Plastic recycling business plan Report

Plastic Recycling Business Plan

Hind Plastics

High Quality Delievered

Group 22

ANKUR VERMA

BALVINDER

PRATEEK DAHIYA

SHIVAM

RAJAT

Executive summary

COMPANY OVERVIEW..................................................................................................7

Mission Statement...................................................................................................7

Markets and Products..................................................................................................8

Objectives.................................................................................................................9

Key to success:..........................................................................................................9

Product and services..................................................................................................10

Market comparison................................................................................................11

Possible obstacles.......................................................................................................12

Industry and marketplace analysis.............................................................................13

Industry analysis.....................................................................................................13

STRUCTURE OF THE PLASTICS INDUSTRY...................................................................15

Raw Material Producers.........................................................................................15

Compounders.........................................................................................................15

Stockists..................................................................................................................15

Specialist Manufacturers or Molders.....................................................................16

Other Manufacturers..............................................................................................16

Fabricators..............................................................................................................17

Marketplace analysis..................................................................................................18

Customer analysis.......................................................................................................18

Competitor analysis....................................................................................................19

Marketing strategy.....................................................................................................20

Product/ service strategy...........................................................................................20

Pricing strategy...........................................................................................................21

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Distribution strategy...................................................................................................21

Advertising & promotion strategy..............................................................................22

Sales strategy............................................................................................................. 22

Marketing & sales forecast.........................................................................................23

Development..............................................................................................................25

Development strategy............................................................................................25

Management..............................................................................................................27

Job description.......................................................................................................28

Operations..................................................................................................................29

Stages of Recycling and Production........................................................................30

Chipping..................................................................................................................31

Segregation.............................................................................................................31

Cleaning..................................................................................................................31

Agglomerating / Colouring.....................................................................................32

Extrusion / Palletisation..........................................................................................32

Fabrication into end Product..................................................................................32

Scope of operations................................................................................................33

Supply chain........................................................................................................... 33

Gantt chart............................................................................................................36

FACILITY LAYOUT.............................................................................................37

Financials..................................................................................................................38

Income statement......................................................................................................40

Balance sheet...........................................................................................................42

Break Even Point........................................................................................................ 44

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Appendix.................................................................................................................... 46

Annuity table:.........................................................................................................46

Bibliography...............................................................................................................54

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EXECUTIVE SUMMARYPlastic is the basic need of our day-to-day life. During recent years the plastic industry has grown with a substantial growth rate. This growth is driven by three sectors viz. packaging, infrastructure and agriculture. There are the various verities of plastics out of which PVC (Polyvinyl chloride) and PET (Polyethylene Terephthylene) plastics have their considerable contribution. PET plastics are generally used in the manufacturing of beverage bottles for the packaging and PVC plastic is used in the production of household plastic materials. The growing utilization of plastics in industrial and consumer applications and surrounding solid waste recycling, has led to an increased demand for recycled plastic resins and products.

We the Hind plastics provide a wide range of plastic solutions for household and raw material for packaging of various companies. As a part of our ongoing efforts to exploit this opportunity we will recycle the plastics and then produce kitchenware items and other related plastic material. We will also sell the recycled plastics to the companies in the plastic business. We will have a recycling plant along with the production unit. The raw material will be procured from the waste collectors. The raw material will be post-consumed beverage bottles and other soft plastic materials

Our main focus is our industrial customer whom we will sell PET bottles and PET flakes. It will contribute more than 60% of our sales. We will also focus on the household plastic business, which is the part of our portfolio. The initial set up cost will be Rs 34, 40,000.

Hind plastics will be a solution proprietorship business run by the promoters.

Since plastic material does not carry any brand name so it will give us an addition benefit in long term to establish our brand name. To exploit the market we will use penetration pricing as our marketing strategy and utilize our stringent distribution network and strong industrial relationship.

As a future plan in coming years we will increase the variety of plastics like LDPE (Low density polyethylene) and HDPE (High density polyethylene). By doing this we will be able to produce plastic carry bags and raw material for production for plastic chairs and tables and other fiber based products.

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COMPANY OVERVIEWHind Plastics provide a wide range of plastic solutions for households and raw material for packaging to the various companies. Allahabad is the place where the facility will be established and other operation will commence.

We will collect the plastic garbage like consumer beverage bottles, plastic bags from various garbage stores and then our recycle unit will process it which eventually be used for the production of finished goods.

The plastic garbage we are getting as raw material has two components one is PVC (Polyvinyl chloride) and other is PET (Polyethylene Terephthylene). Firstly the whole garbage is melted and then PVC and PET are separated from each other by froth flotation technique.

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

We will produce two types of replay plastics

PVC (Polyvinyl chloride) PET (Polyethylene terephthylene)

Mission Statement Strive to provide the excellent plastic solution to the customers at

competitive prices. Continually expand our range of products. Poised to service both large and small customers.

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MARKETS AND PRODUCTSThe plastic products usually do not carry a brand name so intruding in the business like plastic will not be too hard with low price strategy. The population of Allahabad and the cities around it like Varanasi, Gorakhpur, Johnpur is around 3 Crores and this area basically comprises of low to middle income group families so they focus on plastic products rather than fiber since it is a cheaper. Hence it is huge market to exploit.

From Allahabad city 500 tons of solid waste is produced from that 15tons of plastic bags and around 7 tons of plastic bottles is generated per day. So the supply of raw material will be continuous.

Apart from this we will sell raw material for packaging to the various small companies in this area. Around 30 small and medium scale companies are working in this region. So a large amount of industrial customer is also available.

There are two folds of products that we are providing one are industrial and other is household.

Objectives Develop a business that survives on its own cash. Create a company that exceeds customer satisfaction level. Expand the service to whole UP in first five years and then to Delhi. Extending the services to electronic component manufacturing companies for

production of capacitors printed circuit boards etc.

Key to success: The main keys to the success of the Company are: Secure Supply- Contract for supply of post-consumer bottles and post-

industrial manufacturing waste for PET raw material feed stock. Satisfy our customer so that we can retain them Maintain low overhead and operating costs Provide better prices than all our competitors

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PRODUCT AND SERVICES We will provide a wide range of plastic products for households and raw material for packaging. The recycled plastic is processed to Polyethylene Terephthalate (PET). PET is a thermoplastic polymer viscous of polyester family. The biggest property of this compound is it transparent. This is the reason why it is used for packaging. Apart from this PET have good strength, ductility, stiffness and hardness. After the recycling process completed an extruded plastic is generated. Plastics extrusion is a high volume manufacturing process in which raw plastic material is melted and formed into a continuous profile.

The products we are producing are

Cleaned and recycled plastic flakes of PET and bottles, recovered from post-consumer beverage bottles. (This PET will work as raw material for packaging to various firms, not for the end user)

Household finished plastic goods. We will manufacture plastic tubes of various diameters, plastic kitchenware. (For the end user)

PET flake will be sold to thermo formers (those who mold plastic sheets into usable products) primarily to be used to produce high-visibility packaging. And also to the beverage companies for packaging.

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

Market comparison While quality and delivery are important factors to our potential clients, price is most often the determining factor in a buying decision. Good-quality packaging products manufactured from recycled (less expensive) resins, as close as practical to the end customer's operations, will be most competitive and achieve a significant market share. These factors have helped to determine the business parameters of Replay Plastics.9 |

POSSIBLE OBSTACLES

The product is completed and ready for the market launch. The possible obstacles are:

Unavailable or scarce raw material stock for production

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

Company may not meet environmental standards

This environmentally-favorable venture provides for the development of technically feasible and economically viable solutions to PET plastic beverage bottle recycling, as well as environmentally aware in-house re-use practices which filter and return nearly all of the process water to the production lines

INDUSTRY AND MARKETPLACE ANALYSIS

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

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Region wise and polymer wise turnover of recycling industry in Rs.Crore

Region PVC PET

West 156 383

East 75 86

North 338 158

South 111 139

Total 680 766

Each region is specialized in one type of plastic viz south: PET; north: PVC;

Plastic India Foundation estimates the current plastic recycling rate at 60%. One estimate is that about 20,000 microenterprises are engaged in reprocessing and recovery of plastic waste in addition to 180,000 of various sorting and washing units, 60% of which are unregistered. Delhi alone has estimated 53,400 units and Delhi and Bombay together process over 50% of India's waste plastics.

STRUCTURE OF THE PLASTICS INDUSTRY

Raw Material ProducersThese are chemical and petroleum companies who produce "virgin" plastic (sometimes called resin or polymer) in huge quantities. The main influence they have on the recycler is to fix prices and availability of virgin materials. Virgin material is delivered in powder or pellet form, in plastic or paper sacks of around 20 kilos weight, in large cardboard drums that hold many times that quantity or even by road tanker.

CompoundersThese specialist companies, usually small, stock various polymers and provide the manufacturers of plastic goods with technical advice and the most suitable materials or mixtures for each individual need. The compounder is often the best market for the recycler because he possesses superior technical knowledge and has a large volume throughput of virgin material, in which small percentages of reclaim will reduce cost without seriously affecting the quality required by the molder.

StockistsThese warehouses stock polymers and compounds but neither manufacture themselves, nor provide a compounding service. They may be agents or subsidiaries of the producer companies or departments of companies concerned with the supply of other materials such as chemical, rubber or paper. They may be willing to stock reclaim alongside virgin materials, especially if these are in short supply.

Specialist Manufacturers or MoldersThese buy their raw materials from compounders. If they do their own compounding, or if the material is used as produced and does not need compounding, they may buy direct from stockists or producers. They are specialists in plastics and do not perform other types of manufacturing. They may be an attractive market to the recycler because they operate at high volume, but rarely have as much flexibility to vary product quality as molders who know, accurately, the final market for the product.

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Other ManufacturersMany companies are not plastics specialists but employ molding operations in the manufacture of some other product. For example shoe and boot makers use plastics extensively and may carry out the various plastics molding operations in the same production sequence as the work in leather, canvas, rubber etc. Many manufacturers use plastic packaging machinery at the end of a production operation.

FabricatorsThese firms cut and join sheet, rod or extrusion to manufacture a variety of products. They have no opportunity to use reclaim. Machinery and Tool Makers and other sector of the plastics industry justifies mention although not customers for reclaim. The makers and suppliers of plastics manufacturing machinery, tools, moulds and dies are well informed about who does what, who makes what and who uses what within the local plastics industry. They may advise who is likely to buy material.

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MARKETPLACE ANALYSISVarious overseas players wish to explore the Indian market and invest in opportunities thrown open by the country, projected to be world number 3 in plastics consumption by 2010. As shown above the north region of India is specialized in recycling of PVC. So there is a great scope of PET recycling. Apart from this the other

A huge market with full of opportunity. Absence of standard product and service Well connected with other rural areas Having good transportation facility

CUSTOMER ANALYSIS Since we are new player in the market so we need to make some stringent strategies to penetrate market and grab customers. The customers of the plastic industry are scattered due to lack well known brand names. So our first priority will be to accumulate the defused customers.

The direct customers are the customers whom we are selling our product regularly. So for us households whom we are selling plastic goods and companies who are getting raw materials for packaging are direct customers (PET bottles). So only in Allahabad around 20,000 families are our direct prospective customers and in terms of business-to-business market around 20 small and medium scale companies are our direct customers

Apart from them there are few small companies that are giving compounding services. They use to collect various types of plastics flakes along with the virgin plastic and suggest customer (companies) in choosing appropriate plastic. An Asha enterprise is one compounder whom we will sell our plastics.

COMPETITOR ANALYSISIn plastic manufacturing market there is no specific brand name exists so small companies that are in this business flood the market. So they are our biggest direct competitors.

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As we are also not alone as a supplier of PET to the companies as raw materials there are many companies in this region that are supplying PET. Indira Plastics is one of them who is currently selling all types of plastics items. So in case of business-to-business market they are our direct competitors. Kanpur is plastic recycling city of UP. The direct threat we will also have is with the companies operating in Kanpur. But as the distance between Kanpur and Allahabad is 200km as well as the road is not in good condition, so it will not affect much.

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MARKETING STRATEGY The Company has chosen to focus on the production of plastic packaging materials from recycled post-consumer beverage bottles. We have identified a significant available market in the eastern part of UP. All of our initial marketing strategy will be to secure contracts in that segment, and after reaching full planned capacity, look to grow in concert with that segment and related markets. We see little need at present for further market research and development, and will focus on continually updating our production technology in an effort to remain in the forefront of our chosen marketplace.

PRODUCT/ SERVICE STRATEGYThe packaging companies require high quality and highly transparent PET bottles. The companies that are producing mineral water will reject PET bottles with even small impurity/ opaqueness. So we the Hind Plastics provide high-end PET flakes for the perfect packaging.

Hind Plastics will apply recycling and extrusion technology managed by decades of industry specific expertise to create a competitive advantage for its clients. These processes will produce clean, cost-efficient, recycled raw material for manufacturers of thermoform, laminate and other high value-added products, and high strength packaging strapping for shippers of large products and pallets, thereby reducing costs and creating a clear pricing edge among their competitors.

Plastic bags and plastic sheets are now in high demand. And this demand is driven by continuously increasing promotional activities.

PRICING STRATEGYAs plastic products do not carry any brand name so only pricing and distribution strategies will works to achieve competitive edge. The pricing strategy we will use is penetration pricing. The price of all household plastic goods we will sell will be lower than the market price. Also for the PET flakes and bottles the price will be lower than the competitors. A lower price enables me to get contracts of PET bottles and sheets from various companies.

In case of kitchenware and other household products we will provide combo offers and discounts which a common customer expects.

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DISTRIBUTION STRATEGY As I described before that firstly we will target Allahabad city and villages close to it. We will have a distribution center in the Allahabad city that continuously maintains the supply of goods. So the household plastics will be sold through small local grocery shops from which the customers can get them easily. Apart from this we will hire street hawkers who will roam around the city and sell the goods door to door.

PET bottles will be stored in warehouse that is close to the facility itself. The sales people will directly contact to the companies that require these bottles for packaging and look for the contracts. In city as stated above that we will have a distribution center, from that center we will distribute to whole sellers.

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

SALES STRATEGYThe strategy of sales effort will be to convert potential and first time customers into long term customers. Our sales strategy is totally based upon the distribution channel and the pricing strategies. We will have a distribution centre in the city that will take care of sales of household and also supply products to the wholesalers. We will also give the industrial customers a facility to order the products through our website which will help them in reducing the delivery time.

To market the products, the Company will use a number of sales agents/brokers. They have a customer base of their own, having developed successful relationships with their client over the years. Their customer base is currently demanding product so they can expand upon their current base. Of course, they will expand that to new customers when product is available.

If the Company grows faster than its prime customer base, additional capacity may be developed. We will identify additional prospective customers who can be attracted for our products.

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

Sales forecast

Year 1 Year 2 Year 3 Year 4

Annual sales 1620000 2106000 2737800 3559140

Monthly sales 135000 175500 228150 296595

PET Sales 94500 122850 159705 207617

Household items 40500 52650 68445 88978.5

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

Legal formalities Office/business setup Future offerings and expansion plan

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

LDPE (Low density polyethylene) HDPE (High density polyethylene)

LDPE plastic is used in the production carry bags and other plastic sheets as well as cling wrap, car covers, squeeze bottles, liners for tanks and ponds, moisture barriers in construction. And HDPE plastics are used in production of freezer bags, water pipes, wire and cable insulation, extrusion coating.

Our development strategy will base on timely completion of the establishment of the business centre with low execution cost. Our strategy will focus not only the current uninterrupted production of PVC and PET and acquisition of customer as fast as we can, but we will also look for the future expansion plan and execution strategy.

Our future development strategy will focus on to chart out a careful plan for the future expansion and growth of our business. The development strategy will address following issue:

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

Our development strategy will address all those above-mentioned point. As we will grow and our earning will increase, we will produce more of PVC and PET as well as

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expand in new area. We have a development strategy to expand our facility size in order to meet the production size.

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MANAGEMENT

Promoters and six supporting staff will manage the company. There will be five promoters of Hind Plastics.

Marketing skills like convincing power, negotiating ability, creating promotional strategies and sales skills will all be extremely helpful in taking the business a long way and will prove intensely valuable to take Hind Plastics to flaring heights.

Thus with such potential skills, and other qualities like efficient interpersonal skills, leadership skills and decision making quality, aptly makes him the best promoter and eligible founder and owner of Hind Plastics

Along with promoters five more employees will work for the accomplishment of companies’ objective. One supervisor will work on the facility along with two supporting staff. Supervisor who will work upon the facility does not need to be a chemical engineer a simple technician has experience on working upon the facility can be able to do this.

Job description Process No of employees Proficiency

Sorting 2 Unskilled

Belt Conveyer 1 Semiskilled

PET Separator 1 Semiskilled

Packaging 4 Unskilled

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OPERATIONS The operations is defined as the process used to deliver your products and service to the customer market place and also include manufacturing transportation logistics travel and after sales services.

The facility is located at outside the city. Facility is divided in two parts

Recycling and Production unit Warehouse

The facility is located in an area of 3000 sqft. Apart from these two units there will be an office that will look for the perpetual supply of required raw material and also take care about the outbound logistics. The production capacity is 80kg/hr.

The operations will be based upon JIT i.e. just in time. We will have contracted with the suppliers who can supply the raw material as quickly as we want. The raw material contains post consumer beverage bottles and other plastic materials. The bottles and other plastic material that can be recycled have a specific sign from which it can be identified that it can be recycled or not.

The plastic is then transferred to respective unit to be recycled because PET and PVC cannot be recycled simultaneously due to their different properties. There will be two units running parallel to each other. On unit will recycle and produce PVC plastic and other will perform the same for the PET plastic.

The recycled PVC is then moved for the plastic injection-molding unit in the various shapes. Since there are a variety of product is being produced so the preference will be given to that product whose demand is high. All the products will not be produced each and every day. There will be different products that will be produced on different day according to the demand in market.

After the recycling process is completed one part of PET flake is moved to the warehouse according to the demand of raw material that different companies need and other part will move for the molding in bottles.

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

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

Sizing / Chipping Cleaning Segregation. Agglomerating / Colouring Extrusion / Palletisation Fabrication into end Product.

ChippingThe plastics waste should be properly sized so that those may be fed into the extruders for processing and palletizing. The sizing operation depends on the type and shape of the waste plastics.

During this process, attention is required to separate any powdery material from the sized / chipped plastics.

SegregationCertain polymeric materials are compatible with each other at all proportions. For example LDPE and Lldpe are generally compatible to each other at all proportions.

The advanced technology of separating / segregating different types of waste plastics involves ‘Floatation Process’. In this process the property of the varying densities of different plastics is made use of for segregating different types of plastics.

However in the Indian Context, this separation or segregation process, in many cases, are done by manual process utilizing the availability of cheap and expert labor force. In case the waste is contaminated with embedded metals, proper method of separating the metals / other contaminants is required.

CleaningThe scale of cleaning depends on the type of waste. Whenever a cleaning operation is involved, it is to be ensured that the water or any other cleaning material used, should be discharged after ascertaining that the discharge does not contain any objectionable substance. A proper Treatment Device may have to be deployed – like a water treatment plant / effluent treatment plant. For drying, a suitably designed drier is used.

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Many industries situated outside the metropolises, use open space for natural drying of the cleaned waste.

Agglomerating / Colouring In the next operation the sized plastics waste is mixed with colour master batch in high-speed mixers / agglomerators and the output is ready for extrusion into pellets.

Extrusion / Palletisation This is the most important part of the process wherein the sized / chipped plastics are plasticized and granulated to make the plastics material ready for fabrication next. The type and size of the Extruder depend on the type and volume of the plastics waste.

Fabrication into end Product Finally the reprocessed plastics granules are used as raw material for producing end products using similar fabrication machines like Injection Molding / Extrusion etc., depending upon specific requirement.

Scope of operations Now presently our production capacity is 200kg/day from which in initial stages we are utilizing around 50% of it. As the business expands we will reach to optimum capacity utilization. We are expecting that we will start producing more advance plastics in the fourth year of our operations and accordingly the sales will increase and the facility will have to be expanded.

Supply chainIn the city there are various small post consumer plastic bottle collectors. To make a continuous supply of raw material we will have four suppliers with us. There will be one permanent supplier that will continuously supply the raw material. In case of excess demand other suppliers will be taken into consideration. Supplier will cover the transportation cost only. The finished product will be stored in the warehouse and according to the demand it will be send to city distribution center. The distribution center will directly sell the finished household plastics as well as to the small shops.

Our average daily demand of raw material is 300kg and the lead-time we will keep lead-time of 6hrs. We keep a safety stock of 50 kg. So the reorder point is given by

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Reorder point= average daily uses x lead time + safety stock

Reorder point = 300 X .25day + 50

= 125 kg.

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

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

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PROCESS FLOW CHART

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Gantt chart

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

FACILITY LAYOUT

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FINANCIALS The startup cost of our business is as follows:

Start-up

Requirements Amount

Start-up Expenses

Legal 6,000

Stationery 500

Business Cards 500

Initial Mailing 100

Process Funding 400

Office Equipment 2,500

Total Start-up Expenses 10,000

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Start-up Assets

Cash Required 1,00,000

Other Current Assets 0

Long-term Assets 33,30,000

Total Assets 34,30,000

Total Requirements 34,40,000

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

Particulars YEAR 1 YEAR 2 YEAR 3 Year 4

Net sales 1620000 2106000 2737800 3285360

Cost of good sales 891000 1158300 1505790 1806948

Gross margin 729000 947700 1232010 1478412

Operating expenses:

Admin exp. 3000 3150 3308 3473

Advertisement 6000 7200 8640 10368

Salaries 192000 211200 232320 255552

Transportation 96000 105600 116160 127776

Maintenance 15000 15750 16538 17364

Electricity 4800 5040 5292 5557

Telephone 10000 11000 12100 13310

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Legal exp. 10000 1000 1000 1000

Insurance 20000 20000 20000 20000

Rent 24000 26400 29040 31944

Other exp 6000 6600 7260 7986

386800 412940 451657 494330

EBITDA 342200 534760 780353 984082

less depreciation 303000 272700 245430 220887

EBIT 39200 262060 534923 763195

Less interest paid 175550 165061 153243 139926

EBT -136350 96999 381680 623269

tax @ 30% 0 29100 114504 186981

PAT -136350 67899 267176 436288

BALANCE SHEETThe projected balance sheet of four years is as follows:

Sources of Funds Year-1 Year-2 Year-3 Year-4

Capital

Owner's capital 1930000 1930000 1930000 1930000

Surplus -136350 -68451 130274 765287

Net worth 1793650 1861549 2060274 2695287

Long Term loan

Loan 1417302 1324116 1219111 1100789

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Current Liabilities

Creditors 70500 56722 68066 81680

Total liabilities 3281452 3242387 3347451 3877756

Application of fund

Plant & M/C 3030000 2727000 2454300 2208870

Less depreciation 303000 272700 245430 220887

2727000 2454300 2208870 1987983

Land 300000 300000 300000 300000

Actual Fixed Asset 3027000 2754300 2508870 2287983

Current Assets:

Inventory 97200 315900 410670 821340

Bank 10000 40000 100000 100000

Debtors 147252 132187 117911 232703

Advance to suppliers’ 0 0 210000 335730

Investment 100000

Total Assets 3281452 3242387 3347451 3877756

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BREAK EVEN POINT

VC Amount in Rs FC Amount in Rs

Admin 3000

Other exp 6000 Interest 175550

Transportation 96000 Advertisement 6000

Telephone 10000 Insurance 20000

Wages 119250 Salary 192000

Carriage inward 238500 Rent 24000

Power 119250 Maintenance 15000

Raw material 414000 Depreciation 303000

Legal 10000

Total 1003000 Total 748550

Contribution 617000

pv ratio 0.3808642

BEP units 1965398.703 135000

BEP SALES 15 in months

1.21 In years

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

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APPENDIX

Annuity table:total loan amt.= pmt[1-1/(1-

i)^n]/i

n is number of years

i is interest rate

loan amount 1500000 ######

interest rate annually 0.12 ######

pmt = 21521 21520.64

month EMI Interest principle balance O/S

Annual interest

1 21521 15000 6521 1493479

2 21521 14935 6586 1486894

3 21521 14869 6652 1480242

4 21521 14802 6718 1473524

5 21521 14735 6785 1466738

6 21521 14667 6853 1459885

7 21521 14599 6922 1452963

8 21521 14530 6991 1445972

9 21521 14460 7061 1438911

10 21521 14389 7132 1431780

11 21521 14318 7203 1424577

12 21521 14246 7275 1417302 175550

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13 21521 14173 7348 1409954

14 21521 14100 7421 1402533

15 21521 14025 7495 1395038

16 21521 13950 7570 1387468

17 21521 13875 7646 1379822

18 21521 13798 7722 1372099

19 21521 13721 7800 1364300

20 21521 13643 7878 1356422

21 21521 13564 7956 1348466

22 21521 13485 8036 1340430

23 21521 13404 8116 1332313

24 21521 13323 8198 1324116 165061

25 21521 13241 8279 1315836

26 21521 13158 8362 1307474

27 21521 13075 8446 1299028

28 21521 12990 8530 1290498

29 21521 12905 8616 1281882

30 21521 12819 8702 1273180

31 21521 12732 8789 1264391

32 21521 12644 8877 1255515

33 21521 12555 8965 1246549

34 21521 12465 9055 1237494

35 21521 12375 9146 1228348

36 21521 12283 9237 1219111 153243

34 |

37 21521 12191 9330 1209782

38 21521 12098 9423 1200359

39 21521 12004 9517 1190842

40 21521 11908 9612 1181229

41 21521 11812 9708 1171521

42 21521 11715 9805 1161716

43 21521 11617 9903 1151812

44 21521 11518 10003 1141810

45 21521 11418 10103 1131707

46 21521 11317 10204 1121504

47 21521 11215 10306 1111198

48 21521 11112 10409 1100789 139926

49 21521 11008 10513 1090277

50 21521 10903 10618 1079659

51 21521 10797 10724 1068935

52 21521 10689 10831 1058103

53 21521 10581 10940 1047164

54 21521 10472 11049 1036115

55 21521 10361 11159 1024955

56 21521 10250 11271 1013684

57 21521 10137 11384 1002300

58 21521 10023 11498 990803

59 21521 9908 11613 979190

60 21521 9792 11729 967461 124920

35 |

61 21521 9675 11846 955615

62 21521 9556 11964 943651

63 21521 9437 12084 931567

64 21521 9316 12205 919362

65 21521 9194 12327 907035

66 21521 9070 12450 894584

67 21521 8946 12575 882010

68 21521 8820 12701 869309

69 21521 8693 12828 856481

70 21521 8565 12956 843526

71 21521 8435 13085 830440

72 21521 8304 13216 817224 108010

73 21521 8172 13348 803876

74 21521 8039 13482 790394

75 21521 7904 13617 776777

76 21521 7768 13753 763024

77 21521 7630 13890 749134

78 21521 7491 14029 735104

79 21521 7351 14170 720935

80 21521 7209 14311 706624

81 21521 7066 14454 692169

82 21521 6922 14599 677570

83 21521 6776 14745 662825

84 21521 6628 14892 647933 88957

36 |

85 21521 6479 15041 632892

86 21521 6329 15192 617700

87 21521 6177 15344 602356

88 21521 6024 15497 586859

89 21521 5869 15652 571207

90 21521 5712 15809 555398

91 21521 5554 15967 539432

92 21521 5394 16126 523305

93 21521 5233 16288 507018

94 21521 5070 16450 490567

95 21521 4906 16615 473952

96 21521 4740 16781 457171 67486

97 21521 4572 16949 440222

98 21521 4402 17118 423104

99 21521 4231 17290 405814

100 21521 4058 17462 388352

101 21521 3884 17637 370715

102 21521 3707 17813 352901

103 21521 3529 17992 334910

104 21521 3349 18172 316738

105 21521 3167 18353 298385

106 21521 2984 18537 279848

107 21521 2798 18722 261126

108 21521 2611 18909 242216 43293

37 |

109 21521 2422 19098 223118

110 21521 2231 19289 203829

111 21521 2038 19482 184346

112 21521 1843 19677 164669

113 21521 1647 19874 144795

114 21521 1448 20073 124722

115 21521 1247 20273 104449

116 21521 1044 20476 83973

117 21521 840 20681 63292

118 21521 633 20888 42404

119 21521 424 21097 21308

120 21521 213 21308 0 16031

BIBLIOGRAPHY Crisil report on plastic industry Plastic waste option for small scale recourse recovery by Inge

Lardinois Small scale recycling of plastic by- Jon Vogler

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