECLARATION ................................................................................................................. I ACKNOWLEDGEMENT .................................................................................................. II TABLE OF CONTENT ..................................................................................................... III SAILENT FEATURES OF BUSINESS ............................................................................VI EXECUTIVE SUMMARY ............................................................................................ VIII LIST OF ABBREVIATION ............................................................................................ IIX CHAPTER-I......................................................................................................................... 1 INTRODUCTION ............................................................................................................... 1 1.1. Background ..................................................................................... 1 1.2. Nature of Business .......................................................................... 2 1.3. Opportunities / Scope of Business .................................................. 3 1.4. Vision ............................................................................................. 3 1.5. Mission ......................................................................................... 20 1.6. Goals & Objectives of Company .................................................. 20 1.7. Values ........................................................................................... 20 1.8. Business Model Canvas ................................................................ 21 1.8.1. Customer Segmentation ............................................................. 21 1.8.2. Value Proposition ...................................................................... 21 1.8.3. Channels .................................................................................... 22 1.8.4. Customer Relationship .............................................................. 22 1.8.5. Revenue Stream ......................................................................... 22 1.8.6. Key Activities ............................................................................ 22 1.8.7. Key Resources ........................................................................... 23 1.8.8. Key Partners .............................................................................. 23 1.8.9. Cost Structure ............................................................................ 23 1.9. VALUE PROPOSITION CANVAS ............................................ 23 1.9.1. Customer Side ........................................................................... 23 CHAPTER 2 ...................................................................................................................... 25 PRODUCT PORTFOLIO .................................................................................................. 25 2.1. Product Description ...................................................................... 25 2.2. Benefits to Consumers .................................................................. 25 2.3. Product Life Cycle ........................................................................ 26 1.3.1. Introduction Stage...................................................................... 26 1.3.2. Growth Stage ............................................................................. 26 1.3.3. Maturity Stage ........................................................................... 26 III | P a g e

1.3.4. Decline Stage ............................................................................. 26 1.3.5. Costing and Pricing Basis .......................................................... 26 1.3.6. Quality and Assurance ............................................................... 27 2.4. Sourcing of raw materials and supplies ........................................ 27 2.5. Research and Development Effort ................................................ 27 CHAPTER 3 ...................................................................................................................... 28 INDUSTRY AND MARKET ANALYSIS ....................................................................... 28 3.1. Industry Structure and Market Characteristics ............................. 28 3.2. Environmental Analysis ............................................................... 28 3.3. PESTLE Factors ........................................................................... 29 3.4. PORTERS Five Forces Model ..................................................... 30 3.5. SWOT Analysis of Everest Dairy ................................................ 32 3.6. Business Strategy Diamond .......................................................... 33 1. ARENAS .......................................................................................... 33 2. VEHICLES....................................................................................... 33 3. DIFFERENTIATORS ...................................................................... 33 4. STAGING ........................................................................................ 33 5. ECONOMIC VALUE ...................................................................... 33 CHAPTER 4 ...................................................................................................................... 34 MARKETING PLAN ........................................................................................................ 34 4.1. Marketing Objectives and Goals .................................................. 34 4.2. Consumer Analysis ....................................................................... 34 4.3. Positioning Strategy...................................................................... 35 4.4. Positioning Statement ................................................................... 35 4.5. Branding Strategy ......................................................................... 36 A. Brand Name...................................................................................... 36 B. Brand Logo ....................................................................................... 36 C. Brand Mantra.................................................................................... 36 4.6. Competitive Advantage ................................................................ 37 4.7. Marketing Strategy ....................................................................... 37 4.8. Marketing Mix .............................................................................. 38 4.9. Sales Strategies, Management and Techniques ............................ 39 CHAPTER-V ..................................................................................................................... 40 PRODUCT OPERATION PLAN ...................................................................................... 40 5.1. Description of product .................................................................. 40 5.2. Process Strategy and Process Design ........................................... 40 5.3. PROCESS DESIGN ..................................................................... 41 5.3.1. Raw Materials ............................................................................ 42 5.3.2. Inventory and Supply Chain ...................................................... 42 IV | P a g e

5.3.3. Production.................................................................................. 42 5.3.4. Packaging .................................................................................. 43 5.3.5. Sales ........................................................................................... 43 5.3.6. Capacity need and Aggregate Planning ..................................... 43 5.4. Location ........................................................................................ 44 5.5. Layout ........................................................................................... 46 5.6. Quality .......................................................................................... 48 5.7. Supply Chain ................................................................................ 48 5.8. Inventory Management ................................................................. 49 CHAPTER-VI .................................................................................................................... 50 HUMAN RESOURCE PLANNING ................................................................................. 50 6.1. Stakeholder Analysis .................................................................... 50 6.2. Organization Structure.................................................................. 50 6.3. Departmentalization and their core functions:.............................. 52 6.4. Job responsibilities of Key Positions and Employees .................. 53 6.5. Human Resource Management Aspects ....................................... 54 6.6. Reporting/Communication Structure:........................................... 56 CHAPTER-VII .................................................................................................................. 57 FINANCIAL PLAN........................................................................................................... 57 7.1. Financial Objectives ..................................................................... 57 7.2. Projected Income Statement ......................................................... 58 7.3. Projected Balance sheet ................................................................ 60 7.4. Cash flow Statement ..................................................................... 62 7.5. Schedules ...................................................................................... 64 CHAPTER-VIII ................................................................................................................. 72 RISK AND CONTINGENCY PLAN ............................................................................... 72 8.1. Risk Contingency Plan ................................................................. 72 8.2. Exit Plan ....................................................................................... 72 REFERENCES .................................................................................................................. 73 TOOLS AND MACHINARY ........................................................................................... 74

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SAILENT FEATURES OF BUSINESS Name of the Company

Everest Dairy Private Limited

Name of the Venture

Dairy

Name of the Product

Everest Dair

Tag line of the Product

Direct from the Himalayas

Nature of Business

Private Limited

Legal Status of Business

Not yet Registered

Address of Office

Lukla, Solukhumbu

Contact Person

Miss. Sharmila Rai

Contact Number

00977-9862975592

Email Address

[email protected]

Virtual Address

www.everestdairy.com.np (Yet to go online)

Innovative Products

Milk Hotels and Restaurants

Target Customers

Local People Coffee Shop Lukla Chaurikharka Phakding

Major Market

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Namche Bazaar

Working Schedules

Annual Working Days as per the Labor Act, 2048.

Project Timeline

7 Months (Land Purchase to Commercial Production)

Capacity Utilization

1000 liters per day for 1st year

Total Investment

NPR 10,000,000.00

Investment through Equity

NPR 10,000,000.00 Skilled- 5

Human Resource

Semi Skilled- 2 Miss. Sharmila Rai Mr. Suren Rai Mr. Fahim Shah

Shareholders- 5 People

Ms. Urmila Rai Mr. Abishek Tamrakar Curd

Upcoming Product Line

Cheese Ice cream

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EXECUTIVE SUMMARY Milk and dairy products are the highly nutrient food. It involves high level of protein and calcium. These are the necessity food supplement to one’s daily diet. It is consumed everyday by an individual but in Lukla people are not been able to have this healthy drink on their regular diet. They depend on powder milk which has low nutrient factors than fresh fluid milk. Lukla being the gateway of Everest for people all over the world visit but those foreigners are bound to drink coffee or any milk mixed food cuisine with powder milk. With the inflow of 900,000 tourists last year, Lukla alone had 100,000 tourists inflow. There is a huge market opportunity size. Everest dairy is trying to provide fresh milk to all the foreign tourist and domestic tourist. Since we are the only opening a factory floor production house in Lukla to cater this opportunity size, there are lots of unseen difficulties and challenges to make the factory work. We have planned to accept to challenge with the high risk factor. Our team partners from various field will certainly coordinate and be a competitive advantage to our company.

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LIST OF ABBREVIATION GoN: Government of Nepal FNCCI: Federation of Nepalese Chamber of Commerce and Industry Kw: Kilo Watt MW: Mega Watt PPA: Power Purchase Agreement NEA: Nepal Electricity Authority IPPAN: Independent Power Producers’ Association- Nepal Gwh: Giga Watt Hour PV: Photovoltaic IRR: Internal Rate of Return GDP: Gross Domestic Product Mwh: Mega Watt Hour

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CHAPTER-I INTRODUCTION

1.1. Background In the year 1990s my parents moved to Lukla, Solukhumbu. Since at that time tourism has just hit that sector they saw an opportunity so they started their own business. First they started with a small grocery store and after many years of hard work they were able to become the largest wholesaler in Khumbu area. They sold almost everything including grocery items and other hardware products. Since there is no road transportation facility till date, every people there in Khumbu area needs to depend upon air cargo. With the tremendously difficult terrain and unpredictable weather condition, the deadliest Lukla Airport is the only way to get human and every commodity there. Dealing with all these obstacles since 1990 our family business has been able to retain a proper market out reach but the one question struck my mind, “how can I increase my family business portfolio.” Looking at all the stuffs that we sell, I found we didn’t have milk and other dairy products. The reason why we were not able to sell these dairy products is because of its perishable character which we could not store it in our inventory for longer period of time. Meanwhile, there were powdered milk available in the market but powdered milk is not as fresh as fresh milk. Drinking coffee, tea and other continental food demands huge quantity of dairy product. The demand for the dairy product is so high that people there pay thrice as higher than that in Kathmandu. This hit my mind. Still the tradition of packet milk was on use because locals had no option. Every family in Khumbu areas are involved in some kind of business related to tourism or hotels so farming and animal husbandry is almost zero. Khumbu being one of the hottest tourism spot there is a huge market for milk and dairy products. During peak season there are high demand for milk, cheese, butter and yogurt. Milk and dairy products are highly nutrient food as these are packed with high source of protein, calcium and other nutrients. The morning in ever houses and locality starts with 1

the sip of milk or tea. Dairy products have become a necessity of an individual. But since locals in Khumbu are deprived of fresh drinking milk, children, adolescent and elderly people are missing essential nutrients in their diet. Especially when the cargo flights are unable to deliver the packed powder milk due to weather problem people are forced to drink tea without milk or even if milk is available, they are forced to purchase the milk at thrice the price. There are issues related to supplying milk and dairy products in Khumbu and me being the local of Khumbu, I have faced the problem myself so I thought of coming up with a solution. I discussed about it with my friends and one of my elder brother as they have wide knowledge on starting a business. And through our discussion we came up with a business idea of starting our own dairy company in Lukla where we will be producing milk from powder milk by pasteurizing it through dairy equipped technologies.

1.2. Nature of Business Everest dairy is a small-scale milk plant established under Everest Dairy Pvt. Ltd. that is based on a Business to Consumer Model. The team at Everest Dairy is working on a strategy that turns powder milk in to fresh liquid milk by using scientific method.

We

use plants to process the raw milk from powder milk to extend the marketable life of milk. Heat treatment is used to ensure the safety of milk for human consumption and to lengthen its shelf- life. Since it is the highly specialized field, it involves production, procurement, storage and distribution of dairy products. The powder milk will be processed in to plants and pasteurized by injecting additional fats in to milk. Dairy scientists will be employed to cover the production aspect. In the initial stage the team have decided to start the production with very small scale of about 1000 liter per day with the use of 500 liters capacity machine. The machine will be run for 2 hours daily. The company will produce milk and other dairy product items such as yogurt, butter, ice cream. We will sell the products to whole seller and on the other side we will also establish our own outlet where we will be focusing more on the sales of ice cream. Our company would be the first dairy business in Solukhumbu and the company team has decided to work hard to make this venture a success by producing a quality product and 2|Page

cater the needs of customers. For this specified team will be assigned with particular tasks to manage the logistics, manpower and finances.

1.3. Opportunities / Scope of Business In earlier days the demand for milk used to be fulfilled by raising the cows/buffalos by people themselves. The milk producers used to sell milk and curd by moving door to door. But today Solukhumbu being the home of Mount Everest, 85% of the population is involved in tourism business. People are busy in two occupations either tourism or business which has decreased the agro business and animal husbandry. The supply and consumption of yak and cow milk have vanished in these many years. There is a high demand for milk and other dairy products in Solukhumbu. Due to cold weather in Solukhumbu the people have a habitant of drinking hot beverages multiple times a day. There is a local Sherpa drink called (Su-chiya) which requires a good proportion of milk. There are more than 50 coffee shops and bakeries in Lukla and on the way to Namche. Mainly during peak season there is a huge market demand for milk, yogurt, cheese and butter. Trekkers demand for ice cream as well. In order to cater their needs coffee owners and retailers directly order from Kathmandu through air cargo as this is the only option available till date. A coffee lover would obviously prefer a cup of coffee with fluid milk rather than powdered milk. A mother would love to provide her children and family natural liquid milk rather than powdered milk. Likewise an elderly would enjoy a cup of liquid milk that has a rich taste to it. But locals have no option. So we are here to cater their needs for fluid milk. We will sell the dairy products to whole sellers and also establish our own outlets where we can sell milk products directly to our consumers.

1.4. Vision Everest Dairy envisions being the first agro dairy business in Solukhumbu. Our vision is to be a company that produces and sell milk and milk products in the Solukhumbu area while offering our employees a safe and meaningful place to work.

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1.5. Mission Our mission is to produce quality milk products and cater the needs of our target customers. We want to introduce fresh liquid milk to the people of Solukhumbu at reasonable price. We aim at taking care of our consumers by providing them fresh liquid milk and milk products at reasonable price. We aim for financial success through marketing quality milk and milk products.

1.6. Goals & Objectives of Company Everest Dairy has been established to achieve the following goals and objectives: 

To produce fresh hygienic milk and milk products at a small quantity in the initial stage.



To sell milk and milk products to whole seller as well as in our own outlets.



To create a value addition in the lives of targeted consumers through supply of variety of milk and other dairy products in coming year.



To work for a constant improvement and change in operation and marketing.



To grow the business and increase the production scale.

1.7. Values At the core, the team of Everest Dairy Pvt. Ltd. constitutes of team member who are enthusiast and energetic, which helps us to generate new ideas and turn those ideas in a feasible business venture.

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INTERGRITY

LEADERSHIP

INNOVATION

&

CHANGE Take pride in everything that Create Vision, Inspire others is

fair,

honest

knowledgeable

and

and and advance the priorities and Encourage build mission of the organization.

trust.

Innovation,

adapt to change and willing to take risk.

ENVIROMENT

SOCIAL RESPONSIBILITY TEAM WORK

FRIENDLY We aim at making balance Co-operate A

commitment

and

work

to profit making activities with together for the common

sustainability and to acting in activities that benefit society.

good of the consumers and

an environmentally friendly

organization’s mission.

manner.

1.8. Business Model Canvas 1.8.1. Customer Segmentation –

The customer of Lukla, Chaurikharka, Phakding, Namche will be targeted.

–

Customers of all ages are targeted for sell of milk and milk products.

–

Target coffee shops, restaurants and hotels.

–

The company aims to gain loyalty from its customers by providing quality products.

1.8.2. Value Proposition  Providing quality milk that would build customer loyalty.  Providing milk and at reasonable rates.  The products will have more storing date than usual milk products.  It enables the customer to focus on their health and nutritional diet. 21 | P a g e

1.8.3. Channels  Everest Dairy will supply the milk grocery stores, coffee shops.  Everest Dairy will have its own retail outlet in the main market.  Facility for home delivery shall also be made available for bulk customers with added delivery charges.

1.8.4. Customer Relationship  Building a Point of Difference by providing quality products to create brand equity and brand loyalty with customers.  Using company’s store to note down customer feedback and complains to help us improve our product line.

1.8.5. Revenue Stream  By selling milk to retailer and directly to the consumers.  By building customer loyalty towards our products making them buy our product again and again.

1.8.6. Key Activities  Bulk quantity of reconstituted milk, necessary fats, preservatives and other raw materials will be transported through air cargo.  Diesel will be brought via animal carriers.  The required inventories will be stocked before hand with the use of inventory tracking system.  Building healthy relationship with in the industry.  Marketing of our product.

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1.8.7. Key Resources  Machinery, Tools and Equipment, Land and Building etc.  Human Resources – labors 2 people, marketing 1 person and operations and management 1 person

1.8.8. Key Partners  The reconstituted milk will be bought from local market or if necessary it can be imported from India.  Grocery whole-sellers in Kathmandu for raw material.  Departmental stores and grocery stores in Solukhumbu.  Coffee shops and restaurants in Solukhumbu area.

1.8.9. Cost Structure  Administrative Cost: Marketing personnel salary and rent expenses.  Operational Cost: These are cost required to operate the daily activities of the factory and will mainly include- raw material costs, electricity, salaries, labor wages, and delivery Cost etc.

1.9. VALUE PROPOSITION CANVAS 1.9.1. Customer Side 

Customers Job  Availability of the product  Quality product

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

Customers Gains  Milk at reasonable price  Long Lasting storage  Promotes healthy lifestyle and nutritional diet  Better taste and availability of milk products.



Customers Pains  High Price  Lack of Customer Support



Value Proposition  Product & Services  Fluid milk production.



Gain Creators  Use of fresh liquid milk instead of powder milk.  More storage date.  Regular availability of milk at more stable price.  Use of high quality raw materials.



Pain Relievers  Monitoring the operation cost that will help us reduce our manufacturing cost.  Our product shall be made available through grocery stores, departmental stores and our own retail outlet.  Customer feedback will be continuously monitored for continuous improvement and development.

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CHAPTER 2 PRODUCT PORTFOLIO 2.1. Product Description At the beginning we will be focusing only on producing milk. The reconstituted milk will be converted in to fluid milk with the use of systematic procedures by adding extra fats for better taste and protein. The processed fluid milk will be fresh to drink and will have a delicious taste. Pasteurization process will prepare the milk with nutrients factors.

2.2. Benefits to Consumers Everest Dairy will be the first dairy industry to be established in Solukhumbu. The core benefit of our milk is as comparable as to other but the core benefit that the people of Lukla get apart from our quality is the availability. The availability is not only about milk but it is about the fresh fluid milk for the first time. Prior to our idea business people used to buy powder milk but due to flight problems a single buyer had to invest a huge amount of money for the inventory of the product. Stocking those inventories would burn the capital of the business as well as increase the inventory cost of the shop. Therefore our products availability would make higher earnings to those retailers who used to purchase high quantity of powdered milk because of seasonal air flight problems. Due to the harsh weather those inventories maintained by the shopkeepers would gets spoiled which would further increase the loss of the shop. Lots of coffees shop at Lukla and Namche Bazaar left the place due to fluid milk. Some coffee shops even tried to get fluid milk from Kathmandu to Lukla via airplane but they failed. In conclusion, our company is trying to solve all these problems faced by shopkeepers, restaurants, hotels and other consumers. Thus regular availability at reasonable price is the main benefit to our customers. Comparably our product price is cheaper than that of the one which people used to buy in Kathmandu and send via flight which benefits the consumers high return. 25 | P a g e

2.3. Product Life Cycle 1.3.1. Introduction Stage In the initial stage, we will be focusing on the production and sales of milk only. The team is planning to set out its own dairy outlet and also sell it to the whole sellers and other grocery stores in various location of targeted market segment of only Lukla area.

1.3.2. Growth Stage Since the company is planning to launch its product every year in the targeted segment, it will take 1 year for the company to reach the total targeted segment of its consumers. Hence, the company expects the growth stage of Lukla to start in the second year of its operation when it would be launching milk products like curd, cheese and ice cream gradually. The milk will be bottled and supplied to other areas of Khumbu region.

1.3.3. Maturity Stage We will be attaining maturity stage when we have two things. One is when the market has intense competition, which we don’t see in near future and the second one is when we produce our products where we can out bit the demand.

1.3.4. Decline Stage Since we are the only the one in the market, we don’t have a clear picture of decline stage.

1.3.5. Costing and Pricing Basis The cost of our company is mainly on reconstituted milk powder, diesel, water and electricity with its individual transportation cost that is pretty high. This makes our product cost higher than that of any other urban areas. Therefore our costing and pricing has a slightly different character than others. If we will be the only dairy industry in Lukla, we can have a monopoly pricing but that does not mean we charge extra higher premium price. Our main strategy is to provide our consumers our product at a price lower than they purchase and send to Lukla.

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1.3.6. Quality and Assurance The “Code of Practice for Dairy Industry” approved by the GoN in 2061 (2005) will be followed. The main objective of the codes are to improve the quality of processed milk and milk products by considering consumers’ health, and secure sustaining long future of the dairy industry. Phosphatase test is used on pasteurized milk and acidity development is done on ultra high temperature milk to improve quality attribute of milk. Since milk contains 87% of water it is prone to adulteration hence it requires quality control. Our factory floor will be neat and clean with the standard to meet quality assurance. The employees will be trained with hygiene. We will go as per the formula that will maintain high quality and in order to make profit we will not be practicing wrongful methods. For this our product will be tested from the Government of Nepal and also get certified from the related agencies.

2.4. Sourcing of raw materials and supplies The main raw materials that we need are reconstituted milk. For this, our company will have a contractual agreement with DDC Nepal and Sujal Dairy. For other raw materials and supplies we buy it from local market. Whenever there is scarcity of milk powder, we will get it from the importer of Indian milk powder like Nova milk, Goodday milk etc. For plastic bottle, bottle labels, we buy it from the direct manufacturer.

2.5. Research and Development Effort Today, innovation is the synonymous of excellence. Innovation drives the world an inch ahead. At Everest Dairy, we understand how much difference innovation could make to the world. The finest people in the team lead our Research and Development Wing at Everest Dairy and we strive to achieve innovation and development by applying new techniques to expand our existing market. Everest Dairy will be continuously looking for new product development and reengineering the present product. Similarly the technicians will be thriving for obtaining cost benefit production methods without deteriorating the quality.

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CHAPTER 3 INDUSTRY AND MARKET ANALYSIS 3.1. Industry Structure and Market Characteristics Everest Dairy is a small-sized business firm in the laps of Mount Everest adopting a business to consumer model. It is currently working on a strategy to convert reconstituted milk into fresh fluid milk, so that the people of Lukla and the tourist can enjoy the fresh milk and milk products. Running a business in such high altitude is a tough task due to its harsh climatic conditions, lack of road transportation. Since the only means of transportation in through air, it is a challenging task. Lukla is one of the most sought after destination for tourism and the demand of milk and milk products certainly is high, so our team will focus on providing tourist with fresh fluid milk and other products. Since this would be the first company in this area we certainly will have the advantage of sole player in the market. As Solukhumbu witnesses’ cold temperature the demand for hot beverages is high for the locals as well as the tourist, but the shops here are relying on milk powder rather than liquid one. We will be producing fresh fluid milk in the first year and by the second year we will be focusing on producing other dairy products namely, yoghurt, cheese and ice cream. Establishing a plant here in Lukla not only would be beneficial for the consumers, but it will also be a boon for the society as it will generate employment opportunity and improve the living standard of the people.

3.2. Environmental Analysis PESTLE Analysis is one of the most widely used strategic tools used to assess the external environmental factors affecting the business. These analyses will help to align strategies with company’s environment. It helps an organization determine the risk and other opportunity associated with the market that helps in the smooth running of a business.

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3.3. PESTLE Factors A. Political Factors Running a business in Nepal is a challenging affair and comes with lots of hassle, as the country has unstable government that affects the smooth running of the business. Basically the government of a country has a vital role in the sustainability of an organization, such as its policy, foreign trade policy, tax policy and other legal issues Strikes, blockade, shortages of raw materials are some of the major issues that hinder the successful operation of the business in Nepal. B. Economical Factor Looking at a top holiday spot for trekkers, hikers and mountaineers, Lukla has been a heaven. Economically Lukla is very viable for business but viability comes with lots and lots of challenges. C. Socio-Culture Factor As the number of people leaving for foreign employment, there certainly have been some changes in the buying and consuming trend of the people. These factors include the demographic of the community, buying habits and behavior of the consumer. During season the population of Solukhumbu increases thrice the number due to the entry of tourist and people from other region for employment so the various people have different need requirement. D. Technological Factor The dairy industry largely relies on use of technology and machineries, and the main objective of this organization is to transform milk powder into fresh liquid milk. With the use of new technological advancement the company aims provide milk at relatively low cost and ensure good hygiene to the consumer.

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E. Environmental Factor Environment has always been key to all companies all over the world. The environmentalists are trying to make the environment healthy. Lukla being the highly tourist area, the pollution is also increasing at the same level. Keeping these things in mind, Everest Dairy is planning to go for environmental friendly production unit. F. Legal Factor Legal factor always plays an important role in any industry like our which is related to food and beverages, it is more monitored and supervised sector. Differences in legal terms and standards have direct impact to the company. Therefore we should be more concerned about the compliances regarding quality and standards.

3.4. PORTERS Five Forces Model A. Rivalry among Competitors Everest diary would be the first of its kind to be operated in Khumbu region therefore; we certainly will have the competitive advantage in the market. Being the first such company, for few years it can act as a sole provider. Hence, the company aims to become very considerate in the pricing strategy while insuring to maintain good quality of milk and other related products. B. Bargaining Power of Suppliers Here at Everest dairy, constant supply of milk powder is crucial for the running of the company. It relies heavily on air cargo to procure the packaged milk powder, so maintaining good relation with the suppliers will ensure in the smooth running of the daily business operation. Due to unpredictable weather large quantity of milk powder has to be ordered and be safely stored as backup in case of any contingencies. C. Threat of New Entrants Business industry is a very challenging and tough to sustain, there is always some risk of potential competitors in the market. At present, there is no threat of new entrants because Everest dairy is the first kind of business 30 | P a g e

D. Threat of Substitutes Powder milk is easily available in the market and which is quite accessible in this region posse’s great threat for the company, as they have already marked their presence in the market. Now the company has to focus mainly on providing the milk product at comparatively lower cost and eliminate the threat of the substitute products. E. Bargaining Power of Buyers The demand for milk and its products is very high in this area due to cold weather. Consuming hot beverage is one way to keep warm. Since Everest dairy is planning to enter the market with the hopes of providing fresh liquid milk to the people, it certainly has to make some plans regarding the pricing strategy. So the company has to keep the price of liquid milk lower than that of packaged powder in order to attract customers and cater their demand. F. Market and Competitor Analysis Everest Dairy carries the tag of first mover in this market segment using this kind of formulation in Nepal. As far as market is concerned, it is like selling a bunch of people who has willingness and ability to buy things they need but unavailability has forbidden them to spend. On the other side, Everest Dairy will be the only fluid milk supplier all over Khumbu region. There are certain business, shopkeepers, hotels who buys fluid milk from Kathmandu but they are not our competitors because when we will have our own production house in Lukla, the entire region will be our clients. G. Consumer and Demand Analysis Visit Nepal 2020 is targeting to accommodate 25 lakhs tourists that year. When we look at the past history around 10% of total tourist inflow in a year visit Everest and Lukla is the gateway to Everest. If we take the past data as reference, in 2020, Everest will welcome around 2.5 lakhs tourist. This directly capitalizes each and every sector of Everest region and Everest Dairy is not an exception. The current population of Lukla is around 1000 similarly, there are more than 5000 individuals residing on Everest region apart from Lukla. With a simple analysis out of all these people if 10% of the population consume our products, the daily demand would be 31 | P a g e

around 500 liters. The tourist inflow and outflow per day is around 800 and Lukla is also the place where a single visitor steps two times. This indicates that the demand is around 1000 liters a day. For visit Nepal 2020, our company goes to the second year and we forecast the demand to be 320,000 liters. We have predicted the demand to be 450,000 liters and 500,000 liters in the fourth year and fifth year respectively.

3.5. SWOT Analysis of Everest Dairy 1. Strength a. Quality Product b. Skilled and Committed Team c. Simple production technique d. Healthy and nutritional e. Help conserving environment

2. Weakness a. High Price b. Highly Labor Oriented c. Lack of transportation

3. Opportunities a. First Mover Advantage b. Huge unmet local market demand. c. Scope of Innovation and Research and Development.

4. Threat a. Powdered milk

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b. Easy entry of competitors due to low c. Capital investment.

3.6. Business Strategy Diamond 1. ARENAS a. Providing quality milk. b. Projects that helps to promote health of locals. c. Targeting local consumers as well as tourist consumers.

2. VEHICLES a. A committed and energetic team that envisions to help the world by its innovation. b. Strategic Partnership with INGOs and NGOs relating to dairy.

3. DIFFERENTIATORS a. Provide quality products that will make our consumer experience new dimension of the products. b. Innovative new and current product line on the basis of consumer surveys conducted on a frequent basis.

4. STAGING a. Building a core team that is dedicated towards providing quality milk and milk products. b. Generating awareness in our targeted consumer segment, using extensive marketing tools.

5. ECONOMIC VALUE a. Providing quality product comes by charging premium price. b. On the long run economies of scale shall reduce the cost increasing the profit margin ratio.

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CHAPTER 4 MARKETING PLAN

4.1. Marketing Objectives and Goals A marketing plan is a road map that a company uses to accomplish a focused marketing goal. In Solukhumbu the local consumers are concerned about certain milk powder brands that they have been consuming for so long like “Everyday milk powder and New Zealand milk powder”. As per a survey conducted by the company it reveals that around 40,000 kilos of milk powder is sold. Therefore the company aims to cater this demand for which our main marketing objective and goal is to make the restaurants, hotels and retail shops to use our products. The major marketing objectives of our company are:  Being the first company to launch this kind of product we plan to identify our potential consumers and make them aware about our product.  Build premium customer base in Lukla.  To research, develop and introduce new product line to the existing consumers.  To develop a team to analyze and assess the consumer experience so that the products can be more personalized.  Building a Point of Difference by providing quality products to create brand equity and brand loyalty with customers.

4.2. Consumer Analysis Consumer analysis is an important and necessary part of market research as it provides an organization an opportunity to take proper steps to maximize consumer satisfaction and come up with solution to solve their problems. The market survey of the consumers of the target area gave us visibility about their demand patterns. Various patterns of daily usage, seasonal usage, purchase point. The company has focused on the market study on dairy consumption of Lukla. 34 | P a g e

The survey found out that the locals consume hot beverages multiple times a day to keep themselves warm. They preferred drinking their traditional tea that requires milk. Hence, there is a demand for milk in Solukhumbu. During peak season, there is additional demand for dairy products. The market for dairy products like milk is very high at that time. There has always been an exceeding demand during seasonal month of April, May and October, November. The company is also targeting the local hotels, restaurants and cafes to supply the milk directly. They are the main consumer for milk products. The market for dairy product is very good in Khumbu. Traders have been sending bulky amount of milk powder in sacks, which fails to reach to their customers on time. Moreover it’s a risky and expensive job since flights often get cancelled and delayed due to weather and air traffic problems. There is a good customer base for dairy product but the medium of supply is very poor so there is a huge opportunity for us to cater our targeted customer.

4.3. Positioning Strategy We shall use Differentiation strategy for “Everest Dairy” due to the following unique attributes in the product:  It will be fluid milk with a longer storage capacity.  The milk will be packaged in a one liter plastic bottle so that it can easier to supply in upper region.  We will provide a home delivery service to bulk buyers including delivery charge.  Our company will be the first one to have these unique attributes in Solukhumbu, which makes our product valuable to our customers. We being the first mover in this business in Solukhumbu, we aim to create new and different product than others.

4.4. Positioning Statement To each individual who wants to enhance their life, we are Everest Dairy – Direct from Himalaya” to make your life healthier and happier. 35 | P a g e

4.5. Branding Strategy A.

Brand Name

The name “Everest” means the highest mountain in the world. We want our customers to experience the taste of our product produced at the top of the world. We want them to feel proud of

B.

Brand Logo

The Brand Logo has a color combination of blue and white. The colour blue represents the image of mountains and the color white represents milk. It contains the image of Mount Everest that signifies the brand and provides the message it is purely the product of Himalayas.

C.

Brand Mantra Emotional Modifier

Descriptive Modifier

Brand Function

Healthy and Delicious

Quality

Drink

Healthy

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Quality

Drink

4.6. Competitive Advantage The competitive advantage of Everest Dairy is that it is the first mover towards producing fluid milk in Lukla. Our product stands out because the local customers have been using powder milk for many years, as there are no options available. The company will be producing fluid milk in a unique way with the use of powder milk and additional fats so that the customers can take the natural taste of milk and get satisfied.

4.7. Marketing Strategy The marketing strategy of Everest Dairy is based on communicating the consumer that we have a great product quality that will increase the consumer base. The company will use various channels of media to communicate with its consumers. We will put the advertisement on F.M station as locals in Lukla, Solukhumbu highly tune on to radio. A. Free Distribution

In the initial phase of production, the company shall provide few samples to its target customers like locals, hotels and restaurants to try out the products and experience the taste. It shall enable our consumers to use the product at least once, and since we focus on quality, the consumers are determined to return, making a long-term sustainable relationship. B. Physical Stores

First in order to attract the local customers the company aims to open its own retail stores in major areas of Lukla in the targeted segments. This store will also be responsible to analyze the buying behaviors of our consumers, at how much quantity the targeted customers purchases the product and this shall also help us to conduct surveys that will help us to analyze whether our consumer want to make the product more personal.

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C. Point Of Parity and Point Of Difference

Points of Parity

Points of Difference

Healthy

Availability of Product

Tasty Quality

Authentic taste Bottled milk

Packaging

4.8. Marketing Mix A. Product

The product range of Everest Dairy includes the following products: 1. Fluid milk B. Price

Everest Dairy will opt for a better Pricing Strategy. This pricing model is set keeping in mind the value the consumer shall presume busing our product. Since there is lack of transportation facility in Lukla, only air cargo is possible which makes the price of the product costlier. Although having all these costly process, our products price range will be lower than that of what the people there are currently paying. Thus our price will be: Product

Price

Milk

Rs. 180 per liters in year one

C. Promotion

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At Everest Dairy, we feel that product promotion is one of the most important marketing tools for getting our brand introduced in front of our consumer and to attract new potential market. The promotion strategy of our product shall include Direct Selling. D. Direct Selling

The company plans to directly connect to its consumers and hence it will follow direct selling as a promotion tool for it marketing. The opening up of physical stores is a way for the company to directly sell and connect with its consumers. E. Place

The main office of the company will be located in Lukla. Similarly the production house of the company will also be located at Lukla Bazaar. We have targeted Lukla as our distribution location because airport is located here which will make us easier to manage the raw materials and further Lukla being the first stop for tourist, it is a best place for advertisement and distribution to other areas as well.

4.9. Sales Strategies, Management and Techniques Quality and Price are the two major factors that our consumers values the most. Moreover, we want to make a sustainable relationship with our consumers by creating a balance of both the factors. Our sales strategy will start from Lukla. After Lukla, our sales manager will be visiting each and every hotel and stores above from Lukla and tell them our product availability. We will also be using local FM stations for advertisement. The best part is by door to door marketing. The interesting part of business at Lukla and above is that when the hotel and shop find one single product which is easily available, they do not want any other product in their use. To attain sales, the company will be focusing improving efficiency and effectiveness of the product processing and try to reduce the cost of production. Quality and price plays an integral part in the daily life of consumers. Our customers we want to develop a

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sustainable relationship with our customers by creating a balance of price and quality of our products.

CHAPTER-V PRODUCT OPERATION PLAN

5.1. Description of product Our only product is milk. Powdered milk will be converted in to fluid milk by using scientific methods. The powdered milk will be heated to certain degree in the milk processing machine and additional 3% fat will be added into milk for 1 kilo of powder milk. We will be using bottles so that it will be easier for us to supply to other upper areas.

5.2. Process Strategy and Process Design Since we will be using powder milk, the first step in processing milk includes homogenization. Under this process 3% fat is mixed in to the powder milk and water. It is conducted to prevent gravity separation of the fat in the product and to improve the synergy stability of mainly culture products. This process consists of a high pressure pump and homogenizing valve driven by a powerful electric motor. After homogenizing, the next step is pasteurization where each particle of milk and milk product is heated to a specific temperature for a specific period of time (63C for 30 minutes). This process helps in destroying the bacteria and other micro- organisms that may affect customer’s health. It makes the milk safe and healthy, further improving the 40 | P a g e

quality of milk and milk product. This process also lets the milk and milk products stored for longer periods without being spoilt. At the final step the processed milk is packaged in to plastic bottles (one liter). Milk will be packaged in to bottles so that it’s easier to sell to upper areas than Lukla.

5.3. PROCESS DESIGN

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5.3.1. Raw Materials The process begins with the purchase of raw materials. The core raw material is the reconstituted milk powder. This milk powder has fat in it. As we will be having an agreement with supplier i.e. DDC or Sujal Dairy, they will be supplying us with the powder. Apart from this, there are other raw material that are purchase in this process. Diesel and bottle chips are purchase prior to the production form different vendors.

5.3.2. Inventory and Supply Chain After the raw material is purchase from different suppliers, those inventory should be properly and safely transported to the factory site at Lukla. We use air cargo from Phaplu as it is cheaper from there than from Kathmandu. Apart from this, we use animal cargo for diesel transportation from Phaplu.

5.3.3. Production After the safe logistic of the raw material and other components, those ingredients are processed with proper safety, hygiene and best standards. Every set of processing is planned as per the direction of the technician. In this stage, a slight mistake may ruin the whole production lot. Thus, every step must be carefully undertaken.

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5.3.4. Packaging After the cooling is done, the milk is packaged using the bottle. The bottle chip is inflated by the inflation machine which is a part of packaging machine. Leveling and bottling is done and then checked if or not it is accordingly or not.

5.3.5. Sales After the packaging is done, it is first supplied to the local retailers in Lukla. The order received from Namche, Phakding, Khumjung etc are also dispatched according.

5.3.6. Capacity need and Aggregate Planning Everest Dairy is a manufacturing industry that is labor oriented we believe strategic planning of the available capacity will help the company to meet changing demands for its products. Our company aims at achieving maximum capacity utilization in all its aspects of product production process. The company is planning to purchase medium ranged machinery that has the capacity of 1000-3000 liters per day. This machine will be enough only for beginning three years and after that, we will be adding homogenizer, cooling equipment. Our aggregate planning is: Months

Demand in liters

Overtime in Rupees

January

10000

-

February

15000

-

March

13000

-

April

30000

2 staffs*24 days*4 hours per day* Rs. 300 per day = 57,600

May

30000

2 staffs*24 days*4 hours per day* Rs. 300 per day =

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57,600 June

20000

1 staffs*24 days*4 hours per day* Rs. 300 per day = 28,200

July

20000

1 staffs*24 days*4 hours per day* Rs. 300 per day = 28,200

August

20000

1 staffs*24 days*4 hours per day* Rs. 300 per day = 28,200

September

22000

1 staffs*24 days*4 hours per day* Rs. 300 per day = 28,200

October

35000

2 staffs*24 days*4 hours per day* Rs. 300 per day = 57,600

November

35000

2 staffs*24 days*4 hours per day* Rs. 300 per day = 57,600

December

25000

1 staffs*24 days*4 hours per day* Rs. 300 per day = 28,200

The demand for milk is not constant every month thus we need aggregate planning. Our current ground level staff can work easily work up to the production of less than 20,000 liters in a month. Therefore, whenever the demand is higher than 20,000, we need additional staff for which we adopt overtime facility system. For overtime we pay 1.5 times the salary and the overtime hour is four hours a day. The total overtime costs in first year is 374,000 rupees.

5.4. Location There will be two major units set up by the company, one will be the main office of the company that shall be rented and shall be situated in Lukla, Solukhumbu and the second set up will be the production house of the company that shall also be rented by the company and be situated in Lukla, Solukhumbu. Since Lukla is the gateway to Everest, it is the major location point where all the business people, stop by twice a week and the journey of trekkers starts from Lukla. The main office of the company shall be 44 | P a g e

responsible for all the administrative works of the company. The location is chosen by the company due to two reasons, first the airport is located in Lukla so that it becomes easier to manage the raw material for the company, the second reason being it is near the center of the Khumbu and hence distribution to all targeted segment will be easier for the company.

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5.5. Layout

n

Homogenizatio

Production Floor

5000 Sq. Feet

Warehouse & Toilet Office Residence

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PRODUCTION FLOOR

A Block

B Block

1000 Sq. Feet

C Block

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The manufacturing compound will of 5000 square feet in total whereas the production unit will be of only 1000 square feet. The overall manufacturing compound will have ware house, staff residence, toilet, inventory store, production house and homogenization center. Inside the production house, there are three blocks where the equipment will be set up. Block A and B will have the main machine that is for pasteurizing and block C is for packaging.

5.6. Quality The site and design of milk processing facilities will be prevented from dust, rodents other environmental pollutants. For this we will train the personnel in hygiene and install adequate facilities for sanitation and hand washing. We will only use the potable water for processing milk. Since milk being a liquid it is prone to catch bacteria so processing step of milk will begin with pasteurization. It is a heat treatment process that is designed to kill pathogens while preserving the nutritional value of milk. The processing temperature of milk will be about 135-140 C. We know that our customers will look for two major things quality and price while consuming our product so we aim at enhancing the quality of our product.

5.7. Supply Chain Supply chain plays an important role in Everest dairy as the location of our company is in a non- transportation facility area, air cargo is the only option. Thus our supply chain partners must be well known to the fact that we are geographically challenged. One of our key supplier is DDC for powder milk and fats. We assume that DDC can provide the required amount of ingredients to us. Apart from this we also have other powder milk producing industries i.e Suzal Dairy Pvt. Ltd. when this two suppliers cannot fulfill our demand we will be buying it from local importers of Indian powder milk and fats. We choose DDC as a supply chain partner as it has a long history for providing dairy products since 2021 B.S. It has a wide network and branches in 45 districts of Nepal. The DDC factory at Biratnagar would be easier for us to buy product and supply it to Phaplu

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and then cargo it via airplanes from Phaplu. This will help us to reduce our transportation cost. We will be purchasing mini plastic chips for bottles and plastic pouch from local suppliers in Kathmandu.

5.8. Inventory Management Inventory like reconstituted milk, diesel is very important. Since both these products are not available in Lukla market, the scare of one of it directly halts the production. We cannot follow just in time inventory management system therefore we need to stock these raw materials and diesel for at least 15 days. The desiel will be brought using animal carrier. Since the flight cost from Phaplu to half priced than that of Kathmandu to Lukla, transporting the inventory is cheaper from Phaplu. In first year we have to purchase 42,500 kilos of reconstituted milk leaving 2000 kilos as closing stock in year 1. Similarly, 48,200 kilos, 57,300 kilos, 67,500 kilos, 75,500 kilos respectively from second year to end of fifth year. We will have a separate inventory system where we will use First in First Out inventory management system.

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CHAPTER-VI HUMAN RESOURCE PLANNING 6.1.

Stakeholder Analysis

There are 5 shareholders at Everest Dairy Pvt. Ltd. having people from different field. Two of the shareholders are from Lukla itself and remaining three are from Kathmandu out of which one has been in dairy business. Thus we can say that the entire shareholder is connected for a purpose of thriving via business in Lukla. Not everyone is into the management. I look after the overall company as a CEO, local partner from Lukla will look after marketing and operation and the partner from Kathmandu will look after production and quality control.

6.2. Organization Structure The organization has a simple structure with simple hierarchy.

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ORGANIZATION Structure

Managing Director/ Engineer Manager/Engineer

Sales and

Production,

Administration/Fina

Procurement/Sales/

Marketing

Technical and

nce/Human

Quality Test

Resources

Marketing

Two Support Staffs

Accountant

Trainee

Accounts/Finance

Executive

Operation Executive

Charles Darwin

Administration/

Employee

Customer Support

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Ada Lovelace Employee

Support Staff

Marie Curie Employee

6.3. Departmentalization and their core functions: There will be four core departments in the company. So the departments have been planned accordingly. With one Managing Director and remaining three with their own department. The four main departments are as follows: A. Procurement and Logistics: Buying all the necessary ingredient and transporting it to Lukla is taken care by the procurement and logistics department. For this, I myself will be the in charge as I have knowledge of procurement and logistics from my family business. The main function of this department is to place order to the supplier, maintain good relationship with the supplier, contact with the airline company and send the ingredient to Lukla via freight. B. Sales and Marketing Our shop at Lukla has been there for last 30 years. Out of many buyers who come to Lukla to purchase, we supply around 60% of them. Thus, we have a competitive advantage and my sister Urmila Rai will be looking after the marketing of the product. Since the product is new to Lukla, this department has to contact remaining 40% of the buyers and make them the new client of the product C. Production, Technical and Quality Test One of the partner from Kathmandu Mr. Fahim Shah who has knowledge and experience in dairy will be looking after this department. This department is responsible for the overall production, cost reduction techniques, technical algorithms and quality test and control of the dairy. One partner with his technical assistant will lead this department and when there is proper continuity of system, the technical assistant will be the head of this department. D. Administration/Finance/Human Resource Another partner from Lukla Mr. Suren Rai will be the head of this department where he will look at the administration, finance and human resource. Being local of Lukla, he can 52 | P a g e

help find ground staff for the day to day activity. He will have staffs under him to assist him.

6.4. Job responsibilities of Key Positions and Employees Job type

Number

Job Field

Managerial

1

Managing Director

Managerial

1

Sales/Marketing

Technical

1

Managerial Admin/Finance

Technical

1

Senior Technician

Technical

1

Production/Operation

Non-Technical

2

Support staffs

Total

7

A. Managing Director: I will be the managing director of the company. I will look after procurement and logistics and also the over all functioning of the company. Apart from this, I will be doing following things:  Develop strategies with assistance of all other partners and execute them in the company.  Projection for the company.  Coordination with all the stakeholders.  Networking and finding strategic partners with domestic or foreigners.  Managing meeting and distributing the reports to the partner on a monthly basis.

B. Sales and Marketing Manager:  Develop formal and informal channels where we can sell our product in Khumbu region.

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 Work out on bottling of liquid milk so that our product can reach to every place in that region.  Come up with promotional strategy if necessary.  Do market research about our own product and other rivalry product.

C. Administration/Finance/Human Resource:  Look after the administration, prepare and maintain each and every legal documents, purchasing bills, price list, cost structure, contracts and orders, suppliers, approve bills for payment etc.  Accurately maintain the inventory records and accounting, its safeguard.  Communicate with other departments.  Book keeping of all the transaction, expenditure and income.  Motivate and train employee for better performance.

Production, Technical and Quality Test  Follow the standard procedure and maintain the quality.  Resolve any hazards in the site.  Minimize the cost of production.  Optimum utilization of the resources.  Proper care of the inventory and maintaining proper inventory.

6.5. Human Resource Management Aspects Human resource is actually a huge problem in Nepal and when we talk about Lukla, it is more difficult than in anywhere else. As it is a tourism centric economy, people in Lukla would rather work as porter than in a factory floor. A porter can easily earn 2000-5000 rupees per day depending on the tourist season, finding appropriate human resource is challenge. In order to cope up with this problem, one of our partner who will be looking at the production has a plan where he can send worker from Kathmandu to Lukla. Since 54 | P a g e

he already has a dairy factory here at Kathmandu, he is planning to send some of his staff member there. Human resource management aspects ensure that everyone in the company is treated fairly. Reward and recognition is very important aspect of human resource. All the employees should be fully aware of what the company expects of them and what they can expect from the company. A. HR Planning Lukla has a season for tourism. April-May is one peak season, October-November is another peak season. This four month, a proper planning is necessary. Apart from this, the growth of the business is expected to rise by 20% each year. With the increase in production, increase in human resource should go hand in hand. During next year, our company is planning to add more staff in the factory floor. Currently 3 staffs handle the ground floor where one will be doing packaging and other two will look after the production. Two staffs are enough for a 1000 liters of milk production in a day. When the company plans to go more than that, additional staffs will be added. For 2000 liters for day 2 ground staffs and 1 packaging staff will be required. The recruitment and selection will be based on the experience and is selected on a fair basis. The newly appointed staff will be sent to Lukla. They will have their rooms at the factory it self. B. HR Administration Employee are the key resource of the company. The human resource administration is the management of the entire employee, their working schedules, overtime recording etc. This also administers the effectiveness of the workforce. Everest Dairy will always take care of the employees, prevent them from harassment. We regard them as resourceful humans rather than human resource. Although the working environment there in Lukla is cold, we provide them with necessary clothes. We are also planning to provide them with insurance benefits. For this, we do insurance of all the working staffs. C. HR Development Training and development is one of the most important thing for any business. In the beginning years, the company will hire staff from our partner dairy industry. This will

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help us because we already have a competent employee. Nevertheless, timely training and development will be provided to the employees for betterment. For motivation, we will try to provide worker with proper salary package, bonuses, salary increment of ten percent in a year, insurance coverage, etc. Retaining the existing employee is crucial to the organization. The retention is important because these staffs are the actual assets of the company. These people help company to attain its goals and growth. For this a minimum contract period of 3 years is signed between employee and the employer. The tenure can also be added when completed.

6.6. Reporting/Communication Structure: The floor level staff directly reports to the head technician where the head technician does all the report writing and deliver it to the managing director. Since there is no any corporate structure, this small business model has easy communication structure. Managing director compiles all the information received from each and every department and thus makes strategy accordingly.

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CHAPTER-VII FINANCIAL PLAN

7.1. Financial Objectives The main objective is to company is to have a transparent financial statement. Every financial accounting should be transparent and prepared under Generally Accepted Accounting Principle, which shall be update and maintained with high integrity. Other objective is the proper determination of capital requirement of the company where excess capital should not be entertained in the organization. Another objective is to have tax subsidies and reduction. Proper and full utilization of resource is another objective, which will be looked after by Mr. Suren Rai in Lukla office. 1. Assumptions  We assume there is no any receivable and payable but due to the fiscal year end, we assume we have salary and TDS payable.  25 % tax is paid to the government.  Company decides to distribute dividend form year one.  Salary is increased by 10% in a year.  Inventory is calculated.  Accrual basis of accounting is followed.

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7.2. Projected Income Statement

Particulars

Schedule

Year I Amount in NRS.

Income Annual Sales

6

48,600,000.00

59,200,000.00

72,200,000.00

87,750,000.00

100,000,000.00

48,600,000.00

59,200,000.00

72,200,000.00

87,750,000.00

100,000,000.00

32,400,000.00

42,240,000.00

51,300,000.00

62,775,000.00

71,250,000.00

Total Direct Expenses

32,400,000.00

42,240,000.00

51,300,000.00

62,775,000.00

71,250,000.00

Gross Profit

16,200,000.00

16,960,000.00

20,900,000.00

24,975,000.00

28,750,000.00

5,537,400.00 5,528,900.00 1,848,000.00

6,435,440.00 6,692,400.00 1,478,875.00

5,888,344.00 8,992,841.00 1,204,831.25

6,812,238.40 11,686,446.20 1,117,788.44

7,907,634.24 15,176,154.24 1,027,998.33

12,914,300.00 3,285,700.00 821,425.00

14,606,715.00 2,353,285.00 588,321.25

16,086,016.25 4,813,983.75 1,203,495.94

19,616,473.04 5,358,526.96 1,339,631.74

24,111,786.81 4,638,213.19 1,159,553.30

2,464,275.00

1,764,963.75

3,610,487.81

4,018,895.22

3,478,659.89

Total Income

Year II Amount in NRS.

Year III Amount in NRS.

Year IV Amount in NRS.

Year V Amount in NRS.

Direct Expenses Cost of Raw Material

Indirect Expenses Administrative Expenses Employee Cost Depreciation Profit for the Year Income Tax Provision Profit for the Year after Tax Dividend Paid * Interest Rate 8% on FD

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7

8 9 3

Important Ratios NP to Turnover Ratio (NP Margin) Return on Assets Return on Equity Fixed Assets Turnover Ratio (Times) Total Assets Turnover Ratio (Times) Networth per Share (Rs) Dividend Per Share (Rs) Earning Per Share (Rs)

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5.07%

2.98%

5.00%

4.58%

3.48%

19.94% 22.48%

13.78% 15.31%

23.66% 27.48%

24.10% 28.38%

19.52% 22.98%

6.69

10.14

15.06

17.37

24.86

3.93

4.62

4.73

5.26

5.61

438.57 60.00 98.57

461.17 48.00 70.60

525.59 80.00 144.42

566.34 120.00 160.76

605.49 100.00 139.15

7.3. Projected Balance sheet

Schedule

Year I Amount (NR)

Year II Amount (NR)

Year III Amount (NR)

Year IV Amount (NR)

Year V Amount (NR)

Share Capital

1

10,000,000.00

10,000,000.00

10,000,000.00

10,000,000.00

10,000,000.00

Reserve & Surplus

2

964,275.00

1,529,238.75

3,139,726.56

4,158,621.78

5,137,281.68

10,964,275.00

11,529,238.75

13,139,726.56

14,158,621.78

15,137,281.68

-

-

-

-

-

11,529,238.75

13,139,726.56

14,158,621.78

15,137,281.68

7,264,000.00

5,840,125.00

4,795,293.75

7,264,000.00

5,840,125.00

Source of Funds Shareholder's Fund

Loan Fund Term Loan Total Source of Funds

10,964,275.00

Application of Funds Assets & Properties Fixed Assets

Current Assets, Loans &

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3

4,795,293.75

5,050,505.31 5,050,505.31

4,022,506.98 4,022,506.98

Advances Cash & Bank Balances Advance Tax

5,036,052.92

6,463,740.00

9,665,187.68

10,023,688.81

11,695,297.89

60,000.00

500,000.00

800,000.00

1,600,000.00

2,100,000.00

5,096,052.92

6,963,740.00

10,465,187.68

11,623,688.81

13,795,297.89

821,425.00

588,321.25

1,203,495.94

1,339,631.74

1,159,553.30

Less: Current Liabilities & Provisions Income Tax Provision TDS Payable

4

74,211.25

89,205.00

118,605.51

152,820.08

197,190.38

Other Payable

5

500,141.67

597,100.00

798,653.42

1,023,120.52

1,323,779.52

1,395,777.92

1,274,626.25

2,120,754.87

2,515,572.33

2,680,523.20

3,700,275.00

5,689,113.75

8,344,432.81

9,108,116.48

11,114,774.69

11,529,238.75

13,139,726.56

14,158,621.79

15,137,281.68

Net Current Assets Total Application of Funds

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10,964,275.00

7.4. Cash flow Statement Particulars

Year I

Year II

Year III

Year IV

Year V

Amount (NR)

Amount (NR)

Amount (NR)

Amount (NR)

Amount (NR)

Cash Flow from Operating Activities Profit as per Profit & Loss A/C

3,285,700.00

2,353,285.00

4,813,983.75

5,358,526.96

4,638,213.19

Add: Depreciation

1,848,000.00

1,478,875.00

1,204,831.25

1,117,788.44

1,027,998.33

Cash Flow from Operating Activities before changes in Working Capital

5,133,700.00

3,832,160.00

6,018,815.00

6,476,315.40

5,666,211.52

Changes in Working Capital Decrease/(Increase) in Current Assets

(60,000.00) (440,000.00)

(300,000.00)

(800,000.00)

Increase/(Decrease) in Current Liabilities

574,352.92

230,953.93

258,681.67

Net Changes in Working Capital

514,352.92

(328,047.92)

(69,046.07)

(541,318.34)

-

(821,425.00)

(588,321.25)

(1,203,495.94)

Tax paid Net Cash Flows from Operating Activities A

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5,648,052.92

111,952.08

2,682,687.08

5,361,447.68

4,731,501.13

(500,000.00) 345,029.30 (154,970.70)

(1,339,631.74)

4,171,609.08

Cash Flows from Investing Activities Purchase of Fixed Assets Decrease/(Increase) in Investment Net Cash Flows From Investing Activities B

(9,112,000.00)

Cash Flows From Financing Activities Share Capital Introduced

10,000,000.00

Cash Dividend Distribution Net Cash Flows from Financing Activities C Cash Generated during the Year ( A+B+C) Opening Cash and Bank Balance

Closing Cash and Bank Balance

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(9,112,000.00) (55,000.00) -

(160,000.00) -

(55,000.00)

(160,000.00)

(1,373,000.00) -

-

(1,373,000.00)

-

-

-

(1,500,000.00) (1,200,000.00)

(2,000,000.00)

(3,000,000.00)

(2,000,000.00)

(3,000,000.00)

(2,500,000.00)

358,501.13

1,671,609.08

8,500,000.00

(1,200,000.00)

(2,500,000.00)

5,036,052.92

1,427,687.08

-

5,036,052.92

6,463,740.00

9,665,187.68

10,023,688.81

6,463,740.00

9,665,187.68

10,023,688.81

11,695,297.89

5,036,052.92

3,201,447.68

-

7.5. Schedules Schedule-1 Share Capital Authorised Share Capital

Year I Amount (NR) 10,000,000.00

Year II Amount (NR) 10,000,000.00

Year III Amount (NR) 10,000,000.00

Year IV Amount (NR) 10,000,000.00

Year V Amount (NR) 10,000,000.00

(100000 Shares @Rs.100 each) Issued & Paid-up Share Capital

10,000,000.00

10,000,000.00

10,000,000.00

10,000,000.00

10,000,000.00

Year I Amount in NRS.

Year II Amount in NRS.

Year III

Year IV

Amount in NRS.

Amount in NRS.

(100000 Shares @Rs.100 each) Schedule-2 Reserve & Surplus Opening Reserve Add: Current Year Profit carried forward Less: Cash Dividend Distributed

Schedule-4 TDS Payable

-

Year V Amount in NRS.

964,275.00

1,529,238.75

3,139,726.56

4,158,621.78

2,464,275.00

1,764,963.75

3,610,487.81

4,018,895.22

3,478,659.89

(1,500,000.00) 964,275.00

(1,200,000.00) 1,529,238.75

(2,000,000.00) 3,139,726.56

(3,000,000.00) 4,158,621.78

(2,500,000.00) 5,137,281.68

Year I Amount in NRS.

Year II Amount in NRS.

Year III

Year IV

Amount in NRS.

Amount in NRS.

Year V Amount in NRS.

TDS on Salary Payable

69,111.25

83,655.00

112,410.51

146,080.58

189,701.93

Audit fee TDS Payable

600.00

600.00

750.00

750.00

900.00

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TDS on Consultancy

4,500.00 74,211.25

4,950.00 89,205.00

Year I Amount in NRS.

Year II Amount in NRS.

Schedule-5 Other Payable

5,445.00 5,989.50 118,605.51 152,820.08 Year III

Year IV

Amount in NRS.

Amount in NRS.

6,588.45 197,190.38 Year V Amount in NRS.

Salary Payable

460,741.67

557,700.00

749,403.42

973,870.52

1,264,679.52

Audit fee Payable

39,400.00 500,141.67

39,400.00 597,100.00

49,250.00 798,653.42

49,250.00 1,023,120.52

59,100.00 1,323,779.52

Schedule- 3 Projected Fixed Assets Schedule

Particulars

Rate

Computer, Furniture, Fixtures

25%

Addition during the year Depreciation Accumulated Depn WDV at the end of the year

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Year I Projected

Year II Projected -

512,000

512,000

55,000

128,000

102,875 -

128,000

Years Year III Projected 567,000 160,000 104,031 230,875 392,094

Year IV Projected 727,000

Year V Projected 800,000 -

73,000 107,148

89,486

334,906

442,055

Machinery and Equipment

20%

Addition during the year Depreciation

384,000

336,125

-

8,600,000

Total Gross Value Total Addition Total Depn for the Period Accumulated Depreciation & Amortization Net Fixed Assets Vehicle added in middle of 3rd year WDV Written Down Value

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-

8,600,000 1,720,000

-

268,459

8,600,000

9,900,000 -

1,300,000

1,376,000

1,100,800

1,010,640

938,512

1,720,000

3,096,000

4,196,800

5,207,440

6,880,000

5,504,000

4,403,200

4,692,560

3,754,048

9,112,000

9,167,000

9,327,000

10,700,000

10,700,000

9,112,000.00

55,000.00

160,000.00

1,373,000.00 -

1,848,000

1,478,875

1,204,831

1,117,788

1,027,998

-

1,848,000

3,326,875

4,531,706

5,649,495

7,264,000

5,840,125

4,795,294

5,050,505

4,022,507

Accumulated Depn WDV at the end of the year

8,600,000

357,945

-

Machinery and Equipment

Year I

Year II

Year III

Year IV

Year V

Total Cost (in Rupees)

Total Cost (in Rupees)

Type of Equipment

Number required

Expected Price (in Rupees)

Total Cost (in Rupees)

Total Cost (in Rupees)

Total Cost (in Rupees)

1. Mixer

1

300,000.00

300,000.00

-

-

-

2. Mini Dairy Composite Plant

1

5,500,000.00

5,500,000.00

-

-

-

3. Homoginizer

1

500,000.00

500,000.00

-

-

600,000.00

-

4. Cooling Equipments

2

175,000.00

350,000.00

-

-

400,000.00

-

5. Generators

1

950,000.00

950,000.00

-

-

6. Other Setups

1

1,000,000.00

1,000,000.00

-

-

300,000.00

-

Total

8,600,000.00

-

-

1,300,000.00

-

Year I

Year II

Year III

Year IV

Year V

Computer & Printer

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-

Particulars

Number required

Expected Price (in Rupees)

Total Cost (in Rupees)

Total Cost (in Rupees)

Total Cost (in Rupees)

Total Cost (in Rupees)

Total Cost (in Rupees)

1. Laptop

2

80,000.00

160,000.00

-

80,000.00

-

-

2. Desktop

1

55,000.00

55,000.00

-

-

55,000.00

-

3. Printer

2

45,000.00

90,000.00

-

45,000.00

-

-

Total

305,000.00

-

125,000.00

55,000.00

-

Furniture & Fixture

Year II

Year III

Year IV

Year V

Particulars

Number required

Expected Price (in Rupees)

Total Cost (in Rupees)

Total Cost (in Rupees)

Total Cost (in Rupees)

Total Cost (in Rupees)

Total Cost (in Rupees)

1. Computer Table

1

35,000.00

35,000.00

-

35,000.00

18,000.00

-

2. Office Sofa

1

80,000.00

80,000.00

-

-

-

-

3. Chairs & Table

9

10,220.00

92,000.00

55,000.00

-

-

-

Total

207,000.00

55,000.00

35,000.00

18,000.00

-

Schedule-6 Income from sales Production in Ltrs Per liter price Annual sales

Schedule-7 Cost of Raw Material Powder requirement in KG (Per Ltr of milk) Total Reconstituted Milk Powder (in KGS) Price (Per KG)

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Year I

Schedules to Projected Profit & Loss Account Year I Year II Year III Amount (NR) Amount (NR) Amount (NR) 270,000.00 320,000.00 380,000.00 180.00 185.00 190.00 48,600,000.00 59,200,000.00 72,200,000.00

Year IV Amount (NR) 450,000.00 195.00 87,750,000.00

Year V Amount (NR) 500,000.00 200.00 100,000,000.00

Year I

Year II

Year III

Year IV

Year V

Amount (NR)

Amount (NR)

Amount (NR)

Amount (NR)

Amount (NR)

0.15

0.15

0.15

0.15

0.15

40,500.00 800.00

48,000.00 880.00

57,000.00 900.00

67,500.00 930.00

75,000.00 950.00

Total cost of raw material Schedule-7.1 Details of Raw Material Inventory Opening inventory of raw material (KG) Purchaed (KG) closing stocks (KG)

32,400,000.00 Year I

42,240,000.00 Year II

Amount (NR)

Amount (NR) -

42,500.00 2,000.00

2,000.00 48,200.00 2,200.00

51,300,000.00 Year III

62,775,000.00 Year IV

71,250,000.00 Year V

Amount (NR)

Amount (NR)

Amount (NR)

2,200.00 57,300.00 2,500.00

2,500.00 67,500.00 2,500.00

2,500.00 75,500.00 3,000.00

Raw material used (KG) 40,500.00 48,000.00 57,000.00 1,600,000.00 1,936,000.00 2,250,000.00 Price of closing stock Cost of closing stock and cost of goods sold are taken in average price from year 2.

67,500.00 2,325,000.00

75,000.00 2,850,000.00

Schedule- 8 Administrative Expenses

Particulars Audit Fee Telephone & Communication Expenses Kitchen and lunch Expenses Disel expenses Office Expenses Water & Electricity Expenses Printing & Stationery Expenses

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Year I Projected 40,000 65,000 80,000 1,250,000 45,000 900,000 54,000

Year II Projected 40,000 71,500 88,000 1,500,000 49,500 1,080,000 59,400

Years Year III Projected 50,000 78,650 96,800 1,800,000 54,450 1,296,000 65,340

Year IV Projected 50,000 86,515 106,480 2,160,000 59,895 1,555,200 71,874

Year V Projected 60,000 95,167 117,128 2,592,000 65,885 1,866,240 79,061

900,000 House Rent 30,000 Legal & Professional Expenses 100,000 Repair & Maintenance A/c 18,000 Internet Exp 55,000 Registration & Renewal Expenses 150,000 Advertisement Expenses 34,000 Board Meeting Allowanace 100,000 Misc Expenses 150,000 Insurance Charge 7,000 Newspaper Expenses 36,000 AGM Expenses Travelling Expenses 1,020,000 Subtotal 5,034,000 10% Contingency 503,400 Total 5,537,400 Operating expenses 10% increment each year

990,000 33,000 110,000 19,800 60,500 165,000 37,400 110,000 165,000 7,700 39,600 1,224,000 5,850,400 585,040 6,435,440

1,089,000 36,300 121,000 21,780 66,550 181,500 41,140 121,000 181,500 8,470 43,560 1,468,800 5,353,040 535,304 5,888,344

1,197,900 39,930 133,100 23,958 73,205 199,650 45,254 133,100 199,650 9,317 47,916 1,762,560 6,192,944 619,294 6,812,238

1,317,690 43,923 146,410 26,354 80,526 219,615 49,779 146,410 219,615 10,249 52,708 2,115,072 7,188,758 718,876 7,907,634

Schedule- 8 HR Planning-Core Staff

Particulars Managing Director Sales and Marketing Admin/Finance

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Base Salary Per Person Per Month 60000 45000 45000

No of Month 13 13 13

Year I Projected 1 1 1

Year II Projected 1 1 1

Years Year III Projected 1 1 1

Year IV Projected 1 1 1

Year V Projected 1 1 2

Senior Technician Production Operator Ground Staff Total No of Core Staff

Particulars Managing Director Sales and Marketing Admin/Finance Senior Technician Production Operator Ground Staff Total Training Cost (10% of Salary) Fringe Benefits (10% of Salary) Staff Welfare Exp (2% of Salary) Staff Overtime Cost Total Employee Cost

55000 50000 35000

1 1 2 7

Core Employee Expenses Years Year I Year II Year III Projected Projected Projected 780,000 858,000 943,800 585,000 643,500 707,850 585,000 643,500 707,850 715,000 786,500 865,150 650,000 715,000 1,573,000 910,000 1,501,500 2,202,200 4,225,000 5,148,000 6,999,850

1 1 3 8

1 2 4 10

Year IV Projected 1,038,180 778,635 778,635 951,665 2,595,450 3,028,025 9,170,590

Year V Projected 1,141,920 856,440 1,712,880 2,093,520 2,854,800 3,330,600 11,990,160

422,500

514,800

699,985

917,059

1,199,016

422,500

514,800

699,985

917,059

1,199,016

84,500

102,960

139,997

183,412

239,803

374,400 5,528,900

411,840 6,692,400

453,024 8,992,841

498,326 11,686,446

548,159 15,176,154

salary 10% increment each year

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13 13 13

1 3 5 12

2 3 5 14

CHAPTER-VIII RISK AND CONTINGENCY PLAN

8.1. Risk Contingency Plan Risk is the part of business and mitigation is also what a businessman should thrive for. Expected Risk

Mitigation Plan

Sales increases more than expected during If the sales during the season exceeds, the season

company plans to add a working shift of 4 hours in order to meet the sales.

Supply of raw material not one time or not up

To mitigate such risk the company have contracted with more than one supplier.

to our standards Price fluctuation of the powder

For this, we do pre contract agreement and also pay in advance.

8.2. Exit Plan For exit, we have not thought of anything but for any shareholders willing to exit, the value of company will be taken under consideration and the value will be paid to him/her. We might exit from the business when we can get better value for our company around 20 times higher than the initial investment.

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REFERENCES

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TOOLS AND MACHINARY

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