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Business Plan Report for Sahyadri Engineering Enterprises
Group Business Plan Report Sl. No.
Reg. No.
1 2 3 4 5
Student Name
17MCMS046001 Abhishek Gowda 17MCCO051005 Deeksha R. 17MCMS046050 Pramitha S K 17MCMS046051 Prathamesh Mhatre 17MCMS046079 Srikanth U
Department
FMT M Com HRM MMT FMT
Mentor: Dr. Mamatha S V
December– 2018 FACULTY OF MANAGEMENT AND COMMERCE M. S. RAMAIAH UNIVERSITY OF APPLIED SCIENCES Bengaluru -560 054
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FACULTY OF MANAGEMENT AND COMMERCE
Certificate This is to certify that the Project titled “Business Plan Report for Sahyadri Engineering Enterprises” is a bonafide record of the Management Activity group project work carried out by Ms. Pramitha S Kannimbele bearing Reg. No. 17MCMS046050 Department of Management Studies, FT-2017 batch in partial fulfilment of requirements for the award of M.B.A. Degree of M. S. Ramaiah University of Applied Sciences. December– 2018 Mentors
Assistant Prof. Dr. Mamatha S. V.
Prof. Geetanjali Patil HoD – Management Studies
Dr. H S Srivatsa Associate Dean - FMC
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M.S. Ramaiah University of Applied Sciences – Faculty of Management and Commerce (FMC)
Declaration Business Plan Report for Sahyadri Engineering Enterprises This Management Activity report submitted herewith is a result of our own work and in conformance to the guidelines against plagiarism as laid out in the University Student Handbook. All sections of the text and results which have been obtained from other sources are fully referenced. We understand that cheating and plagiarism constitute a breach of University regulations and will be dealt with accordingly.
Sl. No.
Reg. No.
Student Name
Department
1 2 3 4 5
17MCMS046001 17MCCO051005 17MCMS046050 17MCMS046051 17MCMS046079
Abhishek Gowda Deeksha R Pramitha S K Prathamesh Mhatre Srikanth U
FMT M Com HRM MMT FMT
Signature
Date: 22 December 2018
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M.S. Ramaiah University of Applied Sciences – Faculty of Management and Commerce (FMC)
Acknowledgements The completion of this project, although took our combined efforts, would not have been possible without the kind support and cooperation of multiple individuals. "Many ideas grow better when transplanted into another mind than the one where they sprang up." – Oliver Wendell Holmes We first and foremost would like to express our immense gratitude to our mentor, Dr. Mamatha S.V for guiding us and helping us from time and time when we needed of it We are highly indebted for the aid that was provided when necessary and helping us complete the study. We would like to express our thankfulness towards Dr.H.S. Srivatsa, Associate Dean and HOD of FMC and to Prof. H.N. Nagesha, Registrar of FMC for their encouragement to finish our project with zeal. We would also like to express our gratitude towards the retailers who co-operated with us and answered all our questions, and the citizens who took time to fill out our questionnaires that aided us in our study. We would especially like to thank all the organisations who answered our queries. We would finally like to express special gratitude towards all the professors, parents and friends who helped us through times of need. It was their support that helped us through down times.
Business Plan for Sahyadri Engineering Enterprises
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M.S. Ramaiah University of Applied Sciences – Faculty of Management and Commerce (FMC)
Abstract Sahyadri Engineering Enterprises is a small-scale business that makes spare parts for hydraulic machines and cranes used in construction sector. It was established in Commented [M1]: …… (write one line on the history)
1988.......The company manufactures high quality screws and flanges and follows the make-to-order manufacturing process. The company takes pride in their heat treatment process which is a well-guarded secret. This process gives the desired quality to the spare parts and also helps them sustain the competitive advantage. It is headed by single owner with a sustained business from …. Xyz.. (Please rewrite the abstract).
The company does not invest much in marketing, employee development and is currently facing problems with GST, since it blocks an ample amount of the company’s Commented [M2]: The company has no demand in the Indian market and hence they do not invest in marketing, however they plan to expand business in other countries.
working capital, causing a hindrance to the company’s productivity. The team analysed the company using techniques like PEST and SWOT. The departments analysed were marketing, finance, HR and Operations. The analyses were primarily interview based. Problems were identified and appropriate recommendations were suggested. The team also helped the company by designing their website and an exclusive logo. The team devised a performance appraisal template which can be used to evaluate performance in a more systematic and transparent way. The recommendations if implemented would significantly improve the strengths, alleviate the weakness and promote expansion of their business.
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Table of Contents Acknowledgements ............................................................................................................ ii Abstract .............................................................................................................................. iii Table of Contents .............................................................................................................. iv List of Tables ..................................................................................................................... vi Abbreviation and Acronyms .......................................................................................... viii 1. Introduction and Motivation ........................................................................................ 1 1.1 Introduction ........................................................................................................ 1 1.2 Motivation .......................................................................................................... 1 2. Company background ................................................................................................... 3 2.1 Business Profile ................................................................................................. 3 2.2 Marketing Study................................................................................................. 3 2.3 Operations study ................................................................................................ 6 2.4 Finance Statement .............................................................................................. 8 2.5 Human Resource .............................................................................................. 13 2.6 PEST Analysis ................................................................................................. 14 2.7 SWOT Analysis ............................................................................................... 16 3. Aim and Objectives ...................................................................................................... 18 3.1
Title ............................................................................................................ 18
3.2
Aim ............................................................................................................ 18
3.2
Objectives .................................................................................................. 18
3.4
Methods and Methodology/Approach to attain each objective ................. 18 Objectives for Marketing ................................................................................ 19 Objectives for Human Resources ................................................................... 19 Objectives for Operations ............................................................................... 19 Objectives for Finance .................................................................................... 20
4. Problem solving ............................................................................................................ 21 Business Plan for Sahyadri Engineering Enterprises
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M.S. Ramaiah University of Applied Sciences – Faculty of Management and Commerce (FMC)
4.1 Marketing ......................................................................................................... 21 4.1.1 Marketing problems ............................................................................... 21 4.1.2 Marketing Solutions............................................................................... 22 4.2 Financial Statement .......................................................................................... 26 4.2.1 Financial Problems ................................................................................ 26 4.2.2 Financial Solutions ................................................................................ 27 4.3 Human Resources ............................................................................................ 27 4.3.1 Human Resources Problems .................................................................. 27 4.3.2 Human Resources Solutions .................................................................. 27 5. Experiences, References, Testimonials and Evidence .............................................. 31 6. Poster ............................................................................................................................. 32 6. Concluding comments ................................................................................................. 33
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List of Tables Table 1: Loan Summary of SEE .......................................................................................... 9 Table 2: Profit/Loss Statement for SEE ............................................................................. 10 Table 3: Balance Sheet of SEE .......................................................................................... 11 Table 4: PEST Analysis ..................................................................................................... 15 Table 5: SWOT Analysis ................................................................................................... 16 Table 6: Marketing Problem Solving ................................................................................. 21 Table 7: Performance Appraisal Template for SEE .......................................................... 30
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List of Figures Figure 1: Marketing Study ................................................................................................... 3 Figure 2: Large Diameter Screws ........................................................................................ 4 Figure 3: Flange ................................................................................................................... 4 Figure 4: Worm Gear ........................................................................................................... 5 Figure 5: Brake Calliper Pistons .......................................................................................... 5 Figure 6: Construction Industry Process .............................................................................. 6 Figure 7: Internal Manufacturing Process............................................................................ 7 Figure 8: Organisational Structure of the SEE .................................................................. 14 Figure 9: Homepage of Company Website ........................................................................ 22 Figure 10: About Page for Sahyadri Express ..................................................................... 23 Figure 11: Products page of Company Website ................................................................ 23 Figure 12: Contact Page of Company Website .................................................................. 24 Figure 13: Brand Logo for SEE ......................................................................................... 25
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Abbreviation and Acronyms PEST – Political Economical Social Technological SEE – Sahyadri Engineering Exports SWOT – Strengths Weaknesses Opportunities Threats
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1. Introduction and Motivation This chapter concentrates on explaining the basics of business plan is and its components. It also includes the motivation behind making a business plan for the respective organisation.
1.1 Introduction A business plan is one that describes a business, its products and services. It describes a business’ source of income. Our plan helps in uncovering weaknesses that may be a part of the business. A business plan normally consists of plans relating to finance, operations, human resources, and marketing. A business plan for an established business is prepared help in defining strategies and improve on them and to also benchmark their progress. It also aids them in expanding their businesses and improve on aspects that cause hindrance in smoothly running their business. One such established company is Sahyadri Engineering Enterprises. It is a manufacturing and exporting company incorporated in the year 1988. A business plan has been formulated for the company, to help it increase its clientele, its overall production and profit generation with specific focus on marketing, operations, HR and finance. The recommendations are oriented towards increasing clientele, production and profits. The plan analyses the problems that is currently faced by the company and recommendations have been provided for the same in different areas of management. The areas consist of finance, operations, marketing and human resources. It is aimed to tackle each problem with careful consideration. The plan also gives an insight into the problems that are faced by the manufacturing and export sector in general.
1.2 Motivation The motivation for proposing a business plan to Sahyadri Engineering Enterprises is to understand how a business plan functions, what problems the company faces, and the practical solutions that the team can provide to benefit the company. The plan is developed with an aim to broaden their market and aid in the better management of the company where it faces problems relating to many aspects which are further explored in this report.
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M.S. Ramaiah University of Applied Sciences – Faculty of Management and Commerce (FMC)
Summary:
Business Plan for Sahyadri Engineering Enterprises
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M.S. Ramaiah University of Applied Sciences – Faculty of Management and Commerce (FMC)
2. Company background This chapter consists of the background study done on the various fields and aspects of the company. It consists of SWOT and PEST analysis, the business profile and a financial statement that was provided to us by the company.
2.1 Business Profile Sahyadri Engineering Enterprises is a sole proprietorship firm which was established in 1988 and is located in Bangalore, India. It initially manufactured variety of tractor parts – cylinder liners for overseas customers, sleeves king pin shaft and other spare materials for hollow care concrete block manufacturing. Their business then lost its market since the tractor parts became obsolete. In 2002, they became part of a joint venture with Pyrose Contra Maintenance WLL. Since then, they have been manufacturing spares for special purpose machines used in construction field. They have one supplier and one customer, both of which have been associated with the company for 16 years, since quality is their watchword and they stop at nothing to meet it. Their turnover is 1 crore and recruit 20 employees, which was formerly 50.
2.2 Marketing Study
Product
Price
Screws
Previous product –
Flanges
Large diameter screws
Place Exporting the products to Bahrain
Promotion Word of mouth,
One on one interaction
Worm gears $400
Brake piston plate Figure 1: Marketing Study
Business Plan for Sahyadri Engineering Enterprises
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Product Screws – The company manufactures screws of various proportions, ranging from diameters of 8mm to ones with a diameter of 80mm. The large diameter screws are used in heavy machinery such as excavators.
Figure 2: Large Diameter Screws
Flanges – A flange is an internal or external rim, or ridge that forms the end of a pipe when it is fastened to the pipe.
Figure 3: Flange
Worm gears – A worm drive is a gear arrangement in which a component in the shape of a screw is rotated by a revolving cylinder that bears a screw thread. Worm gears are required when large speed reductions are required in an engine.
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M.S. Ramaiah University of Applied Sciences – Faculty of Management and Commerce (FMC)
Figure 4: Worm Gear
Brake calliper pistons – Brake calliper is an essential component of a vehicles ability to stop, especially for heavy construction machinery that need effective braking systems to come to a halt. The piston inside the brake calliper is responsible for the brake pad creating friction with the brake discs.
Figure 5: Brake Calliper Pistons
Price The company follows a make-to-order manufacturing process in which the production process begins only after the customer has given the order details, i.e. Type of product to be produced, number of units to be produced, measurements for the product, where it is to be delivered. The pricing for the product varies according to the measurement and type of product the is demanded. Products of a larger measurement and consuming more raw material will cost more. An 120mm diameter screw with a length of 600mm, produced by SEE has a selling price of $400 per unit produced.
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Place (distribution) – SEE currently only exports to Bahrain. It caters to only one customer at a time to keep the process of production and distribution fluid. The customer provides the company with the type of product to be produced, the measurements for the product, and how many units to be produced along with the time of export.
Promotion – The company does not indulge in any intensive promotional activities. The products that the company produce, and the process of production are both niche. The company caters to a single customer at a time. The only form of promotion conducted is through word of mouth with other businesses and uploading the firms details on Indiamart and Justdial.
2.3 Operations study Construction industry – Process
Form access road and fencing
Set up site
Site Clear
Piling
Abutment
Design of caste
Hydraulic pump and small cranes order
Incremental launch
Finishes
Figure 6: Construction Industry Process
The involvement of Sahyadri Engineering Enterprises can be explained with the example of the process followed to construct a flyover. The process is as follows:
Business Plan for Sahyadri Engineering Enterprises
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1. The form access road and fencing is the process where the site for the flyover construction is selected and sectioned off. The site for the construction is set up and then cleared. 2. The next important process is the process of piling. Here the earth is dug with huge drills for the supports to be set up. This serves as the support for the foundation. The abutment is process where the iron pillars for the structure is set up. The caste is designed when the concrete is poured into the pillars for the final support structure. 3. SEE’s products are utilised in the following step. Hydraulic pumps and small cranes order are the machineries utilised for constructing the flyover. The company produces flanges and pistons which are used in these machines. These machineries are the most important part in laying the flyover. The flyover is built using incremental launch, where the flyover is built from one side. The final touches are then done on the flyover.
Manufacturing process Quality check for raw materials
Lathing
Quality check of Product
Impressions
Heat Treatment
Export
Casting
Fettling
Figure 7: Internal Manufacturing Process
The following is the process followed by SEE in manufacturing their products: • The company’s main raw material is iron. Therefore, in the first step a quality check is conducted on the raw materials to ensure that the composition is purely iron and of the highest quality. • Impressions are made, i.e. moulds are made in which, melted iron is to be poured to get the desired shape of the product.
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• Casting is done. In this process the melted molten iron is poured into the moulds that are made in the impressions stage. In this process, iron is mixed with other important compositions. • Trimming is done to ensure there are no rough edges or improper shaping, this process is the fettling process. • The heat treatment process is one that gives the company a competitive advantage. This process is where the iron is hardened further to ensure that there is no breakage during use. This is a trade secret of the company. • Lathing machines are used to provide threading to the products and give them their final and intended form. This process is where the products are diversified. • A final quality check is performed on the final product, to ensure that it is according to the standards of the customer. • The final products are then exported to the company’s main customer in Bahrain. Connecting paragraph… say that the following sections will look at each department in details and present the analysis of data obtained.
2.4 Finance Statement Financial Schedule Sahyadri Enterprises is a Sole Proprietorship Concern established in the year 1988 with the initial investment of 25,00,000/- which was funded by family members and personal savings, the turnover of the company in the year 2017 is 5,74,55,890/-, it manufactures a Spare part known as a large diameter screw which fits in the construction machinery. Around 150 units are produced every month and annually it stands around 2000 units. The cost of producing 1 unit is 340$ and it is sold at 400$. And the profit margin of the company in the year 2017 is 21% which is the standard profit margin of the manufacturing companies. By reviewing the Company’s financial history of 15 years, it will help to make more accurate financial projections in its operations and improvises the production and profitability. Financing sources will be considered as the financial history to look through the prospects for future growth. Loan Summary The following is the debt Schedule table of Sahyadri Enterprises which gives in-depth information about the company not usually included in the financial statements.
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Loan Summary Table of Sahyadri Enterprises Financial institution State Bank of India
Original Amount 4561000
Original Date
Present Balance
23/05/2017 1293750
Rate of interest 11.5%
Maturity date
Type of Loan
24/05/2019 Long Term
Security given Lathe Machines
Table 1: Loan Summary of SEE
Objective of developing the financial plan is to obtain important insights, like the turnover ratio, liquidity ratio and net profit margin, into the company’s financial situation and provide an estimate of its financial future.
Profit/Loss Statement of Sahyadri Enterprises for the year ending 31/03/2017 is as follows Particulars
Amount
To Opening Stock & WIP
39,54,159 By Sales
To Purchase of Raw Materials
1,91,19,230 By Closing Stock
To tools and Consumables
47,31,160
To Packing Materials
28,40,620
To Transportation
35,65,735
To
Labour
Charges
Particulars
Paid
heating/blacking
Amount
5,26,18,275 48,37,615
to 45,92,255
To Gross Profit c/d
1,86,52,731
Total
5,74,55,890
5,74,55,890
Administrative Expenses
To Salary and Wages
Business Plan for Sahyadri Engineering Enterprises
31,25,000 By Gross Profit b/d
1,86,52,731
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M.S. Ramaiah University of Applied Sciences – Faculty of Management and Commerce (FMC)
To Rent
17,25,000
To Postage and Telephone
38,165
To staff Welfare
5,00,000
To Repairs and Maintenance
99,315
To office expenses
2,43,285
To Power and Electricity
5,03,630
To Travel and Conveyance
1,67,625
To Bank Charges and Interest
5,75,000
To Legal expenses
72,500
To Depreciation
5,17,500
To Net Profit transferred to capital a/c
1,10,85,711
Total
1,86,52,731
1,86,52,731
Table 2: Profit/Loss Statement for SEE
Balance sheet as on 31/03/2017
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M.S. Ramaiah University of Applied Sciences – Faculty of Management and Commerce (FMC)
Liabilities
Amount
CURRENT LIABILITIES
ASSETS
Amount
NON-CURRENT ASSETS
Trade Payables
14815678 Fixed Assets
8946578
Other Current Liabilities
2132898 Capital Work in Progress
751256
Total Current Liabilities
16948576 Total Non-Current Assets 5354129
9697834
Reserves and Surplus NON-CURRENT LIABILITIES
Amount
CURRENT ASSETS
Long Term Borrowings
4561004 Inventories
Other Long term liabilities
3126753 Trade Receivables
Amount
Cash And Cash Equivalents Short Term Loans And Advances Current Investments OtherCurrentAssets Total Current Assets Total Liabilities
29990462 Total Assets
2238565 14786355 785965 2267708 877000 44035 20292628 29990462
Table 3: Balance Sheet of SEE
Interpretation of Ratios
1) Liquidity Ratio is generally used to calculate the adequacy and quality of current assets to meet with the current obligations as they come due. There are many ratios which come under liquidity ratio but the two major ratios that are important to the proprietor and a potential financial institution. The two major Liquidity Ratios which measures the ability of the company to repay its debts through current assets and quick assets are Current ratio and Quick Ratio or acid test ratio. 2) Current Ratio – The current ratio is used to measure whether the firm has enough resources to pay its short-term debts by utilising its current assets. Creditors and Financial institutions use this ratio to determine whether or not to lend short-term loans to the company. The current ratio also has the capacity to determine the efficiency of an industry’s operating cycle or its capability to transform its products into cash.
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M.S. Ramaiah University of Applied Sciences – Faculty of Management and Commerce (FMC)
Current ratio = Current Assets = 20292628 = 1.19730578 Current Liabilities 16948576 Current ratio of Sahyadri Enterprises is 1.19730578 which is more than 1 so it is considered to be financially healthy, meaning the company is easily capable of paying of its debts by using its current assets.
3) Acid test Ratio – The acid test ratio is one of the liquidity ratios that determine the capability of an industry to pay its current liabilities when they come due with only quick assets. Quick assets are nothing but current assets which can be transformed into cash within the time span of 90 days. Short-term investments, cash, marketable securities, cash equivalents and current accounts receivable are generally considered as quick assets.
Acid test Ratio = Cash + Cash equivalents + Short term investments + Current Receivables Current Liabilities = 785965+2267708+14830390 = 1.10694037 16948576 As the Sahyadri Enterprises quick ratio is 1.10694097. This means that Sahyadri Enterprises can pay off all of its short-term debts with quick assets and still be remaining with 0.10694037 of some quick assets left over in excess.
4) Net profit margin - It is a ratio of profitability calculated on net profits divided by sales (revenue). Net profit margin is displayed as a percentage. It shows the amount of each sale left over after all expenses have been paid. Net profit margin = Net Profit Revenue = 1,10,85,711 = 21.06% 5,26,18,275 5) Long Term Debt to Total Asset Ratio – It is the ratio which is used to measure the financial position of the company and the company’s capacity to meet all its financial requirements. It shows the percentage of a company’s total assets which are financed by procuring long term debts and other financial obligations which last for more than a year. 6) Long Term debt to Total Assets Ratio = Long Term Debt / Total Assets = 4561004 = 15% 29990462
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M.S. Ramaiah University of Applied Sciences – Faculty of Management and Commerce (FMC)
This means only 15% Total assets of Sahyadri Enterprises are financed by long term debt which is a good sign for the company. Therefore, it is less dependent on long term debts for their business needs. Total Asset Turnover ratio – This ratio measures the efficiency with which the company’s all assets are utilized effectively to earn revenue. Total Asset Turnover Ratio = sales (Revenue) Total Assets = 5,26,18,275 = 1.75 2,99,90,462 The total asset to Turnover ratio of Sahyadri Enterprises is 1.75 which means the company with total assets of Rs. 2,99,90,462 is able to generate a revenue of Rs. 5,26,18,275 which is 1.75 times of its total assets, therefor it shows that the company has utilized its assets efficiently and effectively in their production to generate revenue. Summary These five ratios indicate that Sahyadri Enterprises financial condition healthy. Net profit margin of the company is 21% which is the standard profit margin of the manufacturing industries Current ratio and Quick ratios indicate that the company is capable and can pay of its short-term obligations without any due.
2.5 Human Resource Sahyadri Engineering Enterprises is a medium scale business that has 15 employees working for it. They are categorized as skilled and unskilled. The skilled workers encompass the employees who are in charge of the lathing and fettling process, whereas the unskilled workers consist of employees who are responsible for accounts, purchase, receiving inspection, packaging and marketing. However, these departments are not segregated systematically. There is no protocol followed for these procedures, they are mostly arbitrary. The following is the organizational structure.
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M.S. Ramaiah University of Applied Sciences – Faculty of Management and Commerce (FMC)
Owner
Inspector
Packing
Marketing
Process Control
Figure 8: Organisational Structure of the SEE
The organization also provides health and medical benefits to the employees. They also help in funding for the education of the staff’s children.
They also give incentives based on performance. Although, they do not have a performance appraisal system.
They also lack training and development facilities for their employees.
They work from 9 am to 4 pm, Sundays are holidays. They have expensive exhaustive equipment that prevent health hazards to the employees due to the heat treatment.
2.6 PEST Analysis Political Factors •
GST
•
Lack of scope in US due to Protectionist laws
Economic Factors •
Initial capital investment was a problem
•
Support of State Bank of India avoids economic
problems
for
the
company
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M.S. Ramaiah University of Applied Sciences – Faculty of Management and Commerce (FMC)
•
Exchange rates have a big impact on their income
Social Factors •
Technological Factors
Welfare of workers, their health
•
and medical assistance •
heat treatment
Staff children education is high
•
priority for the company •
Ahead in technology because of
New technologies might replace heat treatment
Lack of employees for labour intensive jobs Table 4: PEST Analysis
Political factors
GST
Protectionist laws causing hindrance to scope of business in other developed countries
SSI. Registration, Shops and Business Establishment License to be renewed every 5 years
BBMP trade license to be renewed every year
Economic factors
Initial capital investment was a problem,
Support of State Bank of India avoids economic problems for the company
Social factors
Welfare of workers, their health and medical assistance
Staff children education is high priority for the company
Lack of employees for labour intensive jobs
Technological factors
Ahead in technology because of heat treatment
Future technological ventures are a threat
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2.7 SWOT Analysis Strength
Weakness
•
15 years of experience
•
Niche product
•
Heat Treatment (Trade Secret) –
•
Only 70% of the raw material is
core strength •
used •
Quality products for reasonable prices
•
Blockage of capital due to export since GST
Make to order products
Opportunities
Threats
•
Heat treatment for other product
•
Expansion in other countries
•
Scope of market as well
•
The future technologies used for spares in the construction sector
Table 5: SWOT Analysis
Strength
SEE has been conducting its business in the foundry industry since 2002. It is well established in the field and has its processes are well adapted to the demand.
SEE follows the make-to-order process of production. In this process the production starts only after the order is placed by the customer. The customer gives the required measurements of the product and the number of units produced. The products can be customized to suit the customer’s demand.
The products that SEE produces are third party spare parts. These spare parts are useful when the heavy machinery that is used in construction, crosses the warranty period. Therefore, consumers look for more affordable solutions to the spare parts problem.
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M.S. Ramaiah University of Applied Sciences – Faculty of Management and Commerce (FMC)
One of the major strengths of SEE is the heat treatment process that it uses to increase the durability of its products. It gives the company a competitive advantage over the manufacturers of original parts.
Weaknesses
SEE sells products that are niche. There is no demand in the domestic market for these products, and they are only exported to Bahrain.
The entire manufacturing process allows for only 70% of the raw material to be utilized. The remaining 30% materials are discarded as waste.
Export costly since GST
Small industrial area
The hierarchy of management in SEE includes only 1 supervisor for the 15 employees. When demand increases, there arise the issue of manpower shortage, which is difficult to overcome in a short period.
Opportunities
The heat treatment process can be utilized for increasing the durability of products other than spare parts for just construction machinery. There is a vast market for products used in regular automobiles.
SEE can seek opportunities in developing countries, where there is a need for third party spare parts, as the price of commodity is a major factor during purchase.
Threat
With the rapid advancement in technology, there could be a time where the specialized heat treatment process of SEE becomes redundant. The company needs to invest in R & D to prepare for this scenario.
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3. Aim and Objectives This chapter is the roadmap of the study conducted on the company in order to prepare for business solutions and recommendations. It consists of the title, aim and objectives of this project. 3.1 Title Business Plan for Sahyadri Engineering Enterprises 3.2 Aim To provide a business solution for Sahyadri Enterprises 3.2 Objectives 1. To study the background of the company 2. To analyse scope and future opportunities for the company 3. To identify problems within the company 4. To give business solutions for the company
3.4 Methods and Methodology/Approach to attain each objective Objective No.
Statement of the Objective
Method/ Methodology
1
To study the background of the company
Interview
2
To analyse scope and future opportunities for the company
Interview and market study
3
To identify problems within the company
Interview
4
To give business solutions for the company
Interview
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Objectives for Marketing
Objective
Observation/Problems Identified
1) To provide a Marketing
1) Currently the company does not require any marketing activities
Solution to facilitate the
2) The company plans to expand the business in the future
expansion of business
3) The target markets being countries in the Middle East and domestic markets 4) Sahyadri Enterprises does not have its own website 5) The company does not have a unique brand identity
Objectives for Human Resources
Objective
Observation/Problems Identified
1) To provide a Human
1) There are 15 employees working for the company
Resource Solution for
They get health and educational benefits
increased performance of
2) There is no performance reviewing procedures in the company
the employees
3) There are however incentives based on productivity 4) There is no training program for skilled/unskilled employees 5) Lack of employees when demand increases
Objectives for Operations
Objective
Observation/Problems Identified
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1) To utilize the waste
1) The company on an average produces 2000 units per year
produced to increase the
2) Each unit sold at $400
company’s income
Around 30% of raw materials are wasted
generation
3) There is also wastage in the form of iron shavings from producing the final product.
Objectives for Finance
Objective
Observation/Problems Identified
1) To avoid financial
1) GST implementation, working capital will be blocked for 3 months
disadvantages like
2) If demand increases, difficult to fund working capital, restrictions, banks expect
blockage of working
turn over should be 6 times the working capital provided
capital of the company
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4. Problem solving 4.1 Marketing 4.1.1 Marketing problems
Objective To
provide
Deliverables
Recommendations
Currently the company does not
To design a company
Update the company
Marketing Solution
require any marketing activities
logo
details on sites like
to
The company plans to expand the
To provide plans for
indiamart.com,
business in the future
maintaining
justdial.com
The target markets being countries
company website
facilitate
expansion business
a
Observation/Problems Identified
the of
a
in the Middle East and domestic markets Sahyadri Enterprises does not have its own website The company does not have a unique brand identity Table 6: Marketing Problem Solving
1. Promotion The consumers for Sahyadri Enterprises reside in Bahrain. The company seeks to expand its business to other Middle Eastern countries which include Kuwait and United Arab Emirates. The current situation for Sahyadri Enterprises, puts it in a position where it does not require any intense promotional activity for enhancing its sales or positioning in the Indian market. Due to a rapid shift in technology and market trends in the construction industry, the shift towards using this process for manufacturing is within a few years reach. 2. Brand identity
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In the coming years, when the company seeks to expand its business to other Middle Eastern countries and domestically, it will be necessary to have a strong brand identity to distinguish itself in the industry. For a company to have a strong position in the market, it must have the basic brand components, which Sahyadri Enterprises lacks. For this purpose, a brand logo was created to cater to the problem. 4.1.2 Marketing Solutions
1. Company website The recommendation provided for promotion of the company’s products and the company itself, is maintaining a website.
Homepage
Figure 9: Homepage of Company Website
About Sahyadri Enterprises
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Figure 10: About Page of Sahyadri Express
Our products
Figure 11: Products page of Company Website
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Contact us
Figure 12: Contact Page of Company Website
The website was created using Webnode website development services. The website service platform provides its own hosting services with monthly and yearly subscription plans. The chosen monthly subscription plan is the “Profi Plan”, which includes –
Free domain – 1 year
Storage – 5GB
Bandwidth – Unlimited
Premium customer support
Form builder
Website statistics
Video background
Google analytics
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Membership registration
Multiple language versions
Backup and recovery
Since Sahyadri plans on expanding its business to other foreign countries, it will become necessary to keep the company’s information available for viewing to potential customers. The website will act as a reference to those clients, in countries where there is scope for market.
2. Brand logo The brand logo provides the organization with a unique brand identity. This will allow the company to distinguish itself from the competitors. It will be easier for the potential customers to recognize the company through the logo.
Figure 13: Brand Logo for SEE
Recommendations: The details of Sahyadri Enterprises are uploaded to websites like IndiaMart and JustDial. However, these details are outdated and only provide information about the company until the year of 2002. When consumers search for businesses in these websites, they will be provided with information which is outdated and may not approach the company as it
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will not be of their interest. The first recommendation will be to update the details of the company in these websites. The second recommendation would be to approach Search Engine Optimization service firms like Brainpulse and SEO India. Search Engine Optimization is a process which affects the online visibility of a web page or a website’s unpaid results. SEO services will allow Sahyadri to be more visible to consumers in search engines like Google and Bing. Testimonials.
4.2 Financial Statement 4.2.1 Financial Problems
The company’s financial situation is quite stable; the only problem faced by Sahyadri Enterprise in terms of finance is, before implementation of GST (Goods and Service Tax), H-form under CST (Central Sales Tax) was issued when the interstate buyer is an exporter and buys goods for the purpose of exporting. H-Form is a certificate issued as a proof of export. This form can be obtained from sales tax department. When the exporter purchases the materials from the sellers to export then the exporter has to issue the FormH to the seller from whom the goods are purchased. The seller has to obtain this Form-H from the exporter and submit the copy of it to the sales department to get Tax exemption. Along with Form-H the seller has to collect the Bill of Lading (B.L) as a proof of export. After the implementation of GST even though there is no output tax for the exports made by the seller the seller has to claim Input Tax Credit (ITC) for the purchases made by the seller because the goods is being sold by overseas against 0% tax, therefore the purchases made by the seller is taxed under GST @ 18% (SGST@9% + CGST @9%). As 18% tax on purchases is too much from the part of seller the government will stand for the seller and the GST paid will be refunded. But the problem here is the tax paid won’t be refunded in one single settlement, within 6-10 days of successful transaction the 9% SGST (State Goods and Service Tax) paid will be refunded by the state government and
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remaining 9% CGST (Central Goods and Service Tax) which will be transferred to central government will take about 3 months to be refunded after the Input Tax Credit (ITC) is claimed by the seller. Therefore the 9% of CGST which has to be refunded by the central government is blocked for a period of 3 months, so in the eyes of business the working capital of the Sahyadri Enterprises will remain stable and won’t fetch any return for the business. 4.2.2 Financial Solutions
As GST implementation rules and regulations is managed by the Central government, trade unions have to raise this point in front of the concerned department and generate a solution where-as the CGST which is being paid by the seller against their purchases is been refunded immediately after the transaction is processed or the previous H-Form concept can be re-introduced where the interstate buyer who buys goods for the purpose of exporting issues H-form to the seller, where the seller has to resubmit the copy of Hform to the sales department for the purpose of tax exemption. And for the 2nd problem of increase in demand, the business owner can look out for any unsecured loans with any private financial institutions where the company need not have to go through the strict rules and regulations of some Banks, which ask for six times returns for the working capital that they provide. 4.3 Human Resources 4.3.1 Human Resources Problems
As a small-scale business, the company’s procedures are not mandatorily systematic. The company does not offer the employees a performance reviewing system, although it does give incentives based on productivity. It also does not provide training and development opportunities for the employees. This could lead to potential lack of interest and motivation amongst the workers. 4.3.2 Human Resources Solutions
Performance Appraisal System
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The company has been offered a performance review template that can be modified in accordance with his preferences, and used on a quarterly basis. It will provide the company with the following advantages: 3 Interactions based on performance, which would encourage the workers to perform better. 4 Preparation of the employees for increased responsibilities. 5 Allows organization to identify the under-performers and train them to be better. 6 Provides a documented history of the performance of all employees, hence enhancing their growth.
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Performance Appraisal for Sahyadri Engineering Enterprises EMPLOYEE NAME
DEPARTMENT
EMPLOYEE ID
REVIEWER NAME
POSITION HELD
REVIEWER TITLE
LAST REVIEW DATE
TODAY'S DATE
CHARACTERISTICS QUALITY
UNSATISFACTORY
SATISFACTORY
GOOD
EXCELLENT
Works to Full Potential Quality of Work Work Consistency Communication Independent Work Takes Initiative Group Work Productivity Creativity Honesty Integrity Co-worker Relations Client Relations Technical Skills Dependability Punctuality Attendance
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GOALS ACHIEVED GOALS SET IN PREVIOUS REVIEW?
GOALS FOR NEXT REVIEW PERIOD
COMMENTS AND APPROVAL COMMENTS
EMPLOYEE SIGNATURE
REVIEWER SIGNATURE Table 7: Performance Appraisal Template for SEE
Recommendations: Training and Development Process The training and development process would help in enhancing the performance reviewing process. It would also give them ways to enhance their work and would ultimately lead to a better functioning organization. The company can invite professional trainers to their company for this purpose. Having a tie-up with large organizations that conduct workshops for skilled and unskilled labours is also a viable option. Business Plan for Sahyadri Engineering Enterprises
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5. Experiences, References, Testimonials and Evidence Chapter – 5 – Experiences, References, Testimonials by the company / organisation and Evidence of work done – video / photos etc
(Title this Chapter as applicable to your work)
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6. Poster
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6. Concluding comments
???????????????????
Why not filled. Conclusions are needed. Refrences/bibliography
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General Guidelines 1. A good project can be written only if you have good piece of work 2. A good piece of work will be ignored if not presented properly 3. Remember – you are writing it because you want others to read 4. If you do not use sufficient care in writing, one will doubt whether you have taken good care in your work either 5. Use clear and short sentences and write in third person. Avoid using bombastic words or jargons 6. All the assumptions and input data should be documented 7. It should be possible to reproduce your computations/experiments by others using your dissertation. 8. Use British English-spelling 9. Units and consistency in the use of units is important. Use only SI Units 10. Use A4 white sheet (bond paper) for printing your project report. Use font size of 12, Calibri, sub-headings can be of same font size but bold 11. Margins should be as shown in the figure
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Group Business Plan Report Sl. No.
Reg. No.
1 2 3 4 5
Student Name
17MCMS046001 Abhishek Gowda 17MCCO051005 Deeksha R. 17MCMS046050 Pramitha S K 17MCMS046051 Prathamesh Mhatre 17MCMS046079 Srikanth U
Department
FMT M Com HRM MMT FMT
Mentor: Dr. Mamatha S V
December– 2018 FACULTY OF MANAGEMENT AND COMMERCE M. S. RAMAIAH UNIVERSITY OF APPLIED SCIENCES Bengaluru -560 054
i
FACULTY OF MANAGEMENT AND COMMERCE
Certificate This is to certify that the Project titled “Business Plan Report for Sahyadri Engineering Enterprises” is a bonafide record of the Management Activity group project work carried out by Ms. Pramitha S Kannimbele bearing Reg. No. 17MCMS046050 Department of Management Studies, FT-2017 batch in partial fulfilment of requirements for the award of M.B.A. Degree of M. S. Ramaiah University of Applied Sciences. December– 2018 Mentors
Assistant Prof. Dr. Mamatha S. V.
Prof. Geetanjali Patil HoD – Management Studies
Dr. H S Srivatsa Associate Dean - FMC
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Declaration Business Plan Report for Sahyadri Engineering Enterprises This Management Activity report submitted herewith is a result of our own work and in conformance to the guidelines against plagiarism as laid out in the University Student Handbook. All sections of the text and results which have been obtained from other sources are fully referenced. We understand that cheating and plagiarism constitute a breach of University regulations and will be dealt with accordingly.
Sl. No.
Reg. No.
Student Name
Department
1 2 3 4 5
17MCMS046001 17MCCO051005 17MCMS046050 17MCMS046051 17MCMS046079
Abhishek Gowda Deeksha R Pramitha S K Prathamesh Mhatre Srikanth U
FMT M Com HRM MMT FMT
Signature
Date: 22 December 2018
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M.S. Ramaiah University of Applied Sciences – Faculty of Management and Commerce (FMC)
Acknowledgements The completion of this project, although took our combined efforts, would not have been possible without the kind support and cooperation of multiple individuals. "Many ideas grow better when transplanted into another mind than the one where they sprang up." – Oliver Wendell Holmes We first and foremost would like to express our immense gratitude to our mentor, Dr. Mamatha S.V for guiding us and helping us from time and time when we needed of it We are highly indebted for the aid that was provided when necessary and helping us complete the study. We would like to express our thankfulness towards Dr.H.S. Srivatsa, Associate Dean and HOD of FMC and to Prof. H.N. Nagesha, Registrar of FMC for their encouragement to finish our project with zeal. We would also like to express our gratitude towards the retailers who co-operated with us and answered all our questions, and the citizens who took time to fill out our questionnaires that aided us in our study. We would especially like to thank all the organisations who answered our queries. We would finally like to express special gratitude towards all the professors, parents and friends who helped us through times of need. It was their support that helped us through down times.
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Abstract Sahyadri Engineering Enterprises is a small-scale business that makes spare parts for hydraulic machines and cranes used in construction sector. It was established in Commented [M1]: …… (write one line on the history)
1988.......The company manufactures high quality screws and flanges and follows the make-to-order manufacturing process. The company takes pride in their heat treatment process which is a well-guarded secret. This process gives the desired quality to the spare parts and also helps them sustain the competitive advantage. It is headed by single owner with a sustained business from …. Xyz.. (Please rewrite the abstract).
The company does not invest much in marketing, employee development and is currently facing problems with GST, since it blocks an ample amount of the company’s Commented [M2]: The company has no demand in the Indian market and hence they do not invest in marketing, however they plan to expand business in other countries.
working capital, causing a hindrance to the company’s productivity. The team analysed the company using techniques like PEST and SWOT. The departments analysed were marketing, finance, HR and Operations. The analyses were primarily interview based. Problems were identified and appropriate recommendations were suggested. The team also helped the company by designing their website and an exclusive logo. The team devised a performance appraisal template which can be used to evaluate performance in a more systematic and transparent way. The recommendations if implemented would significantly improve the strengths, alleviate the weakness and promote expansion of their business.
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Table of Contents Acknowledgements ............................................................................................................ ii Abstract .............................................................................................................................. iii Table of Contents .............................................................................................................. iv List of Tables ..................................................................................................................... vi Abbreviation and Acronyms .......................................................................................... viii 1. Introduction and Motivation ........................................................................................ 1 1.1 Introduction ........................................................................................................ 1 1.2 Motivation .......................................................................................................... 1 2. Company background ................................................................................................... 3 2.1 Business Profile ................................................................................................. 3 2.2 Marketing Study................................................................................................. 3 2.3 Operations study ................................................................................................ 6 2.4 Finance Statement .............................................................................................. 8 2.5 Human Resource .............................................................................................. 13 2.6 PEST Analysis ................................................................................................. 14 2.7 SWOT Analysis ............................................................................................... 16 3. Aim and Objectives ...................................................................................................... 18 3.1
Title ............................................................................................................ 18
3.2
Aim ............................................................................................................ 18
3.2
Objectives .................................................................................................. 18
3.4
Methods and Methodology/Approach to attain each objective ................. 18 Objectives for Marketing ................................................................................ 19 Objectives for Human Resources ................................................................... 19 Objectives for Operations ............................................................................... 19 Objectives for Finance .................................................................................... 20
4. Problem solving ............................................................................................................ 21 Business Plan for Sahyadri Engineering Enterprises
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4.1 Marketing ......................................................................................................... 21 4.1.1 Marketing problems ............................................................................... 21 4.1.2 Marketing Solutions............................................................................... 22 4.2 Financial Statement .......................................................................................... 26 4.2.1 Financial Problems ................................................................................ 26 4.2.2 Financial Solutions ................................................................................ 27 4.3 Human Resources ............................................................................................ 27 4.3.1 Human Resources Problems .................................................................. 27 4.3.2 Human Resources Solutions .................................................................. 27 5. Experiences, References, Testimonials and Evidence .............................................. 31 6. Poster ............................................................................................................................. 32 6. Concluding comments ................................................................................................. 33
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List of Tables Table 1: Loan Summary of SEE .......................................................................................... 9 Table 2: Profit/Loss Statement for SEE ............................................................................. 10 Table 3: Balance Sheet of SEE .......................................................................................... 11 Table 4: PEST Analysis ..................................................................................................... 15 Table 5: SWOT Analysis ................................................................................................... 16 Table 6: Marketing Problem Solving ................................................................................. 21 Table 7: Performance Appraisal Template for SEE .......................................................... 30
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List of Figures Figure 1: Marketing Study ................................................................................................... 3 Figure 2: Large Diameter Screws ........................................................................................ 4 Figure 3: Flange ................................................................................................................... 4 Figure 4: Worm Gear ........................................................................................................... 5 Figure 5: Brake Calliper Pistons .......................................................................................... 5 Figure 6: Construction Industry Process .............................................................................. 6 Figure 7: Internal Manufacturing Process............................................................................ 7 Figure 8: Organisational Structure of the SEE .................................................................. 14 Figure 9: Homepage of Company Website ........................................................................ 22 Figure 10: About Page for Sahyadri Express ..................................................................... 23 Figure 11: Products page of Company Website ................................................................ 23 Figure 12: Contact Page of Company Website .................................................................. 24 Figure 13: Brand Logo for SEE ......................................................................................... 25
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Abbreviation and Acronyms PEST – Political Economical Social Technological SEE – Sahyadri Engineering Exports SWOT – Strengths Weaknesses Opportunities Threats
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1. Introduction and Motivation This chapter concentrates on explaining the basics of business plan is and its components. It also includes the motivation behind making a business plan for the respective organisation.
1.1 Introduction A business plan is one that describes a business, its products and services. It describes a business’ source of income. Our plan helps in uncovering weaknesses that may be a part of the business. A business plan normally consists of plans relating to finance, operations, human resources, and marketing. A business plan for an established business is prepared help in defining strategies and improve on them and to also benchmark their progress. It also aids them in expanding their businesses and improve on aspects that cause hindrance in smoothly running their business. One such established company is Sahyadri Engineering Enterprises. It is a manufacturing and exporting company incorporated in the year 1988. A business plan has been formulated for the company, to help it increase its clientele, its overall production and profit generation with specific focus on marketing, operations, HR and finance. The recommendations are oriented towards increasing clientele, production and profits. The plan analyses the problems that is currently faced by the company and recommendations have been provided for the same in different areas of management. The areas consist of finance, operations, marketing and human resources. It is aimed to tackle each problem with careful consideration. The plan also gives an insight into the problems that are faced by the manufacturing and export sector in general.
1.2 Motivation The motivation for proposing a business plan to Sahyadri Engineering Enterprises is to understand how a business plan functions, what problems the company faces, and the practical solutions that the team can provide to benefit the company. The plan is developed with an aim to broaden their market and aid in the better management of the company where it faces problems relating to many aspects which are further explored in this report.
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Summary:
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2. Company background This chapter consists of the background study done on the various fields and aspects of the company. It consists of SWOT and PEST analysis, the business profile and a financial statement that was provided to us by the company.
2.1 Business Profile Sahyadri Engineering Enterprises is a sole proprietorship firm which was established in 1988 and is located in Bangalore, India. It initially manufactured variety of tractor parts – cylinder liners for overseas customers, sleeves king pin shaft and other spare materials for hollow care concrete block manufacturing. Their business then lost its market since the tractor parts became obsolete. In 2002, they became part of a joint venture with Pyrose Contra Maintenance WLL. Since then, they have been manufacturing spares for special purpose machines used in construction field. They have one supplier and one customer, both of which have been associated with the company for 16 years, since quality is their watchword and they stop at nothing to meet it. Their turnover is 1 crore and recruit 20 employees, which was formerly 50.
2.2 Marketing Study
Product
Price
Screws
Previous product –
Flanges
Large diameter screws
Place Exporting the products to Bahrain
Promotion Word of mouth,
One on one interaction
Worm gears $400
Brake piston plate Figure 1: Marketing Study
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Product Screws – The company manufactures screws of various proportions, ranging from diameters of 8mm to ones with a diameter of 80mm. The large diameter screws are used in heavy machinery such as excavators.
Figure 2: Large Diameter Screws
Flanges – A flange is an internal or external rim, or ridge that forms the end of a pipe when it is fastened to the pipe.
Figure 3: Flange
Worm gears – A worm drive is a gear arrangement in which a component in the shape of a screw is rotated by a revolving cylinder that bears a screw thread. Worm gears are required when large speed reductions are required in an engine.
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Figure 4: Worm Gear
Brake calliper pistons – Brake calliper is an essential component of a vehicles ability to stop, especially for heavy construction machinery that need effective braking systems to come to a halt. The piston inside the brake calliper is responsible for the brake pad creating friction with the brake discs.
Figure 5: Brake Calliper Pistons
Price The company follows a make-to-order manufacturing process in which the production process begins only after the customer has given the order details, i.e. Type of product to be produced, number of units to be produced, measurements for the product, where it is to be delivered. The pricing for the product varies according to the measurement and type of product the is demanded. Products of a larger measurement and consuming more raw material will cost more. An 120mm diameter screw with a length of 600mm, produced by SEE has a selling price of $400 per unit produced.
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Place (distribution) – SEE currently only exports to Bahrain. It caters to only one customer at a time to keep the process of production and distribution fluid. The customer provides the company with the type of product to be produced, the measurements for the product, and how many units to be produced along with the time of export.
Promotion – The company does not indulge in any intensive promotional activities. The products that the company produce, and the process of production are both niche. The company caters to a single customer at a time. The only form of promotion conducted is through word of mouth with other businesses and uploading the firms details on Indiamart and Justdial.
2.3 Operations study Construction industry – Process
Form access road and fencing
Set up site
Site Clear
Piling
Abutment
Design of caste
Hydraulic pump and small cranes order
Incremental launch
Finishes
Figure 6: Construction Industry Process
The involvement of Sahyadri Engineering Enterprises can be explained with the example of the process followed to construct a flyover. The process is as follows:
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1. The form access road and fencing is the process where the site for the flyover construction is selected and sectioned off. The site for the construction is set up and then cleared. 2. The next important process is the process of piling. Here the earth is dug with huge drills for the supports to be set up. This serves as the support for the foundation. The abutment is process where the iron pillars for the structure is set up. The caste is designed when the concrete is poured into the pillars for the final support structure. 3. SEE’s products are utilised in the following step. Hydraulic pumps and small cranes order are the machineries utilised for constructing the flyover. The company produces flanges and pistons which are used in these machines. These machineries are the most important part in laying the flyover. The flyover is built using incremental launch, where the flyover is built from one side. The final touches are then done on the flyover.
Manufacturing process Quality check for raw materials
Lathing
Quality check of Product
Impressions
Heat Treatment
Export
Casting
Fettling
Figure 7: Internal Manufacturing Process
The following is the process followed by SEE in manufacturing their products: • The company’s main raw material is iron. Therefore, in the first step a quality check is conducted on the raw materials to ensure that the composition is purely iron and of the highest quality. • Impressions are made, i.e. moulds are made in which, melted iron is to be poured to get the desired shape of the product.
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• Casting is done. In this process the melted molten iron is poured into the moulds that are made in the impressions stage. In this process, iron is mixed with other important compositions. • Trimming is done to ensure there are no rough edges or improper shaping, this process is the fettling process. • The heat treatment process is one that gives the company a competitive advantage. This process is where the iron is hardened further to ensure that there is no breakage during use. This is a trade secret of the company. • Lathing machines are used to provide threading to the products and give them their final and intended form. This process is where the products are diversified. • A final quality check is performed on the final product, to ensure that it is according to the standards of the customer. • The final products are then exported to the company’s main customer in Bahrain. Connecting paragraph… say that the following sections will look at each department in details and present the analysis of data obtained.
2.4 Finance Statement Financial Schedule Sahyadri Enterprises is a Sole Proprietorship Concern established in the year 1988 with the initial investment of 25,00,000/- which was funded by family members and personal savings, the turnover of the company in the year 2017 is 5,74,55,890/-, it manufactures a Spare part known as a large diameter screw which fits in the construction machinery. Around 150 units are produced every month and annually it stands around 2000 units. The cost of producing 1 unit is 340$ and it is sold at 400$. And the profit margin of the company in the year 2017 is 21% which is the standard profit margin of the manufacturing companies. By reviewing the Company’s financial history of 15 years, it will help to make more accurate financial projections in its operations and improvises the production and profitability. Financing sources will be considered as the financial history to look through the prospects for future growth. Loan Summary The following is the debt Schedule table of Sahyadri Enterprises which gives in-depth information about the company not usually included in the financial statements.
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Loan Summary Table of Sahyadri Enterprises Financial institution State Bank of India
Original Amount 4561000
Original Date
Present Balance
23/05/2017 1293750
Rate of interest 11.5%
Maturity date
Type of Loan
24/05/2019 Long Term
Security given Lathe Machines
Table 1: Loan Summary of SEE
Objective of developing the financial plan is to obtain important insights, like the turnover ratio, liquidity ratio and net profit margin, into the company’s financial situation and provide an estimate of its financial future.
Profit/Loss Statement of Sahyadri Enterprises for the year ending 31/03/2017 is as follows Particulars
Amount
To Opening Stock & WIP
39,54,159 By Sales
To Purchase of Raw Materials
1,91,19,230 By Closing Stock
To tools and Consumables
47,31,160
To Packing Materials
28,40,620
To Transportation
35,65,735
To
Labour
Charges
Particulars
Paid
heating/blacking
Amount
5,26,18,275 48,37,615
to 45,92,255
To Gross Profit c/d
1,86,52,731
Total
5,74,55,890
5,74,55,890
Administrative Expenses
To Salary and Wages
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31,25,000 By Gross Profit b/d
1,86,52,731
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To Rent
17,25,000
To Postage and Telephone
38,165
To staff Welfare
5,00,000
To Repairs and Maintenance
99,315
To office expenses
2,43,285
To Power and Electricity
5,03,630
To Travel and Conveyance
1,67,625
To Bank Charges and Interest
5,75,000
To Legal expenses
72,500
To Depreciation
5,17,500
To Net Profit transferred to capital a/c
1,10,85,711
Total
1,86,52,731
1,86,52,731
Table 2: Profit/Loss Statement for SEE
Balance sheet as on 31/03/2017
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Liabilities
Amount
CURRENT LIABILITIES
ASSETS
Amount
NON-CURRENT ASSETS
Trade Payables
14815678 Fixed Assets
8946578
Other Current Liabilities
2132898 Capital Work in Progress
751256
Total Current Liabilities
16948576 Total Non-Current Assets 5354129
9697834
Reserves and Surplus NON-CURRENT LIABILITIES
Amount
CURRENT ASSETS
Long Term Borrowings
4561004 Inventories
Other Long term liabilities
3126753 Trade Receivables
Amount
Cash And Cash Equivalents Short Term Loans And Advances Current Investments OtherCurrentAssets Total Current Assets Total Liabilities
29990462 Total Assets
2238565 14786355 785965 2267708 877000 44035 20292628 29990462
Table 3: Balance Sheet of SEE
Interpretation of Ratios
1) Liquidity Ratio is generally used to calculate the adequacy and quality of current assets to meet with the current obligations as they come due. There are many ratios which come under liquidity ratio but the two major ratios that are important to the proprietor and a potential financial institution. The two major Liquidity Ratios which measures the ability of the company to repay its debts through current assets and quick assets are Current ratio and Quick Ratio or acid test ratio. 2) Current Ratio – The current ratio is used to measure whether the firm has enough resources to pay its short-term debts by utilising its current assets. Creditors and Financial institutions use this ratio to determine whether or not to lend short-term loans to the company. The current ratio also has the capacity to determine the efficiency of an industry’s operating cycle or its capability to transform its products into cash.
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Current ratio = Current Assets = 20292628 = 1.19730578 Current Liabilities 16948576 Current ratio of Sahyadri Enterprises is 1.19730578 which is more than 1 so it is considered to be financially healthy, meaning the company is easily capable of paying of its debts by using its current assets.
3) Acid test Ratio – The acid test ratio is one of the liquidity ratios that determine the capability of an industry to pay its current liabilities when they come due with only quick assets. Quick assets are nothing but current assets which can be transformed into cash within the time span of 90 days. Short-term investments, cash, marketable securities, cash equivalents and current accounts receivable are generally considered as quick assets.
Acid test Ratio = Cash + Cash equivalents + Short term investments + Current Receivables Current Liabilities = 785965+2267708+14830390 = 1.10694037 16948576 As the Sahyadri Enterprises quick ratio is 1.10694097. This means that Sahyadri Enterprises can pay off all of its short-term debts with quick assets and still be remaining with 0.10694037 of some quick assets left over in excess.
4) Net profit margin - It is a ratio of profitability calculated on net profits divided by sales (revenue). Net profit margin is displayed as a percentage. It shows the amount of each sale left over after all expenses have been paid. Net profit margin = Net Profit Revenue = 1,10,85,711 = 21.06% 5,26,18,275 5) Long Term Debt to Total Asset Ratio – It is the ratio which is used to measure the financial position of the company and the company’s capacity to meet all its financial requirements. It shows the percentage of a company’s total assets which are financed by procuring long term debts and other financial obligations which last for more than a year. 6) Long Term debt to Total Assets Ratio = Long Term Debt / Total Assets = 4561004 = 15% 29990462
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This means only 15% Total assets of Sahyadri Enterprises are financed by long term debt which is a good sign for the company. Therefore, it is less dependent on long term debts for their business needs. Total Asset Turnover ratio – This ratio measures the efficiency with which the company’s all assets are utilized effectively to earn revenue. Total Asset Turnover Ratio = sales (Revenue) Total Assets = 5,26,18,275 = 1.75 2,99,90,462 The total asset to Turnover ratio of Sahyadri Enterprises is 1.75 which means the company with total assets of Rs. 2,99,90,462 is able to generate a revenue of Rs. 5,26,18,275 which is 1.75 times of its total assets, therefor it shows that the company has utilized its assets efficiently and effectively in their production to generate revenue. Summary These five ratios indicate that Sahyadri Enterprises financial condition healthy. Net profit margin of the company is 21% which is the standard profit margin of the manufacturing industries Current ratio and Quick ratios indicate that the company is capable and can pay of its short-term obligations without any due.
2.5 Human Resource Sahyadri Engineering Enterprises is a medium scale business that has 15 employees working for it. They are categorized as skilled and unskilled. The skilled workers encompass the employees who are in charge of the lathing and fettling process, whereas the unskilled workers consist of employees who are responsible for accounts, purchase, receiving inspection, packaging and marketing. However, these departments are not segregated systematically. There is no protocol followed for these procedures, they are mostly arbitrary. The following is the organizational structure.
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M.S. Ramaiah University of Applied Sciences – Faculty of Management and Commerce (FMC)
Owner
Inspector
Packing
Marketing
Process Control
Figure 8: Organisational Structure of the SEE
The organization also provides health and medical benefits to the employees. They also help in funding for the education of the staff’s children.
They also give incentives based on performance. Although, they do not have a performance appraisal system.
They also lack training and development facilities for their employees.
They work from 9 am to 4 pm, Sundays are holidays. They have expensive exhaustive equipment that prevent health hazards to the employees due to the heat treatment.
2.6 PEST Analysis Political Factors •
GST
•
Lack of scope in US due to Protectionist laws
Economic Factors •
Initial capital investment was a problem
•
Support of State Bank of India avoids economic
problems
for
the
company
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M.S. Ramaiah University of Applied Sciences – Faculty of Management and Commerce (FMC)
•
Exchange rates have a big impact on their income
Social Factors •
Technological Factors
Welfare of workers, their health
•
and medical assistance •
heat treatment
Staff children education is high
•
priority for the company •
Ahead in technology because of
New technologies might replace heat treatment
Lack of employees for labour intensive jobs Table 4: PEST Analysis
Political factors
GST
Protectionist laws causing hindrance to scope of business in other developed countries
SSI. Registration, Shops and Business Establishment License to be renewed every 5 years
BBMP trade license to be renewed every year
Economic factors
Initial capital investment was a problem,
Support of State Bank of India avoids economic problems for the company
Social factors
Welfare of workers, their health and medical assistance
Staff children education is high priority for the company
Lack of employees for labour intensive jobs
Technological factors
Ahead in technology because of heat treatment
Future technological ventures are a threat
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2.7 SWOT Analysis Strength
Weakness
•
15 years of experience
•
Niche product
•
Heat Treatment (Trade Secret) –
•
Only 70% of the raw material is
core strength •
used •
Quality products for reasonable prices
•
Blockage of capital due to export since GST
Make to order products
Opportunities
Threats
•
Heat treatment for other product
•
Expansion in other countries
•
Scope of market as well
•
The future technologies used for spares in the construction sector
Table 5: SWOT Analysis
Strength
SEE has been conducting its business in the foundry industry since 2002. It is well established in the field and has its processes are well adapted to the demand.
SEE follows the make-to-order process of production. In this process the production starts only after the order is placed by the customer. The customer gives the required measurements of the product and the number of units produced. The products can be customized to suit the customer’s demand.
The products that SEE produces are third party spare parts. These spare parts are useful when the heavy machinery that is used in construction, crosses the warranty period. Therefore, consumers look for more affordable solutions to the spare parts problem.
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M.S. Ramaiah University of Applied Sciences – Faculty of Management and Commerce (FMC)
One of the major strengths of SEE is the heat treatment process that it uses to increase the durability of its products. It gives the company a competitive advantage over the manufacturers of original parts.
Weaknesses
SEE sells products that are niche. There is no demand in the domestic market for these products, and they are only exported to Bahrain.
The entire manufacturing process allows for only 70% of the raw material to be utilized. The remaining 30% materials are discarded as waste.
Export costly since GST
Small industrial area
The hierarchy of management in SEE includes only 1 supervisor for the 15 employees. When demand increases, there arise the issue of manpower shortage, which is difficult to overcome in a short period.
Opportunities
The heat treatment process can be utilized for increasing the durability of products other than spare parts for just construction machinery. There is a vast market for products used in regular automobiles.
SEE can seek opportunities in developing countries, where there is a need for third party spare parts, as the price of commodity is a major factor during purchase.
Threat
With the rapid advancement in technology, there could be a time where the specialized heat treatment process of SEE becomes redundant. The company needs to invest in R & D to prepare for this scenario.
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M.S. Ramaiah University of Applied Sciences – Faculty of Management and Commerce (FMC)
3. Aim and Objectives This chapter is the roadmap of the study conducted on the company in order to prepare for business solutions and recommendations. It consists of the title, aim and objectives of this project. 3.1 Title Business Plan for Sahyadri Engineering Enterprises 3.2 Aim To provide a business solution for Sahyadri Enterprises 3.2 Objectives 1. To study the background of the company 2. To analyse scope and future opportunities for the company 3. To identify problems within the company 4. To give business solutions for the company
3.4 Methods and Methodology/Approach to attain each objective Objective No.
Statement of the Objective
Method/ Methodology
1
To study the background of the company
Interview
2
To analyse scope and future opportunities for the company
Interview and market study
3
To identify problems within the company
Interview
4
To give business solutions for the company
Interview
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M.S. Ramaiah University of Applied Sciences – Faculty of Management and Commerce (FMC)
Objectives for Marketing
Objective
Observation/Problems Identified
1) To provide a Marketing
1) Currently the company does not require any marketing activities
Solution to facilitate the
2) The company plans to expand the business in the future
expansion of business
3) The target markets being countries in the Middle East and domestic markets 4) Sahyadri Enterprises does not have its own website 5) The company does not have a unique brand identity
Objectives for Human Resources
Objective
Observation/Problems Identified
1) To provide a Human
1) There are 15 employees working for the company
Resource Solution for
They get health and educational benefits
increased performance of
2) There is no performance reviewing procedures in the company
the employees
3) There are however incentives based on productivity 4) There is no training program for skilled/unskilled employees 5) Lack of employees when demand increases
Objectives for Operations
Objective
Observation/Problems Identified
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M.S. Ramaiah University of Applied Sciences – Faculty of Management and Commerce (FMC)
1) To utilize the waste
1) The company on an average produces 2000 units per year
produced to increase the
2) Each unit sold at $400
company’s income
Around 30% of raw materials are wasted
generation
3) There is also wastage in the form of iron shavings from producing the final product.
Objectives for Finance
Objective
Observation/Problems Identified
1) To avoid financial
1) GST implementation, working capital will be blocked for 3 months
disadvantages like
2) If demand increases, difficult to fund working capital, restrictions, banks expect
blockage of working
turn over should be 6 times the working capital provided
capital of the company
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M.S. Ramaiah University of Applied Sciences – Faculty of Management and Commerce (FMC)
4. Problem solving 4.1 Marketing 4.1.1 Marketing problems
Objective To
provide
Deliverables
Recommendations
Currently the company does not
To design a company
Update the company
Marketing Solution
require any marketing activities
logo
details on sites like
to
The company plans to expand the
To provide plans for
indiamart.com,
business in the future
maintaining
justdial.com
The target markets being countries
company website
facilitate
expansion business
a
Observation/Problems Identified
the of
a
in the Middle East and domestic markets Sahyadri Enterprises does not have its own website The company does not have a unique brand identity Table 6: Marketing Problem Solving
1. Promotion The consumers for Sahyadri Enterprises reside in Bahrain. The company seeks to expand its business to other Middle Eastern countries which include Kuwait and United Arab Emirates. The current situation for Sahyadri Enterprises, puts it in a position where it does not require any intense promotional activity for enhancing its sales or positioning in the Indian market. Due to a rapid shift in technology and market trends in the construction industry, the shift towards using this process for manufacturing is within a few years reach. 2. Brand identity
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M.S. Ramaiah University of Applied Sciences – Faculty of Management and Commerce (FMC)
In the coming years, when the company seeks to expand its business to other Middle Eastern countries and domestically, it will be necessary to have a strong brand identity to distinguish itself in the industry. For a company to have a strong position in the market, it must have the basic brand components, which Sahyadri Enterprises lacks. For this purpose, a brand logo was created to cater to the problem. 4.1.2 Marketing Solutions
1. Company website The recommendation provided for promotion of the company’s products and the company itself, is maintaining a website.
Homepage
Figure 9: Homepage of Company Website
About Sahyadri Enterprises
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M.S. Ramaiah University of Applied Sciences – Faculty of Management and Commerce (FMC)
Figure 10: About Page of Sahyadri Express
Our products
Figure 11: Products page of Company Website
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M.S. Ramaiah University of Applied Sciences – Faculty of Management and Commerce (FMC)
Contact us
Figure 12: Contact Page of Company Website
The website was created using Webnode website development services. The website service platform provides its own hosting services with monthly and yearly subscription plans. The chosen monthly subscription plan is the “Profi Plan”, which includes –
Free domain – 1 year
Storage – 5GB
Bandwidth – Unlimited
Premium customer support
Form builder
Website statistics
Video background
Google analytics
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M.S. Ramaiah University of Applied Sciences – Faculty of Management and Commerce (FMC)
Membership registration
Multiple language versions
Backup and recovery
Since Sahyadri plans on expanding its business to other foreign countries, it will become necessary to keep the company’s information available for viewing to potential customers. The website will act as a reference to those clients, in countries where there is scope for market.
2. Brand logo The brand logo provides the organization with a unique brand identity. This will allow the company to distinguish itself from the competitors. It will be easier for the potential customers to recognize the company through the logo.
Figure 13: Brand Logo for SEE
Recommendations: The details of Sahyadri Enterprises are uploaded to websites like IndiaMart and JustDial. However, these details are outdated and only provide information about the company until the year of 2002. When consumers search for businesses in these websites, they will be provided with information which is outdated and may not approach the company as it
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M.S. Ramaiah University of Applied Sciences – Faculty of Management and Commerce (FMC)
will not be of their interest. The first recommendation will be to update the details of the company in these websites. The second recommendation would be to approach Search Engine Optimization service firms like Brainpulse and SEO India. Search Engine Optimization is a process which affects the online visibility of a web page or a website’s unpaid results. SEO services will allow Sahyadri to be more visible to consumers in search engines like Google and Bing. Testimonials.
4.2 Financial Statement 4.2.1 Financial Problems
The company’s financial situation is quite stable; the only problem faced by Sahyadri Enterprise in terms of finance is, before implementation of GST (Goods and Service Tax), H-form under CST (Central Sales Tax) was issued when the interstate buyer is an exporter and buys goods for the purpose of exporting. H-Form is a certificate issued as a proof of export. This form can be obtained from sales tax department. When the exporter purchases the materials from the sellers to export then the exporter has to issue the FormH to the seller from whom the goods are purchased. The seller has to obtain this Form-H from the exporter and submit the copy of it to the sales department to get Tax exemption. Along with Form-H the seller has to collect the Bill of Lading (B.L) as a proof of export. After the implementation of GST even though there is no output tax for the exports made by the seller the seller has to claim Input Tax Credit (ITC) for the purchases made by the seller because the goods is being sold by overseas against 0% tax, therefore the purchases made by the seller is taxed under GST @ 18% (SGST@9% + CGST @9%). As 18% tax on purchases is too much from the part of seller the government will stand for the seller and the GST paid will be refunded. But the problem here is the tax paid won’t be refunded in one single settlement, within 6-10 days of successful transaction the 9% SGST (State Goods and Service Tax) paid will be refunded by the state government and
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M.S. Ramaiah University of Applied Sciences – Faculty of Management and Commerce (FMC)
remaining 9% CGST (Central Goods and Service Tax) which will be transferred to central government will take about 3 months to be refunded after the Input Tax Credit (ITC) is claimed by the seller. Therefore the 9% of CGST which has to be refunded by the central government is blocked for a period of 3 months, so in the eyes of business the working capital of the Sahyadri Enterprises will remain stable and won’t fetch any return for the business. 4.2.2 Financial Solutions
As GST implementation rules and regulations is managed by the Central government, trade unions have to raise this point in front of the concerned department and generate a solution where-as the CGST which is being paid by the seller against their purchases is been refunded immediately after the transaction is processed or the previous H-Form concept can be re-introduced where the interstate buyer who buys goods for the purpose of exporting issues H-form to the seller, where the seller has to resubmit the copy of Hform to the sales department for the purpose of tax exemption. And for the 2nd problem of increase in demand, the business owner can look out for any unsecured loans with any private financial institutions where the company need not have to go through the strict rules and regulations of some Banks, which ask for six times returns for the working capital that they provide. 4.3 Human Resources 4.3.1 Human Resources Problems
As a small-scale business, the company’s procedures are not mandatorily systematic. The company does not offer the employees a performance reviewing system, although it does give incentives based on productivity. It also does not provide training and development opportunities for the employees. This could lead to potential lack of interest and motivation amongst the workers. 4.3.2 Human Resources Solutions
Performance Appraisal System
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M.S. Ramaiah University of Applied Sciences – Faculty of Management and Commerce (FMC)
The company has been offered a performance review template that can be modified in accordance with his preferences, and used on a quarterly basis. It will provide the company with the following advantages: 3 Interactions based on performance, which would encourage the workers to perform better. 4 Preparation of the employees for increased responsibilities. 5 Allows organization to identify the under-performers and train them to be better. 6 Provides a documented history of the performance of all employees, hence enhancing their growth.
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M.S. Ramaiah University of Applied Sciences – Faculty of Management and Commerce (FMC)
Performance Appraisal for Sahyadri Engineering Enterprises EMPLOYEE NAME
DEPARTMENT
EMPLOYEE ID
REVIEWER NAME
POSITION HELD
REVIEWER TITLE
LAST REVIEW DATE
TODAY'S DATE
CHARACTERISTICS QUALITY
UNSATISFACTORY
SATISFACTORY
GOOD
EXCELLENT
Works to Full Potential Quality of Work Work Consistency Communication Independent Work Takes Initiative Group Work Productivity Creativity Honesty Integrity Co-worker Relations Client Relations Technical Skills Dependability Punctuality Attendance
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M.S. Ramaiah University of Applied Sciences – Faculty of Management and Commerce (FMC)
GOALS ACHIEVED GOALS SET IN PREVIOUS REVIEW?
GOALS FOR NEXT REVIEW PERIOD
COMMENTS AND APPROVAL COMMENTS
EMPLOYEE SIGNATURE
REVIEWER SIGNATURE Table 7: Performance Appraisal Template for SEE
Recommendations: Training and Development Process The training and development process would help in enhancing the performance reviewing process. It would also give them ways to enhance their work and would ultimately lead to a better functioning organization. The company can invite professional trainers to their company for this purpose. Having a tie-up with large organizations that conduct workshops for skilled and unskilled labours is also a viable option. Business Plan for Sahyadri Engineering Enterprises
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M.S. Ramaiah University of Applied Sciences – Faculty of Management and Commerce (FMC)
5. Experiences, References, Testimonials and Evidence Chapter – 5 – Experiences, References, Testimonials by the company / organisation and Evidence of work done – video / photos etc
(Title this Chapter as applicable to your work)
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6. Poster
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M.S. Ramaiah University of Applied Sciences – Faculty of Management and Commerce (FMC)
6. Concluding comments
???????????????????
Why not filled. Conclusions are needed. Refrences/bibliography
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General Guidelines 1. A good project can be written only if you have good piece of work 2. A good piece of work will be ignored if not presented properly 3. Remember – you are writing it because you want others to read 4. If you do not use sufficient care in writing, one will doubt whether you have taken good care in your work either 5. Use clear and short sentences and write in third person. Avoid using bombastic words or jargons 6. All the assumptions and input data should be documented 7. It should be possible to reproduce your computations/experiments by others using your dissertation. 8. Use British English-spelling 9. Units and consistency in the use of units is important. Use only SI Units 10. Use A4 white sheet (bond paper) for printing your project report. Use font size of 12, Calibri, sub-headings can be of same font size but bold 11. Margins should be as shown in the figure
Business Plan for Sahyadri Engineering Enterprises
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